Electrol, Inc. v. Beatty, Marsh & Moyer

• Decision Date: 17 August 1933
• Citation: 168 A. 43
• Parties: ELECTROL, Inc. v. BEATTY, MARSH & MOYER.
• Court: New Jersey Court of Chancery

168 A. 43

ELECTROL, Inc.

v. BEATTY, MARSH & MOYER.

Court of Chancery of New Jersey.

Aug. 17, 1933.

Syllabus by the Court.

On an application by a receiver to set aside an assignment obviously made to a creditor, held, the facts clearly show that the assignment was made either while the corporation was insolvent or was made in contemplation of insolvency.

Suit by Electrol, Inc., against Beatty, Marsh & Moyer, a corporation. Decision in accordance with opinion.

Warren Dixon, Jr., of Haekensack, for complainant.

Lloyd Beatty, of Newark, for receiver.

LEWIS, Vice Chancellor.

This matter is before the court on an order to show cause obtained by the receiver of defendant why an assignment of accounts made by defendant to complainant should not be set aside. At the conclusion of the testimony on behalf of the receiver, it was agreed that the matter should be submitted as to the sufficiency of the facts to justify the relief, and the right was reserved to complainant to introduce further testimony in case it should be decided that from the testimony adduced the application should be granted.

In" my opinion, the receiver has made out a clear case entitling him to the relief prayed for.

There is no question but that the defendant was insolvent at the time of the appointment of a receiver. The complainant urges that there is no proof that the corporation was insolvent at the time of the assignment and that no inference of insolvency or contemplation of insolvency can be drawn from the fact that it was insolvent on April 8th. The case of Glauberman v. Bergeline Trust Co., 108 N. J. Eq. 531, 155 A. 766, is relied upon for this contention. However, that case is very clearly distinguishable from this one. In that case the decision was based upon the fact that at the time of the challenged payment the corporation had never defaulted upon the payment of any of its obligations, and that it had a substantial bank balance against which there was not outstanding a single past or presently due obligation, and that its business continued as usual right up to the appointment of a receiver.

In this ease the defendant owed to complainant many thousands of dollars. It had been doing business for a long time at a great loss, and it had defaulted at least in payment of its rent for several months. Complainant and defendant were closely allied, and complainant, through its officers, participated in the conduct of business of defendant, and was thoroughly familiar with...