DocketNumber: File No. 5308
Citation Numbers: 49 S.D. 27, 206 N.W. 463
Judges: Sherwood
Filed Date: 12/9/1925
Status: Precedential
Modified Date: 7/20/2022
This action was brought' by plaintiffs (respondents here), as creditors of one Ridnour, against Ridnour and Costain Bros, for alleged violations of what is commonly called' the Bulk Sales Law. (Rev. Code 1919, § 914 et seq.). Findings and judgment, were in favor of respondents, and defendants Co-stain Bros, appeal. No record was settled. The appeal is from the judgment alone.
It is appellants’ contention that the trial court erred in its second and third conclusions of law:
(1) I-n holding", them trustees in the disbursement of the purchase price of the stock of merchandise regardless of whether the Bulk Sales Law had been complied with or not.
(2) In holding appellants liable as trustees to creditors of whom they had no knowledge.
The second and third conclusions of law are as follows:
“Second. That the purchase price for which said stock of merchandise and fixtures was sold to the defendants George Cos*29 tain and Herbert Costain, copartners trading as Costain Bros., on the 28th day of October, 1919, to wit, the $2,095 paid to the defendant A;. J. Ridnour at the consummation of said sale by the delivery of said stock in -bulk to said purchasers, became a trust fund charged with a trust in favor of the creditors of the defendant A. J. Ridnour, regardless of whether or not the provisions .of the Bulk Sales Law in relation to the giving of notice had been complied with, and the defendants George Costain and Herbert Costain, as purchasers, were charged with notice that it was such trust fund and were charged with notice that they held such! .fund subject to the rights of any unpaid creditors of A. J. Ridnour, regardless of whether they knew of the existence of such creditors or not; and they paid the said fund to A. J. Ridnour and the Baldwin Piano Company at their peril. That payment to the defendant A. J. Ridnour or the Baldwin Piano Company in no way discharged their liability, as trustees, by operation of the statute, to the creditors of the defendant, A. J. Ridnour.
“Third. That the plaintiffs, H. C. Bay Company, a.corporation, George L. Shall, Arw'all Factories, Deterling Manufacturing' 'Company, a corporation, P. S. Wick Company, -a corporation, and M. T. -Lund, are entitled to recover a judgment in this suit, adjudging- that the defendants George Costain and Herbert Costain, as trustees, are indebted to the unpaid creditors of the defendant A. J. Ridnour, whose claims existed on the 28th day of October, 1919, for the full amount now due and unpaid thereon, not exceeding, however, the agreed purchase price for which said-stock of merchandise was sold to said purchasers, to wit, the sum of $2,095 and interest thereon from the 28th day of October, 1919, and directing said defendants to pay said amount to the clerk of this court to be paid out by him as this court shall direct, to satisfy the claims of said creditors, together wtli the costs of this suit, and such expenses and attorney’s fees as may be allowed by the court for maintaining this action to recover said trust fund.”
This appeal makes it necessary for us to construe several sections of the Bulk Sales Law and apply the same, to the facts found by the court. The law, as far as .applicable here, provides, in substance:
That every person selling any portion oí a stock of merchandise, other than in the ordinary course of trade, shall furnish a
That any person buying in bulk the whole or any part of a stock of merchandise shall (a) notify personally, or by registered ■mail, each creditor whose name is contained in the list furnished by the seller that he is about to purchase such stock, describing it generally and by location and name of owner; (b) that such notice shall be mailed or given not less than 7 days prior to paying for such stock: (c) that any creditor omitted from seller’s1 list may give written notice of his claim, and shall thereafter bef entitled to share equally with the other creditors as to- such proceeds of sale as are then held by the buyer. Section 914, R. C. 1919.
In the findings of fact, all of which are unchallenged, it appears : That on October 28, 1919, one Gormly, agent for the Baldwin Piano Company, was in Huron. That Ridnour owed said company on account $1,246.66, and1 had besides in his store a consignment of pianos from said company, to be paid for when sold, of the value of $1,900, and also- had in his stock of goods certain phonographs bought of the Mocking Bird Phonograph Company. That Gormly had the consigned pianos segregated: from the Ridnour stock of goods. That Gormly told Costain Bros, he had- investigated and found Baldwin Piano Company was Ridnour’s principal creditor. That outside a recent shipment of goods from the Mocking Bird Phonograph Company he owed no other 'debts. That he had bought most of his goods C. O. D. That arrangements could be made to return to- Mocking Bird Phonograph Company the goods bought of them. That Costain Bros, asked Didnour whom he owed, and were told by him- he only owed the Baldwin and Mocking Bird Companies, as all other good’s were shipped C. O'. D. or settled for. That Costain Bros, believed these statements, and acted on- them. That said statements were untrue. That on the same day Ridnour shipped back to
If we assume from the above facts found by the court that either Gormly or Ridnour had authority to act for the Mocking Bird Phonograph Company, and notice to them was notice to such company, or that they are estopped by receiving back their goods without objection, neither of which facts affirmatively appear of record, it is still clear from these findings and the summary of the Bulk Sales Baw here given that Co-stain Bros., in purchasing said stock in bulk, failed to observe at least two provisions of the Bulk Sales Baw. Knowing Ridnour had at least two- creditors and was being pressed for settlement by -one: (1) They proceeding with the purchase without receiving a written list of all his creditors. (2) They paid Ridnour in cash on the day of the sale, and on the first day any possible notice to any creditor could be given, the entire purchase price, instead of waiting 7 days, as provided by law.
These are requirements of the law it was the duty of Costain Bros, to observe. Section 914, R. C. 1919; Butler Bros. v. Mason, 47 S. D. 308, 198 N. W. 560; Linn County Bank v. Davis, 103 Kan. 672, 175 P. 972, 9 A. L. R. 468; Peck v. Hibben, 185 Ind. 623, 114 N. E. 216; Stuart v. Elk Horn Bank & Trust Co., 123 Ark. 285, 185 S. W. 263, Ann. Cas. 1918A 268; Coach v. Gage, 70 Or. 182, 138 P. 847; Brown v. Kossove, 255 F. 806,
It is common knowledge that some men will freely make statements they would not reduce to writing, and, where the law requires a statement of this character to be in writing, one who chooses to take the word of another where the law authorizes him to receive a written statement does so at his peril.
One of the purposes of the Bulk Sales Law was to prevent secret and hurried sales. It was clearly a violation of the 7 days’ notice provision of the statute to buy and settle for the goods in full on the same day under all the facts found in this case.
We hold that the failure of appellants to comply with the Bulk Sales Law in the two particulars above set forth rendered the sale to- them void as to Ridnour’s creditors, who had not notice of the sale, and made them liable as trustees up to' the amount of $2,09,5.
As judgment must be affirmed against Costain Bros., it remains for us to consider the amount of such judgment. We think the $1,246 paid by Costain Bros, to Ridnour, and by Ridnour to Baldwin P'iano Company, was a part of the indebtedness of Ridnour on the date this sale was mad'e, and that that amount should be added to the, indebtedness found by the court to have been due the other creditors of Ridnour as of the date when the sale was made- and Costaim Bros, should be subrogated to such part of the 2,095 as the $1,246 bore to the entire indebtedness on the date of the sale and Costain Bros, should only account for and pay over the difference between this sum and $2,095 to the other creditors, together with interest on such difference at 7 per cent from the date of the sale.
The judgment of the lower court will be modified to conform with this opinion, and, as so modified, is affirmed. ■