Case ID: so2d_153/html/0203-01.html
Source: Caselaw Access Project
Author: {"author": "HOOD, Judge. TATE, Judge", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

UNITED STATES RUBBER COMPANY, Plaintiff and Appellee, v. Mary BALL et al., Mary Ball, Defendant and Appellant.
    No. 807.
    Court of Appeal of Louisiana. Third Circuit.
    April 9, 1963.
    Rehearing Denied May 28, 1963.
    Gravel, Sheffield & Führer, by Camille F. Gravel, Jr., and Alfred Mansour, Alexandria, La., for defendants-appellants.
    Dupuy & Dupuy, by David I. Couvillion and Marc Dupuy, Marksville, for plaintiff-appellee.
    Before FRUGÉ, TATE and HOOD, JJ.
   HOOD, Judge.

Plaintiff, United States Rubber Company, instituted this suit against Coco & Fuglaar, Inc., Richard Coco and Mary Ball, seeking a judgment against all of said defendants, in solido, for the principal sum of $14,428.73. Alternatively, plaintiff prays for judgment against Mary Ball decreeing the sale of a business from Coco & Fuglaar, Inc., to the said Miss Ball to be null and void, and decreeing the latter to be liable to plaintiff under the Louisiana Bulk Sales Law (LSA-R.S. 9:2961 et seq.). Judgment was rendered by default against the first two named defendants for the amount claimed under the principal demand. The remaining defendant, Mary Ball, filed an answer, and after trial on the merits, judgment was rendered by the trial court in favor of plaintiff and against that defendant, decreeing the sale of the business to be null and void insofar as it affects the rights of plaintiff herein, and condemning the said Miss Ball to pay to plaintiff the principal sum of $7,468.20. The defendant, Mary Ball, has appealed from this last-mentioned judgment.

The evidence shows that by act of sale dated January 4, 1961, Miss Ball purchased from Coco & Fuglaar, Inc., substantially all of the tire business formerly operated by the vendor at 98 Bolton Avenue in Alexandria. The sale purports to convey to the purchaser certain furniture and fixtures, equipment, trucks, stock of merchandise, accounts receivable and other assets. As consideration for the property and rights so conveyed Miss Ball paid the sum of $1,173.92, in cash, and she assumed and obligated herself to pay a number of liabilities of the vendor. The assumed debts which were specifically listed in the act of sale amounted to the aggregate sum of more than $20,000.00. In completing this sale the parties did not comply with the provisions of the Louisiana Bulk Sales Law.

Miss Ball had been employed by Coco & Fuglaar, Inc., as bookkeeper and as manager of its tire business for more than two years prior to the sale, and she was thoroughly familiar with all of the assets and liabilities of the company at the time she purchased the business. She also owned the building in which the tire business was then being conducted, which building had been leased by her to Coco & Fuglaar, Inc., for some time prior to the sale. Immediately after the sale was completed, she took over the business, as owner, and continued to operate it in the same location without any interruption of such business.

In August, 1959, or more than a year before this transaction took place, plaintiff began doing business with Coco & Fuglaar, Inc., by selling it merchandise on consignment, and it continued to do so until October 12, 1960, at which time the consignment agreement was terminated and all merchandise belonging to plaintiff was repossessed. The account due- plaintiff by Coco & Fug-laar, Inc., had been delinquent for several months prior to the cancellation of the consignment agreement, and representatives of plaintiff had contacted officers and the manager of the debtor corporation on several occasions in an effort to obtain payment of the amounts due.

On December 13, 1960, William P. Alth-ans, the District Credit Manager of plaintiff company, went to Alexandria and met with Richard Coco and Jesse Coco, President and Secretary-Treasurer, respectively, of Coco & Fuglaar, Inc., and with Miss Ball; the purpose of such meeting being to discuss this delinquent account. At this meeting, which lasted almost all day, it was determined that the balance then due on that account amounted to $14,428.73. A schedule of payments was agreed upon, and as evidence of the indebtedness six promissory notes amounting to the aggregate sum of $14,428.73 were executed by Coco & Fug-laar, Inc., made payable to the order of plaintiff, all of which notes were endorsed personally by Richard Coco, President of the corporation. These notes were delivered to plaintiff, and as security for the payment of this indebtedness two accounts receivable due Coco & Fuglaar, Inc., were assigned to plaintiff. One of these accounts, amounting to $15,430.95, was due by Coco Brothers, and the other was due by Richard Coco, personally, in the amount of $4,726.25.

No payments have been made on the notes or on the two accounts which were assigned to plaintiff, and by this suit plaintiff is seeking to recover the amount alleged to be due on the indebtedness represented by the above-described promissory notes.

Plaintiff contends primarily that Miss Ball is indebted to it for the full amount claimed because she expressly assumed and agreed to pay all of the liabilities of Coco & Fuglaar, Inc., including the amount due plaintiff in this suit. In the alternative, plaintiff contends that since there has been no compliance with the Louisiana Bulk Sales Law, the sale is null and void as to plaintiff, and that it is entitled to recover from the purchaser, Miss Ball, the amount claimed up to the fair value of all goods and effects transferred to her.

Defendant, Mary Ball, denies that she agreed to pay any part of the account due plaintiff by Coco & Fuglaar, Inc. On the contrary, she contends that prior to the sale plaintiff made other arrangements for the payment of that account, and that plaintiff expressly agreed with her that upon her purchase of the business she would not be liable to plaintiff for any part of the indebtedness due it by Coco & Fuglaar, Inc. As alternative defenses, Miss Ball pleads estoppel against or laches on the part of plaintiff.

We find no evidence tending to establish plaintiff’s primary contention that Miss Ball expressly agreed to pay the account upon which this suit is based. Accordingly, we think the trial court correctly held that there was no such agreement.

The next question presented is whether plaintiff expressly agreed with Miss Ball that upon her purchase of the tire business she would not be obligated to pay the account due plaintiff by her vendor, Coco & Fuglaar, Inc.

Miss Ball testified that early in November, 1960, she agreed with Richard Coco that she would purchase the business if she could do so without assuming the indebtedness due by Coco & Fuglaar, Inc., to plaintiff. She stated that on two occasions, November 12 and December 3, 1960, she informed Mr. Althans that she desired to purchase the tire business, but did not want to assume the indebtedness due plaintiff, and she urged Mr. Althans to “settle the account.” According to her testimony, Mr. Althans came to Alexandria on December 13, 1960, for the purpose of settling the account, and thus enabling her to purchase the business without having to assume that indebtedness. It was Miss Ball’s understanding from the discussions held on that date that plaintiff accepted the notes and the assignment of two accounts as a settlement of the open account, and that plaintiff thereupon agreed that Miss Ball could then buy the tire business from Coco & Fuglaar, Inc., without being liable for the latter’s indebtedness to plaintiff.

Mr. Althans denies that Miss Ball informed him prior to December 13, 1960, of her plan to purchase the business, and he testified that on December 13, 1960, there was no agreement, express or implied, to the effect that she could purchase the tire business without assuming or obligating herself to pay the account due plaintiff. He conceded that on the last-mentioned date Miss Ball mentioned to him, “ * * * that she was thinking of possibly purchasing that business if she could come to some arrangements with Mr. Richard Coco.” He testified however, that this statement was made by defendant Ball at the conclusion of the conference, after the settlement of this account had been arranged, and that he then advised Miss Ball that if she did purchase the business, that “she should comply with the bulk sales statute of Louisiana.”

The testimony of four other witnesses, including Richard and Jesse Coco, tend to support Miss Ball’s version of what transpired on that occasion, while the testimony of E. H. Harry, Jr., Assistant District Credit Manager of plaintiff company, and the written documents which were filed in evidence, tend to support the version given by Mr. Althans.

With reference to some of the documentary evidence in the record, we note that the six promissory notes which form the basis for this suit were all executed by Coco & Fuglaar, Inc., the owner and operator of the tire business which was later sold by it to defendant Ball. There is no question, therefore, but that these notes evidence an obligation of the vendor corporation, which obligation was incurred for tires and merchandise purchased by said vendor from plaintiff in connection with the same tire business. The debt evidenced by these notes, therefore, was a debt. owed by the vendor, Coco & Fuglaar, Inc., at the time the sale was made.

Also, the document executed by Coco & Fuglaar, Inc., on December 13, 1960, formally assigning two accounts to plaintiff as security for the payment of the notes, specifically recites that this assignment was made “in furtherance of the terms of” the consignment agreement which previously had been entered into between plaintiff and said corporation. It seems to us that such a stipulation would not have been included in the assignment if the parties actually had intended, as urged by defendant, that the notes and this assignment were to be accepted by plaintiff as a settlement of the account owed by the tire business, and that said business was no longer to be indebted to plaintiff.

The trial judge in his excellent reasons-for judgment carefully reviewed all of the evidence, including the testimony of each witness, and after doing so he concluded that the evidence failed to establish an agreement between plaintiff and defendant Ball to the effect that the latter would be relieved of any obligation to said plaintiff in the event she purchased the tire business from Coco & Fuglaar, Inc., without complying with the Louisiana Bulk Sales Law. We think the evidence amply supports that conclusion.

Defendant Ball contends alternatively that plaintiff is estopped from taking advantage of her failure to comply with the Bulk Sales Law. The basis for this plea of estoppel is: (1) that Mr. Althans led her to believe that she would not be obligated to plaintiff if she purchased the tire business; (2) that plaintiff’s agents unsuccessfully tried to persuade defendant to continue to handle plaintiff’s tires after the sale had been completed; (3) that after the sale plaintiff accepted a payment of $41.60 from defendant for a sign which admittedly belonged to plaintiff; and (4) that plaintiff made no demand on defendant for payment of the notes until September 2, 1961, although the -first note became due more than six months prior to that date.

As correctly pointed out by counsel for defendant, where a person, with knowledge of the facts, acts or conducts himself in a particular manner, he cannot afterward assume a position inconsistent with such act, to the prejudice of another who has acted in reliance on such conduct or representation. Phillips v. Mid-Continent Life Insurance Company, La.App. 2 Cir., 130 So.2d 791 (Cert. denied). In the instant suit we have found that plaintiff’s agent did not lead Miss Ball to believe that she would be relieved of any indebtedness to plaintiff if she purchased the tire business from Coco & Fuglaar, Inc. Defendant Ball, therefore, did not rely on any such representation in purchasing the business. All of the other acts pointed out by defendant as bases for the plea of estoppel occurred after the sale had been completed, so obviously there could have been no reliance by defendant on any of those acts in purchasing the business. We agree with the trial judge that there is no merit to defendant’s plea of estoppel.

Finally, in the alternative, defendant pleads “laches” on the part of plaintiff in failing to assert a claim against her until more than six months after the first note became due. There is nothing in the record which tends to show that the delay in asserting this claim against defendant was unreasonable or inexcusable, or that defendant was prejudiced in any way because of such delay. Accordingly, we conclude, as did the trial judge, that there is no merit to the plea of laches. See Johnson v. Mansfield Hardware Lumber Company, D.C., 159 F.Supp. 104 (affirmed 5 Cir., 263 F.2d 748); Succession of Picard, 238 La. 455, 115 So.2d 817.

The trial court found that the assets of the business purchased by Miss Ball had a fair value of $23,936.54, and that the total liabilities of the vendor, including the debts which were not expressly assumed by the purchaser, were $46,195.12. The indebtedness of Coco & Fuglaar, Inc., to plaintiff represented 31.2 per cent of the total debts owed. The trial judge held, therefore, that plaintiff was entitled to recover from Miss Ball 31.2 per cent of the fair value of the assets acquired by her, or the sum of $7,468.20. We think his calculations were correct, and that judgment was properly rendered in favor of plaintiff and against Miss Ball for that amount.

For the reasons herein assigned, the judgment appealed from is affirmed. All costs of this appeal are assessed to defendant-appellant.

Affirmed.

On Application for Rehearing.

En Banc. Rehearing denied.

TATE, Judge

(concurring in denial of rehearing).

The writer signed the majority opinion with some reservations. He retains them in signing this denial of the defendant-appellant’s application for rehearing.

I am very frank to say that, on the face of the cold record, I believe the defendant, Miss Ball, by the great preponderance of the evidence has proved her defense that the plaintiff’s credit manager agreed, prior to her purchase, that she could buy the going tire business of Coco & Fuglaar, Inc., without being liable for the debt due by this firm to the plaintiff. If so, of course, the plaintiff is estopped from subsequently seeking to hold Miss Ball liable for her failure to comply with the Bulk Sales Act. See, e. g., Chelsea Sales Corp. v. A. Jacobs Co., La.App. 1 Cir., 193 So. 402.

This defense is advanced by the clear and positive testimony of the plaintiff herself and of her witness Jesse Coco, who was with her in the day-long conference with the plaintiff’s credit manager, as well as by the less precise but nevertheless corroborative testimony of Richard Coco, who participated in part of the conference. It is further stipulated that the testimony of two other witnesses is to the same effect.

Further, I think that her version of the incident is to some extent corroborated by other circumstances.

For instance, the plaintiff’s credit manager positively denied having made such an agreement. However, his final version of the conference was as follows, Tr. 239: “She intimated on the afternoon of December 13th 1960, that she was giving some consideration to purchasing the business of Coco & Fuglaar, Inc. And at that time she had also mentioned she was trying to negotiate in someways of not assuming certain indebtedness of Coco & Fuglaar, Inc. and that is the time I had approached her and told her that when she did make up her mind to purchase the business of Coco & Fuglaar, whether it was the next day or a month later, that she should comply with the Bulk Sales Act of Louisiana. And that we were not in there to negotiate or relieve the firm of Coco & Fuglaar of any indebtedness.”

Is it really likely that in the face of this warning (if indeed it had been given) that Miss Ball would have gone ahead and purchased the assets of Coco & Fuglaar without complying with the Bulk Sales Act? If indeed the plaintiff’s credit manager had warned her that by so doing she was exposing herself to the present $14,000 claim against her by the plaintiff ?

In view of this admission by the plaintiff’s credit manager that the subject of Miss Ball’s purchase of the business was indeed discussed at the conference, the following circumstances seem to be more corroborative of Miss Ball’s version of the agreements reached at the conference than of that of the plaintiff’s credit manager:

1. A few days after the conference of December 13th, Miss Ball purchased the business of Coco & Fuglaar. In doing so, she actually did assume and did pay some twenty thousand dollars in outstanding obligations of the firm (see Tr. 180), plus some two thousand dollars to Coco & Fug-laar. She expressly failed to assume only three accounts (one of them being the present) ; with these three creditors, she thought she had an agreement that the account would be paid by Coco & Fuglaar or its owners from other sources or security.

As was pointed out, Miss Ball was familiar with the Bulk Sales Act. If she had not thought that the plaintiff’s account had been by agreement transferred beyond the application of the Bulk Sales Act, she could have protected herself against claims of these and the other creditors of the business by depositing into court the twenty-two thousand-odd dollars consideration for the business which instead she paid directly to the assumed creditors and to Coco & Fuglaar; in this event, the court distributes the consideration pro rata among the creditors, and the purchaser is free from claim by such creditors, LSA-R.S. 9:2963.

2. The plaintiff’s credit manager likewise admitted that he himself was thoroughly familiar with the Bulk Sales Act. He further admitted that, within about a month after the sale, he learned that Miss Ball had purchased the business without having complied with the Act.

Nevertheless, even though the notes given him in settlement of the debt due the plaintiff by Coco & Fuglaar became delinquent at about that time, he never once sought payment from Miss Ball. The first time that the plaintiff made any demand on Miss Ball for payment of the Coco & Fug-laar liability was not until some seven months later.

3. The majority seems to feel that the plaintiff company could have no cause to release any possible purchaser of the Coco & Fuglaar business of a possible liability to pay the debts of the firm, such as the agreement to which Miss Ball testifies.

On the other hand, the evidence reflects that Miss Ball was an excellent businesswoman, and it further reflects that the plaintiff through its salesman and even through its managers in Kansas City persistently attempted to secure Miss Ball’s agreement to handle its products following Miss Ball’s purchase of the business. The plaintiff’s credit manager may well have seen benefit to his company in encouraging a shift to new management by the livewire Miss Ball of the failing tire business being conducted by Coco & Fuglaar at the premises, which was insolvent largely because of the non-payments of accounts due it from its stock holders or their business enterprises.

4.At the conference of December 13th, to secure the payment of the account due by Coco & Fuglaar the plaintiff’s credit manager secured the assignment to the plaintiff of two accounts totaling about twenty thousand dollars in all. (Although these accounts later proved worthless, at the time they were believed to have value.)' The plaintiff’s removal of these accounts from the assets of the firm available to all its creditors, seems to be corroborative that the plaintiff at the December 13th conference agreed to look only to the owners of Coco & Fuglaar for payment, thus intending to waive any rights against Miss Ball on her purchase of the assets of the business; the value of the remaining assets purchased approximately equaled the amount of the firm’s remaining debts assumed by Miss Ball and paid by her as the consideration for the purchase of the business.

I do therefore believe that the version of the agreement given by Miss Ball and her four witnesses, as corroborated by the surrounding circumstances, is more probable than the version given by the plaintiff’s credit manager. However, human beings are not cut from identical patterns, human conduct is unpredictable, and human memories are variable — the trial judge, who saw and heard the witnesses, apparently concluded that the more improbable version of the conference given by the plaintiff’s credit manager was nevertheless the truthful account, expressly negating any such agreement by him as that to which the defendant and her witnesses testified.

Nevertheless, although I myself would reach a different conclusion in the evaluation of the testimony in this record, ultimately I believe the resolution of the central issue of this suit depends on the credibility of the parties at the conference of December 13th, 1960. It is not my function as an appellate judge to reverse the factual determination by the trial court, especially since the evaluation of credibility is within the province of the trier of fact and not within that of the reviewing tribunal, in the absence of positively shown (manifest) error in such regard.

I therefore respectfully concur with the majority opinion on the merits and with the denial of' the rehearing herein.