Harpham Brothers Company v. Perry

• Decision Date: 09 May 1925
• Docket Number: 25,766
• Citation: 235 P. 1039,118 Kan. 457
• Parties: HARPHAM BROTHERS COMPANY, Appellant, v. C. C. PERRY, E. E. RITTER and W. T. WARD, Appellees (H. J. HALLENBECK, Defendant)
• Court: Kansas Supreme Court

235 P. 1039

118 Kan. 457

HARPHAM BROTHERS COMPANY, Appellant, v. C. C. PERRY, E. E. RITTER and W. T. WARD, Appellees

(H. J. HALLENBECK, Defendant)

No. 25,766

Supreme Court of Kansas

May 9, 1925

Decided January, 1925.

Appeal from Rawlins district court; WILLARD SIMMONS, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. FRAUDULENT CONVEYANCES -- Bulk-sales Act -- Estoppel and Waiver. The record examined concerning a sale of a mercantile stock of goods by the vendor in disregard of the bulk-sales act, and the subsequent disposal of part of the goods at retail by the vendee, and a later sale of the remaining stock in bulk to third parties who made their bargain in conformity with the statute, giving due notice to the plaintiff creditor of the original vendor who, pursuant to such notice, effected a settlement with the original vendor, its debtor, by a consideration partly furnished by the original vendee, and who also assured the vendee and the third parties then negotiating for the stock that a settlement had been effected with the original debtor and that plaintiff's claim against the stock of goods was released. Held, that the facts and circumstances constituted an estoppel against any later claim by plaintiff on the goods in the hands of the third parties and constituted a waiver of plaintiff's claim against the original vendee.

2. SAME--Evidence--Instructions. Other points of minor importance urged against the judgment considered and not sustained.

Dempster Scott, and Charley E. Scott, both of Atwood, for the appellant.

C. A P. Falconer, of Atwood, for the appellees.

OPINION

DAWSON, J.:

The plaintiff corporation brought this action to enforce the provisions of the bulk-sales act against the defendants.

The facts were these:

One Hallenbeck owned a $ 7,000 stock of merchandise at McDonald in Rawlins county. In January, 1921, Hallenbeck sold and defendant Perry bought this stock of goods without compliance with the bulk-sales law. Hallenbeck owed plaintiff $ 1,234.84 on account and a large aggregate sum to other creditors. Perry conducted the Hallenbeck business for several months, selling about $ 4,000 worth of the goods at retail; and in the autumn of the same year Perry entered into negotiations with defendants Ritter and Ward to sell the mercantile stock in bulk to them, but Ritter and Ward made their bargain contingent upon a substantial compliance with the bulk-sales law. In conformity therewith, on October 20, 1921, they caused a notice to be sent to plaintiff and Hallenbeck's other creditors. On October 24, 1921, plaintiff notified Ritter and Ward as to the amount of their claim. On October 29, Ritter and Ward wrote plaintiff saying that their bargain for the purchase of the stock was being held in abeyance pending a release of all claims and requesting that plaintiff send a man to settle its account if it could not be done by mail. Accordingly on November 1, plaintiff sent its agent and credit man, H. F. Gilmour, from its headquarters at Lincoln, Neb., to McDonald, and he made a settlement with Hallenbeck for the following consideration:

$ 234.84 in cash furnished by Perry,

$ 500.00 note executed by Hallenbeck,

$ 500.00 postdated check by Hallenbeck,

$ 200.00 postdated check by Hallenbeck.

It was also shown in evidence that when Gilmour arrived in McDonald, he said he came in response to the notification he had received from Ritter and Ward. Until the time of settlement, Hallenbeck had not theretofore admitted that he owed plaintiff anything. As an incident to the settlement Gilmour agreed to release plaintiff's claim on the mercantile stock. As he was about to leave for home Gilmour said to Ward: "We made a settlement all right." And shortly thereafter Ritter appeared and Gilmour said: "Well, I will have to be going--Mr. Hallenbeck is going to take me to Benkelman; we have just made a settlement and so far as we are concerned you fellows can go ahead with your deal." Perry was present when the latter statement was made. Several witnesses testified to these facts, and, indeed, plaintiff's agent's testimony was to the same effect except that, according to his version, the release was only to become effective if and when the note and postdated checks were paid. Against that construction of the agent's statement was the obvious fact that if the checks and note were paid plaintiff would have had no claim to release.

Following that settlement between plaintiff's agent and Hallenbeck on November 1, and in reliance on the assurance given defendants by Gilmour, plaintiff's agent, at that time, Perry and Ritter and Ward concluded their deal for the bulk sale of the stock of merchandise on November 23, 1921, the purchasers paying the agreed price therefor. Later, Hallenbeck failed to provide funds to meet the postdated checks and failed to pay the $ 500 note, and plaintiff brought an action against Hallenbeck thereon, with what result this record does not show, but it can be inferred that it was fruitless since this action followed.

On the joinder of issues and the evidence adduced by the parties the cause was submitted to a jury which returned a general verdict for defendants and answered special questions, viz:

"1. Did the plaintiff take a note and two postdated checks from defendant, H. J. Hallenbeck, and retain the same, and bring suit on them in this action? A. Yes, he did.

"2. Did defendant, C. C. Perry, pay any money or cause any money to be paid the defendant, H. J. Hallenbeck on or about November 2, 1921, that was paid by Hallenbeck to plaintiff? A. Yes.

"3. If you answer 'yes' to the preceding question, then did Perry pay said money to Hallenbeck to apply on or as a part of the transaction between plaintiff's agent H. F. Gilmour and H. J. Hallenbeck? A. Yes.

"4. How much money, if any, did plaintiff receive on the check given by Hallenbeck to Gilmour on November 1, 1921, and so dated? A. $ 234.84.

"5. Did the plaintiff ever make any demand on defendants, C. C. Perry, E. E. Ritter and W. T. Ward, for the payment of the Hallenbeck post-dated checks and note due January 1, 1922, and after the same became due and before this action was filed on August 12, 1922? A. No. . . .

"7. When did E. E. Ritter and W. T. Ward pay C. C. Perry for the goods and fixtures formerly owned by H. J. Hallenbeck? A. Nov. 23, 1921.

"8. When did Hallenbeck sell or trade out to defendant, C. C. Perry? A. January, 1921."

Judgment was entered accordingly, and plaintiff appeals.

It is first urged that there was no consideration for Gilmour's agreement to release plaintiff's claim on the stock of merchandise. As to Ritter and Ward, there was all the consideration which law and good conscience required. The law did not forbid them to purchase the stock of merchandise. It only prescribed certain requisites designed to give creditors a fair chance to protect themselves. When Gilmour, pursuant to notice given by Ritter and Ward, came to McDonald and made a settlement with Hallenbeck, and assured defendants that plaintiff's claim was released and that defendants could safely go ahead with their deal, Ritter and Ward had a perfect right to proceed to consummate their pending contract, pay the agreed consideration, and take over the property. Ritter and Ward had complied with the statute, which protected them from liability; moreover, they relied on the assurance of Gilmour, the authorized agent and credit man of plaintiff, that settlement of plaintiff's claim had been effected and that they could proceed in safety to consummate their bargain with Perry, and the equitable principles of estoppel barred the plaintiff from afterwards taking a position contrary thereto.

The foregoing conclusion is not quite so obvious when applied to the situation of Perry. He acquired the goods in disregard of the bulk-sales law, and proceeded to dispose of them as if they were his own. He therefore acquired no title as against Hallenbeck's creditors (R. S. 58-101), although his title was perfectly good as against Hallenbeck himself. (Note in 5 A. L. R. 1517.) But it may well be that Perry did this with his eyes open, not intending to flout the law, but quite willing to assume and pay whatever valid claims of creditors might turn up against the stock of goods if Hallenbeck did not or could not pay. The record does not...