Young v. Lemieux

The plaintiff is the trustee of the estate of Philip E. Hendrick, who was adjudicated a bankrupt upon the petition of sundry creditors, dated September 19th, 1904.

On and for some years prior to August 31st, 1904, said Hendrick conducted personally, in his own name and in his building in Taftville in this State, a retail general store and meat market, and at the same time, in a store hired by him on the opposite side of the street, carried on a separate and independent retail drug business under the name of the Taftville Drug Company, which was managed by a licensed druggist employed by him.

The value of the stock in the general store was about $2,000, and of the stock, fixtures and soda fountain in the drug-store, about $3,500. There was no evidence at the trial of the separate value of the stock, fixtures, and soda fountain.

On the 31st of August, 1904, said Hendrick, at a single transaction and not in the regular course of business, and without any written bill of sale, and without having caused to be recorded the notice of his intention to make such sale required by chapter 72 of the Public Acts of 1903, sold and delivered to the defendant said drug-store and the whole of his stock, fixtures and soda fountain therein, for the price of $3,500, receiving therefore from the defendant $50 in cash, a small indorsed check, one note for $2,000 payable in five days, and one for $1,400 payable in seven days, both being signed by the defendant as agent. It was understood between Hendrick and the defendant that payment of said notes would not be demanded before January 1st, 1905. The defendant has never paid said notes, and it did not appear at the trial that payment thereof had ever been demanded.

The defendant had been managing said drug business as a clerk for Hendrick, for two months before such sale, with the expectation of eventually buying it. He had no property, had previously failed in business and was owing debts on account thereof, and for that reason signed said notes as agent.

After such purchase the defendant continued to conduct said drug business, purchasing goods in small amounts from time to time from the receipts of the business to keep up the stock, and drawing from the receipts about $16 a week for his living expenses, until the goods were replevied by the plaintiff in January, 1905.

At the time of said sale Hendrick was largely indebted and was being pressed by his creditors, but he did not believe that he was in fact insolvent. His general store was closed by attachment on the 16th of September, 1904. The property in the hands of the plaintiff is insufficient to pay the claims of Hendrick's creditors.

The trial court held that the sale to the defendant was not made to hinder or defraud creditors, nor in contemplation of insolvency, but that it was void under chapter 72 of the Public Acts of 1903 and § 4869 of the General Statutes, and rendered judgment for the plaintiff.

In this reasons of appeal the defendant claims that the trial court erred in holding, upon the facts above stated, that the sale of the drug business was a sale by Hendrick of "the whole, or a large part of his stock in trade," within the meaning of chapter 72 of the Public Acts of 1903, and was void under said Act and § 4869 of the General Statutes, and in not holding that said Act of 1903 was in conflict with the State and Federal constitutions.

In this court the plaintiff pleaded in abatement of the defendant's appeal, that the finding of facts for the appeal was filed, and notice thereof given to the defendant, on the 26th of July, 1906, and that the appeal was not filed until August 11th, 1906, and not within ten days after such notice of the filing of the finding.

To this plea the defendant demurred, upon the ground that he was not required to file his appeal within ten days after July 26th, since chapter 24 of the Public Acts of 1905 provides that "all proceedings to make or complete the record on such appeal shall be suspended during the months of July and August."

The plea in abatement is insufficient. The appeal was filed in time. The filing of the finding in July and of the appeal in August were effective, notwithstanding the provision that all proceedings should be suspended during those months. That provision was not intended to prevent either court or counsel from filing the necessary papers to make or complete the record on the appeal, during the months of July and August, to become operative upon the expiration of that period.

As the drug-store was not conducted as a part of the business of the general store, but as a separate and independent business carried on in another building, and under another name, the decision of the trial court that the sale was within the statute is clearly sustainable, upon the ground that it was a sale of Hendrick's whole stock in trade in an independent business.

Section 4868 as amended by chapter 72 of the Public Acts of 1903 is not invalid as conflicting with either the Federal or State constitution.

In 1901 an Act entitled "An Act concerning Sales of Personal Property" was passed, which provided in effect, as afterward stated in § 4868 of the General Statutes, that any sale by such dealer, at a single transaction and not in the regular course of business, of the whole or a large part of his stock in trade, should be in writing, describing the property sold and all the conditions of the sale, acknowledged before competent authority, and recorded within one day after the sale in the town clerk's office where the vendor had his place of business; and, as afterward stated in § 4869 of the General Statutes, that such sales made without these formalities should be void as against the creditors of the vendor at the time of the sale. Public Acts of 1901, p. 1356, Chap. 161.

In 1903 an Act was passed, entitled "An Act concerning the Transferring of a Person's Business," which was in force at the time the sale in question was made, and which reads as follows: "Section 4868 of the general statutes is hereby amended to read as follows: No person who makes it his business to buy commodities and sell the same in small quantities for the purpose of making a profit, shall, at a single transaction and not in the regular course of business, sell, assign, or deliver the whole, or a large part of his stock in trade, unless he shall, not less than seven days previous to such sale, assignment, or delivery, cause to be recorded in the town clerk's office in the town in which such vendor conducts his said business, a notice of his intention to make such sale, assignment, or delivery, which notice shall be in writing describing in general terms the property to be so sold, assigned or delivered, and all conditions of such sale, assignment, or delivery, and the parties thereto." Public Acts of 1903, p. 49, Chap. 72. Said Act neither repealed nor changed § 4869 of the General Statutes.

In 1905 § 4868 of the General Statutes was further amended, so that instead of absolutely prohibiting such sales without such notice, as the language of that section did, it should only render them void as against the vendor's creditors. Public Acts of 1905, p. 408, Chap. 211.

In State v. Reynolds, 77 Conn. 131, 134, 58 A. 755, in sustaining, as a valid exercise of the police power of the State, § 1358 of the General Statutes prohibiting any person from exposing for sale from any wagon or temporary stand any article of provisions within one mile from the fair ground of any incorporated society, we expressly approved of the language of the courts of other jurisdictions describing the police power of the State as extending "beyond the protection of health, peace, morals, education and good order," and as comprehending "all those general laws of internal regulation necessary to secure the peace, good order, the health and comfort of society, and the regulation and protection of all property in the State," and as the "power to prescribe regulations to promote the health, peace, morals, education, and good order of the people, and to legislate so as to increase the industries of the State . . . and add to its wealth and prosperity"; citing State v. Harrington, 68 Vt. 622, 626, 35 A. 515, and Barbier v.Connolly, 113 U.S. 27, 31, 5 Sup. Ct. Rep. 357.

In Walp v. Mooar, 76 Conn. 515, 521, 57 A. 277, we said of § 4868 as it read before it was amended in 1903, that it was not unconstitutional because it applied only to retail dealers, nor as depriving persons of their property without due process of law; that the purpose of the Act was to prevent fraud; that the legislature had the undoubted power to adopt reasonable measures for regulating the sale of merchandise in this State so as to prevent fraud; and that the Act then in question was clearly within that power.

No citizen has an absolute right to sell his property either in such manner or at such time as he may choose. Every person holds his rights, however fundamental they may be, subject to the exercise, within constitutional limits, of that governmental power vested in the legislature of the State in which he resides, which is commonly called the police power. Crowley v. Christensen, 137 U.S. 86,11 Sup. Ct. Rep. 13.

While the exercise of such power by the legislature is only to be justified upon the ground that it is for the public good; that its purpose is the removal of an existing evil; that the provisions of the Act bear a reasonable relation to the evil sought to be cured, and that they are such as are not unduly oppressive upon individuals, and do not impose unnecessary restrictions upon lawful occupations, — yet when courts are required to pass upon the validity of such legislation it is to be remembered that in the exercise of such police power "a large discretion is necessarily vested in the legislature to determine, not only what the interest of the public require, but what measures are necessary for the protection of such interests" (Lawton v. Steele, 152 U.S. 133,136, 14 Sup. Ct. Rep. 499); that every such law is not to be held void "which may seem to the judges who pass upon it excessive, or unsuited to its ostensible end, or based upon conceptions of morality with which they disagree" (Otis v. Parker, 187 U.S. 606, 608, 23 Sup. Ct. Rep. 168; Atchison, T. S. F. R. Co. v. Matthews,174 U.S. 96, 19 Sup. Ct. Rep. 609); that "every presumption and intendment is to be made in favor of its validity, and unless it appears, beyond reasonable doubt, to be ``a clear usurpation of power prohibited,' it must stand as a valid Act." State v. Reynolds, 77 Conn. 131, 134, 58 A. 755;Booth v. Illinois, 184 U.S. 425, 22 Sup. Ct. Rep. 425;State v. Main, 69 Conn. 123, 37 A. 80; State v. Feingold,77 Conn. 326, 331, 59 A. 211.

The manifest purpose of the Act in question is to protect creditors of retail dealers against a class of sales which are often fraudulent, and opportunities for making which are readily afforded by the nature of the retail business and the manner in which it is usually conducted. Walp v.Mooar, 76 Conn. 515, 57 A. 277. Enactments to prevent such fraudulent transfers are clearly within that class of legislation generally denominated police regulations. In considering whether, in passing this particular Act, the legislature has transcended the limits of its constitutional authority, we are to inquire whether the methods provided by the Act for curing the existing evil are reasonably appropriate for that purpose, and whether they unreasonably infringe upon personal or property rights.

Section 4868, as originally enacted, provided no other notice to creditors than by the recording of the bill of sale within one day after the sale. In enacting the amendment of 1903, the legislature probably believed that a notice before the sale would be a much more effectual means of enabling creditors to protect their rights than a notice after the sale had been made.

It may be that this Act approaches the verge of legislative power, but we cannot say that its requirements as to the manner and time of giving notice of the sale are so clearly unreasonable or so unnecessarily burdensome as to compel us to hold that any constitutional rights have been infringed. It cannot be said that such notice as creditors would receive from the recording, seven days before the sale, of a notice of his intention to sell by the vendor, would give them an unnecessarily long time to take steps to protect their interests.

Although by the language of the amendment of 1903, taken strictly, sales of the character there described, made without the required notice, are absolutely forbidden, it is apparent, and especially from the fact that § 4869 was left unchanged, that they were only intended to be voidable at the instance of creditors.

It does not seem to us, either from a consideration of the requirements themselves of the Act, or of the facts of the case before us, that the restrictions placed by the legislature upon sales of the kind in question are such as will cause such serious inconvenience to those affected by them as will amount to any unconstitutional deprivation of property. A retail dealer who owes no debts may lawfully sell his entire stock without giving the required notice. One who is indebted may make a valid sale without such notice, by paying his debts even after the sale is made. Insolvent and fraudulent vendors are those who will be chiefly affected by the Act, and it is for the protection of creditors against sales by them of their entire stock at a single transaction and not in the regular course of business, that its provisions are aimed. It is of course possible that an honest and solvent retail dealer might, in consequence of the required notice before the sale, lose an opportunity of selling his business, or suffer some loss from the delay of a sale occasioned by the giving of such notice. But a "possible application to extreme cases" is not the test of the reasonableness of public rules and regulations. Commonwealth v. Plaisted, 148 Mass. 375, 382, 19 N.E. 224. "The essential quality of the police power as a governmental agency is that it imposes upon persons and property burdens designed to promote the safety and welfare of the general public." Chicago, B. Q. R. Co. v. State, 47 Neb. 549,564, 66 N.W. 624.

Statutes imposing even more severe restrictions upon such sales than those of the Act before us, have been sustained in other jurisdictions in the cases cited in Walp v.Mooar, 76 Conn. 515, 57 A. 277, of Squire Co. v. Tellier,185 Mass. 18, 69 N.E. 312, McDaniels v. ConnellyShoe Co., 30 Wash. 549, 71 P. 37, and Neas v. Borches,109 Tenn. 398, 71 S.W. 50.

The fact that some of the goods replevied were placed in stock by the defendant after his attempted purchase from Hendrick does not entitle the defendant to retain them. It appears that he merely replaced goods sold with others purchased with the avails of such sales.

There is no error.

In this opinion BALDWIN, PRENTICE and SHUMWAY, Js. concurred.