Garden & Turf Supply Corp., Matter of

• Citation: 440 N.E.2d 710
• Decision Date: 14 October 1982
• Docket Number: No. 4-1181A177,4-1181A177
• Court: Indiana Appellate Court
• Parties: 34 UCC Rep.Serv. 1325 In the Matter of GARDEN & TURF SUPPLY CORPORATION, Bankrupt. Ward W. MILLER, Trustee, Appellant-Plaintiff, v. Kelly STRANGE d/b/a Midwest Liquidators and Midwest Liquidators, Inc., Appellees-Defendants.

Page 710

440 N.E.2d 710

34 UCC Rep.Serv. 1325

In the Matter of GARDEN & TURF SUPPLY CORPORATION, Bankrupt.

Ward W. MILLER, Trustee, Appellant-Plaintiff, v. Kelly STRANGE d/b/a Midwest Liquidators and Midwest

Liquidators, Inc., Appellees-Defendants.

No. 4-1181A177.

Court of Appeals of Indiana,

Fourth District.

Oct. 14, 1982.

Allen N. Wheat, Latriealle Wheat, Wheat & Wheat, Indianapolis, for appellant-plaintiff.

R. M. Kroger, Julie Z. Schmitt, Kroger, Gardis & Regas, Indianapolis, for appellees-defendants.

CONOVER, Judge.

Ward W. Miller, as bankruptcy trustee of Garden & Turf Supply Corporation (Trustee), appeals the trial court's denial of his motion for summary judgment and its entry of summary judgment in favor of Kelly Strange d/b/a Midwest Liquidators, and Midwest Liquidators, Inc. (Auctioneer).

We affirm.

ISSUES ¹

1. Did the trial court err in finding the notice given to creditors was adequate to satisfy the requirements of the Indiana Bulk Transfer Act?

2. Did the trial court err in finding Auctioneer prepared and retained a schedule of property which satisfies the requirements of the Indiana Bulk Transfer Act?

3. Did the trial court err in finding Auctioneer had obtained a certified list of creditors as required by the Indiana Bulk Transfer Act?

4. Did the trial court err in concluding the products of discovery were insufficient to prove damages?

5. Did the trial court err in refusing to strike an affidavit which was not based upon personal knowledge?

6. Did the trial court err when it failed to consider the Trustee's motion for summary judgment and Auctioneer's motion for summary judgment separately?

7. Did the trial court fail to decide certain issues which had to be resolved before summary judgment could properly be entered in favor of Auctioneer?

8. Did the trial court enter inaccurate and incomplete findings of fact in granting summary judgment in favor of Auctioneer and in denying summary judgment in favor of the Trustee?

FACTS

Garden & Turf Supply Corporation, an Indiana corporation, is a wholesale lawn and garden distributor. Michael J. Doherty owns all issued and outstanding stock of the corporation. Doherty also serves as president, chairman of the board and chief operating officer.

The unaudited monthly balance sheets of the corporation indicate its insolvency after September, 1977. On April 21, 1978, the corporation, by Michael J. Doherty, and Auctioneer entered into a "Contract to Sell Merchandise and Equipment at Public Auction." The auction was conducted on June On September 12, 1978, an involuntary creditor's petition was filed in the United States District Court, Northern District of Indiana, Fort Wayne Division, seeking an adjudication of the corporation as bankrupt. It was so adjudged on January 13, 1979. Ward W. Miller was then appointed trustee in bankruptcy of the corporation.

10 and June 14, 1978. The net proceeds from the auction were $101,943.55.

Miller, as Trustee, brought this suit alleging Auctioneer failed to comply with the requirements of the Indiana Bulk Transfer Act. ² After discovery, the Trustee moved for summary judgment. Auctioneer then filed a response which the trial court treated as a motion for summary judgment. The trial court denied Trustee's motion and entered summary judgment in favor of Auctioneer. ³ Trustee appeals.

DISCUSSION AND DECISION

I. STANDARD OF REVIEW

When reviewing the trial court's entry of summary judgment, this court must determine whether there is any genuine issue of material fact and whether the law was applied correctly. Zalewski v. Simpson, (1982) Ind.App., 435 N.E.2d 74; Carroll v. Lordy, (1982) Ind.App., 431 N.E.2d 118. As stated in Podgorny v. Great Central Insurance Co., (1974) 160 Ind.App. 244, 311 N.E.2d 640:

The burden is on the proponent to establish that no genuine issue as to any material fact exists. Accordingly, for purposes of determining whether to grant the motion: (a) facts set forth by the opponents' affidavits will be taken as true; (b) the depositions, admissions, etc. are to be liberally construed in favor of the opponent; and (c) any doubt as to the existence of a genuine issue as to a material fact must be resolved against the proponent of the motion.

Finally, to help insure that real factual issues may not be evaded, supporting and opposing affidavits must be made on personal knowledge, must show affirmatively that the affiant is competent to testify to the matters covered, and must set forth facts as would be admissible in evidence. TR 56(E); .... Similarly, under the process of construction favoring the opponent of the motion, matters contained in depositions and answers to interrogatories are to be considered in the light of their capability of being admitted into evidence at a trial. (citations omitted)

Id. at 254-55, 311 N.E.2d at 648.

II. ADEQUACY OF NOTICE

Trustee argues the trial court erred when it entered summary judgment in favor of Auctioneer because it failed to give adequate notice of the auction to the bankrupt corporation's creditors. He argues the notice was inadequate because it was incomplete, inaccurate and was not sent by the proper person. We disagree.

Article 6 of the Uniform Commercial Code ⁴ governs bulk transfers. Auctions which amount to bulk transfers are governed by IC 26-1-6-107. ⁵ IC 26-1-6-107 requires the auctioneer to send notice to the creditors of the transferor named on the list of creditors prepared by the transferor and to any creditor of the transferor known to the auctioneer. The key questions presented in this case are 1) what information must be included in the notice to creditors, and 2) who may actually send the notice.

In this case, the notice sent to creditors ⁶ read as follows:

1. Kelly Strange d/b/a Midwest Liquidators (Auctioneer) intends to sell at auction the materials, supplies, merchandise equipment, inventory and all other personal property belonging to Garden & Turf Supply Corporation.

2. The name and address of Garden & Turf Supply Corporation as known to the Auctioneer is 201 Main Street, New Haven, Indiana 46774.

3. The name and address of the Auctioneer is Kelly Strange d/b/a Midwest Liquidators, 1453 East Washington Street, Indianapolis, Indiana.

4. The auction will be held beginning at 9:00 A.M. to 9:00 P.M. on June 10, 1978, June 13, 1978, and June 14, 1978, at the principal office of Garden & Turf Supply Corporation, 201 Main Street, New Haven, Indiana 46774, and continue until concluded.

The notice was dated May 26, 1978, and was signed Kelly Strange d/b/a Midwest Liquidators with Michael J. Doherty's initials under the signature.

Trustee argues this notice is insufficient because it should have contained all the information required of a non-auctioneer transferee as set out in IC 26-1-6-106. Auctioneer responds section 107 does not require all section 106 information be given by the auctioneer to the creditors. Section 107 merely states notice of the auction is required. ⁷

What must be included in a Section 107 notice? To answer that question we must determine the purpose of such notice. Initially it must inform the creditor an auction of his debtor's property will be held.

Beyond this, very little protection is given and very little protection can be given by statute. Armed with the requisite notice, the next step would be up to the creditors involved to protect their interests in whatever manner possible under local procedural rules.

3A Bender's U.C.C. Serv. (MB) Sec. 15.01 (1982). When the creditor receives notice, he has at least three choices, (a) seek an injunction to prevent the auction, (b) file an involuntary bankruptcy petition, or (c) do nothing and hope the auction produces sufficient income to pay off all debts. However in order to make such a decision, the creditor needs information so he can intelligently protect himself from a fraudulent conveyance or unnecessary loss.

The few authors which have made statements regarding the notice requirement for auctions are split as to how they read the statute. Some argue that without complete information the notice would be meaningless. ⁸ Others argue since the statute does not specifically mandate this extensive notice, it is not required. ⁹

We are not at liberty to rewrite section 107 to mandate auctioneers to give the notice required by section 106. We must construe the statute according to its plain meaning. Barr v. State, (1980) Ind.App., 400 N.E.2d 1149.

Due to the special treatment of auctions under the Act, and the failure to specifically incorporate the non-auction notice requirements into section 107, the non-auction notice requirements are not required in the auction setting. Rather, reasonable notice is required. Such notice would contain the date, time, and place of the auction, the general nature of the property to be sold (e.g. inventory), the name and address of the debtor and the name and address of the auctioneer. The notice here forwarded to creditors satisfies these requirements.

The Trustee also argues the notice given was inaccurate. He claims the dates listed on the notice as the dates of the auction, June 10th, 13th and 14th, 1978, are incorrect. Actually the auction was held only on June 10th and 14th. June 13th was an inspection day. He also claims the name of the auctioneer listed on the notice, Kelly Strange d/b/a Midwest Liquidators, was incorrect. Actually Midwest Liquidators, Inc., contracted to conduct the auction.

We agree these errors are improper. The notice to creditors is designed to provide them with accurate information. However, this does not mean a failure to include a comma, an "Inc." or something of equivalent significance will cause the notice to fail unless that error misleads the creditor.

Here, the dates of the actual auction were listed. The additional day named which was used for inspection was not irrelevant to the creditor. Furthermore, we cannot say this error misled any creditor. As to the real...