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In re Assignment for Benefit of Creditors of Old Colony Coal Co.

Decided: March 3, 1958.


Goldmann, Freund and Conford. The opinion of the court was delivered by Goldmann, S.j.a.d.


The assignees under an assignment for the benefit of creditors of Old Colony Coal Company appeal from an order of the Hudson County Court vacating all prior proceedings taken in that court and forwarding the record and all papers to the Surrogate of Essex County, for the reason that jurisdiction of the matter lay exclusively in Essex County. The order was the result of a motion by the Chesapeake & Ohio Railway Company, a judgment creditor, to vacate a prior order entered by the County Court authorizing the assignees to sell all of Old Colony's assets to Garner, its president, for $7,500.

Old Colony is a New Jersey corporation having its statutory registered or principal office in the City of Newark, Essex County. It is engaged in the coal business, its principal place of business being represented as located in Kearny, Hudson County. On August 20, 1956 Old Colony executed a deed of assignment for the benefit of creditors which was filed with the Surrogate of Hudson County on September 13, 1956 in accordance with N.J.S. 2 A:19-7. All subsequent papers were likewise filed in that office. The list of creditors annexed to the assignment pursuant to N.J.S. 2 A:19-5 did not include the name of Chesapeake which had in the interval between the execution and filing of the assignment recovered a judgment in the Superior Court, Law Division, Essex County, against Old Colony for $1,288.80, with costs. On October 1, 1956 the assignees filed their affidavit of mailing of the notice of assignment to creditors. Chesapeake did not receive a copy of the notice because the assignees allegedly had no knowledge of its claim.

The assignees meanwhile proceeded to examine president Garner and his son, N.J.S. 2 A:19-15, but the depositions were not filed with the Hudson County Surrogate until February 1957. The assignees also engaged a certified public accountant to make an audit of Old Colony's books and records for the fiscal year ending June 30, 1956, but for some unexplained reason his audit report was not filed until

June 1957. And the assignees' surety bond in the sum of $7,500, obtained October 31, 1956 in accordance with N.J.S. 2 A:19-10, was not filed with the surrogate until February 1957.

On November 13, 1956 the assignees filed a petition to accept an offer of $7,500 made by Garner for all the assets of Old Colony. An order to show cause was entered that day reciting that the assignees would apply to the County Court on November 30, 1956 for permission to accept the offer and for instructions. Notice was mailed to all creditors except Chesapeake, the reason assigned being that the assignees did not then know of its claim.

The petition to accept Garner's offer recited that Old Colony had a claim against S. Smith Coal and Oil Company, its principal debtor, of about $26,000, and "some possible claims" against Garner Coal Mining Company. However, the depositions taken by the assignees revealed that Garner owns both companies, and that the Smith company owed Old Colony $33,459 and was indebted in the amount of about $67,500 by way of a mortgage originally held by Old Colony but later assigned by it to Garner Coal Mining Company for about $16,000. The depositions also show that Old Colony was not engaged in the retail coal business but was a wholesaler of coal.

After a hearing on November 30, 1956 the Hudson County Court entered an order authorizing the assignees to consummate a settlement with Garner on his $7,500 offer for the assets of Old Colony. As of this date, neither the true inventory and valuation required by N.J.S. 2 A:19-9, nor the assignees' bond required by N.J.S. 2 A:19-10, had been filed with the court. Chesapeake, learning of the assignment, filed its proof of claim with the assignees on December 6, 1956. Later, when it found out about the approval of the sale to Garner, it moved for an order setting aside and vacating the order of November 30, 1956 on the following grounds, among others: (1) failure of the assignees to give it notice of the general assignment within 30 days, in violation of N.J.S. 2 A:19-8, and their further failure to give

it notice of any of the subsequent proceedings, although its judgment claim was a matter of record; (2) the Hudson County Court was without jurisdiction because Old Colony's principal office was, by virtue of N.J.S. 2 A:19-45, located in Newark, Essex County, so that only the Essex County Court or the Superior Court had jurisdiction; (3) the order approving the sale of the assets was improper under N.J.S. 2 A:19-11 because the assignees had not prior thereto filed their inventory, valuation and bond.

Thereafter the Hudson County Court, on July 30, 1957, entered its order vacating all proceedings theretofore taken before it and adjudging them void, and forwarding the record and all papers to the Essex County Surrogate. The assignees filed their notice of appeal on August 30, 1957.

We will dispose, first, of respondent Chesapeake's motion, made prior to the date of oral argument and held until final determination of the appeal, to dismiss the appeal because the order vacating the Hudson County Court proceedings was interlocutory in nature and the permission of this court to appeal from said order had never been sought or granted, in accordance with the rules. R.R. 2:2-3 requires that application for leave to appeal from an interlocutory order or judgment shall be served and filed within ten days thereof. R.R. 1:27 B permits us to extend that period for not exceeding 30 days, "upon a clear showing of a good cause and the absence of prejudice." The application for extension "may be made at any time, provided that the action required to be taken within the specified time was in fact taken within that time as extended by the court."

Both briefs refer to Romano v. Maglio , 41 N.J. Super. 561 (App. Div. 1956), certification denied 22 N.J. 574 (1956), certiorari denied 353 U.S. 923, 77 S. Ct. 682, 1 L. Ed. 2 d 720 (1957), and In re Mortgage Guaranty Corporations' Rehabilitation Act , 131 N.J. Eq. 120 (E. & A. 1942). In the former, an order approving a sale, entered after final judgment , was held to be final in character. In the latter, an order ...

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