Frauds in procuring discharge in insolvency. acknowledged and recorded, and accompanied by a full disclosure of both the debit and credit sides of the assignor's affairs, and even then only upon the condition that the assignee shall give bonds for the discharge of his duty, and stand liable to render account of his proceedings to a legal tribunal. Stated in the books, viewed as a theory, the privilege seems reasonable, and the guards against abuse sufficient. But as actually administered, a system better adapted to tempt the designing and corrupt, to fraud, and to provoke litigation against the well disposed and the honest, could not easily be devised. The Commissioners are of opinion that the policy of permitting insolvents to regulate the distribution of their estates among their creditors should be abandoned, and that the order of preference should be prescribed by law, upon general considerations of justice and sound policy, instead of being left to be determined by the irresponsible and often capricious or prejudiced judgment, or fraudulent purposes of the insolvent, or influenced by the undue solicitation of particular creditors. The effect of the provision in the text, unless modified by such provisions as have been above suggested, would be that the property of an insolvent would become a trust fund to be administered in equity for the equal benefit of all his (if needed) creditors, as in the case of insolvent limited partnerships. (Inness v. Lansing, 7 Paige, 583.) S644. Every person who, upon making or prosecuting any application for a discharge as an insolvent debtor, either: 1. Fraudulently presents, or authorizes to be presented on his behalf, such application, in a case in which it is not authorized by law; or, 2. Makes or presents to any court or officer, in support of such application, any petition, schedule, book, account, voucher, or other paper or document, knowing the same to contain any false statement; or, 3. Fraudulently makes and exhibits, or alters, obliterates or destroys any account or voucher relating to the condition of his affairs, or any entry or statement in such account or voucher; or, 4. Practices any fraud upon any creditor, with intent to induce him to petition for, or consent to such discharge; or, 5. Conspires with or induces any person fraudu lently to unite as creditor in any petition for such CHAPTER XII. FRAUDULENT INSOLVENCIES BY CORPORATIONS, AND SECTION 645. Frauds in subscriptions for stock of corporations. 646. Frauds in procuring organization of corporation, or increase 647. Unauthorized use of names in prospectuses, &c. 653. Officer or agent of banking corporation, making guarantee 654. Bank officer overdrawing his account. 655. Omitting to enter receipt of property of corporation in its 656. Destroying or falsifying books or papers of corporation. books. 659. Insolvencies of corporations deemed fraudulent, when. 661. Violation of duty of directors of moneyed corporations. 663. Debt contracted in violation of last section, not invalid. 665. Director present at meeting, when presumed to have 666. Director absent from meeting, when presumed to have 667. Foreign corporations. 668. "Director" defined. $645. Every person who signs the name of a fictitious person to any subscription for, or agreement to take stock in any corporation, existing or proposed; and every person who signs, to any subscription or Frauds in procuring organiza agreement, the name of any person, knowing that such person has not means or does not intend in good faith to comply with all the terms thereof, or under any understanding or agreement that the terms of such subscription or agreement are not to be complied with or enforced, is guilty of a misdemeanor. This section, which is new, is intended to reach a species of fraud frequently practised in the organization of corporations. See Palmer v. Lawrence, 3 Sandf., 161; 1 Seld., 389. S 646. Every officer, agent or clerk, of any corporation, or of any persons proposing to organize a corporation, or to increase the capital stock of any its capital. corporation, who knowingly exhibits any false, forged tion of corporation, or increase Unauthorized use of names in prospectuses, &c. Misconduct of directors of stock corporations. or altered book, paper, voucher, security or other instrument of evidence to any public officer or board authorized by law to examine the organization of such corporation, or to investigate its affairs, or to allow an increase of its capital, with intent to deceive such officer or board in respect thereto, is punishable by imprisonment in a state prison not exceeding ten years and not less than three. See Laws of 1829, ch. 94, § 29. S 647. Every person who, without being authorized so to do, subscribes the name of another to, or inserts the name of another in any prospectus, circular or other advertisement or announcement of any corporation or joint stock association existing or intended to be formed, with intent to permit the same to be published and thereby to lead persons to believe that the person whose name is so subscribed is an officer, agent, member or promoter of such corporation or association, is guilty of a misdemeanor. $648. Every director of any stock corporation, who concurs in any vote or act of the directors of such corporation, or any of them, by which it is intended, either: 1. To make any dividend, except from the surplus profits arising from the business of the corporation, and in the cases and manner allowed by law; or, 2. To divide, withdraw, or in any manner pay to the stockholders, or any of them, any part of the capital stock of the corporation; or to reduce such capital stock without the consent of the legislature; or, 3. To discount or receive any note or other evidence of debt in payment of any installment actually called in, and required to be paid, or with the intent of providing the means of making such payment; or, 4. To receive or discount any note or other evidence of debt with the intent of enabling any stockholder to withdraw any part of the money paid in by him, or his stock; or, 5. To apply any portion of the funds of such corporation, except surplus profits, directly or indirectly, to the purchase of shares of its own stock; or, 6. To receive any such shares in payment or satisfaction of any debt due to such corporation; or, 7. To receive from any other stock corporation, in exchange for the shares, notes, bonds, or other evidences of debt of their own corporation, shares of the capital stock of such other corporation, or notes, bonds or other evidences of debt issued by such other corporation, Is guilty of a misdemeanor. directors of banking $649. Every director of any corporation having Miscon banking powers, who concurs in any vote or act of the directors of such corporation, or any of them, by tions. which it is intended, either: 1. To make any loan, or discount, by which the whole amount of the loans and discounts of the corporation is made to exceed three times its capital stock then paid in and actually possessed; or, 2. To make any loan or discount to any director of such corporation, or upon paper upon which any such director is responsible, to an amount exceeding corpora Loans made in violation in the aggregate one-third of the capital stock of such corporation, then paid in and actually possessed, Is guilty of a misdemeanor. The provisions of this and the preceding section are founded on 1 Rev. Stat., 589, § 1. That section embodies nine subdivisions, the first seven of which correspond with those of section 648 in the text, while the eighth and ninth correspond with those of section 649. The whole section is, however, as it appears in the Revised Statutes, limited to moneyed corporations; while the last two subdivisions are restricted to corporations having banking powers. In the opinion of the commissioners, the provisions of the first seven subdivisions should be extended to all stock corporations; and they have so framed them; placing in a separate section, confined to banking corporations, the provisions of subdivisions 8 and 9. The word "corporation" is substituted for "company," in one or two instances, merely for the sake of greater uniformity of expression. S 650. Nothing in the last section shall render any of last sec- loan made by the directors of any such corporation, in violation thereof, invalid. tion, not invalid. Sale, or hypotheca tion of bank notes, by officer, &c. Officer of bank put See 2 Rev. Stat., 590, § 1, subd. 9. S 651. Every officer or agent of any corporation having banking powers, who sells, or causes or permits to be sold, any bank notes of such corporation, or pledges or hypothecates, or causes or permits to be pledged or hypothecated, with any other corporation, association or individual, any such notes, as a security for a loan or for any liability of such corporation, is punishable by imprisonment in a county jail not exceeding one year, or by a fine not exceeding five thousand dollars, or both. See Laws of 1842 ch. 247, § 10. $652. Every officer or agent of any corporation ting exces having banking powers, who issues or puts in circu sive num ber of its notes in circulation. lation, or causes or permits to be issued or put in circulation, the bank notes of such corporation to an amount, which, together with previous issues, leaves in circulation or outstanding a greater amount of notes |