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Finn v. Tires & Appliances Inc.

Decided: December 23, 1954.

EDWARD E. FINN, TRUSTEE IN BANKRUPTCY OF MARTIN JENOFF AND CARMEN CORONA, INDIVIDUALLY AND AS PARTNERS TRADING AS CORONA APPLIANCES, PLAINTIFF,
v.
TIRES & APPLIANCES, INC., A CORPORATION OF NEW JERSEY, T/A GOODYEAR TIRES & APPLIANCES, DEFENDANT



Haneman, J.s.c.

Haneman

[33 NJSuper Page 542] Plaintiff, as trustee in bankruptcy of Martin Jenoff and Carmen Corona, individually and as partners trading as Corona Appliances, seeks to set aside a sale made by the said bankrupts to Tires & Appliances, Inc., a corporation trading as Goodyear Tires & Appliances, Inc., on the ground that the same is void, having been in violation of R.S. 46:29-1 et seq. Plaintiff as well seeks to make discovery of the profits obtained by the defendant from a re-sale of said goods. The facts in connection herewith are as follows:

The defendant purchased the goods here involved from the bankrupt on or about January 25, 1952; an involuntary petition in bankruptcy was filed on February 19, 1952; on March 6, 1952 Jenoff and Corona, individually and as partners trading as Corona Appliances, were adjudged bankrupts. On March 16, 1953 plaintiff obtained leave to file the complaint herein, and on March 31, 1953 said complaint was filed.

The bankrupts were engaged in the business of selling toys, records, radios, television sets and "white goods." The term "white goods" is an all-inclusive term apparently used in the trade and refers to refrigerators, ranges, etc. The sale about which complaint is made included the "white goods" from the bankrupts' establishment.

It is admitted that there was a failure to comply with the provisions of the Bulk Sales Act, requiring notice of such a prospective sale. The applicable sections of said statute read as follows:

"The sale in bulk of the whole or a large part of the stock or merchandise and fixtures or merchandise or fixtures, or goods and chattels, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the seller's business or occupation, shall be voidable as against the creditors of the seller * * *.

No proceeding at law or in equity shall be brought against the purchaser to invalidate any such voidable sale after the expiration of ninety days from the consummation thereof."

The first question involved is whether this sale constituted a sale of a "large part" of the stock of the bankrupt. I find as a fact that the sale here involved was of a large part of the stock of the bankrupt and otherwise than in the ordinary course of trade and in the regular and usual prosecution of the bankrupt's business.

It therefore becomes necessary to determine whether the failure to commence these proceedings within 90 days from the consummation of the sale is a bar to such proceedings.

It is apparent from the above recital of facts that the action was not commenced within 90 days from the consummation

of the sale. However, plaintiff alleges that in the light of the provisions of section 11(e), 11 U.S.C.A. ยง 29(e), which reads as follows:

"A receiver or trustee may, within two years subsequent to the date of adjudication or within such further period of time as the Federal or State law may permit, institute proceedings in behalf of the estate upon any claim against which the period of limitation fixed by Federal or State law ...


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