Twin-Lick Oil Company v. Marbury - 91 U.S. 587 (1875)
U.S. Supreme Court
Twin-Lick Oil Company v. Marbury, 91 U.S. 587 (1875)
Twin-Lick Oil Company v. Marbury
91 U.S. 587
1. A director of a corporation is not prohibited from lending it moneys when they are needed for its benefit and the transaction is open and otherwise free from blame, nor is his subsequent purchase of its property at a fair public sale by a trustee, under a deed of trust executed to secure the payment of them, invalid.
2. The right of a corporation to avoid the sale of its property by reason of the fiduciary relations of the purchaser must be exercised within a reasonable time after the facts connected therewith are made known or can by due diligence be ascertained. As the courts have never prescribed any specific period as applicable to every case like the statute of limitations, the determination as to what constitutes a reasonable time in any particular case must be arrived at by a consideration of all its elements which affect that question.
3. The property in controversy in the present suit had been appropriated and used for the production of mineral oil from wells, a species of property which is, more than any other, subject to rapid, frequent, and extreme fluctuations in value. The director who bought it committed no actual fraud, and the corporators knew at the time of his purchase all the facts upon which their right to avoid it depended. They refused to join him in it, or to pay assessments then made on their stock, and it was nearly four years thereafter when the hazard was over, and his skill, energy, and money had made his investment profitable, that any claim to, or assertion of right in, the property was made by the corporation or the stockholders. Held that the court below properly dismissed tire bill of complaint of the corporation, praying that the purchaser should be decreed to hold as its trustee, and to account for the profits during the time he had the property.