Boise Ass'n of Credit Men, Ltd. v. Ellis

• Citation: 144 P. 6,26 Idaho 438
• Parties: THE BOISE ASSOCIATION OF CREDIT MEN, LTD., a Corporation, Appellant, v. T. R. ELLIS and THOMAS BUHL, Respondents
• Decision Date: 29 October 1914
• Court: United States State Supreme Court of Idaho

144 P. 6

26 Idaho 438

THE BOISE ASSOCIATION OF CREDIT MEN, LTD., a Corporation, Appellant, v. T. R. ELLIS and THOMAS BUHL, Respondents

Supreme Court of Idaho

October 29, 1914

CONSTITUTIONAL LAW-LIBERTY OF CONTRACT-CLASS LEGISLATION-SALE OF MERCHANDISE IN BULK-DUE PROCESS OF LAW-FIXTURES-MERCHANDISE-POLICE POWER.

1. Held, that chap. 3 of title 10, Rev. Codes, which provides for "sales of goods in bulk," is a constitutional and valid law, that it does not constitute class legislation within the inhibition of the constitution, and that it is a proper and reasonable exercise of the state's police power.

2. Held, that a stock of goods, wares and merchandise, when sold in bulk, does not by implication include the fixtures as a part of the sales.

APPEAL from the District Court of the Seventh Judicial District for Washington County. Hon. Ed. L. Bryan, Judge.

In this action appeal was taken from the judgment of the lower court sustaining the demurrer to the complaint of appellant and denying the relief prayed for therein, and rendering judgment in favor of the defendant Thomas Buhl for costs of the action. Judgment affirmed.

Judgment affirmed, with costs in favor of respondent.

Raymond L. Givens and Charles E. Winstead, for Appellant.

Statutes regulating the sale of stocks of goods, wares and merchandise in bulk have within a comparatively recent period been enacted in twenty-four states of the Union and by Congress for the District of Columbia.

A statute with the same object attained by a similar remedy has been held valid by the highest courts in Massachusetts Connecticut, Tennessee, and Washington. (John P. Squire &amp Co. v. Tellier, 185 Mass. 18, 102 Am. St. 322, 69 N.E 312; Walp v. Mooar, 76 Conn. 515, 57 A. 277; Neas v. Borches, 109 Tenn. 398, 97 Am. St. 851, 71 S.W. 50; McDaniels v. J. J. Connelly Shoe Co., 30 Wash. 549, 94 Am. St. 889, 71 P. 37, 60 L. R. A. 947.) An act declaring such sales presumptively fraudulent was assumed to be valid by the courts of last resort in Wisconsin and Maryland. (Fisher v. Herrmann, 118 Wis. 424, 95 N.W. 392; Hart v. Roney, 93 Md. 432, 49 A. 661; Wright v. Hart, 182 N.Y. 330, 75 N.E. 404, 3 Ann. Cas. 263, 2 L. R. A., N. S., 338; Jaques & Tinsley Co. v. Carstarphen Warehouse Co., 131 Ga. 1, 62 S.E. 82.)

"The Michigan sales in bulk act (Pub. Acts 1905, No. 223), avoiding, as against creditors, sales in bulk otherwise than in the regular course of business, unless an inventory is made at least five days before the sale, and the purchaser receives a list of the seller's creditors, and notifies them of the proposed sale personally, or by registered mail, at least five days before its consummation, and making a purchaser not conforming to the statute a receiver for the benefit of the seller's creditors, is a valid exercise of the police power, and does not deny due process or the equal protection of the laws." (Kidd, Dater & Price Co. v. Musselman Grocer Co., 217 U.S. 461, 30 S.Ct. 606, 54 L.Ed. 839; sustained in Noble State Bank v. Haskell, 219 U.S. 104, 31 S.Ct. 186, 55 L.Ed. 112, Ann. Cas. 1912A, 487; Thorpe v. Pennock Mercantile Co., 99 Minn. 22, 108 N.W. 940, 9 Ann. Cas. 229; John P. Squire & Co. v. Tellier, 185 Mass. 18, 102 Am. St. 322, 69 N.E. 312; Lemieux v. Young, 211 U.S. 489, 29 S.Ct. 174, 53 L.Ed. 295; affirming Young v. Lemieux, 79 Conn. 434, 129 Am. St. 193, 65 A. 436, 600, 8 Ann. Cas. 452, 20 L. R. A., N. S., 160.)

A sale of the fixtures necessary for the conducting of the business made such sale fraudulent and void as to the creditors unless the notices provided in the statute had been given in the manner prescribed by law, for the reason that by the sale of such fixtures without the purchase of new fixtures to take the place of the old fixtures there was a substantial conveyance of the business or trade of the vendor to the prejudice of the rights of the vendor's creditors, among whom were plaintiffs herein. (Parham & Co. v. Potts-Thompson Liquor Co., 127 Ga. 303, 56 S.E. 460; Knapp, Stout & Co. v. McCaffrey, 178 Ill. 107, 69 Am. St. 290, 52 N.E. 898; Fitz Henry v. Munter, 33 Wash. 629, 74 P. 1003; Holford v. Trewella, 36 Wash. 654, 79 P. 308; Plass v. Morgan, 36 Wash. 160, 78 P. 784.)

Varian & Norris, for Respondent Thomas Buhl.

The bulk sales law is unconstitutional and violates the provisions of sec. 1, art. 1, and sec. 13 of art. 1 of the constitution. (Off & Co. v. Morehead, 235 Ill. 40, 126 Am. St. 184, 85 N.E. 264, 14 Ann. Cas. 434, 20 L. R. A., N. S., 167; Pogue v. Rowe, 236 Ill. 157, 86 N.E. 207; Wright v. Hart, 182 N.Y. 330, 75 N.E. 404, 3 Ann. Cas. 263, 2 L. R. A., N. S., 338; Miller v. Crawford, 70 Ohio St. 207, 71 N.E. 631, 1 Ann. Cas. 558; McKinster v. Sager, 163 Ind. 671, 106 Am. St. 268, 72 N.E. 854, 68 L. R. A. 273; Block v. Schwartz, 27 Utah 387, 101 Am. St. 971, 76 P. 22, 1 Ann. Cas. 550, 65 L. R. A. 308.)

The language of the statute seems to be very plain, and it is evident from the terms thereof that the legislature never intended that fixtures should be embraced within its meaning. (Gallus v. Elmer, 193 Mass. 106, 78 N.E. 772, 8 Ann. Cas. 1067; Lee v. Gillen & Boney, 90 Neb. 730, 134 N.W. 278; Albrecht v. Cudihee, 37 Wash. 206, 79 P. 628; Bowen v. Quigley, 165 Mich. 337, 130 N.W. 690, 34 L. R. A., N. S., 218; People's Savings Bank v. Van Allsburg, 165 Mich. 524, 131 N.W. 101; Everett Produce Co. v. Smith Bros., 40 Wash. 566, 111 Am. St. 979, 82 P. 905, 5 Ann. Cas. 798, 2 L. R. A., N. S., 331; Curtis v. Phillips, 5 Mich. 112; Kolander v. Dunn, 95 Minn. 422, 104 N.W. 371, 483.)

The bulk sales law being in derogation of the common law and of the right to alienate property without restriction is to be strictly construed. (Yancey v. Lamer-Rankin Drug Co., 140 Ga. 359, 78 S.E. 1078; Taylor v. Folds, 2 Ga.App. 453, 58 S.E. 683.)

TRUITT, J. Sullivan, C. J., concurs.

OPINION

TRUITT, J.

This action was commenced by the appellant corporation, as assignee of two different mercantile companies, against said T. R. Ellis to collect certain accounts against him for goods, wares and merchandise sold and delivered to him by said companies at his place of business in Cambridge, Idaho. The complaint alleges that these accounts were duly assigned by said companies to appellant, who was the owner and holder of them at the time of commencing this action, and that the aggregate sum of said accounts amounting to $ 285.46 was due and owing from Ellis to appellant, and judgment was demanded for said sum against him.

In said complaint the respondent, Thomas Buhl, is connected with the transaction which is the basis of the action against him as follows: "That on or about December 11, 1912, the said T. R. Ellis sold and transferred all his said stock of goods, wares and merchandise, including fixtures, out of the usual and ordinary course of business and trade, and did thereby substantially sell and convey the entire business and trade thereof conducted by the said T. R. Ellis, said fixtures consisting of counters, scales, shelving, tables, and store fixtures in general. That the said T. R. Ellis particularly sold the said fixtures to the defendant, Thomas Buhl, for the sum of $ 150." It will be seen from the complaint that Buhl did not buy or receive any of the merchandise.

The respondent Buhl, as defendant therein, interposed a general demurrer to said complaint, and after consideration of the same by the trial court it was sustained and the action dismissed. From the order dismissing said action and the judgment entered against appellant, this appeal is taken. The defendant Ellis did not appear in the court below, and the record is silent as to whether or not he was served with process.

The appellant in his brief presents an argument and cites authorities to show that the claims in this case were assignable and were properly assigned to the plaintiff, and it could therefore legally maintain an action upon them. As to the defendant Ellis, counsel for the respondent Buhl do not dispute the validity of the assignment of these claims, nor the right of appellant to maintain an action to collect the debt which they constitute, as to the defendant Ellis, but do question the manner of the proceeding in said action for the purpose of holding defendant Buhl liable for this debt. But as this only relates to the manner of procedure and not to the real points presented by the appeal, we do not think proper to pass upon it.

The two important points presented by this appeal are, (1) whether the law under consideration imposes such restrictions on sales of goods, wares and merchandise in bulk by persons engaged in that business, as to deprive them of their property without due process of law, and also whether it is class legislation within the inhibition of the constitution on that subject; and, (2), that if the law is constitutional, whether fixtures used in connection with the mercantile business are by implication included within its purview and meaning.

This act, though passed by the legislature in 1903, has never before come before this court for interpretation, and for that reason we have examined a number of the decisions of other courts that have passed upon and construed similar laws with much interest.

It must be conceded that this law does restrict and put some burdens on the sale of the kind of property to which it relates, but it is claimed in its favor that its object is to prevent an abuse of credit extended to debtors engaged in the mercantile business and thus prevent fraudulent sales that would otherwise deprive their creditors of their honest debts.

In John P. Squire & Co. v. Tellier, 185 Mass. 18, 102 Am. St. 322, 69 N.E. 312, a case decided by the supreme court of Massachusetts, it is said:

"The statute deals only with sales in bulk of...