United States v. DYNA-TEX, INCORPORATED, Civ. A. No. 7688.

• Decision Date: 21 March 1973
• Docket Number: Civ. A. No. 7688.
• Citation: 372 F. Supp. 280
• Parties: UNITED STATES of America v. DYNA-TEX, INCORPORATED, a Tennessee corporation, et al.
• Court: U.S. District Court — Eastern District of Tennessee

372 F. Supp. 280

UNITED STATES of America v.DYNA-TEX, INCORPORATED, a Tennessee corporation, et al.

Civ. A. No. 7688.

United States District Court, E. D. Tennessee, N. D.

March 21, 1973.

John L. Bowers, Jr., U. S. Atty., Robert E. Simpson, Asst. U. S. Atty., Knoxville, Tenn., for plaintiff.

John M. Norris, Cheek, Taylor & Groover, Knoxville, Tenn., John M. Davis, Wartburg, Tenn., David M. Pack, Atty. Gen., William Hubbard, Deputy Atty. Gen., Nashville, Tenn., J. Polk Cooley, Rockwood, Tenn., for defendants.

MEMORANDUM

ROBERT L. TAYLOR, District Judge.

On March 1, 1973, this Court filed a memorandum and order requiring this case to be set down for proof on the question of whether Dyna-Tex, Inc. was insolvent, and if so, when it became insolvent.Several hours of proof was heard on that subject, from which the Court concluded that the overwhelming preponderance of the evidence, if not the entire evidence, established to a reasonable certainty that Dyna-Tex was insolvent within the meaning of Title 31 U. S.C. § 191 as of September, 1969 and for some time prior thereto.Section 191 provides in pertinent part as follows:

"Whenever any person indebted to the United States is insolvent, . . . the debts due to the United States shall be first satisfied; and the priority established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed."

Insolvency has been defined in interpreting this statute as the liabilities of an estate exceeding the assets.See, United States v. Oklahoma, 261 U.S. 253, 43 S.Ct. 295, 67 L.Ed. 638(1923).

The proof showed that a judgment against Dyna-Tex was procured by Automatic Heating & Air Conditioning Company, Inc. in the Morgan County Equity Court for $27,640.43.This judgment was affirmed by the Court of Appeals of Tennessee and is presently unsatisfied and amounts to $35,864.00.The suit was filed October 1, 1968 to perfect a lien on the property.On September 30, 1969, the Chancellor entered a lien against the lands and buildings of Dyna-Tex.A final decree was filed in the Court of Appeals on July 8, 1970 enforcing the mechanics and materialmen's lien.

Dyna-Tex is presently indebted to Plateau Electric Co-op in the amount of $46,571.94.In April of 1970, Dyna-Tex owed Plateau Electric over $9,000.00 and in May of that year in excess of $13,000.00.

The total taxes from 1969 to the present owed by Dyna-Tex to Morgan County amounts to $15,170.11.American National Bank held a note in the amount of $275,976.62, which has been past due since January, 1969.As of April 30, 1970, approximately $200,000.00 of this debt was charged off...