Miller v. T. I. C. Consumer Discount Co.

69 Pa. D. & C. 585, 1949 Pa. Dist. & Cnty. Dec. LEXIS 346
CourtPennsylvania Court of Common Pleas, Adams County
DecidedJuly 29, 1949
Docketnos. 10 and 69
StatusPublished

This text of 69 Pa. D. & C. 585 (Miller v. T. I. C. Consumer Discount Co.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Adams County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller v. T. I. C. Consumer Discount Co., 69 Pa. D. & C. 585, 1949 Pa. Dist. & Cnty. Dec. LEXIS 346 (Pa. Super. Ct. 1949).

Opinion

Sheely, P. J.,

Claimant, Ralph J. Miller, entered into an agreement with one Albert L. Wolford for the purchase of the stock of goods and [587]*587equipment of a gasoline station for $1,592.05. Wolford, the seller, notified Miller, the buyer, that he had but two creditors. He then executed, but did not immediately deliver, an affidavit substantially in the form provided by the Bulk Sales Act to the effect that he had no creditors. Miller then paid the two creditors in full, whereupon Wolford delivered to him the bill of sale, schedule, and the affidavit of no creditors previously sworn to, and Miller paid to him the difference between the sale price and the amounts paid to the two creditors. At the time Wolford had additional creditors, unknown and not divulged to Miller, including T. I. C. Consumer Discount Company, defendant. The discount company levied upon the assets sold and delivered by Wolford to Miller, and Miller then filed his claim in sheriff’s interpleader. The matter is now before the court on the discount company’s motion for judgment on the pleadings in the interpleader proceeding, the facts above recited being admitted.

The question presented is whether, on the facts stated, Miller is liable to creditors of Wolford under the provisions of the Bulk Sales Act of May 23, 1919, P. L. 262, 69 PS §521. There is no allegation of bad faith on the part of Miller but the discount company contends that he is liable for two reasons:. (1) The Bulk Sales Act requires a statement of creditors with a supporting affidavit, and an affidavit of no creditors does not comply with the act; (2) Miller paid a portion of the purchase price to, or for the benefit of, the seller without first requiring the list of creditors, and otherwise complying with the provisions of the act.

“The purpose of the Act of May 23, 1919, P. L. 262, supplanting that of March 28,1905, P. L. 62, was to protect creditors against the sale of stock in hand as a whole, to the prejudice of those unpaid, and who could look to the assets alone for the satisfaction of their claims. The legislature expressly provided for the [588]*588relief of all parties concerned where the transfer of the merchandise was in bulk. Not only was an accurate inventory showing values required to be made, but a sworn statement setting forth the names and addresses of the claimants, with provision for notice to them so that objection to the transfer could be lodged if deemed advisable. It was also directed that the sale should be void if these provisions were not complied with. The vendee, in case of doubt, was granted permission to pay the purchase price into court, which would make the appropriate distribution after hearing”: West Shoe Co. et al. v. Lemish et al., 279 Pa. 414, 417 (1924).

The act applies regardless of the intention of the parties, and the effect of noncompliance is to make the sale voidable as to creditors of the seller: Wilson v. Edwards, 32 Pa. Superior Ct. 295, 302 (1907). The purpose of the act, however, is not to penalize the purchaser for noncompliance, but to provide a means to protect the creditors of the seller. To accomplish this purpose the act requires a purchaser of goods in bulk to do certain things: (1) Before paying any part of the purchase price he must demand and receive from the vendor a sworn statement of the names and addresses of all the creditors of the vendor, together with the amount of indebtedness due to each, and an accurate inventory of the goods to be purchased; (2) at least 10 days before the completion of the purchase or the payment therefor, he must notify, personally or by registered mail, each of said creditors of the proposed sale, the price to be paid, the time set for the sale, and a copy of the list of creditors, and (3) he must pay the purchase price to the creditors pro rata, or pay it into court for distribution.

The act, being in derogation of the common-law right to purchase and sell property, and being highly penal, must be construed strictly and cannot be extended [589]*589beyond its plain language: International Shoe Co. et al. v. Duttenhofer et al., 120 Pa. Superior Ct. 102, 107 (1935) ; Gitt v. Hoke et al., 301 Pa. 31 (1930). Since the act declares the sale void only when the purchaser fails to perform the duties required of him by the act, it follows that if he acts in good faith in performing those duties he is not responsible if the seller inadvertently or willfully omits the names of one or more creditors. He is not a guarantor of the accuracy of the sworn statement of the seller. To hold otherwise would make an innocent purchaser liable for the fraud of the seller to which he was not a party: Coach v. Gage, 70 Ore. 182, 138 Pac. 847 (1914) ; International Silver Co. v. Hull & Co., 140 Ga. 10, 78 S. E. 609 (1913; Glantz v. Gardiner, 40 R. I. 297, 100 Atl. 913 (1917) ; McKelvey v. John Schaap & Sons Drug Co., 143 Ark. 477, 220 S. W. 827 (1920) ; Buch v. Miller, 94 Pa. Superior Ct. 237 (1928). See 83 A. L. R. 1140.

While we have found no case directly in point, it would follow that if he is not responsible where the seller omits the name of one or more creditors, he would likewise not be responsible if he, in good faith, relied upon the seller’s affidavit of no creditors. In Fischer et al. v. Rio Tire Co. et al. (Tex.) 65 S. W. (2d) 751, 756 (1933), the court said:

“We think a fair and reasonable construction of the statute to be that a purchaser, who in good faith demands and receives an affidavit showing a list of his creditors, or that he has none, should not be held liable to creditors, unless known to him, when the transferor has either by fraud or inadvertence omitted the name of a creditor or stated that he had none” (Italics supplied.)

If there are no creditors of the seller the buyer has no duty to perform because he obviously could not give notice to, or distribute money to, nonexistent creditors. If there are no creditors, in fact, there is no one who [590]*590would be harmed by the sale, and the act would not apply. The first contention of the discount company cannot be sustained.

But that is not quite the present case. Here the seller admittedly had two creditors and advised the purchaser of this fact. Instead of complying with the provisions of the Bulk Sales Act under which the purchaser would have required the seller to furnish a sworn statement of the two creditors and an inventory of the goods, and would have given 10 days’ notice to those creditors of the proposed sale, the parties sought to avoid the application of the Bulk Sales Act. In his brief counsel for the purchaser frankly states:

“. . . the seller notified the buyer — (claimant) that he had but two creditors and he then executed an affidavit of no creditors. The admitted understanding between the seller and the buyer was that the two items of indebtedness were to be satisfied prior to consummation of the sale and prior to delivery of the bill of sale and the affidavit. This was done.”

Had these two creditors been satisfied by the seller independently of the buyer, the situation might be different, but here the buyer joined with the seller to avoid the application of the law and himself paid the creditors and deducted the amounts paid from the purchase price. Apparently the entire transaction was consummated in a single day.

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69 Pa. D. & C. 585, 1949 Pa. Dist. & Cnty. Dec. LEXIS 346, Counsel Stack Legal Research, https://law.counselstack.com/opinion/miller-v-t-i-c-consumer-discount-co-pactcompladams-1949.