Opinion
Nos. 31196, 31197.
April 23, 1934.
1. FRAUDULENT CONVEYANCES.
One who purchased automobile filling station without complying with Bulk Sales Law held liable to seller's creditors for oil and gasoline purchased by seller and used in seller's business before sale of filling station was consummated (Code 1930, section 3353).
2. FRAUDULENT CONVEYANCES.
Fixtures used in connection with automobile filling station held part of owner's "stock of merchandise," within Bulk Sales Law (Code 1930, section 3353).
APPEAL from Circuit Court of Forrest County.
Heidelberg Roberts, of Hattiesburg, for appellants.
A sale of any portion of a stock of merchandise, otherwise than in the ordinary course of trade, or in the regular and usual prosecution of the seller's business, and a sale of an entire stock of merchandise in gross, shall be presumed to be fraudulent and void as against the creditors of the seller, unless, at least five days before the sale, the seller shall have made a full and detailed inventory.
Section 3353, Mississippi Code of 1930.
Merchandise fixtures often constitute a very large part of the merchant's assets carried in his place of business, and it is a rare case that a merchant sells his stock of goods without selling his fixtures. The word "merchandise" in the statute should be given a broad enough meaning to cover the evil the statute sought to remedy. To limit the statute strictly to goods kept for sale would, in a large measure, defeat its purpose.
Walton v. Walter Fisher Co., 146 Miss. 291, 111 So. 364; Ellis Jones Drug Co. v. Coker, 151 Miss. 102, 117 So. 545.
When the complainants in the cases now before the court showed that they were two of the creditors of the Hub City Service Station at the time of its transfer on the first day of May, 1932, and that there was a transfer made of furniture, fixtures and equipment valued at five hundred dollars and gas and oil valued at two hundred ninety-eight dollars and two cents, said complainants had made out a prima facie case and it was up to the defendants to show, if they could, that they had complied with the terms and provisions of the bulk sales law. There was no effort on the part of said defendants to offer any such testimony.
Moore Dry Goods Co. v. Rowe Carithers, 99 Miss. 30, 54 So. 659; Huckins v. Smith, 29 F.2d 907.
Paul B. Johnson, of Hattiesburg, for appellees.
Where business alleged to have been sold in violation of bulk sales law was essentially an automobile repair shop, in which it was necessary to keep various parts for use in repairing cars, which parts were usually adjusted to cars of purchasers, and sale of such parts constituted an inconsequential part of business, held, that chancellor properly found that such business was not "mercantile business" nor parts of a "stock of merchandise" within meaning of bulk sales law.
Fish Rubber Co. v. Hinson Auto Co., 270 S.W. 605.
The purpose of the bulk sales law, as we understand it, is to prevent merchants from perpetrating a fraud against those who furnish them merchandise, and the law affords a means whereby creditors shall have notice before the merchant can successfully dispose of his stock of merchandise. In this case the filling station operator Breland delivered all of his tires and tubes, or so called merchandise, to the appellants. They stripped him of all the merchandise in his possession and left him with nothing save his tools and equipment for operating the filling station. Certainly when he had no merchandise to dispose of he was no longer a merchant and if he was not engaged in the mercantile business, certainly the sale of his filling station and tools did not come within the provisions of the bulk sales law.
Carnaggio Brothers v. City of Greenwood, 108 So. 141.
Argued orally by M.M. Roberts, for appellant, and by Paul B. Johnson, for appellee.
Each of these appellants filed, on the same day, bills in equity in the county court of Forrest county against the appellees, alleging that the appellee Breland, while indebted to them for merchandise sold him, sold his stock of merchandise to the other appellees, J.H. and H.C. Overstreet, without complying with the Bulk Sales Law, section 3353, Code of 1930; prayed for a discovery of the articles sold, the value thereof, and the amount paid therefor, and for a judgment against each of the appellees for the amount of the debts due them by Breland.
The cases were not consolidated, but were tried together by agreement, resulting in decrees awarding personal judgments against Breland, but dismissing the bills as to the Overstreets. These decrees were affirmed on appeal to the circuit court.
Breland owned and operated an automobile filling station. He returned to the appellants the merchandise bought from them, and then sold his filling station to H.C. Overstreet, without complying with the requirements of the Bulk Sales Law. The evidence discloses that the sale to Overstreet was agreed on, but that a day intervened between the making of the agreement and the consummation of the sale, during which day Breland continued to operate the filling station, delivered the property sold the next day, and then received payment therefor. On the morning of the day of the agreement for the sale, Breland purchased, at Overstreet's suggestion, a lot of oil and gasoline, placed the same in his receptacles therefor, and sold therefrom during the day. The amount of oil and gasoline so purchased does not clearly appear, but Overstreet paid Breland seven hundred eighty-nine dollars and sixty-two cents, five hundred dollars of which, according to him, represented the filling station fixtures, and the remainder was to cover the gasoline and oil. Overstreet's contention is that he purchased from Breland only the fixtures; that the gasoline and oil referred to were purchased by Breland for and as the agent of Overstreet. It is immaterial how Breland came to purchase the gasoline and oil. He purchased it on his own credit, used it in his business, and it became for all intents and purposes a part of his stock and trade.
In so far as the fixtures are concerned, it would be immaterial whether any oil and gasoline were included in the sale to Overstreet, for fixtures used in connection with a mercantile business are a part of the owner's "stock of merchandise," and within the provisions of the Bulk Sales Law. Walton v. Walter Fisher Co., 146 Miss. 291, 111 So. 364. Cf. Carnaggio Bros. v. Greenwood, 142 Miss. 885, 108 So. 141. The evidence discloses that J.H. Overstreet was not a party to the sale and had nothing to do therewith, except that H.C. Overstreet obtained the money from him with which to make the purchase.
The circuit court should have affirmed the decrees of the county court as to Breland and J.H. Overstreet, reversed them as to H.C. Overstreet, and tried the cases de novo as to him. Section 704, Code of 1930. Such decrees will be entered here.
Reversed in part and remanded.