Sokol v. Fidelity Union Trust Co.

As pointed out in the opinion of the learned Vice-Chancellor, the payments of Mica Facing Corporation to the respondent Trust Company came from three sources: (a) funds of the parent corporation or other third parties; (b) security held on May 14th, 1937; and (c) accounts assigned August 25th, 1937. With his decision as regards the first two we have no fault to find. As regards the third, which relates to the assignment on August 25th by the Mica Facing Company to the Fidelity Union Trust Company, its depositary and creditor of "all Mica's accounts receivable as well as its formulas" the trial court held, and properly that the burden was on the complainant, the present appellant, of proving that the Mica Company was then insolvent. With this we agree, but we do not agree that complainant failed to sustain that burden. "Insolvency" as held in a long line of cases, such asEmpire Trust Co. v. Trustees, 67 N.J. Eq. 602, "denotes a general inability to meet pecuniary liabilities as they mature, by means of either available assets or an honest use of credit." That such a condition existed in this case is clear. As to knowledge by the trust company, perhaps the best evidence is its insistence on taking over from Mica "all its accounts receivable as well as its formulas" in the language of the Vice-Chancellor.

As regards this phase of the case the decree of dismissal will be reversed, with directions to award to the appellant the accounts receivable on August 25th, 1937, and the formulas then assigned. In other respects the decree is affirmed.

For affirmance — COLIE, OLIPHANT, WELLS, DILL, FREUND, JJ. 5.

For reversal — THE CHIEF-JUSTICE, PARKER, DONGES, HEHER, PERSKIE, RAFFERTY, McGEEHAN, JJ. 7.