Watkins v. Angus

• Decision Date: 14 February 1928
• Docket Number: No. 17.,17.
• Citation: 217 N.W. 894,241 Mich. 690
• Parties: WATKINS v. ANGUS (NOOR, Garnishee).
• Court: Michigan Supreme Court

241 Mich. 690

217 N.W. 894

WATKINS

v.ANGUS (NOOR, Garnishee).

No. 17.

Supreme Court of Michigan.

Feb. 14, 1928.

Case-Made from Circuit Court, Muskegon County; John Vanderwerp, Judge.

Action by Raymond H. Watkins against Gaylord B. Angus, in which John W. Noor was made garnishee. From the judgment, garnishee appeals on a case-made. Judgment affirmed.

Argued before the Entire Bench.

Alexis J. Rogoski, of Muskegon, for appellant.

Harry D. Reber, of Fremont, for appellee.

WIEST, J.

The question: If a debtor, without compliance with the Bulk Sales Law, sells a half interest in his business to another who becomes his partner, and later, and again without compliance with the Bulk Sales Law, sells out to his partner, may his creditors hold the purchaser in garnishment proceedings for the value of the merchandise received?

The answer: Yes.

The facts: Gaylord B. Angus conducted a retail coal business. In March, 1924, he was indebted to plaintiff, had about $500 worth of coal on hand, sold a half interest in the business and merchandise to defendant John W. Noor, and the seller and purchaser became equal partners and continued the business. In August, 1925, the partnership had $1,500 worth of coal on hand and Noor purchased the interest of Angus. The provisions of the Bulk Sales Law (C. L. 1915, § 6346) were not complied with at any time. Plaintiff obtained judgment against Angus in the sum of $1,289.44, and sued out a writ of garnishment against defendant Noor. The garnishee was examined in court and adjudged liable to respond to plaintiff for one-half the value of the coal in stock at the time of each purchase. Noor paid some other creditors of Angus to an amount, he claimed, in excess of the value of the coal, but how much was so paid before the writ was served and how much after service was not shown. The garnishee defendant, by case-made, reviews the judgment rendered against him for $1,000.

Claims of garnishee defendant: ‘(1) The transfer by the owner of a stock of merchandise and fixtures of an interest in his business to another is not a sale, transfer, or assignment in bulk within the purview of the ‘Bulk Sales Law.” Fixtures are not involved in this case. (2) The disclosure and examination of the garnishee defendant failed to show unqualified liability on the part of the garnishee defendant; and are, therefore, insufficient to support a judgment for plaintiff. (3) In no event was plaintiff entitled to recover a judgment for the full value of all merchandise received by the garnishee defendant from the principal defendant.’

The law: If defendant Noor is liable by reason of noncompliance with the Bulk Sales Law then garnishment was proper procedure. Spurr v. Travis, 145 Mich. 721, 108 N. W. 1090,116 Am. St. Rep. 330,9 Ann. Cas. 250;Musselman Grocer Co. v. Kidd, Dater & Price Co., 151 Mich. 478, 115 N. W. 409;Marquette County Savings Bank v. Koivisto, 162 Mich. 554, 127 N. W. 680;National Grocer Co. v. Plotler, 167 Mich. 626, 133 N. W. 493.

The statute (C. L. 1915, § 6346) provides:

‘The sale, transfer or assignment, in bulk, of any part or the whole of a stock of merchandise, or merchandise and the fixtures pertaining to the conducting of said business, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the business of the seller, transferor or assignor, shall be void as against the creditors of the seller, transferor, assignor, * * *’

-unless certain specified conditions are observed. In the first sale of a half interest and formation of the partnership, there was a transfer in bulk of a part of the stock and merchandise, and such was not in the ordinary course of trade or the regular and usual transaction of the business of the seller and, having been made in violation of the Bulk Sales Law, was void as to creditors and the purchaser became accountable to the creditors of the seller to the value of the interest in the merchandise so purchased. See Virginia-Carolina Chemical Co. v. Bouchelle, 12 Ga. App. 661, 78 S. E. 51, covering such a sale and formation of a partnership.

Authorities are at variance upon the question here presented; the divergence in some instances being attributable to language of particular statutes, in others to the adoption of strict or liberal construction, while in still others there is flat disagreement. We have examined the cases and, without citing all, will give our views.

Some courts consider the Bulk Sales Law as in derogation of the common law and therefore to be strictly construed (Smith-Calhoun Rubber Co. v. McGhee Rubber Co. [Tex. Civ. App.] 235 S. W. 321;Fairfield Shoe Co. v. Olds, 176 Ind. 526, 96 N. E. 592), but no court departs from the express provisions of the statute. We consider the law remedial and to be given such construction as will effectuate its clear purpose.

In Daly v. Sumpter Drug Co., 127 Tenn. 412, 155 S. W. 167, Ann. Cas. 1914B, 1101, it was urged, in behalf of the purchaser:

‘That a sale of a half interest in a stock of goods, where the purchaser contemporaneously becomes a partner therein with the seller, does not fall under the ‘Bulk Sales Law’ [Acts 1901, c. 133], and therefore he was not bound to comply with the terms of that law, and his purchase was not fraudulent in law.'

The court answered:

‘We are of the opinion that the case before us falls within the terms of the act. The language of the act is: ‘A sale of any portion of a stock of merchandise otherwise than in the ordinary course of trade in the regular and usual prosecution of the seller's business, or a sale of an entire stock of merchandise in bulk, shall...