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Ebling Brewing Co. v. Heirloom Inc.

Decided: November 1, 1948.

EBLING BREWING CO., INC., COMPLAINANT-RESPONDENT,
v.
HEIRLOOM, INC., A CORPORATION, DEFENDANT-APPELLANT



On appeal from the former Court of Chancery.

For affirmance: Chief Justice Vanderbilt and Justices Case, Wachenfeld, Burling, and Ackerson. For reversal: Justice Heher. The opinion of the court was delivered by Case, J. Heher, J. (dissenting).

Case

The appeal is from an order appointing a statutory receiver of the defendant corporation and from other orders incident thereto. The proofs will not be recounted here as they are stated and lucidly appraised in the opinion of Vice Chancellor Egan, 141 N.J. Eq. 136.

The bill of complaint alleged the debt, the insolvency of the defendant, its inability to meet its maturing obligations either by the use of cash or other assets or by an honest use of credits and other matters incident to such a proceeding. Title 14 of the 1937 Revised Statutes, entitled "Corporations, General", comprehends the subject matter of the former General Corporation Act, Ch. 185, P.L. 1896. R.S. 14:14-3, formerly section 65 of the General Corporation Act as amended by ch. 221, P.L. 1931, provides: --

"When any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or if its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, any creditor, * * * may, by petition or bill of complaint setting forth the facts and circumstances of the case, apply to the court of chancery for an injunction and the appointment of a receiver or receivers or trustees.

"The court being satisfied by affidavit or otherwise of the sufficiency of the application, and of the trust of the allegations contained in the petition or bill, and upon such notice as the court by order may direct, may proceed summarily to hear the affidavits, proofs and allegations of the parties.

"If upon such inquiry it shall appear to the court that the corporation has become insolvent and is not about to resume its business in a short time thereafter, or that its business has been and is

being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, so that its business cannot be conducted with safety to the public and advantage to the stockholders, it may enjoin the corporation and its officers and agents from exercising any of its privileges or franchises and from collecting or receiving any debts, or paying out, selling, assigning or transferring any of its real or personal property whatsoever, except to a receiver appointed by the court, until the court shall otherwise order."

Defendant corporation has its corporate existence under the provisions of that statute and subject to the conditions therein imposed. Title 14 is a part of the defendant's charter and of the charter of every corporation formed under that statute except as the same is inapplicable and inappropriate to the objects of the corporation. R.S. 14:2-8.

A careful study of the proofs convinces us that upon the showing there made the alleged debt of the defendant to the complainant exists, that the defendant is insolvent and that the several facts necessary to support the appointment of a receiver are clearly proved. That disposes adversely of appellant's contentions that the complainant failed to establish the jurisdictional facts of insolvency and that the findings of the court were contrary to the weight of the evidence.

Appellant argues, however, that the denial of its demand for a jury trial was in contravention of Art. 1, par. 7 of the 1844 Constitution, and of sec. 8, Ch. 116, Pamph. L. 1915 (R.S. 2:29-9), a supplement to the General Chancery Act. The constitutional provision was that "The right of a trial by jury shall remain inviolate." That mandate, a part of the 1844 Constitution since the original adoption in 1844, was implemented by the 1915 statute as follows: --

"If any question, ordinarily determinable at law and requiring a jury trial, arise in a suit of which the court of chancery has jurisdiction, a jury trial, if required, may be ordered, but shall be deemed to be waived unless demanded in the pleadings. If demanded, and the issue be one requiring a jury trial, the court shall send such issue of fact to a court of law for trial according to the existing practice.

"In all cases coming within the purview of this section the court of chancery shall retain the cause until the legal question shall be determined, or until an adequate opportunity to determine the same shall have been given, unless justice or the public interest requires a dismissal of the cause."

We find no textual evidence in the statute of an intention to extend the field of jury trials beyond the wording of the constitution. Rather, the purpose of the statute was to clarify the practice and procedure. Vice Chancellor Buchanan said in Sayre & Fisher Land Company v. R.U. Rue Co., 2 Misc. 1081 (Ch. 1924): --

"Formerly, it seems to have been held that when this objection was made by the defendant's answer, the bill should be dismissed, but at the present time, and especially since the enactment of the 1915 Chancery act (which contains an express provision to that effect in section 8), this court sends the parties to the law ...


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