
    THE PRESENT BULK SALES LAW A VALID ENACTMENT.
    Common Pleas Court of Montgomery County.
    Meyer Schaine v. W. H. Schaeffer et al.
    Decided, May 15, 1914.
    
      Constitutional Law — Ohio Act Less Drastic Than Those of Other States — Its Provisions Not Unreasonable.
    
    The “hulk sales” law, contained in Sections 11102 and 11103, General Code of Ohio, as amended in 103 Ohio laws, p. 461, relating to the transfer of a stock of merchandise and fixtures other than in the usual course of trade, is a valid exercise of the police power of the state, and a law of this character is reasonable and is not unconstitutional.
    
      Wolfe & Wolfe, for plaintiff.
    
      Howard B. Cromer and A. W. Schulman, contra.
   Martin, J.

The facts in this case .are as follows: Nathan Falk and Joseph Falk were partners in the restaurant business under the name of the Berkshire Dairy Lunch. On February 11, 1914, Falk Bros, sold their entire stock of merchandise and fixtures pertaining to the restaurant business to Meyer Schaine. At the time of the sale, Falk Bros, were indebted to W. PI. Schaeffer upon an account for merchandise sold by him to the Falk Bros. Meyer Schaine, the purchaser, paid an adequate consideration for the property bought by him. The purchaser took immediate possession of the restaurant. The purchaser did not demand, and did not receive, a written list, under oath, of the creditors of Falk Bros., together with their addresses and the amount of indebtedness against Falk Bros. On the 20th day of February, 1914, W. H. Schaeffer entered suit against Falk Bros, in the municipal court of the city of Dayton, and judgment was rendered in his favor. Execution was issued and levy was made by the bailiff upon the identical stock of merchandise bought by Meyer Schaine from Falk Bros. The property was about to be sold, when Meyer Schaine obtained from this court a temporary injunction restraining the officers of the municipal court from proceeding further in the matter. The defendant here, plaintiff below, filed his answer setting forth the fact that the requirements of the “bulk sales” law, contained in Sections 11102 and 11103, General Code of Ohio, as amended in 103 Ohio Laws, p. 462, had not been followed. The defendant claimed that the sale to Meyer Schaine was void .and that no title to the property ever passed to him. The ease comes before the court upon the motion of the defendant to dissolve the temporary injunction.

The facts being undisputed, the issue in this case is the constitutionality of the “bulk sale” law. As known by all parties in this case, the Supreme Court of the state of Ohio has already declared two “bulk sales” laws unconstitutional. It is unnecessary for the court to go into detail in reference to those laws, only to say this, that the laws passed upon by the Supreme Court in the 70th Ohio State in the ease of Miller et al v. Crawford et al, was a very unreasonable law. It contained six requirements, three of which had to be fulfilled by the seller and which might not have been fulfilled and the purchaser been none the wiser, and if any of those six requirements had not been complied with the sale would have been fraudulent or void ,as to creditors. In other words, the purchaser, who‘would have-suffered, might have in good faith fulfilled all the provisions of this law which the law required the purchaser to carry out and still would have been liable to claims of the creditors as far as the goods were concerned. Then, there were some requirements which could not have been fulfilled by many of the sellers or venders if they had made that effort,, such as the original invoices for the cost price of the merchandise, etc. So that the Supreme Court of the state had very good reasons to find that this law was repugnant to the first article of the Constitution of the state, because it placed an unwarrantable restriction upon the right of the individual to acquire and possess property, and because it contained a forbidden discrimination in favor of a limited class of creditors. It especially had good reason to find that the law unduly restricted the acquirement and possession of property.

When we come to the 84th Ohio State, in the case of Williams & Thomas Company v. Preslow, the Supreme Court passed upon the second “bulk sales” law, in which the court found that the same objections that applied to the'first “bulk sales” law applied to the second law. But an examination of the second law will show that the provisions thereof were not so restrictive, neither were they so onerous as the first law referred to in the 70th Ohio .State. The main objection to the second law w,as that it provided that, in case the purchaser did not place on record at the recorder’s office a notice of the purchase which he was about to make seven-days before said purchase, his failure to do so created a presumption that the sale or purchase was a fraud upon creditors. In other words, the law proposed to change the universal rule of evidence and testimony in regard to proof. Now, the court is not so sure that the Supreme Court of the state of Ohio is right upon this proposition, because a number of states, including the United States Supreme Court, have found laws more drastic than this to be constitutional.

' This brings us to the law under consideration, which is very different and much less drastic than the first laws which we have mentioned. As the parties to this action well know, it only requires that the purchaser shall demand and receive a list of ereditqrs certified to by the seller under oath and that he must give five days notice by registered letter before the purchase is made complete to the creditors in the list furnished as well as creditors of which he has knowledge concerning the proposed sale.

Now, it is true that in extreme cases this may somewhat interfere with the possession and disposition of property, but those are extreme cases. Under this law, as the court understands it, if the seller gives a list to the purchaser ,and swears that it is a true list of his creditors,' the purchaser, at least, is not disturbed in his possession of the goods if he carries out the requirements of the law in relation to purchaser. The seller, by reasonable diligence, should be able to name the list of his creditors. It does not appear to the court that this law is such class legislation, as far as the requirements go, as to render it unreasonably burdensome. As the court has already stated, practically every state in the Union has passed laws as drastic if not more drastic than this, and these have not been found unconstitutional except in three states, Ohio, New York and Utah.

But the court does not need to rest upon its own opinion in considering this law constitutional, because in the state of Michigan there has been been ,a law passed which is almost word for word similar to the law in this state, only that that law is more drastic as far as the purchaser is concerned than the law in Ohio, because in that state it makes all sales void unless the seller shall at least five days before the sale make a full detailed inventory showing the quantity and as far as possible with the exercise of reasonable diligence the cost price to the seller of each article to be included in the sale. In this respect the Ohio law is more liberal and less restrictive than the Michigan law.

We find in 145 Michigan, in the case of Spurr v. Travis, p. 721, that this law has been declared constitutional by the Supreme Court of the state of Michigan; and we further find that this opinion has been confirmed by the Supreme Court of the United States in Vol. 217, p. 461, in the case of Kidd, Dater & Price Co. v. Musselman Grocery Co. And both courts found that such an act is a valid exercise of the police power and is not invalidated by reason of being restricted in its .operation to merchants.

In the 70th Ohio State the court had occasion to quote Cooley on Constitutional Law as applying to the act then before the court. In the case of Spurr v. Travis, in 145 Michigan Reports, we find that the court also quoted Cooley on Constitutional Limitations, 7th Edition, p. 554, in which Cooley holds as follows:

“Laws public in their objects may unless express constitutional provisions forbid, be either general or local in their application. They may embrace many subjects or one, and they may extend to all citizens or be confined to particular classes, as minors or married women, bankers or traders and the like. If the laws be otherwise unobjectionable, all that can be required in these cases is that they be general in their application to the class or locality to which they apply, and they are then public in character; and of their propriety and policy the Legislature must judge.”

It not only seems to the court that this law is constitutional, but it is a law which should be commended, because it is designed to prevent fraud and dishonesty. Only those who are ignorant of the law will suffer to any great extent from its operation.

The Connecticut “bulk sales” law was declared constitutional not only by the Supreme Court of Errors of the state of Connecticut, Vol. 76, p. 515, case of Walp v. Mooar, but the opinion in this case was also affirmed in the 211 U. S. Reports, p. 489, in the case of Lemieux v. Young, Trustee. The Connecticut law is very similar to that of Michigan and Ohio with some differences, but the principles that apply to the laws of all three states are the same. The Supreme Court of the United States has passed upon two of them and found them to be constitutional. The court feels that, when the Supreme Court of the state of Ohio passes upon this particular act, it will follow the opinion rendered by the Supreme Court of the United States.

This being the opinion of the court, the court therefore finds that the temporary restraining order in this case granted should be dissolved and that plaintiff’s petition be dismissed and that the prayer thereof be refused.  