George A. Kelly Co. v. Snyder ( 1914 )

Opinion by

Orlady, J .

Hyde Brothers owned and conducted an established drug store business, which, on February 10, 1910, by a written article of agreement for a consideration of $3,800, they hired and let to Gerald A. Snyder. The writing carefully enumerates the several promises of the parties. Snyder took possession of the drug store; placed his sign “G. A. Snyder, Drugs,” under the old sign “Hyde’s Drug Store” on the front of the store building, and the name “Snyder’s” across the prescription counter; $500 was paid in cash and the balance was secured by notes to become due monthly until the whole was paid, and Snyder agreed to pay the rent due under a lease made by Hyde Bros, with the owner of the building. He was to replenish the stock from time to time and keep it in as good condition as at the date of the agreement, and “to pay monthly all bills contracted by him in the operation of the store.” Hyde Bros, reserved the right to enter on the premises and “to. examine at all times Snyder’s books of account, in order to determine whether the conditions of the agreement were complied with.” It was agreed that the drug store and all goods therein would remain the property of Hyde Bros, until the balance of the purchase money was paid “as well as future debts contracted in the operation of the store.” In case of Snyder’s default for sixty days in payment of any monthly installment, Hyde Bros, had the right, without process of law, to repossess themselves of the store and contents. Snyder made default in the payments falling due in September, October and November, 1910, and on November 26, he surrendered his agreement and lease to Hyde Bros., which by mutual consent was cancelled, and in consideration of Snyder’s discharge from liability for the unpaid purchase money, Hyde Bros, repossessed themselves of the store, leasehold and all goods in the drugstore, and entered into possession of the premises. On December 5, 1910, George A. Kelly Company issued a fraudulent debtor’s attachment in assumpsit under the act of 1869, and supplements, for goods sold to Snyder while he was conducting this drug business and after due service on Snyder as defendant, and Hyde Bros, as garnishee, a judgment was entered in the plaintiff’s favor against Snyder in default of an appearance for $509.69. The regularity of this judgment is not challenged. The case proceeded against the garnishees by interrogatories and answer, when a feigned issue was framed to determine the title, etc., to the goods seized by the sheriff under the attachment, and on a trial in court before a jury a verdict was rendered in favor of the plaintiff. The material facts are not in dispute, and it is conceded that as between Snyder and Hyde Bros, the agreement was valid. It is clear that the terms of the sale by Hyde Bros, to Snyder were not known to Kelly, and that the goods delivered by the plaintiff to Snyder were sold on the faith and credit of the business then being openly conducted and avowedly owned by him. Hyde Bros, knew or could have known by inspection of Snyder’s books of account that Kelly was furnishing goods and supplies to keep up the stock in the drug store, and that these accounts were not being paid by him.

The alleged lien on the stock was a secret one. Hyde Bros, permitted, if not induced Kelly to improve and enlarge this stock for their benefit, without notice to him of their claim against the original stock and the additions innocently made to it by Kelly. This conduct induced a credit in Snyder, so as to keep the business a going one at the expense of creditors who were misled to their injury by this secret agreement between the apparent owner and this claimant. The questions of extending credit to Snyder on the faith of his apparent ownership, and the purpose of the agreement between Hyde Bros, and Snyder were fully and carefully submitted to the jury. Hyde Bros, knew all the facts of the case, and were bound to give the notice, and proceed under the terms of the bulk sales act to make it a valid one under the facts set out by them in their answer to the interrogatories. They admit that they “repossessed themselves of the said drug store, leasehold and all the goods, chattels and merchandise therein, whereby all the equitable and legal rights of the said Gerald A. Snyder in and to the drug store and all his rights in the said agreement became totally null and void.” The fraudulent debtors’ act of 1869, with its supplements, prescribes the procedure to be followed under it, and the courts have passed upon the necessary pleadings to define the issue raised and protect the interests of all parties. The act qf 1905 does not provide any mode of procedure, and the appellant concedes that an attachment under the act of 1869 is a proper remedy to try the question as to whether the act of 1905 has been violated. As clearly stated by Judge Moschzisker in Ochse v. Druda, 34 Pa. C. C. R. 151, “By treating the Act of 1869 and its supplement of May 24, 1887, P. L. 197, in connection with the act of 1905, we have a complete system for carrying the latter into execution, wherein the seller, the purchaser and the creditors, all as parties to the action, the goods in controversy are taken into the custody of the law, and relief, worked out in a most expeditious and inexpensive manner.” In Schumacher-Binzley Co. v. Riddle, 52 Pa. Super. Ct. 6, we held, “No particular mode of procedure is prescribed by the Act (March 28, 1905, P. L. 62), but it has been held, upon full consideration of the subject, that a creditor has a right to attack the sale in the method which was always an available and appropriate one for a creditor to pursue in order to invalidate, that is, to render of no legal force and effect, so far as the collection of his claim is concerned, a sale of chattels which, as to such creditor, is voidable upon the ground of fraud, namely, to levy on the goods as the property of the debtor, and in response to the sheriff’s rule to interplead, to aver the facts which made such sale fraudulent and voidable as to creditors: Wilson v. Edwards, 32 Pa. Super. Ct. 295; Feingold v. Sternberg, 33 Pa. Super. Ct. 39.” In this case all the parties in interest were properly in court under pleadings arranged by themselves, and all the facts in the case were fully developed on the trial without objection, as to the regularity of the pleadings. The case was heard and determined on its merits, and we do not find any reversible error in this record to justify a retrial.

The judgment is affirmed.