The Faeth Company v. Bressie

• Decision Date: 10 March 1928
• Docket Number: 27,801
• Citation: 264 P. 1077,125 Kan. 425
• Parties: THE FAETH COMPANY, Appellee, v. B. L. BRESSIE, L. L. STEVENS, J. R. WALTON and ED STRAWN, Appellants
• Court: Kansas Supreme Court

264 P. 1077

125 Kan. 425

THE FAETH COMPANY, Appellee, v. B. L. BRESSIE, L. L. STEVENS, J. R. WALTON and ED STRAWN, Appellants

No. 27,801

Supreme Court of Kansas

March 10, 1928

Decided January, 1928

Appeal from Montgomery district court; JOSEPH W. HOLDREN, judge.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

FRAUDULENT CONVEYANCES--Bulk Sales Act--Sale Under Valid Mortgage. The bulk sales law (R. S. 58-101 et seq.) does not apply to a sale by mortgagee, made under the terms of a valid mortgage duly executed, delivered and recorded prior to the creation of the debt sought to be enforced under the provisions of the bulk sales law.

Walter S. Keith, Harold C. McGugin and Dallas W. Knapp, all of Coffeyville, for the appellants.

Harold Medill, of Independence, for the appellee.

OPINION

HARVEY, J.:

This action presents the question whether the bulk sales law (R. S. 58-101 et seq.) applies in the circumstances disclosed by the record.

The facts are substantially these: J. R. Walton was the owner of a building in Coffeyville equipped with counters, wall fixtures and shelving, and having a gasoline pump and air stands in front, used as an automobile garage. He also had a number of articles in the building spoken of as "equipment," consisting largely of tools, appliances and devices used in connection with the garage business, and seven used automobiles spoken of as "rental cars." On August 19, 1925, he entered into a written contract with B. L. Bressie and L. L. Stevens by which he sold to them the equipment and used automobiles above mentioned, and leased to them the building for a term of five years at a monthly rental of $ 225. There was executed between the parties an instrument called a "chattel mortgage and lease," which recited the sale of the equipment and used automobiles for $ 3,449.17, of which $ 2,000 was paid in cash and the balance, with interest thereon, was to be paid in three installments. It also provided for the lease and payment of rents, and specifically provided that Walton had a lien upon the property sold for the unpaid portion of the purchase price and for the rents, and the buyers and lessees were to keep the gas and air stands in good repair at their expense. It contained the provision, usual in chattel mortgages, that on condition broken, or if Walton should deem himself insecure, he might take possession of the property covered by the lien and sell the same at public or private sale. This chattel mortgage and lease was promptly recorded in the office of the register of deeds. Bressie and Stevens took possession of the building and the property sold. Later they paid the balance due, $ 1,449.17, and the automobiles named in the instrument were released from the lien. Later, B. L. Bressie sold his business to his partner, L. L. Stevens, who thereafter conducted the business under the name of The Stevens Motor Company. It is not contended, however, that the bulk sales law applied to this sale, for it does not apply to a sale of the interest of one partner in a business to the other. ( Schoeppel v. Pfannensteil, 122 Kan. 630, 253 P. 567. This case is cited and the doctrine approved by the supreme court of Iowa in The Peterson Co. v. Freeburn, 204 Iowa 644, 215 N.W. 746.) On April 13, 1926, Stevens advised Walton that he could no longer pay the rent on the building nor the damages to the gas pump. Walton then informed Stevens that he deemed himself insecure, and demanded possession of the equipment sold and of the leased premises, under the terms of his chattel mortgage and lease. Walton took possession thereof, and, in accordance with the provisions of the chattel mortgage and lease, which authorized him to sell the same at public or private sale, he did sell them to the defendant, Ed Strawn, and Strawn went into possession thereof.

The action was by plaintiff against Bressie and Stevens (Stevens was not served with summons), and also against Walton and Strawn, for the price of the two radios sold by plaintiff to Bressie and...