Lyons-Thomas Hardware Company v. Perry Stove Manufacturing Company

Summary

The Texas Supreme Court held that a preferential deed of trust executed by an insolvent private trading corporation that had ceased business is void as against unsecured creditors, and that the corporation’s stockholders and directors lack any lawful power to make such a preference. The Court based its decision on the statutory limits on corporate powers and the principle that the assets of an insolvent corporation constitute a trust fund for creditors.