
    Gibson v. Trowbridge Furniture Company.
    
      Bill in- Equity by Go-editors to set aside Fraudulent Convey - anee by Insolvent Corporation.
    
    1. Corporctli-vs; interest of st> chholder in assets.— Where one has contributed property to a corporation in exchange for its stock, such contribution gives him no valid claim against the assets of the corporation until all the latter’s debts are paid.
    2. Insolvent corporations; preferring debts due to directors. — An insolvent corporation can not prefer a debt due to one of its board of directors. (McClellan. J. dissenting.)
    3. Creditors’ bill; adding parties complainant; waiver of objections. An objection by a defendant to a “creditors’ bill” that certain persons were allowed to become'parties complainant on imperfect petitions comes too late when made after answer and submission for trial on the merits.
    4. Same; evidence on accounting before register. — On an accounting before the register under a decree in favor of the complainants in a creditor’s bill, the original bill, the amendments thereto, the petitions of other creditors upon which they were let in as co-complainants, the admissions contained in one defendant’s answer, and the decrees pro confesso against the other defendants, are admissible as evidence.
    5. Evidence; proof of handwriting. — Handwriting can not be proved by comparison ; nor can one who has merely seen writings which purported to be those of a certain person, but who is not shown to have personally communicated with such person respecting them, or to have acted upon them as genuine with the knowledge and ac-quiescense of such person, be permitted to testify to his belief as to the genuineness of said writings.
    Appeal from tbe City Court of Decatur.
    Heard before tbe Hon. ¥i. H. SimpsoN.
    Tbe bill in tbis case was filed by tbe Trowbridge Furniture Company, a corporation, and several others, persons and corporations, claiming to be creditors at large of tbe Decatur Furniture Company, a corporation, against B. F. Gibson, said Decatur Furniture Company, and J. L. M. Estes; and sought to have set aside and annulled as fraudulent a transfer of property by said Decatur Furniture Company to said B. F. Gibson, to have a lien decreed in favor of the complainants on said property, and an accounting by said Gibson, etc. Gibson answered under oath, a sworn answer by him not being waived by tbe bill. Decrees pro confesso were taken, against tbe other defendants. Tbe case was tried upon tbe bill, as amended, and tbe sworn answer of Gibson, which agree substantially upon tbe following facts; In tbe latter part of 1888, or early in 1889, Gibson became tbe owner of a stock of furniture’ and opened a retail furniture store in Decatur, Ala. Tbe business was conducted in tbe name of “Tbe Decatur Furniture Company,” and tbe defendant Estes was employed as general manager. In July, 1889, Gibson, Estes, and some members of their families, filed a petition with tbe probate judge of Morgan county for tbe incorporation of tbe Decatur Furniture Company, and subscribed to tbe capital stock thereof, which was fixed at $4,000, Gibson and members of bis family taking-twenty shares of tbe par value of $100 each, and tbe Estes family taking tbe remainder. Upon tbe organization of tbe corporation, Gibson was made president, and Estes general manager. -Both were directors, elected for one year. On December 9, 1889, Gibson baying acquired all tbe stock issued to members of bis family, sold tbe twenty shares to tbe company, and received from tbe company its note, signed also by tbe Estes’ for $2704, to cover tbe price of tbe stock, and also money claimed to be due to bim on account of loans made by bim to tbe Esteses and assumed by tbe Decatur Furniture company, and also on loans made to tbe company. Tbis note not being paid at maturity, Gibson took in payment thereof or thereon tbe stock of furniture belonging to tbe company, and all, or a large part of, its notes, accounts, etc., and appropriated tbe property, which bis answer states was worth about $1,800, to bis own use. It is not clear from Gibson’s answer whether tbe sale of bis stock was made to tbe Esteses or to tbe company itself. But it is clear that tbe corporation was one of the makers of tbe note be received, and tbe property of tbe corporation was taken by bim in payment on the note. On final bearing, tbe court granted tbe complainants tbe relief prayed for, and ordered a reference to tbe register to ascertain tbe amounts of tbe debts due to tbe complainants, including tbe creditors who bad come in on petitions, and tbe value of tbe assets transferred to and converted by said Gibson; who, on such reference, reserved numerous exceptions to tbe rulings of tbe register in admitting evidence. Tbe appellant Gibson now assigns as error tbe final decree and the several rulings of tbe court which are referred to in tbe opinion.
    Kyle & Skeggs, for tbe appellants.
    E. W. Godbey, contra.
    
   STONE, 0. J.

-This is tbe second appeal in tbis case. Gibson v. Trowbridge Furniture Co., 93 Ala. 579. In tbe former appeal tbe question presented for decision was tbe decretal order of tbe chancellor, overruling tbe demurrer to tbe bill as amended. We affirmed tbe chancellor’s decree. Tbe present appeal is from tbe final decree rendered in tbe cause.

Considering tbis case in tbe light most favorable to appellant which tbe record facts permit us to consider it in, we find no error in tbe chancellor’s decree, granting relief to tbe complainants. So far as Gibson’s claim is rested on bis alleged contribution of furniture as the subscription price or consideration paid for tbe stock be subscribed for in tbe corporation, we declaredin tbe former appeal tbat sucb payment or contribution furnished bim no valid claim against tbe assets of tbe corporation, until all tbe latter’s debts are paid. — 93 Ala. 579. We adhere to tbat opinion, and need not add to what we there said.

But Gibson, in bis answer, avers tbat, while tbe corporation was in active business, be, on two several occasions, lent it money. If tbat be true, be became a creditor of tbe corporation to tbe extent of tbe loan. Tbe corporation, however, became insolvent, and be, being a director, could not purchase its stock in trade and close its operations, and thereby make himself a preferred creditor. Nor could be accomplish tbat end by the means resorted to, as set up in bis answer. What can not be done directly can not be done indirectly. In tbe recent case of Corey v. Wadsworth, (in manuscript) we considered this question so fully, tbat we do not propose to add anything to what is there said. Tbe assets of tbe insolvent corporation bad become so far a trust fund in tbe bands of tbe managing body as tbat by no artifice could a member of tbe governing board have himself preferred over other creditors of tbe insolvent corporation.

If it be claimed tbat Gibson, being a creditor to tbe extent of bis loan, has tbe right to share ratably with tbe other creditors in tbe distribution of tbe assets, our answer must be tbat, even if be be 'guilty of no actual fraud and bad faith in tbe premises, as be avers, tbe present record is not in sucb conditon as that, we can consider tbe question. Not only is there no proof of tbe justness of bis claim, but tbe record fails to show tbat either in tbe pleadings or other proceedings was any information given tbat sucb claim was, or would be set up. It can not be set up for tbe first time in this court.

Tbe objection is raised here tbat tbe City Court erred in allowing some of tbe petitioning creditors to be made parties complainant on tbe imperfect petitions they filed. If tbat objection bad been raised before, or at tbe time of, tbe answer, there would possibly be something in it. Some one or more of tbe petitions is possibly defective, in tbat tbe averments of tbe bill are not in terms adopted by anything therein contained. But after answer, and submission for trial on tbe merits, tbe objection comes too late. Tbe original bill in this case is in tbe names of several simple contract creditors, and it is what is known as a creditor’s bill. It was filed March 13, 1890. Tbe amendment of tbe .bill found in tbe record was filed in open court June 23, 1890. Petitions by other creditors to bef allowed to come in and participate in the prosecution and fruits of the suit were severally filed March 26, 1890, April 28, 1890, and July 2, 1891. Defendant Gibson — the only one who answered, and who complains of error to his prejudice — -filed his answer August 26, 1891. Decrees pro confesso on personal service were taken against the other defendants September 10,1891. The cause was submitted for final decree in October, 1891, and final decree rendered on the 23rd day of that month. [Report of the register confirmed November 11, 1894. Gibson was required to answer on oath, which he did;. and in his answer admitted many of the averments of the bill to be true. Other creditors, as we have shown, came in by petition, and were made parties complainant by orders of court, all granted and dated before Gibson answered the bill. He admitted the corporation was indebted to each of the petitioning creditors. And the decrees pro confesso against the other defendants were taken long after the grant of the orders making the said petitioners parties complainant.

The remaining errors assigned which we consider it necessary to notice relate to the proceedings before the register in taking the account, and his report thereon. When this case was submitted to the chancellor for final decree, among the instruments of evidence for complainants which the register noted were the original bill, the amended bill, the petitions of other creditors to be let in as co-complainants, the admissions contained in Gibson’s sworn answer, and the decrees pro confesso against the other defendants. No exceptions were filed to any of this testimony; nor should they have been sustained, if any had been filed. The pleadings ■ — bills and petitions — were evidence necessary to a proper understanding of the admissions in Gibson’s sworn answer, and they were equally necessary against the other defendants, to show what charges were therein made, the truth of which they had admitted, by suffering decrees pro confesso to be entered up against them. So, when the register entered upon the account, these same instruments of evidence were again offered by complainants. The defendants filed objections to them, the objections were overruled, and exceptions reserved. For reasons stated above, the City Court did not err in overruling these exceptions.

In one respect the register fell into an error, and the exception on that account ought to have been sustained. We refer to the proof of the handwriting of Estes by the witness Kyle. In this State handwriting can not be proved by comparison.— Givens v. State, 5 Ala. 747 ; Bishop v. State, 30 Ala. 34. Nor was tbe testimony of Godbey brought within the rule. It is not pretended he had seen Estes write, and so the question of his competency to testify as to the genuineness of the signatures to the writings offered was narrowed to the second of the rules on this subject. — 1 Greenleaf on Evidence, § 577, states the rule thus: “The second mode is, from having seen letters, bills, or other documents, purporting to be the handwriting of the party, and having after-wards personally communicated with him respecting them; or acted upon them as his, the party having known and acquiesced in such acts, founded upon their supposed genuineness ; or, by such adoption of them into the ordinary lousiness transactions of life, as induces a reasonable presumption of their being his own writings.” See also 1 Whar. Ev. § 708. The testimony of Godbey, on which he was permitted to testify to his belief that certain papers were in Estes’ handwriting, was as follows : “In the year 1889 I saw considerable writing of J. L. M. Estes, and I think I am acquainted with his handwriting.” On this he was, against objection and exception, permitted to testify to his “belief” that certain writings were those of Estes. Our interpretation of the language of this witness is that he had seen writings which purported to be those of Estes. ¥e reach this conclusion, because if the witness had known more, we must presume it would have been called out. No sufficient predicate was laid for calling out the belief of this witness.

The small credit claimed in reduction of the debt to the Trowbridge Furniture Co., it would seem, from any thing we can discover in the record, ought to have been allowed; as that debit rested for its proof against Gibson on the admissions of his answer.

The decree confirming the report of the register is reversed, and a re-taking of the account is ordered.

Reversed and remanded.

McClellan, J., dissenting.  