M System Stores, Inc. v. Johnston

76 S.W.2d 503
CourtTexas Commission of Appeals
DecidedNovember 28, 1934
DocketNo. 1804-6279
StatusPublished

This text of 76 S.W.2d 503 (M System Stores, Inc. v. Johnston) is published on Counsel Stack Legal Research, covering Texas Commission of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M System Stores, Inc. v. Johnston, 76 S.W.2d 503 (Tex. Super. Ct. 1934).

Opinion

HARVEY, Presiding Judge.

This controversy involves the bulk sales statute (R. S. art. 4001). The material facts shown in testimony and established by the implied findings of the trial court are substantially as follows: On January 7, 1929, and for some years prior to that time, M. P. Hendrick and W. L. Hendrick, as partners, conducted in the' town of Lamesa a retail grocery store. In connection with said business, W.' L. Hendrick conducted a meat market. The meat market fixtures belonged to W. L. Hendrick individually. On the dáte named the latter sold said meat market fixtures to J. M. Marks for a cash consideration. In respect to this sale, none of the provisions of the bulk sales statute was complied with. At that time W. L. Hendrick individually was indebted to Miss Johnston, the defendant in error, in the sum of $4,125. The debt was not a debt of the partnership of which W. L. Hendrick was a member. After the sale of the fixtures to Marks, the latter rented them to W. L. Hendrick, who continued to use them as before. On January 15, 1929, Miss Johnston recovered a judgment against W. L. Hendrick for the amount of the debt owing to her by him. The partnership composed of M. P. and W. L. Hendrick continued to conduct the grocery store until May 24, 1929, when the partnership, acting through W. L. Hendrick, sold to the M System Stores, Inc., all the stock of groceries and the fixtures belonging to the partnership. The market fixtures which had been sold to Marks were, by consent of the latter, sold to said buyer along with the stock of groceries and the grocery store fixtures. The agreed purchase price to be paid by the buyer amounted to the sum of $10,482.23. In this sum Marks had an interest amounting to $2,500, that being the amount coming to him from the sale of his market fixtures; $2,300 of the purchase price belonged to W. L. Hendrick, that being the proportionate amount of his interest in the partnership property that was sold; and the rest of said purchase price belonged to M. P. Hendrick. In the bill of sale executed to the M System Stores, Inc., the aggregate purchase price of $10,482.23 was stated, but the several interests of the parties, just named, in said amount was not stated and were unknown to the M System Stores, Inc. In respect of said sale there was no notice given to Miss Johnston as prescribed by the bulk sales statute. At the time of the sale, the M System Stores, Inc., paid to W. L. Hendrick, in cash, $3,000 of the agreed purchase price and the latter kept same and did not account either to M. P. Hendrick or to J. M. Marks for any' part thereof. Another part of the purchase money, amounting to $1,000, was deposited in a bank at Lamesa, to be held in escrow pending completion of certain details of the sale. The M System Stores, Inc., a few days later, took possession of all said property and proceeded to dispose of it by sale. Thereafter Miss Johnston sued out a writ of garnishment against the M System Stores, Inc., on the judgment which she held against W. L. Hendrick. In answer to said writ, the • garnishee, the M System Stores, Inc., denied [504]*504that it had in its possession any property or effects belonging to W. L. Hendrick, and, in. substance and effect, denied that it was indebted to the latter in any amount, unless the unpaid balance of said purchase money, or some part of said unpaid balance, belonged to W. L. Hendrick. The garnishee admitted that it owed the said -unpaid balance of purchase money, and declared that it stood ready to pay same to the persons that the court found were entitled to receive same; and paid into the registry of the court the sum of $6,482.23. The said garnishee, in connection with and as part of its answer to the writ, interpleaded M. P. and W. L. Hendrick and J. M. Marks for the purpose of having the conflicting claims to said fund adjudicated. No issue was joined between Miss Johnston and the garnishee respecting the facts set out in the garnishee’s answer to the writ. In due time, however, M. P. Hendrick and J. M. Marks pleaded their respective interests in said funds, as stated above, and the facts respecting their claims. On these allegations, Miss Johnston joined issue. Besides, to the extent of her claim against W. L. Hendrick, she set up claim to said funds under the bulk sales statute. The issues thus presented were tried to the court without a jury, resulting in a judgment for Marks for $2,500 of said fund, and for M. P. Hendrick for the rest of said fund, amounting to $4,982.23, including the $1,000 on deposit in the bank; the bank being a party defendant in the judgment. Both Miss Johnston and W. hi. Hen-drick were denied a recovery of any amount. Miss Johnston prosecuted an appeal, and the Court of Civil Appeals reversed the judgment of the trial court on the ground that the sale to the M System Stores, Inc., and the sale fcf the market fixtures to J. M. Marks, were invalid as to Miss Johnston, under the bulk sales statute, for want of notice to her as prescribed in said statute. The application of the M System Stores, Inc., for the writ of error, was granted by the Supreme Court, as was the application of M. P. Hendrick and J. M. Marks. For convenience the M System Stores, Inc., will be designated as the “corporation.”

Under the facts, liability of the corporation to Miss Johnston for any amount depends^upon whether or not, in the case of a sale by a partnership, of property belonging to the firm, a creditor of an individual member of the firm is entitled to notice of the sale as prescribed in bulk sales statute. Said statute (Rev. St. 1925, art. 4001) reads as follows: “The sale or transfer in bulk of any part or the whole of a stock of merchandise, or merchandise and fixtures pertaining to the conducting of said business otherwise than in the ordinary course of trade, and in the regular prosecution of the business of the seller or transferor, shall be void as against the creditors of the seller or transferor, unless the purchaser or transferee demand and receive from the transferor a written list of names and addresses of the creditors of the seller or transferor with the amount of the indebtedness due or owing to each and certified by the seller or transferor under oath to be a full, accurate and complete list of his creditors, and of his indebtedness; and unless the purchaser or transferee shall at least ten days before taking possession of such merchandise or merchandise and fixtures, or paying therefor, notify personally or by registered mail each creditor whose name and address is stated in said list, or of which he has knowledge, of the proposed sale .and of the price, terms and conditions thereof. Any purchaser or transferee who shall not conform to the provisions of this law shall, upon application of any of the creditors of the seller or transferor become a receiver, and be held accountable to such creditors for all goods, wares, merchandise and fixtures that have come into his possession by virtue of such sale or transfer.”

There can be no doubt that as regards a sale of partnership property, by the partnership, this statute contemplates creditors of the partnership, and not a creditor of one of the members of the firm. Ellis Jones Drug Co. v. Coker, 151 Miss. 102, 117 So. 545, 59 A. L. R. 285. The creditors with whom the statute deals are, in the terms of the statute, those of the “seller.” While it is true that a partnership is not a legal entity, like a corporation, nevertheless the assets and liabilities of the partnership are commonly treated as possessing distinct characteristics. For example, under article 2033 of the statute, partnership liability may be enforced against the firm and the partnership property reached, where but one of the members of the firm is served with citation in the suit. 32 Tex. Jur. 380, 381.

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Related

Ellis Jones Drug Co. v. Coker
117 So. 545 (Mississippi Supreme Court, 1928)
Middlebrook & Bros. v. Zapp
15 S.W. 258 (Texas Supreme Court, 1891)

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Bluebook (online)
76 S.W.2d 503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/m-system-stores-inc-v-johnston-texcommnapp-1934.