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and directors, aggregating the sum of $34,500. The cashier absconded, whereupon it was found that each of the notes, without the knowledge or consent of the maker, had been converted into assets of the bank. Holding that the acts of the cashier constituted a breach of the bond, and that the surety company was liable, the court said: "The only reasonable inference to be drawn from the evidence is that upon the respective dates of the conversions Robinson abstracted funds or securities from the bank, converting them to his own use, and substituted the accommodation notes. Thus, the losses to the bank accrued upon the respective dates of the conversions and substitutions. But, if we were not to draw the necessary inference mentioned, the evidence plainly discloses acts of the cashier within the terms of the bond. As cashier, by some means, he got into the bank, as assets for creditors, notes which were, so far as the makers were concerned, without consideration. For these notes, thus converted, he thereby created a liability upon the bank to the respective makers. Through his fraud and dishonesty there came into existence simultaneously with his acts inescapable liabilities and losses to the bank covered by plaintiff's indemnity agreement."

In a case wherein a surety company had issued to a bank what is known as a "banker's blanket bond," whereby the surety company undertook to indemnify the bank against forgery, the question arose as to its liability under the following circumstances: A customer of the bank carried an account with it under his real name. He also carried accounts in other banks under fictitious names. Having a balance in the plaintiff bank, he deposited two checks drawn on other banks to himself under the fictitious names, and indorsed by him in his real name. He was known to the other banks under the name he used. The handwriting on the checks and the indorsement did not vary, there being no disguising thereof. The plaintiff bank allowed him to withdraw the credit established by this deposit, but the checks so de

posited were dishonored by the drawee banks, the customer having no funds therein to meet them. After referring to the penal statute defining forgery, the court held that no forgery had been committed within the meaning of the indemnity bond. The court said: "I do not believe that Wagner's act in signing his assumed name to these checks constitutes forgery within these provisions of law. There was no false making, for Wagner drew checks on a bank where he once had an account, and on a bank where he actually had an account at the time, and used as his signature the one known to each of said banks as that of a depositor, and in the same manner as he had signed to open his accounts therein. The mere assumption of another name than his real one did not constitute a crime, nor was such use prohibited by law. There is no proof that his original opening of these accounts was fraudulent, or intended to assist in subsequent crimes, nor can such a presumption be indulged in. In dealing with a person accused of a crime, he is continuously to be credited with the presumption of innocence until proven guilty. He did not counterfeit anything, for he used his real signature under his assumed name. Had the funds to meet these checks been in the banks on which he drew them, they would have honored and paid them, for the names and signatures were those which they recognized as of a depositor therein." International Union Bank v. National Surety Co. (1926) 217 App. Div. 102, 216 N. Y. Supp. 169, reversing (1925) 124 Misc. 842, 209 N. Y. Supp. 583.

In Underwood v. Globe Indemnity Co. (1926) 217 App. Div. 63, 216 N. Y. Supp. 109, the action was on an indemnity bond purporting to cover an employer for robbery, holdup, etc., while the property was in transit. His employee was sent with bonds to a certain place, and was to receive a certified check therefor. The employee arrived at the designated place, and the bonds were turned over, but the check given the messenger, purporting to be certified, did not bear the signature of any bank officer. Holding

that the indemnity company was not liable, the court said: "There was a delivery and a loss only after the property had arrived at its destination. While the phrase 'in transit' may be considered as implying the whole journey from the place of origin to the place of destination, and does not exclude incidental stops, yet in our view it cannot be considered to imply a continuance of motion after arrival at its final destination. The negligence of an employee which an indemnity company insures against while the employee is in transit would seem to be such negligence as a failure

to properly guard securities or moneys while in his possession; negligence in the placing of them, while still continuing the journey, in some unsafe place where they could be lost or abstracted; negligence in exposing them to destruction or loss by placing them in a dangerous place, where they could be destroyed by the elements or in some fortuitous manner. 'Transit,' in common speech, is the act or process of causing to pass from one place to another. Here the act of passing had totally ceased. The place of stoppage had been attained; there was no longer transit." W. F. A.

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Fraudulent conveyances, § 8-protection of creditors of wholesale merchants.

1. The language of the Bulk Sales Law is broad and comprehensive enough to protect the creditors of wholesale merchants. [See annotation on this question beginning on page 982.]

Fraudulent conveyances, § 8 bulk sale of wholesale business.

2. The sale by a corporation engaged in the business of refining petroleum and selling the products in the same way that they are sold by merchants generally, of its entire business and property, is within the operation of the Bulk Sales Law.

[See 12 R. C. L. 525. See also annotation in 41 A.L.R. 1214.]

Words and phrases "merchandise."

3. The word "merchandise" means something that is sold every day and is constantly going out of the store and being replaced by other goods.

[See 12 R. C. L. 527; 2 R. C. L. Supp. 1445; 6 R. C. L. Supp. 714.]

APPEAL by plaintiff from a judgment of the Circuit Court for Pulaski County (Mann, J.) in favor of defendant in an action brought to recover the invoice price of two cars of gasolene and one car of fuel oil alleged to have been delivered by plaintiff to defendant. Affirmed.

Statement by Hart, J.:

This is an action instituted in the circuit court by the Root Refineries against the Gay Oil Company to recover the sum of $2,253.88, the invoice price of two cars of gasoline and one car of fuel oil.

The defendant filed an answer in

which it denied that it purchased the goods sued for from the Root Refineries. It avers the facts to be that it purchased the gasoline and fuel oil in question from the Petroleum Products Company, and alleges that the company is indebted to it in the sum of $3,217.18, and

pleads the same as a set-off. The defendant also alleges that the plaintiff is indebted to it in the sum of $61.66 for merchandise.

The record shows that on July 21, 1921, the Petroleum Products Company made a contract with the Rose City Cotton Oil Company of Little Rock to furnish it with fuel oil. The Petroleum Products Company made an agreement with the Gay Oil Company, whereby it was to carry out its contract with the Rose City Cotton Oil Company. By the terms of the contract the Petroleum Products Company was to furnish fuel oil to the Rose City Cotton Oil Company for a stipulated period of time, and the contract contained a provision by which the Petroleum Products Company guaranteed that the cost of the fuel oil furnished would not exceed the cost of coal. The Petroleum Products Company made an agreement with the Gay Oil Company by which the latter should furnish the fuel oil to the Rose City Cotton Oil Company for it under its contract. The fuel oil was furnished by the Petroleum Products Company to the Rose City Cotton Oil Company and payments were made from time to time. During the months of October and November, 1921, the amount of fuel oil furnished invoiced $3,217.98. The fuel oil thus furnished exceeded the cost of coal, and for this reason the Rose City Cotton Oil Company declined to pay it. In the month of December, 1921, the Gay Oil Company, in the regular course of business, purchased from the Petroleum Products Company, the gasoline and oil sued for in this case, amounting to $2,253.84. Subsequently the Petroleum Products Company sold its physical properties, plant, refinery, and real estate to the Root Refineries for a consideration of $130,000. It only retained its stock of oil on hand, which invoiced about $10,000.

According to the evidence for the plaintiff, it notified the Gay Oil Company of the purchase of the property of the Petroleum Products Com

pany, and told the Gay Oil Company that it would fill its orders with the Petroleum Products Company for the two cars of gasoline and one car of fuel oil, provided the account was paid promptly and that there would be no counterclaim on account of the alleged contract of guaranty between the Petroleum Products Company and the Rose City Cotton Oil Company, and the Gay Oil Compa

ny.

According to the evidence for the defendant, it thought that the Petroleum Products Company had shipped it the two cars of gasoline and one car of fuel oil and did not know the Root Refineries in the transaction at all. In other words, the Gay Oil Company did not know that the Root Refineries had purchased the property of the Petroleum Products Company until after the two cars of gasoline and one car of fuel oil had been shipped to it under the order sent to the Petroleum Products Company.

The jury found against the plaintiff on its claim, and brought in a verdict in favor of the defendant for the amount by which its set-off against the Petroleum Products Company exceeded the claim of the Root Refineries.

From a judgment against it in favor of the Gay Oil Company for said amount, the Root Refineries has duly prosecuted an appeal to this court.

Messrs. Rogers, Barber, & Henry, for appellant:

Gay Oil Company had no cause of action against Root Refineries; its cause of action was against Petroleum Products Company.

Waterman, Set-off, 2d ed. p. 174; 24 R. C. L. § 64, p. 860; Brown v. Warren, 43 N. H. 430; Gregg v. James, Breese (Ill.) 107, 12 Am. Dec. 151; Johnson v. Bridge, 6 Cow. 693.

Messrs. Moore, Smith, Moore, & Trieber and George A. McConnell, for appellee:

The Root Refineries, upon taking over all the assets of the Petroleum Company, became liable to the defendant for the amount recovered on its counterclaim.

(— Ark. —, 284 S. W. 26.)

Meeks v. Arkansas Light & P. Co. 147 Ark. 232, 227 S. W. 405; Good v. Ferguson & W. Land, Lumber & Handle Co. 107 Ark. 118, 153 S. W. 1107, Ann. Cas. 1915A, 544; Warmack v. Major Stave Co. 132 Ark. 178, 200 S. W. 799; Wesco Supply Co. v. El Dorado Light & Water Co. 107 Ark. 424, 155 S. W. 518.

The Root Refineries is not in a position to complain of the judgment against it, for the testimony conclusively shows that if it did in reality purchase the property from the Petroleum Company, it was such property as falls within the Bulk Sales Act, and their failure to comply therewith leaves them charged as receiver for the debts of the old company.

North American Provision Co. v. Fischer Lime & Cement Co. 168 Ark, $106, 269 S. W. 993; Prins v. American Trust Co. 169 Ark. 455, 275 S. W. 914; Ledwidge v. Arkansas Nat. Bank, 135 Ark. 421, 205 S. W. 808.

Hart, J., delivered the opinion of the court:

It is conceded that the claim of the plaintiff was submitted to the jury upon proper instructions, and that it is concluded by the verdict of the jury as to the account sued on by it.

It is claimed, however, that there is nothing in the record to show that the plaintiff assumed the debts and liabilities of the Petroleum Products Company, and that it is not liable to the defendant for any claim it might have against the Petroleum Products Company. This is true, but the liability attaches on other grounds.

The Petroleum Products Company sold and conveyed its business and all its property used in connection therewith to the Root Refineries for the sum of $130,000. It only reserved from the sale about $10,000 worth of oil which it had in stock. It went out of business, and the Root Refineries succeeded to its business and operating plant. This summary sale of the business of the Petroleum Products Company to the Root Refineries was not in the ordinary course of busi

Fraudulent conveyances -bulk sale of wholesale

business.

ness, and the transaction falls within the prohibition of our Bulk Sales Law (Acts 1923, No. 374). That statute provides that the sale in bulk of any part of, or the whole of, a stock of merchandise and the fixtures pertaining to the conduct of any such business, otherwise than in the ordinary course of trade and in the ordinary prosecution of the business of the seller, shall be void against the creditors of the seller, unless the terms of the act are complied with. The language of the act is very broad and comprehensive, and by its terms protects all creditors of merchants alike.

The court has held that the language of the statute

of creditors

merchants.

is sufficiently broad protection and comprehensive of wholesale to protect the creditors of wholesale merchants as well as the creditors of retail merchants. North American Provision Co. V. Fischer Lime & Cement Co. 168 Ark. 106, 269 S. W. 993. No attempt was made to comply with the provisions of our Bulk Sales Law. The Petroleum Products Company sold practically all of its business, including its fixtures, to the Root Refineries for $130,000, which is a sum greatly in excess of the claim of the defendant. No other claim has been proven against the Petroleum Products Company; therefore_the assets received by the Root Refineries are far in excess of the claim of the Gay Oil Company.

In reaching this conclusion we are not unmindful that in Robbins v. Fuller, 148 Ark. 173, 229 S. W. 8, it was held that our bulk sales statute refers to the trade fixtures connected with the business, and not to the building in which the business is carried on. The record shows that the the Root Refineries bought the physical properties of the Petroleum Products Company for $130,000. This included the real estate, trade fixtures, and all the remainder of its property, except a stock of oil, which invoiced about $10,000. The Petroleum Products Company was engaged in refining oil, and selling

gas oil, fuel oil, gasoline, and naptha. While there was no separate valuation of the trade fixtures, in the very nature of things, it is inferable that they were worth more than the amount of the claim of the Gay Oil Company, which is the only one proved in this case.

In this connection it may be stated that in Ramey-Milburn Co. v. Sevick, 159 Ark. 358, 252 S. W. 20, it was held that a person operating a veneer mill and sawmills, at which logs were manufactured into lumber and then sold, is not within the purview of our bulk sales statute. though he sells substantially all the lumber he has on hand at a particular time. The reason is that the sale of the lumber was only an incident to the operation of the manufacturing plant. On the other hand, if the main business of Sevick was to operate a lumber yard, the sale in bulk of his lumber and trade fixtures would have fallen under the ban of the statute, although he might have operated a sawmill and a veneer mill for the purpose of supplying in whole or in part stock for his lumber yard.

Words and phrases-“merchandise."

Merchandise means something that is sold every day, and is constantly going out of the store and being replaced by other goods. Boise Asso. v. Ellis, 26 Idaho, 438, L.R.A.1915E, 917, 144 Pac. 6. Such is the effect of our holding in Fisk Rubber Co. v. Hinson Auto Co. 168 Ark. 418, 270 S. W. 605, where it was held that an automobile repair shop did not fall within the prohibition of the statute, although there were occasional sales of the various accessories which were kept for the purpose of repairing cars. The reason given was that the principal business of the company was repair work, and

the supplies were carried for use in that business. The court said that the occasional sales of supplies constituted an inconsequential part of the principal business.

The Petroleum Products Company was refining crude oil, which it purchased, into the various products above enumerated, and selling the same from day to day in precisely the same manner as other articles of commerce are bought and sold in trade by merchants. trade by merchants. It was doing something more than selling its products as a necessary incident to refining oil. It was engaged in selling its various products in the same way that they are sold by merchants. The record shows that it was making contracts with various companies to supply them with such products as it sold. It made a contract with the Gay Oil Company to carry out some of its contracts which it had made with other companies. When the record is construed as a whole, it shows that the Petroleum Products Company was carrying on a business or trade in merchandise, and that it was not merely engaged in refining oil and selling the refined products as an incident to its main business. Hence the Petroleum Products Company fell within the ban of the statute, when it sold its trade fixtures in connection with its other property.

The proof fully established the claim of the defendant against the Petroleum Products Company. Hence the court properly rendered judgment in favor of the defendant against the plaintiff for the amount its claim exceeded the claim of the plaintiff.

It follows that the judgment will be affirmed.

Petition for rehearing denied with modification, June 21, 1926.

ANNOTATION.

Applicability of Bulk Sales Law to wholesalers or jobbers. [Fraudulent Conveyances, § 8.]

This annotation does not include cases dealing with the sale by manu

facturers or packers of the products manufactured or produced by them;

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