Court Opinion

ID: 5196227
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:43:40.46007+00
Date Added: 2024-06-11T08:27:05.602926
License: Public Domain

Ingraham, J. (dissenting):
The question presented upon this appeal is as to the validity of chapter 528 of the Laws of 1902, as it is conceded that the demurrer can only be sustained if that statute violates either the Constitution of the United States or the Constitution of this State. This act declares fraudulent and void as against the creditors of the vendor the sale of an entire stock of merchandise in bulk or any portion of a stock of merchandise out of the ordinary course of business unless its provisions are complied with. The condition upon which the owner of a stock of merchandise may sell either the whole or a part thereof is that the seller and purchaser shall, at least five days before the sale, make a full and detailed inventory showing the quantity, and, so far as possible, with the exercise of reasonable diligence, the cost price to the seller of each article to be included in the sale, and that the purchaser shall at least five days before the sale, in good faith, make a full, explicit inquiry of the seller as to the name and place of residence or place of business of each and every creditor of the seller and the amount owing each creditor; that the purchaser shall, at least five days before the sale, in good faith, notify, or cause to be notified, personally or by registered mail, each of the seller’s creditors of whom the purchaser has knowledge, or can, with the exercise of reasonable diligence, acquire knowledge, of such proposed sale, and of the stated cost price of merchandise to be sold and the price proposed to be paid therefor by the purchaser; and that the seller shall • at least five days before such sale file (where, is not stated) a truthful answer in writing of each and all of said inquiries. Thus, the power to dispose of a stock of merchandise, or any portion thereof, does not alone depend upon the good faith of the vendor, but also upon the good faith of the vendee. The vendor may comply with the statute in all respects; he may act in entire good faith, but the sale is still fraudulent and void, unless the vendee also complies with the statute on his part, and no method is provided by which a vendor may compel the vendee to comply with the statute, or by which the vendee can compel the vendor to comply with it. A man who, before the passage of this act, was the owner of a stock of merchandise, with power to sell it as he pleased, the day after its passage was prohibited from selling it except upon conditions which the owner could not control. A notice *228to the creditors given by the seller would not comply with the statute. This statute does not, as do the statutes in relation to chattel mortgages and conditional sales, provide that the mortgage or the contract for such a sale must be in writing and notice thereof given by filing the mortgage or contract which could be complied with by either the mortgagor or mortgagee or vendor or vendee, but declares the sale fraudulent and void if one of the parties does not act in good faith, although the other party may have been entirely, innocent and may have honestly supposed that the statute had been complied with. This statute is sought to be upheld, as is usual when statutes of this kind are questioned, under the broad power that has been reserved to the States known as the police power; but we are reminded by many cases that there is a limit to this police power, and the courts have constantly held that attempts under the police power to restrict the rights of individuals, or to interfere with the personal liberty are void when beyond a fair and reasonable connection with it and to attain the ends which are recognized as within it. As was said in Lawton v. Steele (152 U. S. 133) : “To justify the State in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. The Legislature may not, under the guise of. protecting the public interests, arbitrarily interfere with private business or impose unusual and unnecessary restrictions upon lawful occupations.” Section 6 of article 1 of the Constitution of the State of Hew York provides that no person shall be deprived “ of life, liberty or property without due process of law;” and the courts of this State have universally given to this provision a large and liberal interpretation and have held that the fundamental principle of free government, expressed in these words, protects not only life, liberty and property, in a strict and technical sense, against unlawful invasion by the government, but also protects every essential incident to the enjoyment of those rights. (People v. King, 110 N. Y. 418, and cases cited.). It cannot be fairly disputed, I think, that this statute seriously affects the power of disposition of property by its owner, for the validity of every sale of property embraced within its pro*229visions, as before stated, depends, not upon the good faith of the vendor in complying with the provisions of the statute, but also upon the good faith of the vendee in the performance of the conditions for a valid sale of the property which the statute imposes. We are to determine this question in view of the provisions of the Constitution of this State, construed as they have been by the courts of this State. We may concede that the Legislature would have the power to require a contract for the sale of goods to be in writing and that the contract be filed in a public office, or evidence of the terms and conditions of the sale preserved ; but when the Legislature goes further and makes the validity of the sale depend, not upon the good faith of the vendor, but also upon the good faith of the vendee, I cannot avoid the conviction that restriction upon the sale of the vendor’s property have been imposed beyond a fair and reasonable regulation required for the health, safety and welfare of the public. This conclusion seems to be within the principle established in People ex rel. Tyroler v. Warden of Prison (157 N. Y. 116). The statute under consideration in that-case provided that no person should issue or sell or offer to sell any passage ticket or instrument giving or pmqrorting to give any right to a passage or conveyance upon any vessel or railroad train, unless he was an authorized agent of the owners or consignees of such vessel, or of the company running such train ; and it was held that that act was a violation of this provision of the Constitution now under consideration. The claim was made in that case that the public and the transportation companies had been defrauded by the acts of brokers in selling railroad tickets; but the court in answer said: “ It is novel legislation indeed that attempts to take away from all the people the right to conduct a given business because there are wrongdoers in it from whose conduct the people suffer. * * * If the act prohibited is fraudulent there earn be no doubt that the Legislature under its police power may provide for' its punishment. * * yor ean the contention be tolerated that because there have been, in times past, dishonest persons engaged in the ticket brokerage business, with the result that frauds have been perpetrated on both travelers and transportation companies, therefore the Legislature can deprive every citizen engaged therein of the ‘ liberty ’ to further conduct suc]i business. Stringent rules undoubtedly may *230be enacted to punish those who are guilty of dishonest practices in the conduct of such a business, and the machinery of the law put in motion for its rigorous enforcement; but to cut up, root and branch, a business that may be honestly conducted to the convenience of the public and the profit of the persons engaged in it, is beyond legislative power. If the law were otherwise, no trade, business or profession could escape destruction at the hands of the Legislature if a situation should arise that would stimulate it to exercise its power, for in every field of endeavor can be found men that seek profit by fraudulent processes. Transportation tickets have been forged, it is said ; so have notes checks and bank bills. Railroad companies are no more bound to honor forged tickets than the alleged maker of a forged note is bound to pay it. An innocent person who suffers by parting with his money on a forged ticket has his remedy against the vendor just the same as has the bank that discounts a forged note.. Such instances might be multiplied, but it would serve no good purpose, for it is well known that no business can be suggested through which innocent parties may not be occasionally victimized. But, because of that fact, honest men cannot be prevented from engaging in their chosen occupations.” And it may be added that honest men cannot be prevented from selling their property. That the free and unrestricted right of the owner of a stock of merchandise to use or sell it is an essential attribute of the ownership of the property cannot be disputed. Judge Comstock, in Wynehamer v. People (13 N. Y. 378) says: “ When a law annihilates the value of property and strips it of its attributes, by which alone it is distinguished as property, the owner is deprived of it according to the plainest interpretation, and certainly within the spirit of a constitutional provision intended expressly to shield private rights from the exercise of arbitrary power; ” and in People ex rel. Manhattan Savings Inst. v. Otis (90 N. Y. 48) Chief Judge Andrews says : “ Depriving an owner of property of one of its essential attributes, is depriving him of his property within the constitutional provision; ” and these expressions are quoted by Judge Earl with approval in Matter of Jacobs (98 N. Y. 98), whgre he says: “ and hence any law which destroys it or its value, or takes away any of its essential attributes, deprives the owner of his property.” (See, also, People v. Gillson, 109 N. Y. *231389; Forster v. Scott, 136 id. 577.) If we assume, therefore, that the free and unrestricted right to sell property is one of its attributes, protected by the provisions of the Constitution, then certainly the statute which imposes as a condition of the right of the owner to make a valid sale of his property an act in good faith of another person takes away one of its essential attributes and deprives the owner of his property, and for this reason I think the statute violates the constitutional provision and is void. We are referred to cases in other States which have upheld a statute similar to that in question. The Supreme Court of Massachusetts in Squire & Co. v. Tellier (185 Mass. 18) upheld the statute as passed under the authority of a provision in the Constitution of that State which vests in the Legislature broad power which is not in the Constitution of this State. The cases also from other States have been considered. In some cases where the statute has been upheld it is substantially different from the statute in question, and in other cases the constitutional provision differs from the Constitution of this State, construed as it has been by the courts of this State, but entertaining the views before expressed as to the effect of this law, it seems to me that it cannot be sustained.
I think, therefore, that the judgment should be reversed and the demurrer sustained.
Van Brunt, P. J., concurred.
Judgment affirmed, with costs, with leave to defendant to withdraw demurrer and to answer on payment of costs in this court and in the court below.