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  • Mellon Bank v. Aetna Business Credit Corp.Mellon Bank v. Aetna Business Credit Corp.
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Mellon Bank v. Aetna Business Credit Corp.

United States Court of Appeals for the Third Circuit
619 F.2d 1001 (1980)


Opp, Elgin, and Wise (the borrowers) obtained a mortgage loan from Aetna Business Credit Corp. (Aetna) (defendant) and a construction loan from Mellon Bank (Mellon) (plaintiff) for the development of an office complex called Kensington Square. Aetna and Mellon agreed that Aetna would purchase the construction loan from Mellon, unless the borrowers became insolvent. Aetna later argued that it was not required to purchase the construction loan, because the borrowers were insolvent. Aetna argued that the term “insolvent” in the agreement should be interpreted in its usual commercial sense and that the borrowers were insolvent under this interpretation. Mellon argued that insolvency should be determined without considering the liabilities or assets involved in the Kensington Square project and that the borrowers were not insolvent under this interpretation. The district court held that the borrowers’ insolvency should be determined without considering the liabilities or assets involved in the Kensington Square project, because Aetna, in making the contract, did not give significant consideration to the borrowers’ possible insolvency. Aetna appealed.

Rule of Law


Holding and Reasoning (Cahn, J.)

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