Swift & Co. v. Tempelos

• Decision Date: 12 November 1919
• Docket Number: 250.
• Citation: 101 S.E. 8,178 N.C. 487
• Parties: SWIFT & CO. v. TEMPELOS ET AL.
• Court: North Carolina Supreme Court

101 S.E. 8

178 N.C. 487

SWIFT & CO. v. TEMPELOS ET AL.

No. 250.

Supreme Court of North Carolina

November 12, 1919

Appeal from Superior Court, Wake County; Allen, Judge.

Action by Swift & Co. against James Tempelos, trading as the Busy Bee Café, and J. E. Befarrah. From a judgment against him the last-named defendant appeals. Error.

Goods and fixtures used in a restaurant conducted on the ordinary plan is not a "stock of merchandise" within the meaning of the Bulk Sales Act; such words being used in their common and ordinary acceptation, and meaning the goods or chattels which a merchant holds for sale, being equivalent to "stock in trade."--

The plaintiff alleged that the defendant James Tempelos, who owned and conducted an ordinary restaurant in the city of Raleigh, at No. 225 South Wilmington street, known as the "Busy Bee Café," was, at the commencement of this action, indebted to it, for goods sold and delivered, in the sum of $755.90, which has been due since November 12, 1917 and that, while that amount was still due to it, the defendant sold and conveyed to his codefendant, J. E Befarrah, all the property in said restaurant, consisting of canned goods and other groceries and food supplies, and the furniture and fixtures used in connection with the business for $2,300, and that the sale was made in bulk, contrary to the Bulk Sales Law (Gregory's Suppl. to Pell's Revisal, § 964a), which reads as follows:

"The sale in bulk of a large part or the whole of a stock of merchandise, otherwise than in the ordinary course of trade and in regular and usual prosecution of the seller's business, shall be prima facie evidence of fraud, and void as against creditors of the seller, unless the seller," etc.

Plaintiff therefore alleges that, as the requirements of that act were not complied with by the parties to the sale, it is void and of no effect against the creditors of the defendant James Tempelos. Plaintiff prays judgment for the debt, and that the property be seized and applied to its payment.

Defendant answered and denied the material allegations, except as to the debt due the plaintiff and the sale of the goods.

The jury returned the following verdict:

"(1) Is the defendant Tempelos indebted to the plaintiff, and, if so, in what amount? Answer: Seven hundred, fifty-five dollars and ninety cents ($755.90), and interest from November 12, 1917.

(2) What was the value of the goods purchased from Tempelos by the defendant Befarrah, other than the fixtures, that is to say:

1. What was the value of the eggs? Answer: Two hundred dollars ($200).

2. What was the value of all including the eggs? Answer: Four hundred fifty dollars ($450)."

The court gave judgment against J. E. Befarrah for $450, and directed that the $200, the value of the eggs, which had been attached, be applied to it, as a credit thereon. It also adjudged that the property which was sold by Tempelos to Befarrah be seized under execution, or other legal process, and sold, for the satisfaction of the balance of the judgment. There seems to have been no judgment for the debt of $755.90 against James Tempelos, but that may not be material in the view taken of the case, and may yet be entered below if desired, when the case is remanded for judgment there.

Defendant James Befarrah appealed from the judgment.

J. C. Little and Manning, Kitchen & Mebane, all of Raleigh, for appellant.

J. M. Broughton, of Raleigh, for appellee.

WALKER, J. (after stating the facts as above).

The question is whether the goods and fixtures used in a restaurant, which is conducted on the ordinary plan, is a "stock of merchandise" within the words and meaning of the Bulk Sales Act, copied above. We do not think that they come within that designation. The Bulk Sales Act is in derogation of the common law and must be strictly construed. Fairfield Shoe Co. v. Olds, 176 Ind. 526, 96 N.E. 592; Cooney v. Sweat, 133 Ga. 511, 512, 66 S.E. 257, 25 L. R. A. (N. S.) 758; Taylor v. Folds, 2 Ga.App. 453, 58 S.E. 683; 9 Current Law, 1511.

It is said that the word "merchandise" is usually, if not almost universally, limited to things which are ordinarily bought and sold, in the way of merchants, and as the subjects of commerce and traffic. Van Patten v. Leonard, 55 Iowa, 520, 8 N.W. 334; Burwell's Law Dictionary. The word came into use as a term descriptive of the goods and wares exposed to sale in fairs and markets. Passaic Mfg. Co. v. Hoffman, 3 Daly (N. Y.) 495-512. Speaking of an innkeeper, it is said in Toxaway Hotel Co. v. Smathers, 216 U.S. 439-446, 30 S.Ct. 263, 264 (54 L.Ed. 558), and it may be affirmed, with great force and significance of a restaurateur:

"To say that he buys and sells articles of food and drink is only true in a limited sense. Such articles are not bought to be sold, nor are they sold again, as in ordinary commerce. They are bought to be served as food and drink, and the price includes rent, service, heat, light, etc. To say that such a business is that of a 'trader' or a 'mercantile pursuit' is giving those words an elasticity of meaning not according to common usage."

The specific subject is treated with closer reference to our facts, and more at large, in the case of In re Wentworth Lunch Co., 159 F. 413, 86 C. C. A. 393, where it is held at pages 414, 415, of 159 Fed., at page 394 of 86 C. C. A.:

"The specific categories of the section are corporations engaged principally in printing, publishing, and mining, under which, clearly, a restaurant company does not fall. It remains to inquire whether it falls within the general categories of the section, viz., corporations engaged principally in manufacturing, trading, or in mercantile pursuits. In one sense of the word transformation of raw provisions into cooked dishes is manufacturing; but no one would ever speak of a cook as a manufacturer, and that category may be excluded. A 'trader' is one who buys to sell again, a definition which might apply to a saloon, but not to a restaurant where the proprietor does not sell the provisions he buys in the form in which he buys them, but changed by combination and cooking into edible dishes. The word 'mercantile,' though including trade, is larger, being extended to all commercial operations, so that we speak of shipping merchants, commission merchants, and forwarding merchants. Still we do not think that the dishes of a restaurant would ever be described as merchandise, or the proprietor as a merchant, or as engaged in mercantile pursuits. Printing and publishing companies were specified, presumably because they did not fall within the general categories, and we think the same reasoning applies to a restaurant company."

See, also, In re Chesapeake Oyster & Fish Co. (D. C.) 112 F. 960, and In re Excelsior Café Co. (D. C.) 175 F. 294, where it is said:

" 'A trader is one who buys to sell again, a definition which might apply to a saloon, but not to a restaurant'; and, further, the Circuit Court of Appeals in that opinion [Matter of Wentworth Lunch Co., supra] holds that the word 'mercantile' is not broad enough to cover the business of keeping a restaurant for the cooking and selling of food. * * * This case is the latest and the controlling decision upon the question."

The Supreme Court of Iowa had this question before it, and held that--

"The permission [in a contract] to use the building for 'any mercantile purpose,' granted pursuant to plaintiff's application, does not authorize the use for a restaurant, which is not a mercantile purpose. The word 'mercantile' means 'pertaining to merchants, or the business of merchants; having to do with trade, or the buying and selling of commodities; commerce.' Webster. The business of keeping a restaurant is in no sense commerce. If a restaurant be a mercantile establishment, the term is equally applicable to taverns, boarding houses, and the like, which cannot be admitted. The point demands no further attention. Permission to use a building for 'any commercial purpose' does not authorize its use as a restaurant." Garretson v. Merchants' & Bankers' Ins. Co., 81 Iowa, 727-729, 45 N.W. 1047.

This case was approved in Garretson v. Merchants' & Bankers' Ins. Co., 92 Iowa, 293, 60 N.W. 540.

The federal cases cited above arose under the Bankrupt Act (Act July 1, 1898, c. 541, 30 Stat. 544) but this fact did not in any degree influence the decisions of the courts. They considered the question as one of general law, and construed the statute according to the ordinary, natural, and popular meaning of its language, and as understood among merchants and traders. In re Kingston Realty Co., 160 F. 445, 87 C. C. A. 406; In re N.Y. & W. Water Co. (D. C.) 98 F. 711-713; In re United States Hotel Co., 134 F. 225, 67 C. C. A. 153, 68 L. R. A. 588. Referring to the business of the tavernkeeper, and quoting from Newton v. Trigg, 1 Showers, 96, Justice Lurton says in the Hotel Co. Case:

"He doth not get by buying and selling, but by the price and hire of his lodging, also by the profit on the ale of kitchen. The profits from his stables do not arise from hay alone, but from the standing." Gallagher v. De L. S. Co. (D. C.) 158 F. 381.

In that case the court said:

"I think it so clear that the corporation [engaged in keeping a boarding stable] was principally engaged neither in trading nor in mercantile pursuits that discussion is...