John P. Squire & Co. v. Tellier
| Decision Date | 07 January 1904 |
| Citation | 185 Mass. 18,69 N.E. 312 |
| Parties | JOHN P. SQUIRE & CO. v. TELLIER et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Moses Holbrook and
M. Sumner Holbrook, for plaintiffs.
Henry A. Richardson and Alfred W. Putnam, for defendant Hudon.
A. E Pillsbury and W. M. Morgan, for defendant Boston Credit Men's Ass'n.
The only question for our consideration on the demurrer to this bill is whether St. 1903, p. 389, c. 415, is constitutional. The first section of this statute is as follows: 'The sale in bulk of any part or the whole of a stock of merchandise other than in the ordinary course of trade and in the regular and usual prosecution of the seller's business, shall be fraudulent and void as against the creditors of the seller, unless the seller and purchaser, at least five days before the sale, make a full detailed inventory showing the quantity, and so far as possible with exercise of reasonable diligence, the cost price to the seller of each article to be included in the sale, and unless the purchaser demands and receives from the seller a written list of names and addresses of creditors of the seller, with the amount of indebtedness due or owing to each, and certified by the seller under oath to be to the best of his knowledge and belief a full accurate and complete list of his creditors and of his indebtedness; and unless the purchaser shall at least five days before taking possession of such merchandise or paying therefor, notify personally or by registered mail every creditor whose name and address are stated in said list, of the proposed sale and of the price terms and conditions thereof.' The second section exempts from the provisions of the act sales by executors administrators, receivers, assigness for the benefit of creditors, trustees in bankruptcy, and public officers acting under judicial process. This is a pretty stringent regulation of a certain class of sales. The purpose of the Legislature evidently was to provide for creditors protection against a class of sales which are frequently fraudulent, and which leave creditors with no means of collecting that which they ought to receive. The statute deals only with sales in bulk of a part or the whole of a stock of merchandise, which are not made in the ordinary course of trade and in the regular and usual prosecution of the seller's business. It does not interfere with the transaction of ordinary business, but relates to unusual and extraordinary transfers. In substance it declares that a sale of this kind shall not be made without first giving to creditors an opportunity to collect their debts, so far as the property to be sold might enable them to collect, or without subsequently making satisfactory provision for the payment of these debts. A sale made in violation of the statute is void only as against creditors, and, if the vendor's debts are paid, the sale cannot be interfered with. A purchaser, to be safe, has only to see that the vendor's creditors are provided for. The vendor may sell freely, without regard to the statute, if he pays his debts. The Legislature, when contemplating this legislation, had occasion to consider and balance against each other the general right of property owners to make contracts and dispose of their property, and the general right of creditors to be paid, and to have reasonable opportunities secured to them for the collection of their debts. That this is within a class of legislation for which there is constitutional authority is too plain for question. The object of it is like that of our numerous statutory provisions which authorize attachments on mesne process, and establish courts with all the necessary machinery for the collection of debts. The statute requires of the vendor nothing that cannot be done with reasonable effort. If he is unable or unwilling to pay his debts, it puts a substantial obstacle in his way when he wants to dispose of his stock of merchandise in bulk and to receive payment for himself. But under such circumstances the property in most cases ought not to be sold in bulk without first giving creditors an opportunity to consider what ought to be done with it. The Legislature undoubtedly assumed to act under what is termed broadly the police power, and more specifically to act under the authority directly conferred by part 2, c. 1, § 1, art. 4, of the Constitution of Massachusetts, which permits them 'to make, ordain and establish all manner of wholesome and reasonable orders, laws, statutes and ordinances * * * as they shall judge to be for the good and welfare of this commonwealth,' etc. Their power to regulate and limit the making of contracts and the use and disposition of property is very broad. This is illustrated by the statutes found in titles 12 and 13 of our Revised Laws, comprising chapters from 56 to 74,...
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