IN RE GOLD RUSH EAST, INC.

• Decision Date: 25 October 1985
• Docket Number: Adv. No. 85-1087-BKC-TCB-A.,Bankruptcy No. 84-01837-BKC-TCB
• Citation: 55 BR 126
• Parties: In re GOLD RUSH EAST, INC., Debtor(s). Daniel L. BAKST, Trustee, Plaintiff, v. Leonard VONO d/b/a Precious Metal Exchange, Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Florida

55 B.R. 126 (1985)

In re GOLD RUSH EAST, INC., Debtor(s) Daniel L. BAKST, Trustee, Plaintiff, v. Leonard VONO d/b/a Precious Metal Exchange, Defendant.

Bankruptcy No. 84-01837-BKC-TCB, Adv. No. 85-1087-BKC-TCB-A.

United States Bankruptcy Court, S.D. Florida.

October 25, 1985.

Leslie Gern Cloyd, West Palm Beach, Fla., for plaintiff.

Robert C. Furr, Boca Raton, Fla., for defendant.

MEMORANDUM DECISION

THOMAS C. BRITTON, Bankruptcy Judge.

The trustee seeks judgment for $6,108 against Leonard Vono based upon the avoidance of a bulk sale pursuant to 11 U.S.C. § 544(b) and Florida Statutes Ch. 676. The matter was tried on October 15.

The debtor operated a retail jewelry business next door to the defendant. In August, 1984 the debtor sold substantially all of its inventory and some equipment to the defendant for $5,108 and $1,000 respectively. It is undisputed that the sale was not in compliance with the Uniform Commercial Code-Bulk Transfers, Fla.Stat. Ch. 676.

U.C.C. § 6-104(1), Fla.Stat. § 676.104(1) provides:

"Except as provided with respect to auction sales (S.676.108), a bulk transfer subject to this Chapter is ineffective against any creditor of the transferor . . . "

The defendant's position is that failure to comply with this law raises only a rebuttable presumption of fraud which can be overcome by contrary evidence. I disagree.

I have not overlooked the case cited by defendant in support of its position. The court in Wasserburg v. Coastal Aluminum Products Construction Co., 167 So.2d 889, 890 (Fla.Dist.Ct.App.1964) reached its conclusion as to the effect of a purchaser's failure to comply with the bulk sales law in reference to Fla.Stat. § 726.04, which has since been repealed. In Merit Clothing Co. v. Lees, 218 So.2d 779, 781 (Fla.Dist.Ct.App.1969) the court drew specific attention to the repeal of Fla.Stat. §§ 726.01-726.06 and the adoption of the U.C.C. in Florida, effective January 1, 1967. In Merit, as in Wasserburg, the former law governed the transaction. In Wasserburg, at 891, the distinction was clearly drawn between the presumption of fraud under the former law as it existed then in Florida and the law in other states where the effect of non-compliance with bulk transfer statutes raises a conclusive presumption of fraud:

"Non-compliance with these statutes, even in the face of a showing of good faith, makes the transaction void."

The language in the current Florida statute that the non-complying bulk transfer is ineffective against any creditor of the transferor is conclusive. Therefore, it is not necessary to consider defendant's version of the facts regarding its intention and the debtor's purported emergency need for cash. A bulk sale transferee's good faith is no defense and strict accountability for the transferred goods is imposed. Murdock v. Plymouth Enterprises, Inc. (In re Curtina International, Inc.), 23 B.R. 969, 980 (Bankr.S.D.N.Y.1982).

Under § 544(b), the trustee may avoid any transfer that is voidable under applicable state law...