Case Name: Whittington v. Yazoo Delta Mortgage Co.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1927-12-05
Citations: 148 Miss. 861
Docket Number: No. 26656
Parties: Whittington v. Yazoo Delta Mortgage Co.
Judges: 
Reporter: Mississippi Reports
Volume: 148
Pages: 861–871

Head Matter:
Whittington v. Yazoo Delta Mortgage Co.
(Division A.
Dec. 5, 1927.)
[114 So. 752.
No. 26656.]
J. 0. Day and Watkins, Watkins d Eager, for appellant.
Robertson, Yerger & Cook, for appellee.
Watkins, Watkins & Eager, in reply for appellant.
Corpus Juris-Cyc. References:' Fraudulent Conveyances, 27CJ, p. 590, n. 80; p. 875, n. 36, 38; p. 879, n. 93; p. 892, n. 8. As to validity of sale in violation of Bulk Sales Law, see 12 R. C. L. 525; 2 R. C. L. 1443; 4 R. C. L. Supp. 761; 5 R. C. L. Supp. 649; 6 R. C. L, Supp. 713.

Opinion:
McGowen, J.,
delivered the opinion of the court.
This cause arose in the chancery court upon a claimant's issue filed by Mrs. C. A. Whittington, setting up her claim to a certain .stock of goods levied on by the sheriff by virtue of an execution issued by the chancery court against C. A. Whittington on a judgment against him in favor of the- Yazoo Delta Mortgage Company.
We shall state only such facts as we deem material to an understanding of the conclusions we have reached herein :
C. A. Whittington, defendant in execution, and Mrs. C. A. Whittington are husband and wife, having been married late in the year 1920' or early in the year of 1921. The husband bought a drug store and became the sole owner thereof, operated theretofore, und thereafter down to the date of the execution executed by the sheriff herein, under the name of "City Drug Store."
In 1924 the husband took a position with the federal government as narcotic inspector, and thereupon sold his drug store, a three-fourths interest therein, to Mrs. Whittington for a consideration of three thousand dollars, and a one-fourth interest to Roy Whittington for one thousand dollars. The transfer of the three-fourths interest from the husband to the wife was in writing, acknowledged and recorded, and recited a consideration of three 'thousand dollars paid therefor. Subsequently, a few months later, Mrs. Whitting*ton bought and paid for the one-fourth interest of her brother-in-law.
The bill of sale from the husband to his wife sets out a list of creditors, six in number, and lists the amount due them, in round numbers as about one thousand seven hundred dollars, which indebtedness was assumed by Mrs. Whittington and Roy Whittington. It is conceded that the Bulk Sales Law was not complied with in this sale by the husband to his wife, the appellant here.
The evidence in the case is to the effect that for a portion of the time in 1924 and 1925 the husband was not in the town of Tutwiler, but was engaged in the performance of his duties as inspector for the government. The evidence also shows that in 1926 the husband was engaged in farming, and that during that year some controversy arose between the Yazoo Delta Mortgage Company and C. A. Whittington, resulting in a lawsuit between them, which was evidently for a seizure of the crops, judging from the recitals in the judgment which was entered on November 12, 1926. The clerk was appointed to take charge of the crops, and the proceeds were to be credited on the judgment, after the sale, by the clerk. The amount of the judgment was seven hundred eighty-six dollars and fifty cents. Evidently there was some credit on this judgment, for the reason that the execution issued for five hundred forty-eight dollars and ninety-four cents.
In the course of the examination of Mrs. Whitting-ton as his witness by the plaintiff in execution, the ap-pellee here, Mrs. Whittington was very uncertain and indefinite as to where she obtained the money with which to purchase this stock of goods, not remembering whether the money was or was npt in certain banks, but insisting that the money was her own, separate and distinct from her husband's property, and stating that her hus band's use of ber money bad always been "a bone of contention" between them. At tbe time of tbeir marriage be was a student, and be is not shown to have bad any separate estate.
The testimony is uncontradicted that Mrs. Whitting-ton gave ber personal attention to tbe business of tbe drug store, and that she kept the books, and it is also shown that under her direction tbe husband purchased goods for tbe store at times, and "helped them out" when they bad a rush, and that she had a clerk employed who was constantly engaged in looking after tbe business. Tbe husband was shown to have been irregular in his visits to Tutwiler and being' about the store.
The plaintiff ' in execution made no effort to show when his debt was created, or how the cause of action arose, except what we have recited as being reflected by the judgment'in favor of the Yazoo Delta Mortgage Company against the husband.
The court below entered a decree in favor of the Ya-zoo Delta Mortgage Company, and Mrs. C. A. Whitting-ton, the claimant, appeals here.' .
Counsel for appellant assigns as error that the court below erred in holding':
(1) That the sale of the stock of goods between the hhsband and wife in bulk was a violation of section 3335, Hemingway's Code 1927 (Laws 1908, chapter 100), wherein the sale of a stock of goods in bulk is fraudulent and void against the creditors of.the seller.unless sections (a), (b), and (c) shall have been complied with.
(2) That the evidence in the case did not warrant the court in holding that Mrs. Whittington violated section 3334, Hemingway's Code 1927 (section 4784, Code of 1906), in that the sign over the place of business was not changed from the "City Drug Store" from the time the husband bought the business until the execution was levied.
In order to uphold the decree of the court below, it would be necessary to hold either that the Bulk Sales Law was violated, and applied to this creditor, or that the business sign statute was violated.
(1) Was the violation of the Bulk Sales Law a fraud upon this creditor, the appellee? Unhesitatingly we say that the statute is plain, and the material part is as follows:
"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 he presumed to he fraudulent and -void as against the creditors of the seller, unless, at least five (5) days before the sale."
The burden of proof was upon the appellee, the plaintiff in execution, to show that it was a creditor of C. A. Whittington on the date of the transfer of the stock of goods in bulk by C. A. Whittington to his wife. This it has not done, but from the circumstances it is obvious to us that the cause of action arose out of a farming contract between C. A. Whittington and the Yazoo Delta Mortgage Company during the year 1926, more than two years after the sale. The appellee was a subsequent creditor of C. A. Whittington, who is not shown as such creditor to have had any connection with or relation to the stock of drugs which is the subject of controversy here. We think the authorities of other states are in unanimity that the Bulk Sales Law is not applicable to parties who were not creditors at the time of the transfer. See 27 C. J. 879, section 888, and authorities there cited.
Counsel for appellee says this case is redolent with fraud. We assume he means that the transaction was one between husband and wife; that it was the sale of the stock of goods; that the husband and wife did not agree as-witnesses as to the source of the three thousand dollars recited to have been paid by the wife to the husband; and their testimony was very unsatisfactory.
We may concede all that counsel says, but his client may not avail of the Bulk Sales Law unless he was a creditor such as is described in the act.
Appellee cites the case of Moore Dry Goods Co. v. Rowe & Carithers, 99 Miss. 30, 54 So. 659, Ann Cas. 1913C, 1213, reported on suggestion of error, main opinion 97 Miss. 775, 53 So. 626, wherein this court held that the sale discussed in the case then before the court was fraudulent and void because said subsections (a), (b), and (c) had not been complied with. But the court was there dealing with a bulk sale wherein the buyer and seller had not complied with subsections (a), (b), and (c), or some material part thereof, and was dealing with a creditor whose debt existed at the time of the sale. There is nothing therein contrary to the announcement here made.
The Bulk Sales Law is in derogation of the common law, and must be strictly construed, and does not affect a subsequent creditor, unless perchance it may be that the evidence would disclose that the void bulk sale in some way affected the rights of the subsequent creditor. This we do not decide, because it is not in this case.
(2) That the evidence in this case did not warrant the court in holding that Mrs. Whittington violated section 3334, Hemingway's Code 1927 (section 4784, Code of 1906), in that the sign over the place of business was not changed from the "City Drug Store" from the time the husband bought the business until the execution was levied.
In this case on this question it does not appear that the husband transacted the business of the drug store after the sale. Immediately after1 the sale he was away for many months engaged in other business, and the evidence shows very little of his time was spent in this place of business, that Mrs. Whittington and the clerk selected by her transacted the business, and there is nothing to show that the husband, Whittington, under took to transact any business in Ms own name in so far as it affected the "City Drug Store." See Adams v. Berg, 67 Miss. 234, 7 So. 225; Bufkin v. Lyon, 68 Miss. 255, 10 So. 38; Harris v. Robson, 68 Miss. 506, 9 So. 829; Carberry v. Burns, 68 Miss. 573, 9 So. 290.
Se that we do not tMnk the plaintiff in execution may levy upon the stock of goods herein by virtue of the sign statute cited, supra.
The court below should have rendered a judgment for the claimant, Mrs. C. A. Whittington, the appellant.
Reversed, and judgment here for appellant.