Schmitz v. Wisconsin Soap Manufacturing Co.

The appellant’s contentions are that the defendant company was insolvent as far back as 1925, and that the chattel mortgages taken by Barly constituted an unlawful preference as against other creditors of the defendant corporation, and hence are void.

According to a majority of courts, an insolvent corporation, so long as it remains a going concern in possession and control of its property, may prefer one creditor to another, even though that creditor be an officer or director. Note 5 A. L. R. 561; 7 Ruling Case Law, p. 755. In some jurisdictions this rule is not approved. 7 Ruling Case Law,…