Pennsylvania Rubber Co. v. Sampson

Vinje, C. J. Error is claimed because (1) the court refused to prorate between subject and non-subject property payments made by the appellants to the seller; (2) the court refused to allow any credit to appellants for payments made to the unsecured creditors; and (3) the court refused to prorate liability of appellants among all unsecured creditors. The claim that payments made to the seller should be prorated between subject and non-subject property is not tenable if its effect is to diminish the liability of the purchaser to less than the full value of the subject property. The Bulk Sales Law rests that liability upon a purchaser who buys without complying with it, and such liability cannot be diminished by adding to the sale goods not subject to the law. In this case the purchasers stood charged with the duty to respond to creditors for the full value of the subject, property less the valid liens thereon, or for the sum of $6,840.72 irrespective of what they had paid the seller. The second claim is also untenable because if sustained it would open wide the door to preferences by leaving it to the purchaser, to determine what creditors shall be paid. The object of the Bulk Sales Law is to place all unsecured [79] creditors upon a parity in their rights to the value of the goods sold except in so far as by legal process priorities may be secured. As was stated in Fitz Henry v. Munter, 33 Wash. 629, 74 Pac. 1003, “The object of this law was to hold the goods of debtors under such circumstances as a trust fund for the benefit of all the creditors, and to hold the purchaser in possession as a trustee for such creditors.” See, also, Fecheimer-Keifer Co. v. Burton, 128 Tenn. 682, 164 S. W. 1179, 51 L. R. A. n. s. 343 and cases cited. In National Grocer Co. v. Plotter, 167 Mich. 626; 133 N. W. 493, the court said: “The statute makes the sale absolutely void as against creditors unless its conditions are complied with. In effect, therefore, at the time of the service of the writ upon him the garnishee defendant had in his possession the entire stock of goods belonging to the principal defendant.” And in Gazett v. Iola Co-operative M. Co. 164 Wis. 406, 160 N. W. 170, this court said: “The attempted sale by the principal defendants to the garnishee defendant being void under the statute, such garnishee defendant must hold the goods or the proceeds thereof subject to be reached by garnishment.” Such goods or the proceeds thereof as to unsecured creditors are like any other property of a debtor. They may be reached by garnishment or any other appropriate legal remedy, and when so reached the creditors may obtain a priority in payment. Hence the court properly refused to prorate the liability of the defendants among all unsecured creditors. Plaintiffs obtained a prior right to payment by their garnishments. There being more than enough money to satisfy all claims in these seven actions, priority as among them need not be found. By the Court.- — ]udgment affirmed.