Withers v. Mechanics Trust Co. , 122 N.J. Eq. 413 ( 1937 )

I am unable to agree with the reasoning of the opinion for the majority since it seems to run counter to the opinion of this court in Moore v. Splitdorf Electrical Co., 114 N.J. Eq. 358. The issue in that case is identical in principle with the issue here. In that case the complaining party was the holder of a debenture bond — a creditor. In this case the appellants have the status of creditors of the insolvent bank. The assets of the bank, whatever their value, are a trust fund for payment of creditors, and the rights of the appellants, contractual in essence, may not, in these circumstances, be impaired.

It is not perceived that the statute (chapter 255, P.L.1931), confers authority upon the commissioner of banking and insurance to make the exchange of assets here exhibited against the will of those most interested in those assets, even though they be in the small minority. If such power were contained in the statute, its validity would be open to question upon very fundamental grounds. A creditor, in this situation, may not be compelled to accept that which is not legal tender, and these substituted bonds are not in that category.

Mr. Justices Case, Heher and Perskie are in accord with the view here expressed.

For affirmance — TRENCHARD, PARKER, LLOYD, BODINE, DONGES, DEAR, WELLS, WOLFSKEIL, RAFFERTY, COLE, JJ. 10.

For reversal — THE CHIEF-JUSTICE, CASE, HEHER, PERSKIE, JJ. 4.