99 Neb. 24 | Neb. | 1915
Lead Opinion
On July 9, 1912, Chambers & Company, who for some years prior thereto had been in the retail merchandise business at Atkinson, finding themselves unable to meet their liabilities, executed and delivered to their principal creditor, C. Shenkberg Company, a corporation of Sioux City, Iowa, an instrument reciting that they “hereby sell, grant, convey and assign” unto the second party their stock of merchandise, consisting of dry goods, groceries, boots and shoes, etc.; also the furniture and fixtures used in connection with the stock. The instrument also transferred and assigned to the second party all their book accounts, bills receivable, and evidences of indebtedness. They constituted the second party their “agent, trustee, and attorney in fact, and in their place and stead, to take over, manage, run, and to continue said business, or to sell at public or private sale” all or part of the stock, fixtures and personal property conveyed. It was provided that, if the second party deem it advisable, they may keep up the stock by the purchase of new goods. The instru
Defendant insists that plaintiff is not in a position to question the judgment on appeal, for the reason that in his motion for a new trial his only assignment was that the judgment “was erroneous because it was contrary to law.” The office of a motion for new trial is to give the •trial court an opportunity to correct errors. When the record is complicated and many questions are presented and decided upon the trial, an assignment in the motion for new trial that the judgment is contrary to law may not challenge the attention of the court to the errors relied upon and give opportunity to correct them. It is generally held that such assignment is not sufficient to call attention to the sufficiency of the evidence to support the judgment. When, however, the record shows that there is no substantial conflict in the evidence, and that the sole question is whether upon the conceded facts the law will support the judgment, and that the court must have considered the sufficiency of the evidence in passing upon the motion for new trial, this court upon appeal should also consider that question and determine the case accordingly. Technical rules intended to secure the substantial rights of the parties are not to be strictly enforced when it is manifest that their application-would defeat, rather than promote, justice. This matter is more fully discusse'd in the opinion in Waxham v. Fink, 86 Neb. 180.
Defendant also contends the assignment constitutes a sale in bulk and is void as to creditors, for the reason that it was made without compliance with the provisions of section 2651, Rev. St. 1913. This section provides: “The • sale, trade or other disposition in bulk of any part or the whole of a stock of merchandise, otherwise than in the
A similar question was considered by tbe supreme court .of Massachusetts (in which state, as in this, debtors may lawfully prefer creditors) in a case where an insolvent debtor in that state transferred his stock in bulk to a bona fide creditor without compliance with tbe bull?: sales law of that state, which is substantially tbe same as that of this. After holding that tbe transfer might be valid by way of accord and satisfaction as between tbe debtor and creditor themselves, tbe court say:
*29 “But the transaction had another phase, so far at least as respected Kopec’s other creditors. There was a change in the ownership of the property, which, if Adalid as against them, freed from liability property which theretofore could have been attached by them; and thus their security was impaired. While it is true that in its strictest sense a sale is a transfer of personal property in consideration of money paid or to be paid, still in the interpretation of statutes it is often held to include barter and any transfer of personal property for a valuable consideration. * * We are of the opinion that the statute in question was intended to prevent a trader from disposing of his stock of merchandise in a manner outside his usual course of business, so that the same should be taken away from his creditors in general, and that the transfer under the circumstances disclosed in this case was a sale, although made to a creditor.” Gallus v. Elmer, 193 Mass. 106.
Construing a similar statute, the supreme court of Georgia, in Sampson v. Brandon Grocery Co., 127 Ga. 454, said: “Construing the act of 1903 and section 2697 together, we may easily reach The conclusion that sales of stock in bulk by a debtor to a creditor, in extinguishment of his debt, in whole or in part, are still permissable, but.that such sales are null and void unless there be compliance with the terms of the act of 1903.” (Bulk sales law.) In discussing the matter the court suggested that, if the value of the goods exceeded the amount of the debt and the excess was paid in cash or by the giving of a promissory note, could it be said that such a transaction would not be within the statute? And that, if such a sale for acquittance of the debt and an additional consideration comes within the act, why should a sale in extinguishment of the debt be excluded?
To the same effect are the cases of Humphrey v. Coquillard Wagon Works, 37 Okla. 714, and Youghiogheny & Ohio Coal Co. v. Anderson, 152 N. W. (Mich.) 1025. The object of the statute is pointed out in the cases followed,
It has been suggested that by remaining silent and making no objections to the assignment and sale the defendant was estopped to proceed against the goods. But there could be no estoppel, because by the very terms of the assignment no creditor could be bound by it unless he filed a claim with the trustee, and, in addition, filed a release of the debtor for all liability for his debt in excess of any dividend received. Under such a provision notice by a creditor that he did not or would not agree to the assignment was unnecessary. His silence could not give consent. On the contrary, it clearly indicated his nonassent and his purpose to rely on the legal proceedings he ha'd instituted. The purchaser at the trustees sale was bound to take notice of the title he was buying and of the limitations of the instrument. . He could not be an innocent purchaser under the circumstances.
The judgment of the district court is
Affirmed.
Concurrence Opinion
concurring.
The dissent of Judges Fawcett and Sedgwick might be sfipported without doing any great violence to the principles of law applicable to the facts. The justice of the plaintiff’s claim has much to commend it. This is one of those cases where arguments may be found on either side. When Chambers & Company found themselves unable to meet their liabilities, they executed and delivered to one of
It is further said in the majority opinion that the assignment constitutes a sale in bulk, and is void as to creditors, for the reason that it was made without compliance with the provisions of section 2651, Eev. St. 1913. The act in question provides for an inventory of the goods and a list of the creditors and the giving of notice to such creditors. The statute prohibits a disposition in bulk “otherwise than in the ordinary course of trade.” The appellant claims that in this state it is lawful for a debtor to prefer any one or more of his creditors; that in this case the assignment was made in good faith, with no intention of evading the provisions of the law; and that it is not in violation of the spirit of the law. It will be noticed that
It is said in the majority opinion that the statute in question was intended to prevent a trader from disposing of his stock of merchandise in a manner outside of his usual course of business. I do not think the bulk sales law is in any way applicable to this case. I do not think it is required that it should be considered. If the' property was sold and the defendant stood by while the trustee sold it and made no objection, it is in no condition to levy on the stock of goods for the satisfaction of his judgment, unless it in some way indicated that the arrangement made was not acceptable to it. If it did that, and executed no release, and did not indicate in any other way that it accepted the manner of settlement proposed, then it was at liberty to take its judgment and cause a levy to be made upon the property. It did that, and the property was taken away from the sheriff by a writ of replevin and by one who was a party to the execution of the transfer. As the defendant did not acquiesce in the arrangement made and did not release the debtors or agree to release them, it is not bound. The defendant could not be estopped, because it could not be bound unless it agreed to the contract made. When the defendant did nothing tending to show its consent to the agreement, it thereby indicated that it did not assent. Something affirmative was required of it before it could be bound.
The purchaser at the trustee’s sale could only take such title as his grantor had to give him. In this case the grantor had no title because of the infirmity of the proceedings and the failure of all of the creditors to come into the arrangement and join in the contract. The purchaser therefore is without title. He cannot claim to be an innocent purchaser. He knew that there was a defect in the title.
Dissenting Opinion
dissenting.
A debtor cannot compel his creditors “to accept a share of the proceeds of the firm assets.” The majority opinion ably and laboriously establishes that proposition.' A debtor may induce his creditors to agree to a fair and equitable distribution of all the assets. If a creditor consents to a sale of all of the assets of his debtor at public auction, and a purchaser at such sale has reason to believe and does believe that the -creditor has consented to the sale, and so pays full value for the assets, such creditor ought not after-wards to be allowed to assert any claim against the goods so purchased. There is apparently no controversy as to the facts in the case. The business of the debtor was in a very bad condition. There were about 40 creditors, one of whom had a claim more than the total value of the assets. Some of the creditors, including this defendant, had begun litigation on their claims. The debtor could take advantage of the bankruptcy law, and so compel all creditors to take a pro rata portion of the assets and cancel their claims. The expenses of such proceedings would exhaust substantially all of the assets and leave little or nothing for any creditor. It was thought that the creditors would, under the circumstances, agree to a more reasonable remedy; whether they had suits pending or had judgments or had taken no action on their claims coul'd make no difference. Every other creditor was fully notified of every step in the proceedings. Other creditors who had suits pending also consented to the sale at auction by making no objection to the proceedings. When they learned of the transfer in trust for all creditors, they might at once have attached the goods, or if they remained silent with full notice of the contemplated sale, and so estopped themselves to claim the property itself, instead of the proceeds thereof, they might still have attached the proceeds in the
In Nebraska a man can assign his property for his creditors without complying with the assignment act. If he does, it will be valid, unless it is fraudulent. That is, unless he attempts directly or indirectly to keep some of the property for himself. If he does that it is fraudulent and void. If it is all to go to his creditors, it makes no difference whether he treats them all alike or not, since he has the right to prefer creditors. If he assigns to one creditor
The questions in our case are: (1) Can the creditors and the debtor agree to sell the debtor’s property and divide the proceeds prorated among the creditors? (2) If the debtor proposes to do so, and asks the creditors to agree that he may, and 39 out of 40 creditors agree to it, do the common rules of estoppel apply to the fortieth creditor who allows the others to suppose that he consents also? (3) Will a purchaser at the sale who pays full value for the property, supposing that the creditors are selling it, be protected in his title, as against a creditor who purposely allows' the purchaser to suppose that as one of the creditors he is making such sale?
Dissenting Opinion
dissenting.
In addition to what is said by Judge Sedgwick in his dissenting opinion, I desire to suggest the following: The bulk sales law was designed to prevent the fraudulent secret selling of a stock of merchandise by a failing debtor, for a consideration paid to the debtor, and thus fraudulently taken from his creditors. The purpose of the statute was to require notice to the creditors before any transfer could be made outside of the regular course of business. The transaction by ■ Chambers & Company, in turning their stock and business over to C. Shenkberg Company, was not a sale, nor a mortgage, nor an assignment for the benefit of creditors under the statute. It amounted to nothing more than the constituting of C. Shenkberg Company as their trustee for the purpose of making a sale and distributing the proceeds thereof among their creditors. There never was a sale of the stock of Chambers & Company until the public sale made by C. Shenkberg Company to plaintiff. Of this sale all of the creditors of Chambers & Company had received due notice