Summary
In Hart v. Brierley, 189 Mass. 598 (76 N.E. 286), in a sale by a factory of biscuits and crackers put up for the wholesale market, such articles were considered as merchandise under their bulk sales law, but under the testimony it was held that the sale there of the entire manufactured product was made in the ordinary course of business and therefore valid.
Summary of this case from Patmos v. Grand Rapids Dairy Co.Opinion
October 24, 1905.
December 7, 1905.
Present: KNOWLTON, C.J., LATHROP, LORING, BRALEY, SHELDON, JJ.
Sales of Merchandise in Bulk. Fraud, As against creditors. Practice, Civil, Exceptions, Verdict. Evidence, Admissions. Damages. Conversion.
Biscuits and crackers put up in boxes or barrels for the wholesale market were here assumed to be merchandise within the meaning of St. 1903, c. 415, relating to sales of merchandise in bulk.
To determine whether a sale of merchandise in bulk is within the prohibition of St. 1903, c. 415, it is necessary to inquire whether the sale was made in the ordinary way in which a merchant owing debts conducts his business, or whether the merchant resorted to an unusual method in disposing of his property in order to get the proceeds for his own use leaving his creditors unpaid.
A sale at wholesale by a biscuit company of all its stock on hand, consisting of biscuits and crackers packed in boxes or barrels, to a single buyer, is not voidable as in violation of St. 1903, c. 415, relating to sales of merchandise in bulk, if made in the regular and ordinary course of the company's business; and so it is of a contract made by such a company in the regular and ordinary course of its business to sell to one person a quantity of its product already manufactured and the entire product of its bakery for a period of at least three months following.
Where it is contended that a sale of goods is fraudulent as against creditors under St. 13 Eliz. c. 5, if it is shown that the sale was effected according to the usual course of the debtor's affairs, this is evidence of its validity.
An exception to an erroneous instruction on a point which the findings of the jury on other points have made immaterial cannot be sustained.
No exception lies to the exclusion of evidence of a fact which already has been shown or admitted.
No exception lies to the exclusion of evidence, which, although admissible for the limited purpose of contradicting a witness, was not offered for this purpose, but for another purpose for which it was not admissible.
On the question whether a conveyance was fraudulent as against the creditors of the grantor, declarations of the grantor made after the conveyance when the grantee was not present are not admissible to impeach the grantee's title.
It is within the discretionary power of a presiding judge to submit special questions to the jury or to inquire of them orally as to the grounds on which they based a general verdict or whether they have determined certain issues.
In assessing damages after a general verdict for the plaintiff in an action of tort for a conversion, the plaintiff is entitled to the fair market value of the goods at the time of their conversion, and the defendant cannot show that the plaintiff obtained the goods at less than the market price, not being entitled to the benefit of the plaintiff's bargain.
In assessing damages after a general verdict for the plaintiff in an action of tort for a conversion, although the jury has made a special finding that certain goods were not in existence at the time of the conversion, this does not preclude the plaintiff from showing the contrary, no judgment having been entered upon the general verdict.
TORT, against a deputy sheriff, for the alleged conversion of certain biscuits and crackers in cases and barrels attached by the defendant on September 14 and 18, 1903, in the possession of the plaintiff as the property of the Favorite Biscuit Company and alleged by the plaintiff to have been purchased by him from that company. Writ dated October 17, 1903.
At the trial in the Superior Court before Harris, J. the defendant relied on the defence that the sale to the plaintiff was voidable under St. 1903, c. 415, relating to sales of merchandise in bulk, and also was voidable at common law as in fraud of creditors.
The plaintiff purchased the goods under the following contract:
"Agreement entered into this 15th day of June, 1903, between Moses A.T. Hart of Fall River, Mass., party of the first part, and the Favorite Biscuit Co., a corporation duly organized, of the second part.
"The party of the second part agrees herein to sell all its manufactured product, however obtained or made, to the party of the first part at a discount of 25% plus 2% off the list selling price; all of said goods are to be stored subject to the order of the party of the first part.
"It is agreed by said parties that at no time shall the amount of goods outstanding, undisposed of, exceed in value the sum of $1,500. And the party of the second part to sell and dispose of to the trade said goods, and said party of the first part agrees to retransfer or reconvey them to said party of the second part as needed, at a discount of 25% off list price, being as appears a commission of 2% profit to said party of the first part; said party of the first part agrees to pay $52 a year for rent of a storage house, for said goods. Said party of the second part agrees to have all said goods conveniently packed in cases, boxes or barrels; said party of the first part is privileged to enter the premises of storage or manufactory at any time. It is agreed between said parties that all goods shall be paid for when received at store house, and paid for when taken from store house. All shortage in weight or unsalable goods shall be made good by the party of the second part. It is further agreed between the parties hereto, that either party may withdraw from above agreement at the expiration of three months from the date hereof by giving eight days' notice thereof and the party of the second part in such case agrees to take all stock or product that the party of the first part may have on hand before the expiration of said eight days' notice, and pay for same at time of taking.
"Witness our hands and seals this fifteenth day of June, 1903."
Here followed the signatures and seals of the parties and the signature of a witness.
The judge submitted to the jury certain questions, which are referred to in the opinion. He also inquired of the jury whether they had considered certain other questions, and on the foreman answering in the affirmative asked them for their findings upon those questions. The judge directed the clerk to make out a general verdict for the plaintiff which was returned by the jury, and the defendant alleged exceptions. The case was sent to an assessor who made a report. The defendant moved to recommit the report to the assessor. This motion was denied by the judge, and the defendant appealed.
A.S. Phillips, for the defendant.
M. Druce, for the plaintiff.
The plaintiff's title to the chattels alleged to have been converted is derived under a sale from a corporation described as the Favorite Biscuit Company. By way of defence this sale is alleged to have been made by the vendor either in violation of the St. 1903, c. 415, or for the purpose of defrauding its creditors, and hence to be voidable by them at common law.
In Squire v. Tellier, 185 Mass. 18, although this statute was held to be constitutional, the scope of its application to mercantile transactions similar to those found in this case was neither involved nor determined.
The company was engaged in making biscuits and crackers, which upon being packed in boxes or barrels were sold only at wholesale. Presumably its business was managed in the ordinary way, for although it is not stated what portion of the company's output was taken daily by customers, or how much remained unsold, yet from the nature of the product such an enterprise to be conducted successfully required frequent sales, for if not used before they became stale the biscuits and crackers would become unsalable and worthless. It may be conceded that bread made and put up for the market in this form is merchandise within the meaning of the act, and may comprise the whole or the principal part of a merchant's stock in trade, but the sale prohibited without notice to the vendor's creditors by St. 1903, c. 415, is a disposal of the stock in bulk, or as a whole, leaving them unpaid. Unless the transaction is outside of the ordinary course adopted by the trader for the disposal of the commodity in which he deals, it is not made unlawful. Squire v. Tellier, ubi supra.
Where a going mercantile business is so conducted that to be profitable large quantities of goods must be sold to different customers, even to the extent of exhausting the entire stock which may be on hand at any stated time, such a sale is not voidable although all the stock in the seller's possession at the time may be delivered to a single buyer.
The statutory test is whether the sale was made in the usual way in which a merchant owing debts conducts his business, or whether he takes an unusual method of disposing of his property in order to get the money for his own use, leaving his creditors unpaid. This inquiry is essentially an issue of fact depending upon the nature of the seller's business, his ordinary method of making sales, and his indebtedness. A sale of his entire stock by one trader might not be uncommon, while such a sale if made by another would be extraordinary and within the statute.
The written executory contract between the plaintiff and the company by which it sold to him a quantity of its product already manufactured, and the entire product of its bakery for a period of at least three months following, must be read in connection with the commercial system under which the company necessarily transacted its business, as the parties incorporated this condition of things into their contract. Knight v. New England Worsted Co. 2 Cush. 271, 283.
If the company lawfully could have sold its merchandise as manufactured at wholesale to more than one customer without violating the statute, this agreement to take and pay for its entire product does not become voidable at the election of existing creditors because by reason of its provisions such sales are made continuously to a single purchaser.
In substance the instructions to the jury defined the scope of this part of the statute in accordance with what we have said, and were sufficiently favorable to the defendant.
Under these instructions the jury having found specially that the property was sold and delivered in the regular and ordinary course of the company's business, the plaintiff's title became unimpeachable, while if they had found otherwise it would have been open to attack as being fraudulent and void by force of the statute.
This special finding goes far to dispose of the defendant's further contention that the agreement was fraudulent as against creditors under the provisions of St. 13 Eliz. c. 5.
The conduct of a vendor or grantor when a conspiracy to defraud is charged becomes material in proof of a fraudulent purpose. A sudden sale of his entire stock in trade by a retail merchant, who at the time is insolvent or is in contemplation of insolvency, by which he realizes the value of his goods for his own gain, is strongly presumptive of a deliberate intention to cheat his creditors.
But where the sale is shown to have been effected according to the usual course of the debtor's affairs, that is evidence tending to show its validity. Killam v. Peirce, 153 Mass. 502. Leighton v. Morrill, 159 Mass. 271.
It is not therefore surprising that, in response to further instructions, accompanied by a question to them after they had returned into court, and before the general verdict was recorded, the jury stated that the allegation in the defendant's answer of a conspiracy between the plaintiff and the company to defraud its creditors was not proved.
Under the second and third questions the jury found that the sales and deliveries of the goods were not of the kind prohibited by the statute, and as the plaintiff further was found to be a purchaser for value and in good faith from the vendor, who lawfully could sell, there being no violation of the statute and no fraud at common law, no creditors, whatever their number, had any remedy, and the eleventh instruction to which the defendant excepted, though erroneous in law, becomes immaterial. Gordon v. Clapp, 113 Mass. 335. Carroll v. Hayward, 124 Mass. 120.
The questions and answers referred to were as follows: "2. Was the sale and delivery of the goods on hand on June 15, 1903, made in the ordinary course of trade? The jury answer, Yes. 3. Did the Favorite Biscuit Company at the time of the sale and delivery to the plaintiff of the first lot of goods on June 15, 1903, have other creditors whose claims were due and owing? The jury answer, No."
The argument now advanced that the contract was consummated with the intent to defraud future creditors is not open under the answer, but if it was, there is no evidence upon which such a defence could be founded within the general rule of Winchester v. Charter, 12 Allen, 606, 610, 611. To sustain this defence proof must be advanced that the company designed to contract debts which it did not intend to pay, and which it had reasonable ground at the time to believe it might not be able to pay.
In connection with this branch of the case is the exception relating to the exclusion of the record of judgments obtained by two of the company's creditors. This exclusion affords no just ground of exception, and the defendant was not prejudiced, as the evidence was offered after an agreement of the parties had been introduced establishing the amount of the claims of the judgment creditors and the fact that they were in existence at the time shown by the record of judgments itself.
The defendant also offered the petition and schedules in bankruptcy of the company, and though excluded they were admissible for the limited purpose of contradicting the statement of its treasurer, who was a witness for the plaintiff, as to its indebtedness.
But the offer of proof at the trial made no reference to this reason for its admission, but was limited to the express purpose of showing debts due from the company before the date of the contract, and the time when these debts were contracted. It is, however, well settled that declarations made by the grantor after an alleged fraudulent conveyance, when the grantee is not present, are not admissible for the purpose of impeaching the title of the latter. Aldrich v. Earle, 13 Gray, 578. Holbrook v. Holbrook, 113 Mass. 74, 76.
A further exception is taken to the submission of special questions to the jury as well as to inquiries orally addressed to them as to the grounds upon which they based their general verdict, or inquiring if they had determined certain issues involved in the case. But it was within the discretionary power of the trial judge to submit or ask any or all of these questions calling for special findings, and as this discretion does not appear to have been improperly exercised no ground of exception is shown. Spoor v. Spooner, 12 Met. 281. Lawler v. Earle, 5 Allen, 22. Graves v. Washington Ins. Co. 12 Allen, 391. Spurr v. Shelburne, 131 Mass. 429. Boston Dairy Co. v. Mulliken, 175 Mass. 447.
A general verdict having been returned in favor of the plaintiff, an assessor was appointed to assess damages. Upon the coming in of his report the defendant moved that it be recommitted for the correction of erroneous rulings and refusals to rule, and, the motion being denied and the report confirmed, these questions are now before us.
As the issue of the defendant's liability had been settled previously, the validity of the original agreement was not before the assessor. By the ordinary rule the measure of damages would be the fair market value of the goods at the date of their conversion, and evidence that the plaintiff under the contract could buy them for less than the market price was not competent to reduce the amount of the defendant's liability as he was not entitled to the benefit of the plaintiff's bargain. Lorain Steel Co. v. Norfolk Bristol Street Railway, 187 Mass. 500, 506.
The plaintiff also was allowed damages for the conversion of six hundred pounds of crackers, which he alleged had been manufactured before but were sold to him on the date of the contract, and it is the contention of the defendant that because the jury specifically found that none of the goods converted were in existence when the contract was made there can be no recovery for this item. But no judgment has been entered upon the general verdict, and until this is done there is no estoppel preventing the plaintiff from showing such conversion. Burlen v. Shannon, 99 Mass. 200, 203. Hawks v. Truesdell, 99 Mass. 557. O'Connell v. O'Leary, 151 Mass. 83, 84.
The exceptions, therefore, must be overruled, and the order accepting and confirming the assessor's report affirmed.
So ordered.
THE Honorable JAMES MADISON BARKER, a justice of this court from the eighteenth day of June, 1891, died at Boston, where he was sitting as a single justice, on the second day of October, 1905. A meeting of the members of the bar of the Commonwealth was held in Boston on the twentieth day of January, 1906, at which a memorial was adopted, which was presented to the full court on the same day. Before presenting it, the Attorney General addressed the court as follows:
May it please your Honors: As a young man, James Madison Barker's great ambition was to be a judge of our Superior Court. He attained that office in 1882, and more than that, a place upon the bench of this court in 1891. Each appointment was considered by all a good one, not only on account of his ability, but because the position had been earned by conscientious work in his profession, in the Legislature and upon a commission to revise the statutes of the Commonwealth.
From his young manhood he had been taught industry, self-reliance and respect for labor, which are so necessary to learn if one is to win success in the profession of the law. He had been active and influential in all the affairs of his town and county, social, business and, until he took his place upon the bench, political. A very useful man, a man of very high ideals, and a very good citizen, the leading man of his generation of Berkshire men. His practice at the bar was in Berkshire County, which has furnished its quota of the strongest and best, — men of the highest character and attainments, men who have left brilliant examples to their successors of how the law should be practised and administered.
He was loyal to his profession, and had ever in mind that the bar, through personal character, prestige and example, must constantly continue the work of educating themselves and the public as to the importance of keeping the bench and bar upon the highest plane of ability and character.
His was the manner of the courteous gentleman, always; but behind the attractive presence, the mildness of manner, there was a strength, a fairness, a firmness of character that could be relied upon. He was a good business man, coming from a race of manufacturers, and especially valuable upon the court at a time when the practice of the law is more and more commercial in its character, and trials are more and more businesslike, with less attempt to evade the speedy conclusion of the issue.
He was also a valuable adviser in the large affairs of his community, but never in sympathy with commercialism in its grosser forms. He was always pleasant and agreeable on the bench, always a high-minded gentleman, highly respected in both courts for his courtesy, and especially for his integrity.
Judge Barker was an open-minded man who sought faithfully to discharge the exacting duties of his position. His opinions show constant and unremitting toil, and bear evidence of most careful consideration of all the questions involved.
No happy talent and no fortunate opportunity formed the sides of the ladder on which he mounted to preferment; but the rounds of that ladder were made of stuff to stand wear and tear.
Judge Barker died on the second of October, 1905, and in every bar association in the Commonwealth there was genuine sorrow.
The last time I saw Judge Barker socially was at a dinner given by the Berkshire Bar Association, at which I had the honor of being one of the speakers with him. He referred to the circumstances under which he became a judge. While enjoying an outing with a friend one summer's day, the then young men told each other their respective ambitions. Judge Barker expressed the hope that some day he should attain his ideal of public service, — a place on the Superior Court bench of Massachusetts. It so happened that in after years his friend of that summer afternoon was elected Governor of Massachusetts, and he, remembering the conversation of the early days, appointed Judge Barker to the place he had coveted. This was twenty-five years ago. On the bench now is but one man who was his senior in point of office, — Chief Justice Knowlton.
I now have the honor to present the resolutions of the bar, and to move that they be entered of record in this court.
The Attorney General then presented the following memorial:
The members of the Suffolk bar place on record this tribute to the high personal character and devoted public service of James Madison Barker, late a justice of the Supreme Judicial Court, whose death on the second day of October, 1905, is a personal and public bereavement.
Born in Berkshire County in 1839, graduated at Williams College in 1860, he was afterwards at the Harvard Law School, and then entered upon his profession in his native town of Pittsfield. To his birthplace, as long as he lived, he devoted his abilities at every call. He served its schools, its financial institutions, all its public interests, identifying himself actively with every uplifting and refining local effort of a social or public character. He was a model of true citizenship.
In 1872 he was elected to the Legislature, bringing to its important duties the steady, undemonstrative application which was a marked characteristic of his mental habits. In 1874 he was appointed one of the commission to revise the statutes, in 1882 a justice of the Superior Court and in 1891 a justice of the Supreme Judicial Court, at which post he died. He was equal to every position of honor or trust to which he was called, and in each rose to the ideal of pure, faithful, patient, wise, consummate service.
His character found expression in his firm but gentle face, his calm, sweet manners, his receptive and considerate attention in the court room, and in the combination of personal dignity with charming comradeship.
He was thoroughly grounded in the law, its principles and its precedents, and his sound legal learning combined with his rare good sense, his familiarity with the ways and interests of the people at large, and his instinctive fidelity to the essentials of truth and justice made him as a judge upon the bench a pattern of the best judicial standards of the Commonwealth.
CHIEF JUSTICE KNOWLTON responded as follows:
Brethren of the Bar: If we consider the career of Judge Barker, to discover the causes which led to his success, we find, first of all, that his boyhood and youth was spent under very favorable conditions. The eldest son of a prosperous manufacturer, he grew up among the hills of Berkshire, in a thriving town which has become a city and for many years has been the county seat. He breathed an invigorating atmosphere, charged with ozone from the fields and woods, and he found stimulating food for thought among his intelligent neighbors in his native town. He was able to obtain a liberal education without enduring the privations of poverty, or suffering from the peculiar temptations which often accompany the possession of great wealth. On entering Williams College he came under the influence of the great educator, President Mark Hopkins, and having been graduated just before reaching his majority, he went forth to the study of his profession, with a high purpose and a firm resolve to make the world better for his living in it. After his admission to the bar he joined the practitioners of law whom he had known in his boyhood, and, to the end of his life, he remained loyal to the friendships and traditions which he shared in his youth.
As a lawyer and citizen he was interested in local affairs, and for a time he held an important town office. Like his distinguished predecessors in this court, Judge Wells in Brookline and Judge Colt in Pittsfield, he deemed it a duty to join the voters in town meetings, and there to give expression to his opinions in debate. While yet a young man he was sent as a representative to the General Court, where he served two years on important committees, and took an active part in shaping legislation. He was a delegate in the national convention of the Republican party in 1880, and at all times he showed a lively interest in public measures, with an earnest purpose to improve the methods of government.
All this was in addition to the practice of law, which was his regular vocation. To his professional work he gave assiduous attention, striving to attain the highest success in the prosecution of it, and making such success the principal object of his ambition. In the autumn of 1882, with this preparation and experience, he was appointed to the bench of the Superior Court; and to say that he carried with him the confidence of the bar and of the people to this new service is to state a fact which could hardly fail to follow.
As a judge at nisi prius he was dignified, kindly, regardful of the rights and wishes of others, thorough and painstaking in his investigations, patient and attentive in hearing counsel, definite and intelligible in his rulings, and ready to secure to all parties their right to a revision of his decisions if such a revision was desired. He was a lover of justice and a hater of chicanery and fraud. He was diligent in his study of legal principles and judicial decisions. The chief object of his effort was to do justice through a proper administration of the law.
When, after nearly nine years of service in the Superior Court, he was promoted to the Supreme Judicial Court, his long experience and careful training gave him special qualifications for the performance of his new duties. He entered upon the work with enthusiastic interest and was faithful in it to the end. He found it easy to express his conclusions in written opinions. He enjoyed especially extended investigation of the history of the legislation which he was obliged to interpret, and often in that way he obtained new light upon doubtful questions. His familiarity with the statutes through his service as a legislator and his wider experience as one of the commissioners who revised the laws which became the Public Statutes of 1882, gave peculiar value to his work in this department of the law. He also had great familiarity with mills and machinery, which sometimes enabled him to make plain that which otherwise would have been obscure in cases involving mechanical operations.
His affection for his native town and county, and especially for Williams College, was strong and steadfast. For many years before his death he was a trustee of the college, and he served its interests faithfully in a variety of ways.
In his official journeys about the State, especially when he was a judge of the Superior Court, he embraced opportunities to become familiar with places and persons outside of the precincts of the court. Often he took long walks, and sometimes, at intervals between sittings, he journeyed into neighboring towns, making observations and gathering experiences which he put into charming bits of narration for the entertainment of his friends. It has been my privilege, on several occasions, to listen to delightful papers, giving his experiences and reflections on such excursions. These were illustrations of a breadth of humanity and a depth of sympathy which filled a large place in his personality. He loved the hills and woods and streams. He enjoyed his rural retreat on the mountain heights of the little town of Windsor, where it was his delight, with a few friends, in a rustic way, to spend the days in communion with nature and with these companions. Above all, he had a genius for friendship. He felt kindly towards his fellows, and had a genuine, unselfish interest in promoting their happiness. This it was which intensified the sorrow at his death in thousands of hearts all over the Commonwealth.
Dignity and modesty were blended in his nature in a remarkable way. No one ever had a higher sense than he of the dignity of the courts, and of high official positions of every kind. He felt the dignity of noble manhood, and of those who are chosen to represent manhood. At the same time, no one was ever more simple and unobtrusive than he in demeanor. In feelings and in manner he was modesty personified.
We all miss him, in his absence from his accustomed place. We who were his associates upon the bench, in daily intercourse which brought us very close together, miss him as you do, and a great deal more. The sundering of ties, which have accumulated in their strength the growing affection of many years, always brings sadness which surpasses all other sadness in human experience. Were it not for consolation, found in memories of the past and in hope for the future, it would seem unendurable.
An order may be entered that your resolutions be recorded, and the court will now adjourn.