Hart v. Brierley
| Decision Date | 07 December 1905 |
| Citation | 76 N.E. 286,189 Mass. 598 |
| Parties | HART v. BRIERLEY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Milton Druce, for plaintiff.
Phillips & Fuller, for defendant.
The plaintiff's title to the chattels alleged to have been converted is derived under a sale from a corporation described as the 'Favorite Biscuit Company.' By way of defense this sale is claimed to have been made by the vendor either in violation of St. 1903, p. 276, c. 415, or for the purpose of defrauding its creditors, and hence became voidable by them at common law. In Squire v Tellier, 185 Mass. 18, 69 N.E. 312, 102 Am. St. Rep 322, although this statute was held to be constitutional, the scope of its application to mercantile transactions similar to those found in this case was neither involved nor determined. The company was engaged in making biscuits and crackers, which, upon being packed in boxes or barrels, were sold only at wholesale. Presumably its business was managed in the ordinary way, though it is not stated what portion of the company's output was taken daily by customers, or how much remained unsold. But from the nature of the product, such an enterprise to be successfully conducted required frequent sales; for, if not used before they became stale, the biscuits and crackers would become unsalable and worthless. It may be conceded that bread made and put up for the market in this form is merchandise within the meaning of the act, and may comprise the whole or the principal part of a merchant's stock in trade, but the sale prohibited without notice to the vendor's creditors is a disposal of the stock in bulk, or as a whole, leaving them unpaid. Unless the transaction is outside of the ordinary course adopted by the trader for the disposal of the commodity in which he deals, it is not made unlawful. J. P. Squire Co. v. Tellier, ubi supra.
Where a going mercantile business is so conducted that to be profitable large quantities of goods must be sold to different customers, even to the extent of exhausting the entire stock which may be on hand at any stated time, such a sale is not voidable, although all the stock in the seller's possession at the time may be delivered to a single buyer. The statutory test is whether the sale was made in the usual way in which a merchant owing debts conducts his business, or whether he takes an unusual method of disposing of his property in order to get the money for his own use, and leaving his creditors unpaid. This inquiry is essentially an issue of fact depending upon the nature of the seller's business, his ordinary method of making sales, and his indebtedness. A sale of his entire stock by one trader might not be uncommon, which, if made by another, would be extraordinary, and within the statute.
The written executory contract between the plaintiff and the company by which it sold to him a quantity of its product already manufactured, and the entire product of its bakery for a period of at least three months following, must be read in connection with the commercial system under which the company necessarily transacted its business, as the parties incorporated this condition of things into their contract. Knight v. New England Worsted Co., 2 Cush. 271, 283. If the company lawfully could have sold its merchandise as manufactured at wholesale to more than one customer without violating the statute, this agreement to take and pay for its entire product does not become voidable at the election of existing creditors because by reason of its provisions such sales are made continuously to a single purchaser. In substance, the instructions to the jury defined the scope of this part of the statute in accordance with what we have said, and were sufficiently favorable to the defendant.
Under these instructions, the jury having found specially that the property was sold and delivered in the regular and ordinary course of the company's business, the plaintiff's title became unimpeachable, when, if they had found otherwise, it would have been open to attack as being fraudulent and void by force of the statute. This special finding goes far to dispose of the defendant's further contention that the agreement was fraudulent as against creditors under the provisions of St. 13 Eliz. c. 5. The conduct of a vendor or grantor, when a conspiracy to defraud is charged, becomes material in proof of a fraudulent purpose. A sudden sale of his entire stock in trade by a retail merchant, who at the time is insolvent, or in contemplation of insolvency, by which he realizes the value of his goods for his own gain, is strongly presumptive of a deliberate intention to cheat his creditors. But, where the sale is shown to have been effected according to the usual course of the debtor's affairs, that is evidence tending to show its validity. Killam v. Peirce, 153 Mass 502, 27 N.E. 520; Leighton v. Morrill, 159 Mass. 271, 34 N.E. 256. It is not, therefore, surprising that in response to further instructions, accompanied by a question to them after they had returned into court, and before the general verdict was...
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