Court Opinion

ID: 3884733
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:15:02.055543+00
Date Added: 2024-06-11T14:15:25.506074
License: Public Domain

The complaint herein contains two causes of action — one to set aside the sale in bulk by the defendant, Huey  Martin Drug Company, to the defendant, Calhoun Drug Company, of its stock of merchandise, etc., on the ground that such sale was in violation of sections 2434, 2435 and 2436 (which will be set out in the report of the case); and the other on the ground that the sale was fraudulent under the statute of Elizabeth. At the conclusion of the testimony his Honor, the presiding Judge, made the following order:
"This action having been brought on for a hearing before the Court and a jury, and the evidence being all in, and a motion having been made by plaintiff's counsel for a direction of verdict, after hearing argument of counsel for and against said motion, I find and hold as follows: That the undisputed testimony shows that the Huey-Martin Drug Company and the Calhoun Drug Company, in the sale and purchase of the stock of drugs, etc., which is the basis of this action, in bulk, failed to comply with the requirements of the law known as the `Bulk Sales Law,' contained in sections 2434, 2435 and 2436 of volume I, Code of Laws of South Carolina of 1912; also appearing as sections 448, 449 and 450, in volume II, Code of Laws of South Carolina of 1912. The undisputed testimony also shows that the defendant, Calhoun Drug Company, the purchasers of said stock, have sold and disposed of said stock of merchandise in the ordinary course of their drug business to an amount equal to the amount due on the notes sued on in this action. I am, therefore, of the opinion that the plaintiff is entitled to a direction of a verdict against the Huey-Martin Drug Company and *Page 341 
the Calhoun Drug Company for the amount sued for, in the sum of six hundred and eighty-nine and 12/100 ($689.12) dollars; and it is so ordered. My conclusion, as above stated, is based upon the view that the statutes referred to make it a prima facie presumption of fraud for the seller and purchaser of a stock of merchandise in bulk to fail to comply with the requirements of said statutes provided with reference to such sales, and upon this prima facie presumption such failure must be held to be fraudulent as to the creditors of the seller of such stock of merchandise, and that this presumption of fraud is not rebuttable by evidence of the good faith of the parties to such sale; the good or bad faith of the parties having nothing to do with the result."
The Circuit Judge also ruled that the objection to the constitutionality of the said sections, on the ground that they were in violation of sections 5 and 17, art. V, of the State Constitution, and of article V, and of section 1 of the fourteenth amendment to the Constitution of the United States, could not be sustained. The first question that will be considered is whether there was error in this ruling. It is only necessary to cite the case of Kidd, Dater  Price Co. v.Musselman Grocer Co., 217 U.S. 461, 30 Sup. Ct. 606,54 L.Ed. 839, which shows that the exception raising this question cannot be sustained.
The next question that will be considered is whether there was error in the ruling that the presumption mentioned in the statute is not rebuttable by evidence of the good faith of the parties to such sale; the good or bad faith of the parties having nothing to do with the result. Section 2434 provides that "in either of such events such sale shall primafacie be presumed to be fraudulent and void as against the creditors of such seller," and the language of section 2436 is: "Except as expressly provided in the preceding sections, nothing therein contained, nor any act thereunder, shall change or affect the present rules of evidence or the present presumption of law." *Page 342 
Our construction of the statute is that, where the parties to the sale of a stock of merchandise in bulk fail to comply with the statutory requirements, a presumption arises that the sale was fraudulent and void, and the burden of proof rests upon the parties to the sale to show that the transaction was in good faith; in other words, that the statute was intended to be merely a rule of evidence, casting upon the parties to the sale the burden of proof as to the bona fides
of the transaction. No other construction will give force and effect to all the provisions of the statutes. The exception raising this question is sustained.
When the case was called for trial, his Honor, the presiding Judge, made the following order:
"After hearing motion of the defendants to refer to a referee all the issues arising out of the pleadings, except the liability on the notes of the defendant, Huey-Martin Drug Company, now owned by the plaintiff, and after a consideration of the pleadings, it is ordered that the following issues be submitted to the jury: First, whether or not there is any liability on the part of the defendant, the Calhoun Drug Company, upon said notes. Any equitable issues raised by the pleadings are subject to the further orders of this Court, except such as arise incidentally in the determination of the above issues."
The issues under both causes of action were equitable in their nature, and were not properly triable by a jury. Exparte Landrum, 69 S.C. 136, 48 S.E. 47; Pratt v. Timmerman,69 S.C. 186, 48 S.E. 255; Mobley v. McLucas, 99 S.C. 99,82 S.E. 986; Rainwater v. Bank, 108 S.C. 206,93 S.E. 770; Oliver v. McWhirter, 109 S.C. 358,96 S.E. 140.
These conclusions practically dispose of all questions presented by the exceptions.
For these reasons, I dissent. *Page 343 
                   ON PETITION FOR REHEARING.