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Trusts -- Self-Dealing Of The Trustee -- Right To Look Through The Corporate Entity
Trusts -- Self-Dealing Of The Trustee -- Right To Look Through The Corporate Entity
Michigan Law Review
One Northrop was appointed by the court as guardian, receiving $2,500 which he deposited in defendant bank of which he was the president, the general manager, and of which he was in complete control. Subsequently he exchanged this deposit for a mortgage owned by the bank. The bank became insolvent, and plaintiff, as substituted trustee, brought this action to have a preference adjudged out of the bank's assets in favor of the ward. Held, plaintiff could ignore the mortgage transaction but could only claim as a general creditor of the bank. Ottawa Banking and Trust Co. v. Crookston State …
Banks And Banking - Statutory Liability Of Directors Of Insolvent Bank For Issuing Renewal Certificate Of Deposit
Michigan Law Review
The plaintiff renewed certain certificates of deposit with the defendant bank. When each renewal was issued the bank was "unsafe or insolvent," and the directors knew or had good reason to know it to be so. This was not the situation when the original certificates were issued. The plaintiff based his right of recovery from the directors of the bank upon Gen. Stat. 1923 (2 Mason, 1927) sec. 10407, which makes it a penal offense for the officers or directors of a bank to receive deposits knowing the bank is "unsafe or insolvent." Plaintiff recovered in the lower court. Held …