Court Opinion

ID: 9544999
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:04:24.283153+00
Date Added: 2024-06-11T15:13:51.639449
License: Public Domain

Ringold, J.
(dissenting) — I respectfully dissent and would affirm the trial court's decision requiring compliance with the Bulk Transfers Act (BTA) as incorporated into the Uniform Commercial Code (U.C.C.) in 1965. The majority opinion serves no justifiable policy and turns on an overly technical and erroneous analysis of the BTA. RCW 62A.6-103 states:
The following transfers are not subject to this Article:
(4) Sales by executors, administrators, receivers, trustees in bankruptcy, or any public officer under judicial process . . .
The majority places inordinate emphasis on the lack of a comma following the word "officer." Before adoption of the U.C.C., the Legislature enacted versions of the BTA without apparent regard for the placement of the comma:
1901: "Nothing in this act contained shall apply to executors, administrators, receivers, or any public officer acting under judicial process." Laws of 1901, ch. 109, § 5, p. 224.
1925: ''[Njothing contained in this act shall apply to sales or transfers of property by executors, administrators, *802receivers, or public officers acting under judicial process." Laws of 1925, 1st Ex. Sess., ch. 135, § 1, p. 338.
1939: "[NJothing contained in this act shall apply to sales or transfers of property by executors, administrators, receivers, or public officers, acting under judicial process." Laws of 1939, ch. 122, § 4, p. 343.
The Washington Comments to the U.C.C., RCWA 62A.6-103(4), support the view that no substantive change was intended from the prior law, which included the comma: "[Subsection 4 is] in substantial conformity with the prior Washington rule. RCW 63.08.010 [Laws of 1939, supra] expressly excluded transfers by 'executors, administrators, receivers, or public officers, acting under judicial process."'
The critical difference between the U.C.C. and the prior statutes is the omission of the word "acting," which in the prior statutes made the phrase "under judicial process" modify the individual actors, the executors, administrators, receivers, and public officers. Without the word "acting," the phrase "under judicial process" must be taken to modify the word "sales." It makes no sense to speak of an executor or a public officer under judicial process. The exemption relates only to those sales made under the supervision of a court because in such sales the court would presumably exercise due regard for the rights of the business creditors.
The probate code and the BTA were not enacted in a vacuum. The sections of the probate code dealing with creditors apply only, except for expenses of administration, to debts incurred by the decedent. The specific purpose of the Bulk Sales Act is to protect the creditors of a business.
The probate code does not, nor was it intended to, provide protection to postdeath business creditors. In the case at bench, the death occurred on October 3, 1979, and a notice to creditors was first published October 8, 1979. The business continued operation after death until the time of sale to Sylvester Brown on January 15, 1980. The creditors of a decedent are put on notice by the requirement of publication of notice to the creditors that may suffice if the *803business ceases operation. But when a nonintervention executor continues to operate an existing business, the majority opinion affords no protection to the creditors who have enabled that business to continue in operation. While here the business continued for only 3 months, many instances arise where the business continues in operation under the executor or administrator for a much longer period. The creditors of the business may have no knowledge of the precise legal entity that controls the business operations, and should not be denied the protection of the BTA.
The absence of the word "acting", the insignificance of the missing comma, the policy in favor of protecting creditors' rights following a bulk transfer, all speak in favor of applying the BTA to a sale of the business by an administrator or executor with nonintervention powers. The sale here was not made under the direction or order of the court and thus was not "under judicial process."
I would therefore hold that the sale, by the personal representative with nonintervention powers, requires compliance with the BTA. We should affirm the trial court's holding and order distributing the proceeds of the sale pursuant to the BTA.