Frederick v. Dettary Englneering Co.

• Decision Date: 27 June 1947
• Docket Number: No. 61.,61.
• Citation: 318 Mich. 252,28 N.W.2d 94
• Parties: FREDERICK et al. v. DETTARY ENGLNEERING Co. et al. (CARR et al., Garnishees).
• Court: Michigan Supreme Court

318 Mich. 252

28 N.W.2d 94

FREDERICK et al.

v.DETTARY ENGLNEERING Co. et al. (CARR et al., Garnishees).

No. 61.

Supreme Court of Michigan.

June 27, 1947.

OPINION TEXT STARTS HERE Appeal from Circuit Court, Wayne County; John V. Brennan, judge.

Edwin S. Frederick and others, doing business as the Frederick Steel Company, against the Dettary Engineering Company, principal defendant, and Allan Carr and Thomas Kemp, individually, and doing business as Linwood Industries, Limited, garnishee defendants. From a judgment of no cause of action, plaintiffs appeal.

Affirmed.

Before the Entire Bench.

John McNeil Burns, of Detroit (Irving I. Boigon, of Detroit, of counsel), for appellants.

McCauley & Wilson, of Detroit, for appellees.

BUSHNELL, Justice.

Defendant Dettary Engineering Company, a Michigan Corporation, had but one stockholder, Steve Dettar. It was engaged in the manufacture of tools, dies, fixtures, nuts and gauges, which it sold to various customers as ordered. Its articles of incorporation authorized it to ‘manufacture, purchase or otherwise acquire, to own, hold or use, to sell, assign, transfer or otherwise dispose of and to invest in and generally deal in and with goods, wares and merchandise of every nature and description.’

Defendant ordered and received from plaintiff Edwin D. Frederick et al., doing business as Frederick Steel Company, a quantity of steel, for which it failed to pay. frederick obtained a default judgment against Dettary Engineering Company for $1,120.82. Before this suit was started, Dettary Engineering Company sold substantially all of its assets to the garnishee defendants Allen Carr and Thomas Kemp, copartners doing business as Linwood Industries, Ltd. A bill of sale was executed covering all its ‘machinery and equipment, furniture and fixtures and inventory of steel and parts,’ with the exception of certain machines specified therein.

Plaintiffs, claiming that the sale from Dettary Engineering Company to Linwood Industries was void because of failure to comply with the Bulk Sales Act, brought garnishment proceedings against Linwood. It is admitted that the sale was made other than in the ordinary course of business and that no attempt was made to comply with the act.

From this sale Dettary Engineering Company received $11,000 from Linwood Industries, which was distributed largely among creditors who had liens on its property, and the balance of about $2,000 was paid to Steve Dettar. At the same time Dettary Engineering Company had a liquidated claim of about $8,100 against the government.

The trial judge filed a written opinion in which he discussed the Bulk Sales Act and concluded that it was not applicable to sales by manufacturers. Plaintiffs have appealed from a judgment in favor of defendant of no cause of action. Section 1 of the Bulk Sales Act, Act No. 223, Pub.Acts 1905, 2 Comp.Laws 1929, §§ 9545-9547, Stat.Ann. §§ 19.361-19.363, reads in part as follows: ‘The sale, transfer or assignment, in bulk, of any part or the whole of a stock of merchandise, or merchandise and the fixtures pertaining to the conducting of said business, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the business of the seller, transferor or assignor, shall be void * * *.’

When the Uniform Sales Act, Act No. 100, Pub.Acts 1913, 2 Comp.Laws 1929, § 9440 et seq., Stat.Ann. § 19.241 et seq., was enacted, the Bulk Sales Act was specifically excluded from its scope. See section 76b thereof, 2 Comp.Laws 1929, § 9517, Stat.Ann. § 19.318.

Appellants state the question presented for decision as follows: ‘Is the sale of machinery, tools, furniture and fixtures used by the seller to manufacture tools, dies, fixtures, nuts, gauges, etc., to be sold to its customers, where there was also included an inventory of steel and parts, void under the Michigan Bulk Sales Act, where the sale was in bulk and otherwise than in the regular course of business of the seller?’

In 24 Am.Jur. p. 362, § 258, it is said: ‘The Bulk Sales Acts do not govern a sale by a manufacturer, their purpose being to regulate sales of merchandise which constitutes the stock of mercantile establishments.’

Professor Williston, in discussing bulk sales acts in general, states in his work on sales, 2d Ed., § 643, p. 1616: ‘The statutes are applicable to retail dealers but generally not to wholesale dealers or to manufacturers or persons not ordinarily engaged in trade. A few statutes are wider in their operation.’

In the early case of Spurr v. Travis, 145 Mich. 721, 108 N.W. 1090, 1091,116 Am.St.Rep. 330,9 Ann.Cas. 250, which involved the validity of the Bulk Sales Act, the court answered the argument that it was class legislation ‘because it limits its operation to merchants and does not include farmers, manufacturers, etc.,’ by quoting from McDaniels v. J. J. Connelly Shoe Co., 30 Wash. 549, 71 P. 37, 60 L.R.A. 947, 94 Am.St.Rep. 889: “It is well known that the business of retailing goods, wares, and merchandise is conducted largely upon credit, and furnishes an opportunity for the commission of frauds upon creditors not usual in other classes of business.' The act is not class legislation.'

The key word in the construction of the act is ‘merchandise.’ ‘Merchandise is defined by Webster as ‘objects of commerce; whatever is usually bought and sold in trade or market by merchants.’ We think that ‘merchandise,’ as used in this...