Court Opinion

ID: 9832667
Source: CourtListenerOpinion
Date Created: 2023-09-01 22:05:39.546427+00
Date Added: 2024-06-11T07:43:49.987539
License: Public Domain

On'Motion for Leave to File Second Motion for Rehearing.
On the motion for leave to file second motion for rehearing by appellees, we have concluded that it should ’ be denied. As basis for the second motion counsel insist that our opinion, holding a purchaser of merchandise in violation of the Bulk Sales Law as trustee for the benefit of all creditors and upon the same condition, and liable to them to the extent of the value of the property received pro rata, is in conflict with the decisions in Owosso Carriage & Sleigh Co. v. McIntosh, 179 S. W. 257, 107 Tex. 307, L. R. A. 1916B, 970; Kell Milling Co. v. “Wooten (Tex. Civ. App.) 195 S. W. 342; and Gardner v. Goodner, 256 S. W. 911, 113 Tex. 423. The contention is without merit.
The Supreme Court in Owosso Carriage Co. Case held, first, that the Bulk Sales Law was constitutional as an exercise of the police power of the state, and, second, that a creditor might reach through garnishment proceedings the-proceeds of goods sold in violation of the Bulk Sales Law; distinguishing that procedure from former decisions of the Supreme Court in the cases of Blum v. Goldman, 1 S. W. 899, 66 Tex. 623, and Le Gierse v. Kellum, 18 S. W. 509, 66 Tex. 243, in which cases it was held that a creditor of an insolvent debtor could not by a direct proceeding, without the aid of garnishment, attachment, or other similar process, obtain a personal judgment against the purchaser, even^ though he purchased for the purpose of hindering, delaying, or defrauding creditors. As to the amount of liability the court simply held, as did all courts prior to the 1915 amendment to the Bulk Sales Law, which makes a pur*555chaser in violation of it a receiver, that the attaching creditor was entitled to the full amount of his debt, if the property attached was of that value. But the amendment now fixes the purchaser’s liability at the value of the property purchased pro rata to all creditors.
The Gardner v. Goodner Case, supra, by the Commission of Appeals, and cited as being in conflict with our decision, is a thoroughly well-considered case, and completely sustains our decision with respect to the liability of a purchaser of merchandise in violation of the Bulk gales Raw as amended in 1915. We quote from this opinion the following':
“The liability of a purchaser of a stock of goods and fixtures in violation of the Bulk gales Law is that of a receiver. Having taken the property subject to the rights of creditors, he becomes bound in equity to see that the property or its value is appropriated to the satisfaction of claims of the creditors of his seller. He becomes the trustee of an express trust, and is subject to the same duties and liabilities of such a trustee. We think the law was intended to charge him with liability, however, only to the extent of the value of the property received by him,- and this liability is to all of the creditors pro rata. As aptly stated by the gupreme Court of Arkansas in the case of Stuart v. Bank & Trust Co., 185 g. W. 263, 123 Ark. 285, Ann. Cas. 1918A, 268: The Bulk gales Act does not make the person who fails to comply with its provisions liable for all the debts of the seller. It treats the sale as being void and the purchaser as being a receiver and his possession as being for the benefit of all the creditors. He is like any other receiver so far as his liability is concerned. He is responsible for the property purchased, but for that only. If he gets enough property to pay all the debts, he must pay them all. If the property is not sufficient for that purpose, he must pay the creditors pro rata as any other receiver would do.’ ”
(Appellees confuse the two methods by which a creditor may, since the amendment, bring the purchaser violating. the law into court, as fixing two separate and distinct methods of fixing liability, contending that, where a diligent creditor attaches the property, he should be permitted to recover the full amount of his debt, if the property is of that value, and that, on the other hand, if the creditor sues for an accounting as authorized by the statute, he is entitled to recover only pro rata with other creditors. Ap-pellees’ petition, as pointed out in our original opinion, showed a sufficient compliance with both methods of obtaining jurisdiction over the purchaser, but the court failed to charge the purchaser with the only liability which the statutes imposed upon it, that of accounting to all the creditors for the value of the property received pro rata. The mode, and manner of fixing the liability and of adjusting the rights of all creditors is clearly and well set forth in Gardner v. Goodner, supra.
The Kell Milling Company Case, supra, did not take into consideration the 1915 amendment to the Bulk gales Law, which fixed the liability of a purchaser as that of a trustee. The issue involved in tl}at case, and for which the case was reversed, was that the court was in doubt as to the sufficiency of the testimony to sustain an allegation that the debtor had transferred his merchandise to the purchaser as trustee for the benefit of his creditors, and a new trial was ordered to establish that fact.
The contentions set out in the motion for leave to file second motion for rehearing are without merit, and the motion will be refused and denied in all things.
Motion refused.