Patterson v. Peaslee-Gaulbert Co.

• Decision Date: 16 February 1917
• Citation: 174 Ky. 47,191 S.W. 670
• Parties: PATTERSON v. PEASLEE-GAULBERT CO.
• Court: Kentucky Court of Appeals

191 S.W. 670

174 Ky. 47

PATTERSON v. PEASLEE-GAULBERT CO.

Court of Appeals of Kentucky.

February 16, 1917

Appeal from Circuit Court, Nelson County.

Action by the Dwiggins Wire Fence Company against J. W. Edwards and H. S. Patterson, in which the Peaslee-Gaulbert Company and others intervened. Judgment for interveners, and defendant Patterson appeals. Reversed and remanded, with directions.

J. F Combs, of Shepherdsville, for appellant.

John A Fulton, E. N. Fulton, and O. W. Stanley, all of Bardstown for appellees.

SAMPSON J.

This is the second appeal of this case. The opinion on the first appeal may be found in Dwiggins Wire Fence Co. v Patterson, 166 Ky. 278, 179 S.W. 224.

The original action was styled Dwiggins Wire Fence Company v. J. W. Edwards and G. S. Patterson, and sought to recover upon five separate notes of $200 each, alleging that the maker of the notes, J. W. Edwards, was a merchant at Boston in Nelson county, Ky. and that the defendant Patterson was his secret partner in the business, or, if not a partner, then Edwards had attempted to make a sale in bulk of the entire stock of merchandise to Patterson, without first giving the notice to creditors required by section 2651a, Kentucky Statutes. This statute declares that a sale of a stock of merchandise in bulk, or otherwise than in the ordinary and usual course of trade, is and shall be fraudulent and void, as against creditors of the seller, arising out of said stock of merchandise, unless the purchaser, five days before the consummation of the sale, make inquiry to ascertain the names and addresses of the creditors of the seller, and shall notify, or use reasonable diligence as set forth in the statute to notify, each of said creditors of the proposed sale in bulk.

In April, 1914, defendant Edwards, then conducting a general store at the town of Boston, Nelson county, sold and transferred his entire stock to the defendant Patterson without complying with the provisions of section 2651a, Ky. Stat., requiring the purchaser, at least 5 days before the consummation of the sale, to make inquiry of the seller to ascertain the names of his creditors and their post office address, and give notice of his intention to purchase the property to said creditors. On May 20, 1914, the original action of Dwiggins Wire Fence Company against Edwards and Patterson was filed in the Nelson circuit court, charging a sale in bulk of the stock of goods, and asserting that Patterson, as purchaser of the goods, held the same for the use and benefit of all of the creditors of Edwards, and that Patterson was responsible to all creditors of Edwards, including the Dwiggins Wire Fence Company for the value of the entire stock of goods. The lower court upon a hearing adjudged the Dwiggins Wire Fence Company entitled to recover the entire amount of the debt from Edwards, but held that Patterson, the purchaser in bulk of the stock of goods, was liable only for the value of the goods in stock at the time of the transfer, which were furnished by the wire company. From this judgment the wire company appealed, and Patterson prosecuted a cross-appeal. This court affirmed the case upon the cross-appeal, and reversed it upon the original appeal, holding that the view taken by the trial court gave the statute too narrow a construction, and that a creditor, such as the Dwiggins Wire Fence Company, was entitled to a lien upon the entire stock of goods transferred, but a superior lien to other creditors only upon that part of the merchandise which was originally furnished by it to the merchant Edwards, and transferred by him to Patterson.

Upon the filing of the mandate in the lower court, Peaslee-Gaulbert Company and 42 other creditors of the merchant Edwards filed in the office of the clerk of the circuit court a petition to intervene and to be made parties to the original action, styled Dwiggins Wire Fence Company against Edwards and Patterson, and set up in separate paragraphs their several claims against the seller Edwards and the purchaser in bulk, Patterson, alleging that Patterson held the goods for the use and benefit of these interveners as well as the original plaintiff Dwiggins Wire Fence Company. After an amended petition had been filed by the interveners, and other orders made which it is unnecessary here to recite, the defendant Patterson filed his answer and reply to the petition and answer of the interveners Peaslee-Gaulbert Company and others, and denied responsibility upon either of the claims, and denied that he had knowledge or information sufficient to form a belief that these several petitioners, or any one of them, had furnished goods to Edwards, or that Edwards was indebted to either of them in any sum. In a second paragraph the defendant Patterson pleaded limitation against each of the intervening petitioners, in bar of their right of action, stating that the defendant J. W. Edwards, who conducted the store at Boston, Ky. sold and transferred to the defendant Patterson, on the ______ day of April, 1914, and more than 90 days before the commencement of the action by these intervening petitioners, the entire stock of goods upon which a lien was sought by these 40 odd claimants and creditors of Edwards. A demurrer was interposed by Peaslee-Gaulbert Company and the other intervening petitioners to the second paragraph, the plea of limitation, upon the ground that since the Dwiggins Wire Fence Company had instituted this action against Edwards and Patterson, charging a sale in bulk of the stock of goods and asserting a lien upon the entire stock for the use and benefit of the Dwiggins Wire Fence Company and all other creditors of Edwards, and this action was brought within 90 days of the consummation of the sale, as required by subsection 2, § 2651a, Ky. St., the claim of Peaslee-Gaulbert Company and others, being presented by intervening petition in the original suit, and not by independent action, was not barred by the statute of limitation, providing 90 days in which to commence such an action.

Upon a hearing the lower court sustained the demurrer to the plea of limitation, to which the defendant Patterson objected and excepted, and, failing to plead further, judgment was entered for the full amount of each of the claims set forth in the intervening petition, and the entire stock of goods was adjudged subject to the payment of these claims, and a sale was...