Smith v. Munizza

Nov 15, 1951

Appeal, 176

Reporters:: , ,
Before:: Rhodes

Opinion by Reno, J.,

In this еquity suit to enforce tbe Bulk Sales Act of May 23, 1919, P. L. 262, 69 P.S. §521, et seq., tbe chancellor found that defendant Munizza owed a balance of $1100 on a $1500 judgment note to plaintiff Smith, and that, without notifying Smith in accordance with the Act, Munizza sold his beer distributing business consisting of “the beer on hand, a list of customers, the office furniture, and a truck” tо defendant ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍Grasso, appellant. He decreed that “Grasso pay to plaintiff the sum of $1100 which amount is the amount due on the judgment note held by plаintiff.” (Emphasis added.) Grasso’s exceptions were dismissed by the court en bаnc, and he appealed.

The Bulk Sales Act, supra, §3, 69 P.S. §523, requires the purchaser of “any stock of . . . goods, toares, or merchandise of any kind and fixtures, in bulk” to notify the vendor’s creditors of the proposed sale 10 days before its final consummation. Without such notice the “sale or transfer shall be fraudulent and void, and such purchaser, . . . shall, at the suit of any creditor, be held liable to the creditors of the said vendor as a receiver for the fair value of all the property so bought or sold by him.” (Emphasis added.) ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍The provisions of the Act condemn the broad sweep of the decree.

In the first place, the Act relates only to the sale of goods, wares and merchandise, that is, to tangible property, to mеrcantile goods and supplies, to goods or things which are kept fоr sale and which are constantly sold and replaced by other merchandise. 24 Am. Jur., Fraudulent Conveyances, §256. Good will is intangible property. 24 Am. Jur., Gоod Will, §§4, 12. Thus, “the *124 beer on hand” is covered by the Act, bnt the .“list of customers”, which the court en banc held “represented the good will” of the business, is exсluded. The list of customers must be excluded from the computation of fair value.

Second, the fair value of the beer, and the office furniture and the truck, regarded as fixtures, must be shown by competent evidence. The chancellor recog: nized that Grasso. was “liable for the value of the goods received in accordance, with sectiоn ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍three of the Bulk Sales Act, 69 P.S. [§]523”, but declined to find that value because Grаsso “has destroyed .all of his records after the institution of this suit, [and] we hold him liable for the amount of the note which remains unpaid.”

-. ‘ ■ Notwithstanding the . destruction of the records, plaintiff should have produced evidencе upon which the chancellor could .have found the value of thе transferred property. There is some evidence relating- to the value of the fixtures‘. The uncontradicted evidence is that Munizza bought the truck for $275 and sold it to Grasso for $200. It was testified that the desk “was inore like kindling wоod.” Howbeit, only, the fair value of; the beer, furniture, and fixtures is chargéable to Grasso. The question was not raised here or below, and we do nоt decide whether, the truck, which we understand was used for delivering beer, is a “fixture”, within the meaning of the Act.

Third, the Act does not authorize imposition of personal, liability upon Grasso for Munizza’s judgment note. Miller v. Myers, 300 Pa. 192, 150 A. 588. Grasso can “be held liable” only “as a recеiver for the fair value” of ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍the tangible property bought by him.

;. The- evidenсe concerning Grasso’s purchase of articles other‘than the truck was not too clear, but:we agree: with the .learned chanсellor that the defendants’ -testimony , w.as incrediblé,. that the destruction of rеc: *125 ords had sinister implications, and that other persuasive testimony and the attendant circumstances sufficiently support the finding that Grasso bought Munizza’s business.

The decree is reversed and the record is remitted to thе court below for the limited purpose of entering a decree against Grasso as a receiver ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍for the fair value of the tangiblе property bought from Munizza. Additional testimony as to values may be taken. Costs to abide the result.