Summary
In Orgill Bros. v. Gee, 152 Miss. 590, 120 So. 737 (1929) this Court said that "evidence of good faith and payment of value by the purchaser is no defense to a suit by the creditors of the seller to hold the purchaser liable for the debts to the extent of the value of the goods sold," and in Walton v. Walter Fisher Co., 146 Miss. 291, 111 So. 364 (1927), said a sale was void even though the "sale and purchase was made in good faith and for value."
Summary of this case from Laher Spring Elec. Car Corp. v. BreckenridgeOpinion
No. 27694.
February 18, 1928. Suggestion of Error Overruled March 4, 1929.
1. FRAUDULENT CONVEYANCES. Sale of stock of goods in violation of statute is fraudulent per se, and void as to seller's creditors ( Bulk Sales Act [ Hemingway's Code 1927, section 3335]).
Sale of stock of goods in violation of Bulk Sales Act (Laws 1908, chapter 100, section 1; Hemingway's Code 1927, section 3335), is fraudulent per se, and void as to creditors of seller.
2. FRAUDULENT CONVEYANCES. Evidence of good faith and payment of value by purchaser of stock of goods in violation of statute is no defense to suit by creditors of seller ( Bulk Sales Act [ Hemingway's Code 1927, section 3335]).
Evidence of good faith and payment of value by purchaser of stock of goods in violation of Bulk Sales Act (Laws 1908, chapter 100, section 1; Hemingway's Code 1927, section 3335) is no defense to suit by creditors of seller to hold purchasers liable for their debts to extent of value of goods sold.
3. FRAUDULENT CONVEYANCES. Purchaser of stock of merchandise in violation of Bulk Sales Act holds goods as trustees for seller's creditors, and creditors may subject goods to payment of debts or recover personal judgment against purchaser ( Bulk Sales Act [ Hemingway's Code 1927, section 3335]).
Purchaser of stock of merchandise in violation of Bulk Sales Act (Laws 1908, chapter 100, section 1; Hemingway's Code 1927, section 3335) holds goods as trustees for creditors of seller, and creditors are entitled to subject goods in purchaser's hands to payment of their debts to extent of their value, or to recover personal judgment against purchaser for amount of their debts, not to exceed value of goods.
4. FRAUDULENT CONVEYANCES. Sale of goods exempt from execution is valid, even though made with intent to defraud seller's creditors.
Sale of goods which are exempt from execution is valid, even though made with intent to defraud seller's creditors.
5. FRAUDULENT CONVEYANCES. Sale of goods exempt from execution is not within statute of frauds ( Bulk Sales Act [ Hemingway's Code 1927, section 3335]).
Sale of goods which are exempt from execution is not within statute of frauds, of which Bulk Sales Act (Laws 1908, chapter 100, section 1; Hemingway's Code 1927, section 3335) is part.
6. FRAUDULENT CONVEYANCES. Finding that value of stock of goods sold was less than two hundred and fifty dollars, held not against weight of evidence ( Hemingway's Code 1927, section 1902; Bulk Sales Act [ Hemingway's Code 1927, section 3335]).
Chancellor's finding that value of stock of goods sold without compliance with Bulk Sales Act (Laws 1908, chapter 100, section 1; Hemingway's Code 1927, section 3335) was less than two hundred and fifty dollars, so as to be exempt from execution under Laws 1926, chapter 159 (Hemingway's Code 1927, section 1902), held not against overwhelming weight of evidence.
APPEAL from chancery court of Quitman county, HON. HARVEY McGEHEE, Chancellor.
E.C. Black, for appellants.
The best evidence shows that the fair market value of this stock of goods, at the time of the sale, was more than two hundred fifty dollars, and this case should be reversed. Assuming that the court should hold that if it is worth two hundred fifty dollars or less it was not necessary to comply with the Bulk Sales Law, still, in a sale of a stock of goods in any manner other than the regular course of trade, the Bulk Sales Law must be complied with, irrespective of value.
This case should be reversed even though the court should hold that the fair market value of said goods at the time of sale was two hundred fifty dollars or less, and that it is not necessary to comply with the Bulk Sales Law, and the seller is entitled to an exemption of two hundred fifty dollars, because in this case it is shown that Bonner waived any right to claim his exemption and the property was dealt with as non-exempt property, and the full proceeds paid over to the creditors. See 25 C.J., p. 113, par. 195; Levy v. T.R. Rosell Co., 82 Miss. 527, 34 So. 321.
Sec. 1812, par. 9, Hem. Code 1917, specifies the property exempt to the head of a family. Sec. 1922 provides that personal property not exceeding in value two hundred fifty dollars may be selected in lieu of the articles specified in par. 9, sec. 1812. Therefore, if this stock of goods was of a value of two hundred fifty dollars or less it was not thereby exempt under the statute, but might have been selected in lieu of the exempt property specified by the statute. Bonner failed to select this property, but dealt with it as non-exempt property instead. I am not unmindful of sec. 1833, Hem. Code 1917, but contend that this section has reference to property specified in the statute as exempt or property which has been selected in lieu of the property specified in the statute. 25 C.J. 106, par. 182; Peters Shoe Co. v. Gun, 121 Miss. 679, 83 So. 742; Walton v. Walter Fisher Co., 146 Miss. 291, 111 So. 364, Ann. Cas. 1913C 1213, Ann. Cas. 1914B 1101; Kline v. Sims, 149 Miss. 154, 114 So. 871; Rutherford v. Jamieson, 65 Miss. 219, 3 So. 412.
It is admitted by appellee that he paid five hundred sixty dollars for this stock of goods, and for the sake of this argument we may admit that he paid more than the fair market value of the stock of goods and that the fair market value was less than two hundred fifty dollars, yet if he paid five hundred sixty dollars for it and that was more than he should have paid, there is three hundred ten dollars of the proceeds of the sale in which the appellants were entitled to participate under any view of the case, and if they had been notified of the sale as provided by the Bulk Sales Law then they would have received their pro-rata of this three hundred and ten dollars. Not having been notified, they did not participate and have been thereby damaged, therefore they should recover from Gee because of the fact that the three hundred and ten dollars in the hands of Mr. Gee or Mr. Bonner or any one else was subject to the debts of Bonner, and it makes no difference what the stock of goods was worth, whether two hundred fifty dollars or three thousand dollars. The best evidence of the value of anything is what it sells for.
Gore Gore, for appellee.
Counsel argues at great length as to the value of the stock of goods in controversy, contending that six hundred dollars was a fair market value therefor. A number of witnesses testified in this case as to the character of merchandise and the fair cash market value thereof at the time of the sale from Bonner to Gee. The first witness, Mr. G.W. Fuller, testified that he was familiar with the class and character of merchandise that was included in this stock sold by Bonner to Gee, was familiar with the merchandise itself, and was also familiar with the market value of such merchandise; that he estimated the value of this stock of goods at less than two hundred dollars. The only proof in the entire record of a greater value than two hundred fifty dollars, is contained in the statement of what the complainants expected to prove by the witness Bonner, if he were present and testified in the case. We submit that the overwhelming proof in the case is to the effect that the value of these goods was less than two hundred fifty dollars, and this fair cash market value of the goods in controversy, being a question of fact, and it having been found by the court from the evidence to be a fact, that the goods were worth less than two hundred fifty dollars, this court will not reverse the finding of the chancellor, on the facts, which is not only not manifestly wrong, but clearly right, and amply and fully supported by the record. Counsel cites Walton v. Fisher Co., 146 Miss. 291, 111 So. 364. In that case the evidence showed that Mrs. Warfield had a husband and that they were living together as husband and wife, and there was an entire absence of evidence tending to show that Mrs. Warfield was entitled to the exemption allowed by the statute out of the stock of goods involved. There was no showing that she had no other property, or that her husband as head of the family did not hold all of the exemption allowed by the statute, and further, there was no evidence in the record showing that even she did not hold all of the exemptions allowed by the statute.
We submit that it should not be necessary to cite authority on the proposition that compliance with the statute for the protection of creditors, is not necessary, where such creditors have not and cannot under any conceivable theory, have any interest in the thing to be sold. It would be a vain and foolish thing to require compliance with the statute, when such compliance would not avail anybody any good.
Appellants, as creditors of O.E. Bonner, formerly a merchant of Marks, in Quitman county, filed their bill against appellee, the purchaser from Bonner of the latter's stock of merchandise, seeking to hold appellee liable as a trustee to the extent of the value of the merchandise so purchased by him, for the benefit of Bonner' creditors, upon the ground that the sale of the stock of merchandise from Bonner to appellee was made in violation of the bulk sales statute (chapter 100 of the Laws of 1908; section 3335 of Hemingway's Code of 1927), and therefore void as to Bonner's creditors. There was a trial on bill, answer, and proofs, resulting in a final decree in the appellee's favor, from which decree, appellants prosecute this appeal.
Bonner was a merchant at Marks, with a small stock of goods, wares, and merchandise, which he sold at retail. He sold the stock of merchandise to appellee in bulk without complying with the bulk sales statute. Appellants were creditors of Bonner, having sold him goods which went into his business. Bonner was insolvent, owning no other property than his stock of goods.
Our bulk sales statute is the uniform Bulk Sales Act, which has been adopted by most of the states of the United States. The act constitutes part of the Statute of Frauds. The sale of a stock of goods in violation of the statute is fraudulent per se, and void as to the creditors of the seller, and evidence of good faith and payment of value by the purchaser is no defense to a suit by the creditors of the seller to hold the purchaser liable for their debts to the extent of the value of the goods sold. Moore Dry Goods Co. v. Rowe, 97 Miss. 775, 53 So. 626; Dean v. Bowles, 110 Miss. 575, 70 So. 693; Peters Branch International Shoe Co. v. Gunn, 121 Miss. 679, 83 So. 742; Walton v. Walter Fisher Co., 146 Miss. 291, 111 So. 364; Kline v. Sims, 149 Miss. 154, 114 So. 871. The purchaser of a stock of merchandise in violation of the Bulk Sales Act holds the goods as trustee for the creditors of the seller, and the creditors are entitled to subject the goods in his hands to the payment of their debts to the extent of their value, or to recover a personal judgment against the purchaser for the amount of their debts, not to exceed the value of the goods.
Appellee defended the suit mainly upon the ground that the stock of goods purchased by him from Bonner was exempt from the debts of the latter, and therefore the bulk sales statute had no application. An insolvent debtor may make a valid gift of his property, exempt from execution. Such property is not subject to the demands of his creditors. A sale thereof is valid, even though made with intent to defraud his creditors. Such a sale is not within the Statute of Frauds, of which, as stated, the Bulk Sales Act is part. Smith v. Allen, 39 Miss. 469; O'Conner v. Ward, 60 Miss. 1025; Willoughby v. Pope, 101 Miss. 808, 85 So. 705.
The chancellor tried the issue of facts as to whether the goods bought by appellee from Bonner were exempt from the debts of the latter, and found as a fact that they were so exempt. Under chapter 159 of the Laws of 1926 (section 1902, Hemingway's Code of 1927), every citizen of this state, male or female, being a householder and having a family, is entitled to hold, exempt from sale, or seizure under execution or attachment, the land and building owned and occupied as a residence by such person, not to exceed in value three thousand dollars, and personal property to be selected by him, not to exceed in value two hundred fifty dollars, or in lieu thereof the articles specified as exempt to the head of a family in another section of the chapter in the Code (Hemingway's Code 1927, section 1891), under the head "Exempt Property."
There was no dispute in the evidence that Bonner was the head of a family, and lived within the corporate limits of the municipality of Marks, and that he owned no other property, at the time of the sale of his stock of merchandise to appellee, than such stock of merchandise. The issue of fact tried by the chancellor, and on which there was a conflict in the evidence, was whether or not the stock of merchandise was of the value of more than two hundred fifty dollars, and claimed by Bonner as exempt from his debts. Without going into the evidence in detail, we deem it sufficient to say that the chancellor would have been justified in finding either way on that issue. Therefore we cannot hold that the finding of the chancellor that the value of the goods was less than two hundred fifty dollars, and claimed by Bonner as exempt, was against the overwhelming weight of the evidence.
Affirmed.