a thorough and minute examination. They were shown the contract, and testified that they made their estimates as nearly as possible under the terms of the contract as they understood it. They paid no attention to the cost marks upon the tags, but were guided solely by their own recollection and judgment as to what the goods "ought to have cost." It requires no argument to show that this was not in accordance with the contract. That was for the cost to Mr. Sutliff, not what other parties might have bought the same goods for, or what they believed they ought to have cost. The testimony on the part of the complainant was that about one-third of the goods was estimated as damaged or shopworn. One of the defendant's appraisers placed the amount of damaged goods at about the same. A few figures in this respect are instructive. The total of the first appraisal was $21, 535.35. Of course, the cost price would be in excess of this; but if we assume this to be the aggregate cost price, and deduct one-third for damaged goods, it would leave the amount of the undamaged goods to be taken by the contract to be $14,356,-almost $1,000 greater than the valuation placed upon the entire stock by the second appraisal.

Briefly stated, the situation is this: The parties agreed upon a sale at $21,535.35. The goods were delivered, and defendant went into possession, and carried on the business for six weeks. The defendant asks the court to deduct from this $7,800.20, upon the judgment of three men that the stock was worth less than the agreed price by that amount, and to substitute the judgment of these men for the judgment of those agreed upon by both parties, and this without any offer on the part of defendant to rescind the contract. The witnesses were before the court, which had therefore a better opportunity to judge of their candor and truthfulness, and to determine how much credence to repose in them, than we have. To justify a reversal of the case upon the facts under these circumstances, there must be a clear preponderance of

evidence in favor of the appellant. This court has frequently so held. So, also, have other courts. Montgomery v. Pickering, 116 Mass. 230. Courts of equity cannot relieve from foolish and hard bargains. The contract proved must be enforced, and no relief can be granted except in cases of fraud or mistake.

The decree should be affirmed, with costs.

KALAMAZOO SPRING & AXLE CO. v. WINANS, PRATT & CO.

1. ASSIGNMENT FOR BENEFIT OF CREDITORS-PREFERENCES-VALIDITY OF MORTGAGE,

A mortgage given to secure a bona fide indebtedness is not invalid by reason of its proximity to a general assignment by the mortgagor for the benefit of creditors, where the mortgagee, at the time of taking the security, had no notice or knowledge that an assignment was contemplated. Such a transaction does not constitute an illegal preference within the meaning of the assignment law.1

2. FRAUDULENT CONVEYANCES-RELATIONSHIP.

A conveyance by an insolvent debtor will not be presumed fraudulent because executed to a relative.

3. CORPORATIONS-EXECUTION OF CHATTEL Mortgage.

A chattel mortgage executed by the president and the secretary of a corporation, with the consent of all of the stockholders, is valid.

Appeal from Kalamazoo; Buck, J. Submitted May 1, 1895. Decided July 9, 1895.

Bill by the Kalamazoo Spring & Axle Co. and others against Winans, Pratt & Co. and others to set aside cer

For cases involving assignments with preferences, see note to National Bank of Oshkosh v. First National Bank of Ironwood, 100 Mich. 485.

106 MICH.-13

tain mortgages.

plainants appeal.

From a decree dismissing the bill, com-
Affirmed.

Boudeman & Adams (E. M. Irish, of counsel), for complainants.

Howard & Roos, for defendant Winans, Pratt & Co.

J. W. Osborn, for defendants First National Bank, Wagner, and Merrill.

S. F. Master, for defendant A. J. Mills, assignee.

MCGRATH, C. J. Winans, Pratt & Co., a corporation, on June 6, 1893, made an assignment to Alfred J. Mills. On June 5, 1893, it executed three chattel mortgages, one to the First National Bank of Kalamazoo, one to Jacob K. Wagner, and the third to David B. Merrill, and a real-estate mortgage to said bank. The chattel mortgage to the bank was given priority. Wagner was president of the bank; James W. Osborn was its vice president; and Merrill was a director. Wagner, Osborn, and one Kauffer were the discount committee of the bank. James W. Osborn and Alfred J. Mills were partners as Osborn & Mills, and attorneys for the bank. George H. Winans and Ida P. Winans, his wife, and Arthur L. Pratt and Elizabeth P. Pratt, his wife, were the stockholders in Winans, Pratt & Co. All were directors. Winans was president, and Pratt was secretary and treasurer. Ida P. Winans was the daughter of Merrill, and Elizabeth P. Pratt was the daughter of Wagner. The corporation was formed in February, 1891.

This is a bill filed by unsecured creditors, having obtained leave of the court, to set aside the aforesaid mortgages, for the following reasons:

"First. Because Winans, Pratt & Co. was insolvent at the time these mortgages were given, and had been insolvent for some time before.

"Second. Because the First National Bank of Kalamazoo, Mich., knew the actual condition of Winans, Pratt

& Co. Jacob K. Wagner, its president and manager, knew Winans, Pratt & Co. was perpetrating a fraud upon its creditors. The said Jacob K. Wagner was himn self assisting Winans, Pratt & Co. in carrying out this fraud, and therefore the said Wagner cannot, nor can the First National Bank, represented by him, profit by the wrongful act of the said Wagner.

"Third. Because the meeting of the board of directors of Winans, Pratt & Co. held on the 3d day of June, 1893, at which meeting a resolution was passed by some of the directors authorizing the execution of the mortgages in question in this suit, was not properly and legally called and held, and notice of the meeting was not served on all of the directors of the corporation, although all of said directors were then in the city of Kalamazoo. Only two of the directors were present at the meeting at which the resolution was passed, there being no quorum present for the transaction of business; and the resolution was there passed by two of the directors, George H. Winans and Arthur L. Pratt; and after being passed by them, and entered on the record book of the corporation, the record of said meeting was subscribed by Mrs. Winans and Mrs. Pratt, at their respective homes. There was no meeting of the board of directors in which they all met together and determined to execute the mortgages in question. The officers of the corporation derived no legal right or authority, by said resolution or otherwise, to make, execute, and deliver in behalf of said corporation any of said mortgages.

"Fourth. Because the said chattel mortgages and the said real-estate mortgage are illegal preferences as against our assignment law, and were in fact made at substantially the same time as the assignment; that the transaction of making the mortgages and the assignment was in fact a continuous transaction, and the making of all these instruments constituted but a single transaction, namely, an assignment with preferences; and also claim. that the chattel mortgages were void because not legally authorized by the corporation."

It is conceded that Winans, Pratt & Co., at the time the mortgages and assignment were executed, was actually insolvent, and had been for some time previous thereto.

The second proposition is not established by the proofs.

Winans, Pratt & Co. had for years done its banking with the defendant bank. The bank held its individual paper amounting to several thousand dollars. It had also discounted its notes indorsed by Wagner and Merrill, and, in addition, had discounted the bills receivable of the cor poration. Although some of the indebtedness, both to the bank and to Merrill and Wagner, was contingent, it is not disputed but that there was, at the time of the execution of the mortgages, a bona fide indebtedness to each mortgagee equal to the amount of the mortgage to each person. In December, 1892, the corporation had executed to the bank a real-estate mortgage for $5,000. So far as appears, the bank relied upon the information fur nished by the officers of the corporation as to its assets and liabilities. On June 3, 1893, Mr. Pratt came to the bank, and represented to Mr. Wagner that they had paper and other obligations maturing upon that day, and needed $1,000; that they expected some remittances, but must have the $1,000 on that day, and, if they had it, they could pull through. It is evident that the officers of the bank became alarmed. Osborn and Merrill were sent for, and a consultation was had, and the bank finally agreed that it would advance the $1,000, provided the bank was secured by mortgages for the entire indebtedness of the corporation, both actual and contingent, and provided that Wagner and Merrill were also secured. This was consented to by Winans, Pratt & Co. The $1,000 was advanced on that day, and on the same day it was checked out to pay existing obligations. Osborn repaired to his office, and requested his partner, Mr. Mills, to prepare the papers. Mr. Mills dictated the mortgages to the stenographer in the office, and the same were completed at about 5 o'clock of that day, but they were not executed until Monday, June 5th, on which date they were filed. On Monday, Winans, Pratt & Co. received notice of the protest of certain customers' notes amounting to $2,000 and upwards, which had been discounted at the defendant bank, and by the latter forwarded for col