Glauberman v. Bergen Line Trust Co.

• Decision Date: 27 July 1931
• Parties: GLAUBERMAN v. BERGEN LINE TRUST CO.
• Court: New Jersey Court of Chancery

155 A. 766

GLAUBERMAN

v. BERGEN LINE TRUST CO.

Court of Chancery of New Jersey.

July 27, 1931.

Syllabus by the Court.

An insolvent corporation or one contemplating insolvency, in the absence of any restrictive statutes, has the same power and dominion over its assets as an insolvent natural person.

Syllabus by the Court.

A corporation is insolvent, within the meaning of section 64 of our Corporation Act (2 Comp. St. 1910, p. 1638), when it is confronted with a general inability to meet its pecuniary liabilities, as and when they mature, by means of either available assets or an honest use of its credit.

Syllabus by the Court.

A payment made by a corporation of one of its unmatured debts, about a week before its being adjudicated insolvent, win not be held to have been made in violation of the statute, in the absence of proof that, at the time of its making, the corporation had suspended its ordinary business for want of funds to carry same on, or was insolvent or had made same in contemplation of insolvency.

Suit by Isadore Glauberman, receiver of the American Yarn Mills, against the Bergenline Trust Company.

Decree dismissing bill of complaint advised.

Platoff, Saperstein & Platoff, of Union City (David Saperstein, of Union City, of counsel), for complainant.

Otto Venino, Jr., of Weehawken, for defendant.

LEWIS, Vice Chancellor.

By a decree of this court, dated October 10, 1928, the American Yarn Mills, hereinafter referred to as the "Mills," was adjudged insolvent and complainant herein was appointed as its statutory receiver. He now brings this suit, the object of which is to have a payment of $3,000, made by the Mills to the defendant herein, declared to be invalid and the latter required to repay said sum to him for the benefit of the former's unpaid creditors.

The payment thus challenged was concededly made under these circumstances. The Mills was a depositor at the defendant hank, by which it was extended a direct credit line of $3,000 and $4,000 on its trade paper. On September 17, 1928, the Mills had its promissory note for $3,000 discounted by defendant, utilizing the proceeds of said discount for the purpose of paying off $3,000 worth of its own notes and trade paper, some of which were not yet then due, and all of which defendant had previously discounted for it. On October, 3, 1928, in accordance with its instructions and authorization from the Mills, defendant deducted from the latter's balance, then on deposit with it, the sum of $3,000 and applied same in payment of the $3,000 note which it had discounted for the Mills on September 17, 1928, but which, according to its tenor, was not to become due until December 17, 1928. After this transaction, the Mills was left with a net balance of $447.55, plus the sum of $37.50, rebated to it by defendant for the unearned interest on the note thus anticipated.

Complainant asserts that the payment thus made was. of a preferential character and illegal, contending that it was made by the Mills while insolvent or in contemplation of insolvency, and by reason of which defendant should be compelled to repay same to him for the benefit of the latter's unpaid creditors.

Our courts have long recognized the rule that a corporation, whether insolvent or contemplating insolvency, aside from any statutory restrictions, is possessed of the same power and dominion over its assets, as is an insolvent natural person. Gallagher v. Asphalt Co., 65 N. J. Eq. 258, 55 A. 259. Our restrictive statute in this respect is section 64 of...