Court Opinion

ID: 6662100
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:02:57.549164+00
Date Added: 2024-06-11T16:00:12.548551
License: Public Domain

Fawcett, J.,
dissenting.
In addition to what is said by Judge Sedgwick in his dissenting opinion, I desire to suggest the following: The bulk sales law was designed to prevent the fraudulent secret selling of a stock of merchandise by a failing debtor, for a consideration paid to the debtor, and thus fraudulently taken from his creditors. The purpose of the statute was to require notice to the creditors before any transfer could be made outside of the regular course of business. The transaction by ■ Chambers & Company, in turning their stock and business over to C. Shenkberg Company, was not a sale, nor a mortgage, nor an assignment for the benefit of creditors under the statute. It amounted to nothing more than the constituting of C. Shenkberg Company as their trustee for the purpose of making a sale and distributing the proceeds thereof among their creditors. There never was a sale of the stock of Chambers & Company until the public sale made by C. Shenkberg Company to plaintiff. Of this sale all of the creditors of Chambers & Company had received due notice *37in writing and had been fully advised of the precise capacity in which O. Shenkberg Company ivas assuming to sell the property of Chambers & Company. While in some technical respects the bulk sales law ivas not literally complied with, there was a substantial compliance therewith. Everything was done openly and upon due notice. There was not even a semblance of secrecy or fraud in the actions of either Chambers & Company or C. Shenkberg Company. To put such a construction upon the bulk sales law as is given in the majority opinion, will be to defeat the beneficent purpose of that law. Such a construction will prevent an honest merchant who finds that his business enterprise has not been a success and that failure is inevitable, and who earnestly desires that his creditors shall receive as much as possible on their just claims, from turning his property over to one of them with instructions to take charge of it, and, without the heavy cost and long delay of a court proceeding, sell it- and distribute the proceeds among all of his creditors, pro rata, imposing only the condition which the bankruptcy court would give him without request, that those who participate in the distribution of the money arising from the sale of his stock shall release him from further liability. The majority opinion will prevent such honorable and inexpensive procedure. This leaves no alternative for the honest failing debtor except to either turn his stock over to the -court of .bankruptcy, or by a statutory assignment apply it as far as it will go, and go out into the world burdened with debts which will forever stand as a barrier to his resuming business. This was not the intention of the legislature, and is not a proper construction o’f the bulk sales lav/.
Barnes, J.,'concurs in above dissent.