Armfield Co. v. Saleeby

Walker, J., after stating the case: It having appeared that the property sold by C. A. Saleeby to his codefendants was worth more than the amount 'of his indebtedness to the plaintiff, the court gave judgment against both defendants for $446.29, which was the amount of the debt. The court submitted to the jury, for their determination upon the evidence, the question whether the “Bulk Sales Law” had been violated, and refused to instruct the jury as requested by the defendant. This was error. The statute forbids the sale of a large part or the whole of a stock of merchandise, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the seller’s business, without first complying with certain requirements therein specified as to notice, etc., and if they are not observed, declares that the sale shall be void, and even if they are, such a sale is made prima facie evidence of fraud. Fraud on creditors is the basis of this new remedy, in the one case the fact of noncompliance with the requirements of the statute is -conclusive evidence of it, and the sale is void, and in the other it is prima facie fraudulent, and the evidence is referred to the jury upon which they may find the fact of fraud. Gallup v. Rozier, 172 N. C., 283; Pennel v. Robinson, 164 N. C., 257. The precise questions now before us were not present in the Gallup v. Rozier case, which involved only the correctness of the charge, upon a different ground than the one taken in this case. The point here is whether the court should have given the instruction requested by the defendant. A sale is not forbidden by the statute unless it is of the whole or a large part of the stock, and we do not think that 10-per cent thereof constitutes a large part of this stock. There was evidence to support the prayer of defendants, for L. L. Greenwood, [301] plaintiff’s witness, testified that in ordinary times C. A. Saleeby carried a stock of goods worth $3,000 or $4,000, and consisting of groceries, fruits, dry goods, notions and tbe like, and there was other like evidence sufficient, at least, to justify the instruction. The stock during the approach of Christmas was increased in size and seems to have been at its maximum when the 179 barrels of apples were sold, so that the jury might well have found that the stock was worth, at that time, forty-five hundred dollars, and perhaps even more than that amount. If they had so found, and it being admitted that the apples were worth $450, it follows that they were worth only 10 per cent of the value of the stock, which in our judgment is not a large part thereof. It should be something more than that or nearer a half of the stock to come under the condemnation of the statute. No such question has been before this Court since the statute was passed, but it has been considered in the case of Fiske Rubber Co. v. Hayes Motor Car Co., 199 S. W. (Ark.), 96, and the Court held that a sale of 10 per cent of the stock by an automobile agency and accessories shop was not forbidden by the statute, which was substantially like ours, as it was not a sale of a large part of the stock. The Court conceded, as we decided in Gallup v. Rozier, supra, that such a stock as was sold there came within the words of the statute and a sale of it, or a large part of it, would be void if the requirements were not met by the seller. The syllabus of the Fiske Rubber Company case is as follows, and it correctly states accurately the point decided: “A sale by an automobile agency and accessories shop of goods aggregating approximately $150 out of an accessories stock of $1,500 to its successor in the agency, when the seller was about to move the accessories stock, is not a sale in bulk requiring compliance with the Bulk Sales Law.” In the course of the opinion Judge Humphreys says: “The sale of items such as these in respect to value and quantity was not out of the ordinary in the conduct of the retail business in which they were engaged. ... In the instant case only a small portion of the stock was sold. The number of items and value thereof were inconsequential when compared with the amount and value of the entire stock. The number of articles sold and the value thereof were within an ordinary retail transaction. Thompson & Dalhoff were engaged in the retail business. It is manifest that the sale was hot intended to impair a continuation of the Thompson & Dalhoff automobile accessory business at some other location in the city. ... In order to constitute a fraudulent sale under the act it must appear that a material portion of the stock was sold in bulk, out of the ordinary course of trade and contrary to the'regular prosecution of the business of the seller. The Chancellor found in the instant case that the sale was an ordinary retail transaction. We think the finding was supported by the weight of evidence. It cer [302] tainly cannot be said tbat tbe finding was contrary to a clear preponderance of tbe evidence.”' We take it, therefore, tbat tbe court should have recognized this construction of tbe law and have given tbe instruction, at least in substance. Tbe defendant further contends tbat, as this action was originally brought in tbe recorder’s court, tbe Superior Court only acquired the jurisdiction derivatively of tbe recorder’s court, and could not amend the pleadings so as to change tbat jurisdiction or to enlarge it, and tbat it has attempted to do so by allowing tbe plaintiff to waive tbe tort arising out of tbe fraud, and to sue on contract. Tbe jurisdiction conferred upon the recorder’s court is limited to those cases of contract where tbe amount in dispute does not exceed $500, and in cases of torts, when it does not exceed $300,. but within those limits tbe jurisdiction is quite broad and comprehensive. Tbe Public-Local Laws of 1913, cb. 667, makes tbe jurisdiction of tbe recorder’s court concurrent with tbat of tbe Superior Court (sec. 3, subsec. 2) in all civil actions, matters and proceedings founded on contract within tbe above limit, and tbe same provision is made in tbe case of torts; and by section 26 tbe procedure, with certain exceptions, is required to follow tbe rules and practice as set forth in chapter 12 of tbe Revisal of 1905, on Civil Procedure and Amendments thereto, in so far as tbe same may be adapted to tbe needs and requirements of said court, and any changes in tbe rules of procedure of tbe court are required to be published. We think tbe court had tbe power, under this act, to proceed against both defendants upon tbe supposition tbat tbe tort, if one was committed, bad been waived, and tbat plaintiff bad elected to sue in contract. Tbe complaint, as originally framed, indicated clearly tbat this was tbe intention of tbe pleader, and we must construe it liberally. Rev., sec. 495; Blackmore v. Winders, 144 N. C., 215; Brewer v. Wynne, 154 N. C., 467; Bank v. Warehouse Co., 172 N. C., 602. No one can read tbe complaint, with prayer for judgment, and not conclude that tbe plaintiff was waiving tbe tort and suing on tbe implied contract, as in indebitatus assumpsit. When tbe court allowed tbe amendment so as expressly to waive tbe tort, it did not substantially change tbe cause of action but simply amplified tbe statement so as to show more clearly and expressly what was implied or to be inferred from tbe complaint as already drawn. This was legitimate and proper. It was not tbe substitution of a new cause of action but a better pleading of tbe original one. Simpson v. R. R., 133 N. C., 95, 98; Pickett v. R. R., 153 N. C., 148; Hockfield v. R. R., 150 N. C., 419; Gadsden v. Crafts, 175 N. C., 358. We said in tbe Simpson case, supra: “Tbe general scope and purpose of this action, or what is sometimes called tbe gravamen, tbe grievance or injury specially com [303] plained of, were not changed by the amendment. . . . Amendments which only amplify or enlarge the statement in the original complaint are not deemed to introduce a new cause of action, and -the original statement of the cause of action may be narrowed, enlarged or fortified, in varying forms, to meet the different aspects in which the pleader may anticipate its disclosure by the evidence,” citing 1 Enc. PI. & Pr., 557-562. "We have held that in cases of fraud, where the person.committing it has been thereby enriched to the damage or detriment of the other and innocent party, indebitatus assumpsit will lie against him, upon the ground that the law implies a promise on his part to' restore what he has thus gained by the transaction. The subject is discussed in Keener on Quasi Contracts, pp. 318-325. We so decided in Sanders v. Bagan, 172 N. C., 612, where Justice Hoke treats the subject, and reviews the authorities with much clearness and discrimination, and concludes as follows: “The action of indebitatus assumpsit, as stated, is dependent largely on equitable principles (Mitchell v. Walker, 30. N. C., 243), and in the absence of a special contract controlling the'matter, and unless in contravention of some public policy, it will usually lie wherever one may have been enriched or his estate enhanced at another’s expense under circumstances that, in equity and good conscience, call for an accounting by the wrong-doer.” The third syllabus is especially pertinent to this case: “When one’s property has been wrongfully converted by fraud or deceit the owner is allowed to waive the tort and sue on an implied contract in the equitable action of indebitatus assumpsitIt has also been held that, in equity, where one has acquired the property of another in fraud of the rights of a third party, and has disposed of the same so that it cannot be reached by execution or ordinary process, the court may render a money judgment against the fraudulent vendee for the value of the property so fraudulently converted. Sprinkle v. Wellborn, 140 N. C., 163-178, and cases cited. The law simply compels the vendee, who cooperated with his fraudulent vendor, to surrender what he has unfairly and unjustly received, and of which he has deprived the vendor’s creditors, it being an asset of their debtor to which they .are entitled to resort for the satisfaction of their claim. It was decided in Whitmore v. Hyatt, 175 N. C., 117, where the property was alleged to have been sold in violation of the “Bulk Sales Law,” that the creditors could recover of the buyer the vahxe of the goods so sold by their debtor, who was the seller, citing Daly v. Drug Co., 127 Tenn., 412, and Martin v. Binger, 91 S. E. (W. Va.), 386. The Daly case involved this very question. [304] The remaining objection of defendants is not one which they are in a position to set up, as the record shows that they moved to dismiss the action because J. A. Nevin, trustee in bankruptcy, had not been made a party thereto, whereupon the court found that he had theretofore been made a party as interpleader, without objection, by order of Judge Lyon, and then ordered that he come in and be allowed to join with the plaintiff in the prosecution of the action. By not objecting at first defendants waived their right to object now. A defendant cannot ask that a party be brought in, and when it is so ordered, object because he is an improper party, for when the court has done what he has asked to be done he is in no position to insist that it be undone. But the trustee was a proper party under the circumstances to prevent further litigation. He claimed the entire fund as trustee for all the creditors, including the plaintiff, while the latter claimed only his proportionate part of it.. Symons v. Reid, 58 N. C., 327; Vanhorn v. Duckworth, 42 N. C., 261; Ayers v. Wright, 43 N. C., 229; Kornegay & Co. v. Farmers, etc., Steamboat Co., 107 N. C., 115. The plaintiff is not objecting to the trustee being made a party or to his intervening'. He is not claiming all of the fund but only his rateable part. The court must make parties in some cases, and in others it may add new parties. Rev., sec. 507. “It can very rarely happen,” said the Chief Justice, “that making an additional party will be a serious prejudice, and hence such orders are usually discretionary, and not reviewable.” Bernard v. Shemwell, 139 N. C., 446, citing Code, sec. 273; Tillery v. Candler, 118 N. C., 889. Defendants cannot be prejudiced by making the trustee a party. It is rather beneficial to them, as they will be protected from another action by him, based upon his right to recover the money for the creditors generally, the fund to be administered in the bankruptcy proceedings. We have considered all the questions as there must be a new trial, for they would be raised again. There was error in the charge, because of which a new trial is ordered. New trial.