[§ 2295 he can thus obtain a preference over other creditors when the corporation is insolvent is a different question, and is considered hereafter.75 "It violates no principle of law or equity," says the Supreme Court of California, "to permit the judgment-creditor, even though he be a director of the debtor corporation, to become the purchaser at the execution sale of the corporation property. Such a case is distinguishable from those cases where a director, with no personal interest in the action, becomes the purchaser under execution sale in a suit of a third party against the corporation." 76 In a New Jersey case, it was held that undue advantage was not shown by failure to give notice of the sale, other than the statutory notice, to all the stockholders; 77 but on appeal the circumstances were held to be such that the corporation or stockholders were entitled to the benefit of the purchase, where the property sold for only half of its value, and where no notice of the sale was given to stockholders (the board of directors having practically ceased to act in the affairs of the company), and the director who purchased had been in sole charge of the business for nearly two years.78 In the last appeal, Chancellor Pitney said that "we deem it clear that the director, who is also a creditor, must, on taking legal proceedings for collection of his debt, relinquish his trust pro hac vice, not covertly, but openly, and with fair notice to his company. Whether such notice should be given to the stockholders or to the directors may depend upon circumstances. If the company is equipped with other officers and directors who are actively representing the interests of the stockholders, it may well be that notice to such officers or directors would be deemed sufficient. But it is, as we think, inconsistent with the duty of a director (at least under circumstances such as here presented) that he should assume an attitude antagonistic to his company, unless he sees to it that the interests of the stockholders, which he, by reason of his personal interest, is for the time disqualified from protecting, are in the charge of other officers and directors able and willing to protect them, and to whom his notice may be given, or else sees to it that fair notice of his contemplated action be given to the stockholders, so that they may take measures to protect themselves."79 If fraud and collusion in purchasing at an execution sale 75 Infra, chapter on Insolvency. 76 Snediker v. Ayers, 146 Cal. 407, 80 Pac. 511. 77 Marr v. Marr, 72 N. J. Eq. 797, 66 Atl. 182, rev'd on other grounds in 73 N. J. Eq. 643, 133 Am. St. Rep. 742, 70 Atl. 375. 78 Marr v. Marr, 73 N. J. Eq. 643, 133 Am. St. Rep. 742, 70 Atl. 375, rev'g 72 N. J. Eq. 797, 66 Atl. 182. 79 Marr v. Marr, 73 N. J. Eq. 643, 133 Am. St. Rep. 742, 70 Atl. 375, rev'g on other grounds 72 N. J. Eq. 797, 66 Atl. 182. under one's own judgment is alleged, the burden is on the complainant to show such facts.80 Likewise, when a director or other officer has a valid debt against the corporation, secured by a mortgage on its property, he is entitled to foreclose the mortgage, and may purchase at the sale.81 So when directors of a corporation are sureties on notes of the corporation secured by a mortgage on its property, and the mortgage is foreclosed, they may purchase at the sale for the purpose of protecting themselves.82 If directors hold bonds of their corporation as security, and it be conceded that directors may lend their credit in good faith to the corporation to enable it to carry on its legitimate business and take as indemnity its bonds to secure themselves from personal loss, it necessarily follows that they acquire the right, the same as any other mortgagee, to protect themselves even to the extent of becoming a purchaser at a foreclosure sale which has become inevitable through no fault of themselves.83 Especially may a director or other officer pur 80 Snediker v. Ayers, 146 Cal. 407, 80 Pac. 511. 81 United States. Twin-Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328. Connecticut. Hopson v. Aetna Axle & Spring Co., 50 Conn. 597. Iowa. Warfield v. Marshall County Canning Co., 72 Iowa 666, 2 Am. St. Rep. 263, 34 N. W. 467; Hallam v. Indianola Hotel Co., 56 Iowa 178, 9 N. W. 111. Kentucky. McMurtry v. Montgomery Masonic Temple Co., 86 Ky. 206, 5 S. W. 570. Massachusetts. Saltmarsh v. Spaulding, 147 Mass. 224, 17 N. E. 316. Michigan. Lucas v. Friant, 111 Mich. 426, 436, 69 N. W. 735. Mississippi. Millsaps v. Chapman, 76 Miss. 942, 71 Am. St. Rep. 547, 26 So. 369. Missouri. Foster v. Belcher's Sugar Refining Co., 118 Mo. 238, 24 S. W. 63. Nebraska. Gorder v. Plattsmouth Canning Co., 36 Neb. 548, 54 N. W. 830. New York. Inglehart v. Thousand Island Hotel Co., 109 N. Y. 454, 17 N. E. 358; Harpending v. Munson, 91 N. Y. 650; Preston v. Loughran, 58 Oregon. Jones v. Hale, 32 Ore. 465, 52 Pac. 311. 82 Where the directors of a corporation, being authorized by the stockholders to borrow money, signed the corporate note for a loan as sureties, and gave a deed of trust, which stipulated that it should inure to their benefit in case they should be compelled to pay the debt, it was held that, even if the stipulation was void, the directors had a right to bid in the property at the trustees' sale, to protect their interests. College Park Elec. Belt Line v. Ide, 15 Tex. Civ. App. 273, 40 S. W. 64. Where corporate officers are personally liable as indorsers on notes of the corporation on which judgment had been rendered against the corporation, they may purchase the property at the execution sale for their own protection-this being an exception to the general rule. Tiffany v. Smith, 124 N. Y. Supp. 85. 83 Rawlings v. New Memphis Gaslight Co., 105 Tenn. 268, 80 Am. St. Rep. 880, 60 S. W. 206. chase where he is not only a creditor of the corporation but, in addition, at the time of the sale, he exercised no control over the property of the corporation because it had been placed in the control of a court through a duly appointed receiver, and the corporate officer had done all that he could to prevent or delay the foreclosure suit.84 In Canada, however, it has been held that even where a director who purchased at a foreclosure sale under a mortgage held a judgment against the corporation, he could not purchase for the amount of his claim nor avoid liability for the difference in price at which he bought and the price at which he sold some time later, by showing that the property when purchased at the foreclosure sale brought its then full market value.85 However, in any event, unless ratified, a purchase at one's own execution sale will not be upheld where the sale was brought about by collusion and the price was inadequate.86 And when a director who is a creditor purchases corporate property at a judicial, execution or other public sale, and the bona fides of the transaction is assailed in a direct proceeding in equity to set aside the sale, the burden is upon the purchasing director to show that the property produced at such sale its full value.87 § 2296. Rule as affected by insolvency of corporation. If the corporation is insolvent at the time of the forced sale, or is rendered insolvent by such sale, the right of a corporate officer to purchase the property is even more limited, it would seem, than if the corporation were solvent.88 And if the officer acts contrary to his trust he then is liable even to creditors of the corporation, since upon a corporation becoming insolvent the directors become trustees for the creditors, it is generally held.89 "The weight of authority," said the court in a Washington case, 84 Buchler v. Black, 226 Fed. 703, aff'g 213 Fed. 880. 85 In re Iron Clay Brick Mfg. Co., 19 Ont. Rep. 113. 86 Hope v. Valley City Salt Co., 25 W. Va. 789. See J. W. Butler Paper Co. v. Robbins, 151 Ill. 588, 38 N. E. 152, where, although purchase was by wife of president pursuant to judgments entered by his connivance, the principle is applicable. Sale will be closely scrutinized for fraud. Hallam v. Indianola Hotel Co., 56 Iowa 178, 9 N. W. 111. 87 Patterson v. Portland Smelting Works, 35 Ore. 96, 107, 56 Pac. 407. 88The law will not permit a director of an insolvent corporation to purchase all of its assets, at execution sale to which he is not a "is in favor of the rule that a director of a corporation may not purchase the corporate property at a foreclosure or execution sale thereof, except subject to the right of the corporation (and, in some cases, of its creditors) to repudiate the sale and demand a resale. This principle results from the relation of a director to the corporation of which he is a member. The office of a director is fiduciary in its character, and ordinarily a director or officer of a corporation is a trustee, or at least a quasi trustee, of the company and the stockholders. But after a corporation becomes insolvent its assets constitute in equity a trust fund for the payment of its debts, and the directors or managing officers are held to be trustees for the company's creditors. ** And in the event of the insolvency of a corporation its directors are bound to manage its assets with scrupulous regard for the equitable rights of creditors; and a court of equity will not permit them to use or dispose of the property of the corporation for their own benefit, or to purchase and hold it for their private purposes, if objection thereto be made at the proper time by the corporation or its creditors. A sale of corporate property under judicial process to a director of the corporation will usually be set aside in equity as contrary to public policy, even though no actual fraud or actual advantage to the purchaser be shown." 90 § 2297. Where property sold by assignee or receiver. As well stated by Chief Justice Start in a Minnesota decision, it is clear "upon principle that where the legal title and control of all the property of a corporation is vested in an assignee or receiver, in trust for the benefit of its creditors, and the court orders the property sold for the purposes of the trust, a director creditor, having interests to protect, may in good faith purchase the property at such sale, and acquire thereby the absolute title thereto. Especially is this so where there are other active directors, and the sale is made subject to confirmation by the court, and is approved by it. But in all such cases the director must act in the utmost good faith, for the transaction will be jealously scrutinized." 91 § 2298. Judicial sale of property of debtor of corporation. It has been held that where a corporate officer buys in property of a debtor of the corporation, at execution sale, for the amount of the debt, he is 90 Potvin v. Denny Hotel Co., 26 Wash. 309, 66 Pac. 376. 91 Janney v. Minneapolis Industrial Exposition, 79 Minn. 488, 50 L. R. A. 273, 82 N. W. 984. See also Buchler v. Black, 226 Fed. 703, aff 'g 213 Fed. 880. deemed to have acted for the corporation, where he used the debt to pay his bid for nearly a year.92 § 2299. Application of rules to tax sales. These rules laid down above also govern tax sales, except when obviously not applicable. But a manager of a corporation, whose duty it was to pay the corporate taxes, cannot become a purchaser at a sale made because of the failure to pay the taxes, as against the corporation.93 § 2300. Ratification, laches and estoppel. Inasmuch as the purchase is voidable rather than void,94 it may be ratified by the corporation.95 Moreover, if the corporation or stockholders desire to attack the sale, application must be made within a reasonable time; 96 and delays of four years,97 three years,98 two and one-half years, twenty months, and seventeen months, have been held fatal in particular cases. Moreover, the rule which requires prompt action is especially applicable to cases in which a sale of mining property is involved.3 99 The corporation or its stockholders may be estopped to attack a judicial sale to one of the officers of the corporation by their approval thereof which was relied on by the transferee of the property who thereupon erected substantial improvements on the property. On the other hand, the fact that the officer purchasing at a foreclosure sale, under a mortgage to a third person, had previously conveyed such property in behalf of the corporation by a warranty deed does not estop him from purchasing at the foreclosure sale where the deed contained no express personal warranty.5 § 2301. Who may attack. A stranger cannot attack the sale because of the relationship of the purchaser; 6 and this includes a mere 92 Moses V. Ocoee Bank, 1 Lea (Tenn.) 398, 412. 93 Collins v. Hoffman, 62 Wash. 278, Ann. Cas. 1913 A 1, 113 Pac. 625. Same case, 74 Wash. 264, 133 Pac. 450, holding that the purchase inured to the benefit of the corporation. 94 See § 2291, supra. 95 Ready v. Smith, 170 Mo. 163, 70 S. W. 484. 96 Ready v. Smith, 170 Mo. 163, 70 S. W. 484. 97 Twin-Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328; Horbach v. Marsh, 37 Neb. 22, 55 N. W. 286. 98 Buchler v. Black, 226 Fed. 703, 707, aff'g 213 Fed. 880. 99 Pittsburgh & L. I. Iron Co. v. Cleveland Iron Min. Co., 178 U. S. 270, 44 L. Ed. 1065. 1 Ready v. Smith, 170 Mo. 163, 70 S. W. 484. 2 Rothchild v. Memphis & C. R. Co., 113 Fed. 476. 3 Johnston v. Standard Min. Co., 148 U. S. 360, 370, 37 L. Ed. 480; TwinLick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328; Buchler v. Black, 226 Fed. 703, 707. 4 Fagan v. Stuttgart Normal Institute, 91 Ark. 141, 120 S. W. 404. 5 Vermeule v. Hover, 113 Me. 74, 93 Atl. 37. 6 Vermeule v. Hover, 113 Me. 74, |