Court Opinion

ID: 5784613
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:56:39.230211+00
Date Added: 2024-06-11T08:42:04.282564
License: Public Domain

Munder, J. (dissenting).
The issue here is simply whether an affidavit of “no creditors ’’ relieves the purchaser at a bulk sale of the duty to make careful inquiry as to the possible existence of creditors of whom he had no actual knowledge, under section 6-104 of the Uniform Commercial Code.
I conclude the answer is no.
The majority reaches the opposite conclusion and relies upon subdivision (3) of section 6-104 in doing so. That subdivision provides that ‘ ‘ responsibility for the completeness and accuracy of the list of creditors rests on the transferor, and the transfer is not rendered ineffective by errors or omissions therein unless the transferee is shown to have had knowledge ” (emphasis added). The majority says that subdivision (3), which has no counterpart in the predecessor to section 6-104, viz., former section 44 of the Personal Property Law, has removed the careful inquiry requirement and made the cases decided under the former section inapplicable. I disagree.
First, there is no indication that such a rash departure from the former law was intended. The notes in McKinney’s Consolidated Laws of New York (Book 62%, Part 2, Uniform Commercial Code, p. 735) state the contrary. They refer to subdivision (3) as “new to the statute, hut declaratory of the New York law ” (emphasis added). They cite the cases decided under the former law (e.g., Marcus v. Knitzer, 168 Misc. 9) which the majority would now abandon. More important, a purchaser or transferee of the entire stock of a going business knows the seller more than likely has some creditors. He should at least inquire into the sources of the inventory. Otherwise, the opportunity for fraud upon creditors is too great. Here, the purchasers made no such inquiry. They relied upon an oral assurance by the seller’s attorney that there were no general creditors and a statement to the same effect by the seller’s president. The statement, although in affidavit form, was not notarized.
I agree with the finding of the Special Term that the purchasers’ conduct was insufficient to bar the plaintiff’s claim. The judgment should be affirmed insofar as appealed from.
*150Rabin, P. J., and Hopkins, J., concur with Shapiro, J.; Munder, J., dissents and votes to affirm the judgment insofar as appealed from, with, an opinion, in which Latham, J., concurs.
Judgment reversed insofar as appealed from, on the law and the fácts, with costs, and complaint dismissed as to appellants, with costs.