Wheeler & Motter Mercantile Co. v. Moon
| Decision Date | 15 June 1914 |
| Docket Number | 3388. |
| Citation | 141 P. 665,49 Mont. 307 |
| Parties | WHEELER & MOTTER MERCANTILE CO. v. MOON. |
| Court | Montana Supreme Court |
Appeal from District Court, Park County; Albert P. Stark, Judge.
Action by the Wheeler & Motter Mercantile Company against L. T Moon, garnishee. Judgment for defendant, and plaintiff appeals. Reversed and remanded.
Frank Arnold, of Livingston, for appellant.
Fred L Gibson, of Livingston, for respondent.
Prior to March 15, 1911, the Hefferlin Mercantile Company, a domestic corporation, was engaged in the general retail mercantile business at Livingston. About July 10, 1911, the Wheeler & Motter Mercantile Company secured a judgment in the district court of Park county against the Hefferlin Mercantile Company, and W. N. and O. M. Hefferlin, and execution was issued thereon, but returned unsatisfied. Thereafter an alias execution was issued and served upon L T. Moon as garnishee, who answered that he did not owe the judgment debtors anything, and did not have in his possession or under his control any property belonging to them. Thereupon this action was instituted by the judgment creditor against Moon. In addition to the foregoing facts, the complaint charges that about March 15, 1911, the Hefferlin Mercantile Company sold its entire stock or merchandise in bulk to defendant, Moon, and to Anderson & Co. for an amount in excess of $5,000; that the purchasers immediately paid for the goods and took possession; that before paying the purchase price, defendant, Moon, did not demand, obtain, or receive from the seller, its officers, or agent a verified statement containing the names of the creditors of the seller, "and said Hefferlin Mercantile Company did not furnish a written statement sworn to by said Hefferlin Mercantile Company, or any of its officers, or its managing agent, as provided in sections 6131, 6132, 6133, 6134 and 6135 of the Civil Code, Revised Codes of Montana 1907, of the names and addresses of all the creditors of said Hefferlin Mercantile Company to whom said Hefferlin Mercantile Company was then and there and at the time of the sale indebted, together with the amount of the indebtedness then and there due and owing or to become due or owing from said Hefferlin Mercantile Company to such creditors"; that defendant, Moon, did not pay, or see to it that the purchase money was applied to the payment of, the bona fide creditors of said Hefferlin Mercantile Company, share and share alike, or at all; that at the time of the purchase of said stock of goods by defendant, Moon, plaintiff was, and for a long time prior thereto had been, a bona fide creditor of said Hefferlin Mercantile Company, on account of goods, wares, and merchandise sold and delivered to said company for conducting its business; that at the time of said sale the value of the goods purchased by defendant, Moon, was greatly in excess of plaintiff's claim; that at the time of said sale each of said judgment debtors was insolvent; and that by reason of these facts such sale by the Hefferlin Mercantile Company to Moon was fraudulent and void. It is further alleged that no part of plaintiff's claim has ever been paid. The prayer of the complaint is that the pretended sale be set aside, and that defendant, Moon, be required to account to plaintiff for the value of the property so pretended to have been purchased by him, or the proceeds thereof if any of said goods have been sold, or so much thereof as may be necessary to satisfy plaintiff's judgment, and for general relief. To this complaint a general demurrer was interposed and sustained, in an order in which the court indicated that the reason for its ruling was that the act known as the "Bulk Sales Law," is unconstitutional. Plaintiff, declining to plead further, suffered judgment to be entered against it, and appealed.
Our Bulk Sales Law is chapter 145, Laws of 1907, incorporated in the revision as sections 6131, 6132, 6133, 6134, and 6135 of the Revised Codes. Section 6131 provides:
"It shall be the duty of every person who shall bargain for, or purchase any stock of goods, wares or merchandise in bulk, for cash, or on credit, before paying to the vendor, or his agent or representative or delivering to the vendor, or his agent, any part of the purchase price thereof, or any promissory note or other evidence therefor, to demand of and receive from such vendor, or agent, or if the vendor or agent be a corporation, then from the president, vice president, secretary or managing agent of such corporation, a written statement, sworn to substantially as hereinafter provided, of the names and addresses of all the creditors of said vendor, to whom said vendor may be indebted, together with the amount of indebtedness due or owing, and to become due and owing, by said vendor to each of such creditors; and it shall be the duty of said vendor, or agent, to furnish said statement, which shall be verified by an oath to the following effect."
And this is followed by a form of verification. Section 6132 provides that if the purchaser at such bulk sale shall pay for the goods without having demanded and received the statement mentioned in the preceding section "and without paying, or seeing to it that the purchase money of the said property, is applied to the payment of the bona fide claim of the creditors of the vendor as shown upon such verified statement, share and share alike, such sale, or transfer shall be fraudulent and void." Section 6133 provides a penalty for making a false statement. Section 6134 defines a bulk sale as follows:
"A sale and transfer in bulk in contemplation of this act, shall be deemed to be any sale or transfer of an entire stock of goods, wares or merchandise out of the usual or ordinary course of business or trade of the vendor, or attempted to be sold or conveyed; provided, however, that if such vendor produces and delivers a written waiver of the provisions of this act from his creditors as shown by such verified statements, then in that case, the provisions of this act shall not apply."
And section 6135 contains this exemption:
"Nothing in this act contained shall apply to executors, administrators, receivers, or any public officer acting under judicial process."
Prior to 1900 an act of this character was practically unknown in the United States, but to-day nearly every state in the Union, as well as the District of Columbia, has one. These statutes differ somewhat in their phraseology, and vary in degree as to their stringency, but they all proceed upon the same general theory, are aimed at the same evil, and are so nearly alike in their provisions as to warrant the assumption that some efforts have been expended toward procuring uniform legislation upon the subject. The New York, Ohio, and Illinois acts were declared unconstitutional, generally upon the grounds that the subject-matter of the legislation is not within the police power; that these acts make an unwarranted classification, and therefore deny to certain persons the equal protection of the law, and deprive the owner of his goods without due process of law, in contravention of the guaranties of the fourteenth amendment to the Constitution of the United States, or like provisions found in the state Constitutions. Wright v. Hart, 182 N.Y. 330, 75 N.E. 404, 2 L. R. A. (N. S.) 338, 3 Ann. Cas. 263; Miller v. Crawford, 70 Ohio St. 207, 71 N.E. 631, 1 Ann. Cas. 558; Off & Co. v. Morehead, 235 Ill. 40, 85 N.E. 264, 20 L. R. A. (N. S.) 167, 126 Am. St. Rep. 184, 14 Ann. Cas. 435. The Utah act of 1901 (Laws 1901, c. 67) made no exemption of sales conducted by public officers or persons acting under court orders, and was held invalid (Block v. Schwartz, 27 Utah, 387, 76 P. 22, 65 L. R. A. 308, 101 Am. St. Rep. 971, 1 Ann. Cas. 550); while the Indiana act of 1903 (Laws 1903, c. 153) applied only to creditors who furnished merchandise or money to carry on the business, and for that reason was held unconstitutional (McKinster v. Sager, 163 Ind. 671, 72 N.E. 854, 68 L. R. A. 13, 106 Am. St. Rep. 268).
Statutes similar to our own have been upheld as valid legislative enactments in Washington, Massachusetts, Connecticut, Georgia, Oklahoma, Michigan, Tennessee, Minnesota, Nebraska, and in the federal court. McDaniels v. Connely Shoe Co., 30 Wash. 549, 71 P. 37, 60 L. R. A. 947, 94 Am. St. Rep. 889; Squire v. Tellier, 185 Mass. 18, 69 N.E. 312, 102 Am. St. Rep. 322; Walp v. Mooar, 76 Conn. 515, 57 A. 277; Young v. Lemieux, 79 Conn. 434, 65 A. 436, 20 L. R. A. (N. S.) 160, 129 Am. St. Rep. 452, 8 Ann. Cas. 452; Jaques & Tinsley Co. v. Carstarphen Warehouse Co., 131 Ga. 1, 62 S.E. 82; Williams v. Bank, 15 Okl. 477, 82 P. 496, 2 L. R. A. (N. S.) 334, 6 Ann. Cas. 970; Spurr v. Travis, 145 Mich. 721, 108 N.W. 1090, 116 Am. St. Rep. 330, 9 Ann. Cas. 250; Kidd, Dater & Price Co. v. Musselman Grocer Co., 151 Mich. 478, 115 N.W. 409; Neas v. Borches, 109 Tenn. 398, 71 S.W. 50, 97 Am. St. Rep. 851; Thorpe v. Pennock Mercantile Co., 99 Minn. 22, 108 N.W. 940, 9 Ann. Cas. 229; Appel Mercantile Co. v. Barker, 92 Neb. 669, 138 N.W. 1133; In re Gaskill (D. C.) 130 F. 235.
Young v. Lemieux, above, was removed to the Supreme Court of the United States, and there the contentions that these statutes violate the due process and equal protection clauses of the fourteenth amendment to the Constitution of the United States were swept aside as without merit. That the subject-matter of such acts is well within the police power of the states was declared by the Supreme Court to be too plain to require discussion. The position of the Supreme Court of Connecticut that the Connecticut act does not impose such restrictions upon transactions in merchandise in bulk as amount to unreasonable deprivation of property was sustained....
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