Little v. Fleishman
| Decision Date | 03 January 1919 |
| Docket Number | 259. |
| Citation | 98 S.E. 455,177 N.C. 21 |
| Parties | LITTLE v. FLEISHMAN ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Wake County; Calvert, Judge.
Action by J. C. Little, receiver, against Benjamin Fleishman and others. From judgment for defendants, plaintiff appeals. Affirmed.
Where failing corporation sold stock of goods and good will for benefit of creditors, title passed by delivery of the goods to buyers in seller's store, and by buyers' placing servant in charge, price being fixed, and parties having gone to another city to pay money to seller's creditors.
The action was brought by the plaintiff, as receiver of the Raleigh Department Store, Inc. (hereinafter called the Store), to recover of the defendants the sum of $2,621.56 which he alleges to be due to him as receiver, it being the difference between the net proceeds of the sale of a stock of goods sold by him officially, viz. $7,427.10, and the price of the stock which as he alleges, the defendant agreed to pay the Store for the same.
The defendants denied the liability, and averred that the contract of sale had not been completed; that the stock of goods were sold in bulk by the Store, and the provisions of Revisal, § 964a, were not complied with; that the creditors by their own unauthorized and illegal action, defeated the consummation of the contract by taking the goods from the possession of the defendants' servant, who had been placed in charge by them; that while the parties, that is the defendants and the Store, were engaged in closing up the contract, and before the purchase price had been paid, plaintiff, at the instance and request of some of the creditors, was appointed receiver, in an action commenced by them in the superior court of Wake county, and took the goods from the possession of defendants' caretaker, afterwards selling the same for a greatly reduced price at public auction. Defendants claimed that not only were the goods contracted to be sold to them, but also the good will of the Department Store, which at the time was a going concern, although somewhat embarrassed financially; that by the plaintiff's action, as above described, the main purpose of the parties in making the contract of sale was altogether frustrated, and the contract became valueless to the defendants, the consideration upon which it was based having utterly failed.
Plaintiff contended that he took possession of the goods for the purpose of tendering them to the defendants, in furtherance of a due execution of the contract, intending that, upon payment of the price by the defendants, to wit, $10,308.68, to deliver the goods to them, and that afterwards, on the 11th or 12th of September, 1918, the court made an order to that effect. The price, by agreement of the parties to the contract, was to be paid in the city of Baltimore, and, while in that city for the purpose of arranging some matters with a view to the payment of the money, the suit was brought in Raleigh, and the receiver appointed; whereupon the defendants, as soon as notified of the receivership, renounced the trade, and refused to proceed further with the contract and rescinded the same. This was done on September 4, 1918, and it was afterwards, on September 11, 1918, that the court, by its order, appointed plaintiff permanent receiver, and directed him to tender the goods to the defendants. Plaintiff, as temporary receiver, had on August 31, 1918, been given "authority to take possession of the property, assets, and effects of the Raleigh Department Store, Inc., and hold the same subject to the further order of the court," and plaintiff, on September 1, 1918, qualified as receiver, and took possession of the goods, as before stated.
The parties waived a jury trial, and consented that the judge should find the facts, which was done, the findings being mainly in favor of the defendants, and the judgment being rendered, upon the facts, for them. Other facts will be found in the opinion of the court. Plaintiff appealed.
J. H. Pou and John W. Hinsdale, both of Raleigh, for appellant.
R. W. Winston and J. Crawford Biggs, both of Raleigh, and Baldwin & Sappington, of Baltimore, Md., for appellees.
WALKER, J. (after stating the facts as above).
The goods were delivered to the defendants at Raleigh, where the business of the Raleigh Department Store had been conducted, and remained in the store under the care of a servant of the defendants. The plaintiff contends, in two of its assignments of error and in its brief, that the title thereby passed to the defendants. If this be so, the receiver had no right to take possession of the goods, nor did the court have any power to make the order requiring him to do so. If the title was in defendants, even the plaintiff, acting as receiver and under an order of the court in a suit to which defendants were not parties could not seize the goods. He could not do so for the purpose of tendering them to the defendants under the contract of sale, because he could not tender defendants' own goods to them; and besides, when he seized the goods, no order of the court requiring a tender to be made had been granted. It may further be said that no tender was necessary, as the goods were already in the possession of defendants, and the defendants, as we have stated, contended that the title had thereby vested in them. The only remedy of the receiver was to demand payment of the price, and, if the demand was refused, to sue for its recovery. It was a very simple remedy, as the defendants were not only perfectly solvent, but, to use plaintiff's own description of their financial rating, as set forth in his brief, they were, as a firm, a "strong, wealthy, and successful concern."
A court cannot, by ordering a thing to be done, such as the seizure of property, make it lawful for its receiver to do it, when the property belongs to another, and not to the insolvent concern whose assets only are subject to its custody. It exceeds its jurisdiction, and its order is invalid and confers no lawful authority to seize the property. In this view of the case, that the title passed to the defendants when it received possession of the goods of the Raleigh Department Store, Inc., the court, by its order and through its receiver, having caused the property to be wrongfully taken, would not permit its receiver to recover the price of the goods, or any part of it, in a case like this, because, by seizing and selling them, it has destroyed the subject-matter of the contract, and worked a failure of the consideration upon which the promise to pay the price of the goods was based. It would be unjust and inequitable to permit a recovery under such circumstances. The property was taken innocently, as no wrong was intended, but in a legal sense it did not affect the defendants' right to it, though they lost the possession.
Excluding from consideration, at present, the bulk sales law, and its effect upon this contract, we are disposed to agree with the plaintiff's contention, as stated in his brief, that the title did pass by the delivery of the goods to the defendants in the store at Raleigh, and their exercise of the right of ownership by placing their servant in charge of them, the price being fixed, and the parties having gone to Baltimore for the purpose of paying the money there to the creditors of the Department Store. Phifer v. Erwin, 100 N.C. 69 6 S.E. 672; Wittkowsky v. Wasson, 71 N.C. 451; McArthur v. Mathis, 133 N.C. 143, 45 S.E. 530; Foley v. Mason, 6 Md. 37; Leedom v. Philips, 1 Yeates (Pa.) 527. There was nothing to be done by the buyer or seller, as a condition precedent or concurrent, upon which the passing of the property in the goods depended. When there is such a condition, and it is unperformed, the title, of course, will not pass, even though the goods may have been left in the possession of the buyer; and this is according to the third rule of Mr. Benjamin in his Treatise on Sales, 318, as explained in Hughes v. Knott, 138 N.C. at page 110, 50 S.E. 586. The buyers had the goods and were ready to pay the price. This but exhibits more clearly the mistake in seizing the goods which belonged to...
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