106 N.J. Eq. 333 | N.J. Ct. of Ch. | 1930
This is an action to foreclose a mortgage made by the defendant company to the complainant. After the bill was filed a receiver was appointed for the defendant company in insolvency proceedings. The receiver was made a party to this suit and defends on the ground that the mortgage is void as against creditors under the provisions of section 64 of the Corporation act. 2 Comp. Stat. p. 1638. It is undisputed that the consideration for the mortgage in question was an antecedent debt. Antecedent debts do not constitute a valuable consideration within the meaning of this section of the Corporation act.Miller v. Gourley,
The word "insolvent," as used in section 64 of the Corporation act, must be defined the same as "insolvent" as used in section 65; that is, a corporation is insolvent when there is a general inability to meet pecuniary liabilities as they mature by means of either available assets or an honest use of credit. HooverSteel Ball Co. v. Schafer Ball Bearings Co., supra; Skirm v.Eastern Rubber Manufacturing Co.,
On behalf of the complainant it is urged that section 64 of the Corporation act has been modified by the Uniform Fraudulent Conveyance act (P.L. 1919 ch.
But aside from the question of the modification of the earlier statute by the later, the Morrisville Case is clearly distinguishable from the sub judice in that there "the trust company admittedly did not know of the insolvency of Black." Here, if the bank did not know of the mortgagor's insolvency, it had sufficient information respecting the debtor's financial condition to arouse suspicion and make inquiry by it incumbent. As a result of appropriate inquiry under the circumstances the insolvency of debtor would have been inevitably discovered.
I will advise a decree dismissing the bill of complaint.