Court Opinion

ID: 5576383
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:25:31.80777+00
Date Added: 2024-06-11T08:35:56.543860
License: Public Domain

Atkinson, J.,
(dissenting from the ruling made in the second headnote.) The substance of the statute under consideration is set forth at the beginning of the second division of the majority opinion, and repetition here is unnecessary. It is sufficient to say that the statute in question is of that class which provides that, as a matter of law, sales of stocks of goods, wares, and merchandise in bulk, made without complying with certain formalities required by the statute, shall, as against creditors, be conclusively presumed to be fraudulent. The question certified is as to whether the statute is void on the ground that it is violative of article 1, section 1, paragraph 3, of the constitution of the State of Georgia (Civil Code, §5700), which provides: “No person shall be deprived of life) liberty, or propertj1, except by due process of law;” and also whether it is void on the ground, that it is violative of section 1 of the 14-th amendment to the constitution of the United States (Civil Code, §6030), which provides: “No State shall make-or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.” A case involving the constitutionality of a statute relating specifically to sales of stocks of merchandise in bulk has not been decided either in this court or in the Supreme Court of the United States. Statutes relating to sales in bulk and bearing a varying degree of similarity to the statute under consideration have been under review by courts of other States; and upon the question of their constitutionality there is a marked diversity of opinion. Such cases will be cited, and for convenience will be named in three separate groups, and hereinafter referred to as classes 1, 2, and 3. Statutes which declare sales absolutely void as against creditors, where the parties fail to comply with the formalities required in making the sales, are held to be constitutional, in the following cases: (Class 1) Squire v. Tellier, 185 Mass. 18 (69 N. E. 312, 102 Am. St. R. 322); McDaniels v. Connelly Shoe Co., 30 Wash. 549 (71 Pac. 37, 60 L. R. A. 947, 94 Am. St. R. 889); Walp v. Mooar (Lamkin), 76 Conn. 515 (57 Atl. 277); Spurr v. Travis, *19145 Mich. 721 (108 N. W. 1090, 116 Am. St. R. 330, 9 Ann. Cas. 250); Young, v. Lemieux, 79 Conn. 434 (65 Atl. 436, 8 Ann. Cas. 452); Musselman Grocery Co. v. Kidd, Dater & Price Co. (Mich.), 115 N. W. 409. Substantially similar statutes are held to be unconstitutional, in the following cases: (Class 2) Block v. Schwartz, 27 Utah, 387 (76 Pac. 22, 1 Ann. Cas. 550, 65 L. R. A. 308, 101 Am. St. R. 971); McKinster v. Sager, 163 Ind. 671 (72 N. E. 854, 68 L. R. A. 273, 106 Am. St. R. 268); Sellers v. Hayes, 163 Ind. 422 (72 N. E. 119); Miller v. Crawford, 70 Ohio St. 207 (71 N. E. 631, 1 Ann. Cas. 558); Wright v. Hart, 182 N. Y. 330 (75 N. E. 404, 2 L. R. A. (N. S.) 338, 3 Ann. Cas. 263). Other substantially similar statutes, with the exception that, for a failure to comply with the requirements, it is provided that only a rebuttable presumption of fraud shall arise, are held to be constitutional, in the following eases: (Class 3) Neas v. Borches, 109 Tenn. 398 (71 S. W. 50, 97 Am. St. R. 851); Williams v. Fourth National Bank, 15 Okla. 477 (82 Pac. 496, 2 L. R. A. (N. S.) 334, 6 Ann. Cas. 970); Thorpe v. Pennock Mercantile Co., 99 Minn. 22 (108 N. W. 940, 9 Ann. Cas. 229). An examination of the decisions cited will cover practically the entire body of decisions concerning-the constitutionality of statutes of the several States of this country, relating specifically to the regulation of sales of stocks of goods in bulk; The eases are classified in order that attention may be directed in the first instance to the character of the statute involved and the ruling made in each case. It is provided by the Georgia statute under consideration, that, unless the parties to a sale in bulk of a stock of goods, wares, and merchandise comply with the requirements of the statute, the sale shall be conclusively presumed to be fraudulent as against creditors. One of the requirements is that the vendee shall, at least five days before the completion of the sale, -inform each of the creditors of the vendor of the proposed sale, the price to be paid, etc. These provisions are made to apply to every sale in bulk of goods, wares, and merchandise, without regard to whether the vendor is'solvent or insolvent, or whether the transaction is in fact honest or fraudulent. As they apply to the parties to all sales of the character mentioned, the righteous as well as the unrighteous are affected exactly alike; and as the presumption of fraud is conclusive, there is no avenue of escape for the righteous. However honest or otherwise legiti*20mate the transaction may be, the five-days notice feature renders it impossible for the parties to perfect a sale within .less than five days. It may be to the interest of the parties to conclude their transaction in one day, but their hands will be tied and they will not be at liberty to contract as they desire for a time which at least is as much as five days.' The right which they are thus denied is substantial, and the negation complete. The power to contract is a property right, and the liberty of contract is protected by the fourteenth amendment to the Federal constitution, and can not' be arbitrarily destroyed, even by the exercise of the police power of the State. Adair v. U. S., 208 U. S. 161 (28 Sup. Ct. 277, 52 L. ed.); Lochner v. New York, 198 U. S. 45, 53, 56, (25 Sup. Ct. 539, 49 L. ed. 937); Allgeyer v. Louisiana, 165 U. S. 578 (17 Sup. Ct. 427, 41 L. ed. 832). In respect to the feature just mentioned, the State constitution is similar to the Federal constitution, and the authorities cited apply to the former as well as to the latter constitution. The penalty of suspending the legitimate right of contract should not be visited upon the innocent in order to apprehend the guilty. An imposition in that manner is unreasonable and arbitrary. It may be within the bounds of reason for a statute to clothe such transactions with the presumption of fraud; but there ought to be a provision allowing'due process of law for the separation of the good from the evil, rather than a provision declaring the presumption conclusive. See, on this point, Thorpe v. Pennoek Mercantile Co., supra. It would not do to destroy the right of contract altogether or for a day, because, forsooth, some person may abuse the right by making fraudulent sales; yet, carried to the ultimate, that is the conclusion to which the proposition would lead. The statute is not merely regulative, but for a substantial length of time prohibits entirely, and during that time is'destructive of the liberty of legitimate contract. It is that destructive feature that renders the statute unreasonable and arbitrary. The certified question should be answered in the affirmative.