Appeal by plaintiffs from judgment entered 29 June 2000 by
Judge Zoro J. Guice in Macon County Superior Court. Heard in the
Court of Appeals 13 September 2001.
Jones, Key, Melvin & Patton, P.A., by Fred H. Jones, for
plaintiff-appellants.
No brief filed for defendant-appellees.
MARTIN, Judge.
Plaintiffs brought this action alleging claims against
defendant Darryl Roger Talley for breach of contract, fraud, unfair
and deceptive practices, conversion, and for money due on a
promissory note, all arising out of defendant Talley's operation of
a business known as “R & S Auto Parts.” Plaintiffs also asserted
a claim against defendant Talley and defendants Overholt, alleging
that Talley transferred in bulk all of the inventory, equipment,
and other assets of R & S Auto Parts to defendants Overholt, doingbusiness as “Jones Auto Parts,” without complying with the
provisions of G.S. § 25-6-101 et seq., North Carolina's bulk sales
law. Simultaneously, plaintiffs sought attachment of defendants'
property.
Defendants Overholt filed an answer in which they admitted
that Talley had sold the inventory, equipment and other assets of
R & S Auto Parts to them for $60,000; alleged that plaintiffs had
been given notice of the sale; asserted affirmative defenses,
including estoppel, to plaintiffs' claim for violation of the bulk
sales law; and asserted a counterclaim. Defendants Overholt
obtained an order discharging the attachment of their property upon
posting a bond in the amount of $75,000.
Though it is not clear from the record filed with this Court,
defendant Talley was apparently dismissed from the action and the
case proceeded to trial upon the single claim against defendants
Overholt for violation of the bulk sales law. The trial court
submitted three issues to the jury, which were answered as follows:
1. Did the sale of R & S Auto Parts to the
defendants, Dennis and Michael Overholt,
violate the North Carolina Bulk Sales Act?
ANSWER: YES
2. Are the plaintiff, Sandra and Hugh
Collins, estopped from asserting a violation
of the North Carolina Bulk Sales Act?
ANSWER: NO
3. What amount, if any, are the plaintiffs,
Sandra and Hugh Collins, entitled to recover
from the defendants, Dennis and Michael
Overholt?
ANSWER: $1000.00 (One Thousand Dollars)
Prior to the entry of judgment, plaintiffs moved to elect as theirremedy, in lieu of the damages awarded by the jury, the recovery of
the $75,000 bond. The trial court denied the motion and entered
judgment on the verdict. Plaintiffs gave notice of appeal from the
judgment.
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In their sole assignment of error, plaintiffs contend the
trial court erred in denying their motion for election of remedies
and for entry of judgment in the amount of the bond. Plaintiffs
argue that because the jury verdict established that the transfer
of R & S Auto Parts' inventory to defendants Overholt was done in
violation of G.S. § 25-6-101
et seq., plaintiffs were entitled to
recover the amount of the bond posted by defendants to secure the
release of the property from attachment. Their argument has no
merit.
Article 6 of the Uniform Commercial Code, as set out in
Chapter 25 of the North Carolina General Statutes, governs bulk
transfers. A bulk transfer “is any transfer in bulk and not in the
ordinary course of the transferor's business of a major part of the
materials, supplies, merchandise or other inventory . . . .” N.C.
Gen. Stat. § 25-6-102(1). Such a transfer “is ineffective against
any creditor of the transferor unless at least ten days before he
takes possession of the goods or pays for them, whichever happens
first, the transferee gives notice of the transfer in the manner
and to the persons hereafter provided.” N.C. Gen. Stat. §
25-6-105. Under the statute, the sanction for non-compliance with
the bulk transfer law is that the transfer is ineffective against
creditors of the transferor. Article 6 is designed to prevent amerchant from suddenly selling all or most of his inventory and
then making off with the proceeds of the sale without satisfying
his creditors, Official Comment, G.S. § 25-6-101, and enables the
creditors of the transferor to avoid the transaction and levy on
the transferred property to satisfy the transferor's debts. North
Carolina Comment to G.S. § 25-6-104, 25-6-105;
see Raleigh Tire &
Rubber Co. v. Morris, 181 N.C. 184, 106 S.E. 562 (1921) (decided
under former N.C. Bulk Sales Law). Article 6 does not establish
any tort liability against the transferee nor does it give the
creditor the right to recover from the transferee personally on the
transferor's debt, unless the transferred property has become so
commingled with the transferee's other property so as to be
untraceable. Lawrence's Anderson on the Uniform Commercial Code,
Vol. 7A, §§ 6-101:29 & 6-101:33
, 3
rd Edition (2001).
In the present appeal, plaintiffs, as appellants, have
included neither a statement of the evidence nor a transcript of
the trial proceedings as a part of the record on appeal.
See
N.C.R. App. P. 9(a)(1)e. Therefore, we are without a means to
determine the evidentiary basis upon which the damage issue was
submitted to, or answered by, the jury. Appellate review is based
“solely upon the record on appeal,” N.C.R. App. P. 9(a); it is the
duty of the appellants to see that the record is complete.
Tucker
v. General Telephone Co., 50 N.C. App. 112, 272 S.E.2d 911 (1980).
We will not engage in speculation as to the legal or factual basis
for the jury award of damages,
Pharr v. Worley, 125 N.C. App. 136,
479 S.E.2d 32 (1997), and will presume that the jury was properlyinstructed and that such verdict was supported by competent
evidence.
See In re Botsford, 75 N.C. App. 72, 330 S.E.2d 23
(1985).
Attachment is an ancillary proceeding to a pending action for
a money judgment which enables a plaintiff to bring the property of
a defendant within “the legal custody of the court in order that it
may subsequently be applied to the satisfaction of any judgment for
money which may be rendered against the defendant in the principal
action.” N.C. Gen. Stat. § 1-440.1(a);
see Edwards v. Brown's
Cabinets, 63 N.C. App. 524, 305 S.E.2d 765,
disc. review denied,
309 N.C. 632, 308 S.E.2d 64 (1983). When a plaintiff prevails in
the principal action,
the sheriff shall satisfy such judgment out of
money collected by him or paid to him in the
attachment proceeding or out of property
attached by him as follows:
(1) After paying the costs of the action,
he shall apply on the judgment as much of
the balance of the money in his hands as
may be necessary to satisfy the judgment.
N.C. Gen. Stat. § 1-440.46(a)(1). When the judgment and all costs
have been paid, “the sheriff, upon demand of the defendant, shall
deliver to the defendant the residue of the attached property or
the proceeds thereof.” N.C. Gen. Stat. § 1-440.46(e).
The attachment of a defendant's property may be discharged
upon the defendant giving a bond, which takes the place of the
property to secure the payment of the judgment. N.C. Gen. Stat. §
1-440.39. In such event, a plaintiff who prevails in the principal
action may recover the amount of the judgment rendered from the
surety on the bond if the defendant fails to satisfy the judgment. However, the amount of the bond does not, as plaintiffs seem to
argue, establish an independent measure of damages in the principal
action.
In the present case, the jury's verdict that defendants had
violated the bulk sales law meant simply that Talley's transfer of
the inventory to defendants was ineffectual as to plaintiffs and
that such property was available to satisfy Talley's debt owed to
plaintiffs. Plaintiffs attached the property in the hands of
defendants Overholt, rendering the property subject to the payment
of any money judgment which they obtained in the principal action.
Defendants Overholt secured the release of the property by posting
a bond pursuant to G.S. § 1-440.39, which bond was conditioned upon
their payment to plaintiffs of “the amount of the judgment and all
costs that the defendant may be ordered to pay.” According to the
jury's verdict, that amount was determined to be $1,000.
Plaintiffs are entitled to proceed against the bond only in the
event defendants do not pay the judgment and costs assessed by the
trial court, and then, only to the extent of the judgment and
costs. The judgment of the trial court is affirmed.
Affirmed.
Judges McCULLOUGH and BIGGS concur.
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