Brower v. Brooklyn Trust Co.

1. Fraudulent Conveyance—Mortgage to Secure Advances. A mortgage executed by a corporation after its insolvency, but in pursuance of an agreement to secure advances made before there was anjr expectation of insolvency, is not made “in contemplation of insolvency, ” and is valid. Paulding v. Steel Co., 94 N. Y. 884, followed. 2. Same—Powers of Officers of Corporation. Where such agreement to secure advances was made by an officer of the company, his authority to bind the corporation cannot be questioned where the corporation and its creditors received the benefit of such advances.

Appeal from special term, Kings county. Action by George V. Brower, as receiver of the Ridgewood Ice Company, against William A. Husted and Brooklyn Trust Company, as trustee for the holders of certain bonds, impleaded with Joseph D. Baucus and Alfred J. Voyer, and Ridgewood Ice Company and James R. Downer, as trustee for certain creditors, to set aside three mortgages made by the Ridgewood Ice Company,—one to the Brooklyn Trust Company, for $140,000, to secure a series of 140 bonds of $1,000 each; one to William A. Husted, for $126,300; and one for $167,085 to James R. Downer, as trustee, to secure a large number of creditors of the company. From a judgment at special term sustaining the mortgage of $140,000 and the Husted mortgage for $126,300, and setting aside the Downer mortgage, plaintiff, and defendants Joseph D. Baucus and Alfred J. Voyer, appeal. Affirmed. The mortgage to Husted was assailed on the ground that it was made because of or in anticipation of the insolvency of the mortgagor company, and therefore void, under the prohibition of the statute relating to corporations and the disposition of their property when insolvent or in contemplation of insolvency. The Husted mortgage was given after the company’s insolvency, but under an agreement made when the company was solvent, whereby money was raised to fill its ice houses, and at a time when there was no expectation of insolvency. For former reports, see 14 N. Y. Supp. 462, 17 N. Y. Supp. 707.