Boise Ass'n of Credit Men, Ltd. v. Ellis

144 P. 6, 26 Idaho 438, 1914 Ida. LEXIS 85
CourtIdaho Supreme Court
DecidedOctober 29, 1914
StatusPublished
Cited by13 cases

This text of 144 P. 6 (Boise Ass'n of Credit Men, Ltd. v. Ellis) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Boise Ass'n of Credit Men, Ltd. v. Ellis, 144 P. 6, 26 Idaho 438, 1914 Ida. LEXIS 85 (Idaho 1914).

Opinion

TRUITT, J.

This action was commenced by the appellant corporation, as assignee of two different mercantile companies, against said T. R. Ellis to collect certain accounts [441]*441against him for goods, wares and merchandise sold and delivered to him by said companies at his place of business in Cambridge, Idaho. The complaint alleges that these accounts were duly assigned by said companies to appellant, who was the owner and holder of them at the time of commencing this action, and that the aggregate sum of said accounts amounting to $285.46 was due and owing from Ellis to appellant, and judgment was demanded for said sum against him.

In said complaint the respondent, Thomas Buhl, is connected with the transaction which is the basis of the action against him as follows: “That on or about December 11, 1912, the said T. R. Ellis sold and transferred all his said stock of goods, wares and merchandise, including fixtures, out of the usual and ordinary course of business and trade, and did thereby substantially sell and convey the entire business and trade thereof conducted by the said T. R. Ellis, said fixtures consisting of counters, scales, shelving, tables, and store fixtures in general. That the said T. R. Ellis particularly sold the said fixtures to the defendant, Thomas Buhl, for the sum of $150.” It will be seen from the complaint that Buhl did not buy or receive any of the merchandise.

The respondent Buhl, as defendant therein, interposed a general demurrer to said complaint, and after consideration of the same by the trial court it was sustained and the action dismissed. From the order dismissing said action and the judgment entered against appellant, this appeal is taken. The defendant Ellis did not appear in the court below, and the record is silent as to whether or not he was served with process.

The appellant in his brief presents an argument and cites authorities to show that the claims in this case were assignable and were properly assigned to the plaintiff, and it could therefore legally maintain an action upon them. As to the defendant Ellis, counsel for the respondent Buhl do not dispute the validity of the assignment of these claims, nor the right of appellant to maintain an action to collect the debt which they constitute, as to the defendant Ellis, but do question the manner of the proceeding in said action for the pur[442]*442pose of holding defendant Buhl liable for this debt. But as this only relates to the manner of procedure and not to the real points presented by the appeal, we do not think proper to pass upon it.

The two important points presented by this appeal are, (1) whether the law under consideration imposes such restrictions on sales of goods, wares and merchandise in bulk by persons engaged in that business, as to deprive them of their property without due process of law, and also whether it is class legislation within the inhibition of the constitution on that subject; and, (2), that if the law is constitutional, whether fixtures used in connection with the mercantile business are by implication included within its purview and meaning.

This act, though passed by the legislature in 1903, has never before come before this court for interpretation, and for that reason we have examined a number of the decisions of other courts that have passed upon and construed similar laws with much interest.

It must be conceded that this law does restrict and put some burdens on the sale of the kind of property to which it relates, but it is claimed in its favor that its object is to prevent an abuse of credit extended to debtors engaged in the mercantile business and thus prevent fraudulent sales that would otherwise deprive their creditors of their honest debts.

In John P. Squire & Co. v. Tettier, 185 Mass. 18, 102 Am. St. 322, 69 N. E. 312, a case decided by the supreme court of Massachusetts, it is said:

“The statute deals only with sales in bulk of a part or the whole of a stock of merchandise, which are not made in the ordinary course of trade and in the regular and usual prosecution of the seller’s business. It does not interfere with the transaction of ordinary business, but relates to unusual and extraordinary transfers. In substance it declares that a sale of this kind shall not be made without first giving to creditors an opportunity to collect their debts, so far as the property to be sold might enable them to collect, or without subsequently making satisfactory provision for the payment of [443]*443these debts. A sale made in violation of the statute is void as against creditors, and, if the vendor’s debts are paid, the sale cannot be interfered with. A purchaser, to be safe, has only to see that the vendor’s creditors are provided for. The vendor may sell freely, without regard to the statute, if he pays his debts.”

The purpose of this law is quite similar to that of see. 3169, Rev. Codes, against transfers of property with intent to defraud or delay creditors; and under the statute relating to sales in bulk, the object is to prevent a retail merchant from disposing of his stock of goods without notice to his creditors with the intention of doing the same thing, and it is the intention and purpose of this law to prevent that. It is true that in doing this, it may work a hardship on honest tradesmen, but many other laws do the same thing as to honest men that the designs of the dishonest may be defeated.

Some of the early acts passed upon this subject were held unconstitutional and void by the supreme courts of the respective states in which they were passed, but the objections pointed out by the courts in those acts have been corrected in the later laws enacted on this subject and have now been held constitutional by the courts of the same states that had declared the earlier acts unconstitutional.

Block v. Schwartz, 27 Utah, 387, 101 Am. St. 971, 76 Pac. 22,1 Ann. Cas. 550, 65 L. R. A. 308, is relied on by respondent to support his contention that the law in question in the ease at bar is unconstitutional and void. In that case the statute on this subject in the state of Utah was held unconstitutional, but that statute had two objectionable provisions in it which are pointed out by Mr. Justice Barteh in his-opinion as follows: “Under the provisions of this act a sale of any portion or all of a stock of merchandise, made out of the ordinary course of trade, by any merchant who has creditors, without a detailed inventory made at least five days before the sale, showing the cost price of each article, and notice of the proposed sale, the cost price, and selling price, given at least five days before the sale to each creditor, is not only fraudulent and void, but also renders both the seller and purchaser guilty [444]*444of a misdemeanor, and subjects them to the penalty provided in the act for that crime.” And in the opinion a further objection is stated as follows: “Now, it will be noticed that nowhere in its provisions is there any exemption of any sale by administrators, executors, trustees, assignees for the benefit of creditors, trustees in bankruptcy, or public officers acting under judicial process. There being no such exemption, it would seem that such sales of merchandise owned by debtors, made by persons acting in a fiduciary capacity under judicial process, must also be made in accordance with the provisions of the act, in order that the seller and purchaser may avoid the penalties provided.

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Bluebook (online)
144 P. 6, 26 Idaho 438, 1914 Ida. LEXIS 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/boise-assn-of-credit-men-ltd-v-ellis-idaho-1914.