Ewaniuk v. Rosenberg
| Decision Date | 31 March 1916 |
| Citation | 157 N.W. 691,34 N.D. 93 |
| Court | North Dakota Supreme Court |
Rehearing denied April 27, 1916.
From a judgment of the District Court of Stark County, Crawford, J defendants appeal.
Reversed.
Judgment reversed, and action dismissed against the defendants Morris Rosen and Ben Rosenberg.
W. F Burnett (H. J. Blanchard, of counsel), for appellants.
The statute, § 7224 of the Revised Codes of 1913, known as the Bulk Sales Law, is unconstitutional. It applies only to merchants, and then to those who are able to pay, as well as to those who are insolvent. A good, responsible merchant cannot sell any considerable quantity or unusual amount of his stock without giving to the creditors the notice required by this statute. The law is unjust and unreasonable if intended to cover such a transaction. Everett Produce Co. v. Smith Bros. 40 Wash. 566, 2 L.R.A.(N.S.) 331, 111 Am. St. Rep. 979, 82 P. 905, 5 Ann. Cas. 798; Bowen v. Quigley, 165 Mich. 337, 34 L.R.A.(N.S.) 218, 130 N.W. 690; Cooney, E. & Co. v. Sweat, 133 Ga. 511, 25 L.R.A.(N.S.) 758, 66 S.E. 257.
A statute that is inquisitorial in that it compels the divulging of business secrets which the parties have a right to keep to themselves is pernicious, and ought not to be sustained. Wright v. Hart, 182 N.Y. 350, 2 L.R.A.(N.S.) 338, 75 N.W. 404, 3 Ann. Cas. 263; Everett Produce Co. v. Smith, 40 Wash. 566, 2 L.R.A.(N.S.) 331, 111 Am. St. Rep. 979, 82 P. 905, 5 Ann. Cas. 798; Young v. Lemieux, 79 Conn. 434, 20 L.R.A.(N.S.) 160, 129 Am. St. Rep. 193, 65 A. 436, 600, 8 Ann. Cas. 452; Boise Asso. v. Ellis, 26 Idaho 438, L.R.A.1915E, 917, 144 P. 60; Williams & T. Co. v. Preslo, 84 Ohio St. 328, 95 N.E. 900, Ann. Cas. 1912C, 707; Wm. R. Moore Dry Goods Co. v. Rowe, 99 Miss. 30, 54 So. 659, Ann. Cas. 1913C, 1214; Miller v. Crawford, 70 Ohio St. 207, 71 N.E. 631, 1 Ann. Cas. 558; McKinster v. Sager, 163 Ind. 671, 68 L.R.A. 273, 106 Am. St. Rep. 268, 72 N.E. 854; Block v. Schwartz, 27 Utah 389, 65 L.R.A. 308, 101 Am. St. Rep. 971, 76 P. 22, 1 Ann. Cas. 550; Off v. Morehead, 235 Ill. 40, 20 L.R.A.(N.S.) 167, 126 Am. St. Rep. 184, 85 N.E. 264, 14 Ann. Cas. 434.
The plaintiffs at the time of the sale of the stock in question were not creditors of the vendor, within the meaning of the Bulk Sales Law. "A creditor within the meaning of this chapter is one in whose favor an obligation exists by reason of which he is or may become entitled to the payment of money." Comp. Laws 1913, §§ 7216, 7285; Winans v. Beidler, 6 Okla. 603, 52 P. 405; Karst v. Gane, 61 Hun, 533, 16 N.Y.S. 385; Beers v. Hanlin, 99 F. 695; Hill v. Bowman, 35 Mich. 191.
C. H. Starke, for respondents.
The "Bulk Sales Law" of this state is constitutional. The law is intended to prevent fraudulent sales and to protect creditors, and the state, under police powers, has the right to enact such a law. Everett Produce Co. v. Smith, 40 Wash. 566, 2 L.R.A.(N.S.) 331, 111 Am. St. Rep. 979, 82 P. 905, 5 Ann. Cas. 798; Young v. Lemieux, 79 Conn. 434, 20 L.R.A.(N.S.) 160, 129 Am. St. Rep. 193, 65 A. 436, 600, 8 Ann. Cas. 452, 211 U.S. 489, 53 L.Ed. 295, 29 S.Ct. 174; Boise Asso. v. Ellis, 26 Idaho 438, L.R.A. 1915E, 917, 144 P. 6; Kidd, D. & P. Co. v. Mussleman Grocer Co. 217 U.S. 461, 54 L.Ed. 839, 30 S.Ct. 606.
The plaintiffs at the time of the sale of the stock of merchandise were creditors of the seller. The goods were purchased with the understanding that if not satisfactory they could be returned. The purchaser is the sole judge in such cases, and if not satisfied he may return the goods. Garland v. Keeler, 15 N.D. 551, 108 N.W. 484; McCormick Harvesting Mach. Co. v. Okerstrom, 114 Iowa 260, 86 N.W. 284.
It is in effect a mutual consent to rescission. Comp. Laws 1913, § 5934; 35 Cyc. 128; Alden v. Thurber, 149 Mass. 271, 21 N.E. 312.
Where goods so purchased are returned by the purchaser to the vendor, delivery to the carrier consigned to vendor is delivery to vendor. A. J. Neimeyer Lumber Co. v. Burlington & M. River R. Co. 54 Neb. 321, 40 L.R.A. 534, 74 N.W. 670; Kelsea v. Ramsey & G. Mfg. Co. 22 L.R.A. 415, subject note; Comp. Laws 1913, chap. 111, § 7216; Soly v. Aasen, 10 N.D. 108, 86 N.W. 108; First Nat. Bank v. Calkins, 16 S.D. 445, 93 N.W. 646; Keel v. Larkin, 72 Ala. 493; Loughridge v. Bowland, 52 Miss. 546; Anderson v. Anderson, 64 Ala. 403; De Ruiter v. De Ruiter, 28 Ind.App. 9, 91 Am. St. Rep. 107, 62 N.E. 100.
The statute declares that a sale made of a stock of goods shall be void as against creditors of the seller, unless the seller shall, at least five days before the sale, make inventory, showing quality, cost price to seller, of each article included in sale. Also upon demand of the purchaser, a written list of the names of indebtedness to each, and certified by seller under oath. Comp. Laws 1913, § 7224.
On December 10, 1913, and for some time prior thereto, the defendant Jacob Rosenberg owned and operated a clothing store at Dickinson. The plaintiffs at this time were operating a store at Gorham. On December 10, 1913, the plaintiffs purchased from the defendant Jacob Rosenberg certain clothing, which they intended to place and did place on sale in their store at Gorham. The total price paid by plaintiffs, exclusive of all discounts allowed them, was $ 152.50. The plaintiff Strilczuk personally selected all the clothing so sold and paid for the same at that time. Upon the invoice of the clothing so sold the defendant made the following indorsement: "Agreed with Mr. Peter Strilczuk if any of the suits does not prove satisfactory should except back." The evidence does not show when these goods were placed in plaintiffs' store at Gorham, although Peter Strilczuk testifies that they kept these suits in their store and made efforts to sell them for a period of about fifteen days, and that during that time they tried to sell them to a number of people and found that they could not sell them owing to the fact, as he states: "The coat was too small and the pants too big to make a fit." He further testifies that on December 30, 1913, he shipped these goods back to the defendant Jacob Rosenberg, from Belfield, North Dakota, to Dickinson, North Dakota, and wrote and informed him of such fact. There is no testimony showing when the goods arrived at Dickinson, nor is there any evidence whatever offered by the plaintiffs showing that the goods were returned in good condition, nor is there any evidence whatever showing the method of transmission of the plaintiffs' alleged notification to the defendant of the return of the goods. There is no evidence showing that any letter was mailed or any notice delivered to defendant personally or at all. There is no contention that the plaintiffs in any manner notified the defendant of their intention to return the goods at any time prior to their shipment.
In the meantime the defendant Jacob Rosenberg entered into negotiations with the defendants Morris Rosen and Ben Rosenberg to sell his business to them. The testimony shows that, in connection with these negotiations, they commenced taking stock or inventory about December 24, 1913, and completed the same a day or so thereafter, and that "right after Christmas" the deal was made, but that owing to some delay on the part of Morris Rosen and Ben Rosenberg in obtaining the necessary moneys to pay the consideration agreed upon, the deal was not consummated until on December 31, 1913, when they paid Jacob Rosenberg the agreed consideration in cash, and received from him a bill of sale for the entire stock of goods, and entered into possession of the business. The evidence shows that an inventory was made showing the value of the stock and fixtures at $ 11,464.66. It is also undisputed that Jacob Rosenberg stated that there were no creditors, and that the few outstanding bills would be paid by him. It is also undisputed that prior to the consummation of the deal Jacob Rosenberg made remittances in full to every creditor appearing upon his books.
The goods returned by the plaintiffs were not received at Dickinson until some time in January, 1914. The defendant Jacob Rosenberg was no longer there, and the defendants Morris Rosen and Ben Rosenberg refused the shipment, and caused the same to be returned to the plaintiffs, who have retained possession thereof since that time.
Plaintiffs thereafter brought this action upon the theory that the sale made by Jacob Rosenberg was void for failure to comply with the provisions of the so-called "bulk sales law" of this state. The trial court rendered judgment for plaintiffs, and defendants have appealed from such judgment.
The bulk sales law was first enacted in this state as chapter 221, Laws 1907, being entitled, "An Act Providing for the Giving of Notice by Merchants to Their Creditors before Making Sale of Their Entire Stock of Goods." It was subsequently amended by chapter 247, Laws 1913, and incorporated as §§ 7224-7227 inclusive of the Compiled Laws of 1913. The provisions applicable in this action are as follows: "The sale, transfer or assignment, in bulk, of any part or the whole of a stock of merchandise, or merchandise and fixtures pertaining to the conducting of said business, otherwise than in the ordinary course of trade and in the regular prosecution of the business of the seller, transferrer or assignor, shall be void as against the creditor of the seller, transferrer or assignor, unless the seller, transferrer, assignor and purchaser, transferee and assignee, shall, at least five days before the sale, make a full detailed inventory, showing the quality and, so far as...
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