Sternberg v. Rubenstein, 305 N. Y. 235, 112 N. E. 2d 210 (1953)

Holzman, Donald J.

English

Digital Commons @ University at Buffalo School of Law

Buffalo Law Review Volume 3 Number 1 Article 14 12-1-1953 Business Associations—Bulk Sale—“ordinary course of trade” Donald J. Holzman Follow this and additional works at: https://digitalcommons.law.buffalo.edu/buffalolawreview  Part of the Business Organizations Law Commons Recommended Citation Donald J. Holzman, Business Associations—Bulk Sale—“ordinary course of trade”, 3 Buff. L. Rev. 67 (1953). Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol3/iss1/14 This The Court of Appeals Term is brought to you for free and open access by the Law Journals at Digital Commons @ University at Buffalo School of Law. It has been accepted for inclusion in Buffalo Law Review by an authorized editor of Digital Commons @ University at Buffalo School of Law. For more information, please contact lawscholar@buffalo.edu. THE COURT OF APPEALS, 1952-53 TERMthey could surrender their stock and accept payment without pre-judicing their right to appeal the valuation.During their appeal to the Appellate Division, stockholdersdid surrender their stock and receive payment. The AppellateDivision subsequently granted corporation's motion to dismissthe appeal on the ground that the stockholders' interest was nowterminated.The Court of Appeals reversed on the basis of the languageof § 21 (6) of the Stock Corporation Law which states: "Anystockholder demanding payment for his stock shall have no right. . . with respect to such stock, except the right to receive pay-ment for the value thereof.' '[italics added.] The majority of thecourt held the word "value" to mean the "proper value" and re-fused to allow the language of § 21 (7) ("upon receipt of suchpayment, the objecting stockholder shall cease to have any inter-est in the corporation or its assets by reason of his ownership ofthe stock so paid for . . . ") to narrow its meaning. Such inter-pretation involves no inconsistency, the court maintained, becausesubdivision 7 refers to rights such as to notice, to attend meetings,and to vote and; therefore, it does not conflict with the right to re-ceive "payment for the value thereof."Bulk Sale---"ordinary course of trade"To come within the scope of the Bulk Sales Act,20 a bulk salemust be "otherwise than in the ordinary course of trade and inthe regular prosecution of said business." "Whether or not aparticular transfer in bulk is or is not within the ordinary courseof trade depends on the facts of each case."'"Sternberg v. Rubenstein22 presented an interesting fact situa-tion in which plaintiff trustee in bankruptcy sought to hold Ruben-stein, a dealer in leftover footwear, accountable for the value of abatch of "off season" shoes sold to him by the bankrupt. 3 It ap-pears that in the business of shoe retailing the sale of "off season"merchandise, that rendered obsolete by the passage of time, is anestablished operating pattern.2"Special Term rendered judgment in favor of the view thatsuch sale was in the ordinary course of bankrupt's business. The20. PmEs. PROP. LAw § 44.21. WHTNEY, OUTnINE OF THE LAW OF SALES 87 (4th ed. 1947).22. 305 N. Y. 235, 112 N. E. 2d 210 (1953).23. The sale of 1,294 pairs of shoes represented approximately one-sixth ofbankrupt's stock on hand in money value.24. Sternberg v. Rubenstein, supra note 22 at 240, 241, 112 N. E. 2d at 212, 213.BUFFALO LAW REVIEWAppellate Division, however, took the view that for retail shoemerchants, the ordinary course of trade "was selling shoes tothose who came into the store to buy from the stock in trade forwear."2' 5 That court quoted from Jubas v. Sampsel28 where itwas said that "the 'regular and usual practice and method ofbusiness of the vendor' cannot be measured by a prevalent customof merchants which the vendor followed." 27"Ordinarily the words 'not in the ordinary course of trade'refer to a winding up of the business."' 28 The Court of Appealsimpliedly took cognizance of this by stating that New York courtslimit the reach of the Bulk Sales Act to cases involving the sale ofsubstantially an entire inventory or business.With two judges dissenting, the -court rendered judgment inthe belief that the facts indicated no deviation from the ordinarycourse of trade in the retail shoe business.Business CovenantGlucksterns', Inc. was a restaurant corporation owned andoperated by Simon and Louis Gluckstern with the help of theirrespective sons, Samuel and Philip. When differences arose be-tween the two brothers, Louis and Philip resigned their positionsin the corporation and, in a written agreement, covenanted, amongother things, not to engage in the restaurant business in a specifiedarea for a period of five years. The agreement made it quite clearthat the above restriction was to cease and terminate at the ex-piration of five years from the making. Other provisions relatingto certain representations etc. were not time limited.Approximately twelve years later, plaintiff, purchaser ofGlucksterns', Inc. from Simon, sought to enjoin Philip Glucksternfrom continuing to operate a restaurant recently opened in hisname and located across the street from Glucksterns', Inc.The Supreme Court, through a special referee, granted plain-tiff a sweeping injunction which prohibited defendants from con-tinuing to use their surname or a derivative thereof in connectionwith the restaurant business within twelve city blocks in everydirection from plaintiffs' present restaurant. This geographicallimitation was reduced to three city blocks by the AppellateDivision.25. 279 App. Div. 30, 31, 108 N. Y. S. 2d 218, 220 (4th Dep't 1951).26. 185 F. 2d 333 (9th Cir. 1950).27. Id. at 334.28. See note 2 jupra.

Business Associations—Bulk Sale—“ordinary course of trade”

bepress Legal Repository

https://digitalcommons.law.buffalo.edu/cgi/viewcontent.cgi?article=4363&amp;context=buffalolawreview

Business Associations—Bulk Sale—“ordinary course of trade”

Abstract

Similar works

Full text

Available Versions

Digital Commons @ University at Buffalo School of Law

bepress Legal Repository