{
  "id": 2466061,
  "name": "Pastimes Publishing Company, Plaintiff, v. Advertising Displays et al., Defendants - (Midland Paper Company, Defendant-Appellant- Jupiter Press, Inc., Defendant-Appellee.)",
  "name_abbreviation": "Pastimes Publishing Co. v. Advertising Displays",
  "decision_date": "1972-06-28",
  "docket_number": "No. 56064",
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  "last_updated": "2023-07-14T18:03:18.777064+00:00",
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    "date_added": "2019-08-29",
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  "casebody": {
    "judges": [],
    "parties": [
      "Pastimes Publishing Company, Plaintiff, v. Advertising Displays et al., Defendants \u2014 (Midland Paper Company, Defendant-Appellant\u2014 Jupiter Press, Inc., Defendant-Appellee.)"
    ],
    "opinions": [
      {
        "text": "Mr. JUSTICE ADESKO\ndelivered the opinion of the court:\nPastimes Publishing Company (hereinafter Pastimes) filed a complaint and application for supervision of liquidation naming various persons, businesses and corporations who have a claim or interest as creditors of Pastimes. Upon Pastimes\u2019 motion the court entered an order enjoining any action by Pastimes\u2019 creditors without leave of the court. Among the creditors were defendant-appellant, Midland Paper Company (Midland) and defendant-appellee Jupiter Press, Inc. (Jupiter).\nMidland filed a motion for summary judgment and for a turnover order wherein it stated that it had a perfected security interest in an account receivable of $27,636 based upon a sale by Pastimes to Saalfield Published Company (Saalfield). Jupiter objected to the motion and brought in Saalfield as an additional party defendant. Saalfield filed an answer admitting that it owed plaintiff $27,636 and that it was wilting to pay said sum to the court pending the resolution of the controversy.\nThe trial court denied Midlands motion for summary judgment and set the matter for a hearing. The court entered an order finding that the sale of Pastimes\u2019 property to Saalfield was in violation of Section 6 \u2014 109\n(1) of the Commercial Code and constituted a bulk sale and that the proceeds are subject to the lien of the creditors of Pastimes under Section 6 \u2014 105 of the Commercial Code, which lien has priority over the lien created and perfected under the security interest given by Pastimes to Midland. On appeal Midland contends:\n(1) The trial court erred in finding that the sale to Saalfield was a bulk sale in violation of the bulk transfers act.\n(2) The trial court erred in finding that the proceeds of the sale to Saalfield were subject to the lien of all Pastimes\u2019 creditors.\n(3) The perfected security agreement between Pastimes and Midland was effective against aH Pastimes\u2019 creditors.\nThe facts are as follows:\nPastimes pretty much ceased doing business in 1967. On August 23, 1968, Pastimes sold its entire inventory of books to Saalfield for approximately $27,000. Pastimes owed Midland over $34,000 for prior purchases. On September 16, 1969, Pastimes assigned the Saalfield account receivable to Midland and executed a security agreement. On October 24, 1968, the financing statement was filed with the Illinois Secretary of State. No notice was sent to Pastimes\u2019 creditors informing them of the sale of Pastimes\u2019 inventory.\nMidland\u2019s first contention was that the trial court erred in finding that the sale to Saalfield was a bulk sale in violation of the bulk transfers act. Section 6 \u2014 102 (1) of the Commercial Code provides:\n\u201cA \u2018bulk transfer is any transfer in bulk and not in the ordinary course of the transferor\u2019s business of a major part of the materials, supplies, merchandise or other inventory (Section 9 \u2014 109) of an enterprise subject to this Article.\u201d Ill. Rev. Stat. 1969, ch. 26, par. 6 \u2014 102.\nPastimes sold its entire inventory to Saalfield in 1968. An officer of Pastimes testified that Pastimes had virtuaHy ceased doing business in 1967. The sale was not in the ordinary course of business. Consequently, the sale of Saalfield was a bulk sale.\nSection 6 \u2014 105 of the Commercial Code provides:\n\u201cIn addition to the requirements of the preceding section, any bulk transfer subject to this Article except one made by auction sale (Section 6 \u2014 107) is ineffective against any creditor of the transferor unless at least 10 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 (Section 6 \u2014 106).\u201d Ill. Rev. Stat. 1969, ch. 26, par. 6 \u2014 105.\nNo notice was sent to Pastimes\u2019 creditors and therefore the sale to Saalfield violated the bulk transfers act.\nMidland\u2019s second contention was that the trial court erred in finding that the proceeds of the sale to Saalfield were subject to the lien of all Pastimes\u2019 creditors.\nThe Illinois Code Comment to Section 6 \u2014 104 of the Commercial Code states that the remedies available to creditors under Article 6 are left to the general Illinois law. The court was correct in looking outside of Article 6 of the Commercial Code to find the appropriate remedy.\nIn Marshall Sav. & Loan Ass\u2019n v. Chicago Nat. Bank, 56 Ill.App.2d 372, 206 N.E.2d 117, at page 378, the court held:\n\u201cThe essential elements of equitable liens include (1) a debt, duty or obligation owing by one person to another. Watson v. Hobson, 401 Ill. 191, 81 N.E.2d 885, and (2) a res to which that obligation fastens which can be identified or described with reasonable certainty. Freeman v. Freeman, 314 Ill.App. 641, 42 N.E.2d 315; Hazenwinkle Grain Co. v. McComb, 116 Ill.App. 541. If the res to which the lien attaches is converted into money, the court in a proper case will treat the money as substituted for the property. Elgin Lumber Co. v. Langman and Altman, 23 Ill.App. 250, 25 I.L.P. Liens, Sec. 5.\u201d\nThe essential elements for the imposition of an equitable lien were present in the instant case. There was a debt owed by Pastimes to Jupiter and the other creditors. The books constituted the res which was converted into money. The trial court did not err in subjecting the proceeds of the bulk sale to the lien of Pastimes\u2019 creditors.\nMidland\u2019s third contention was that its perfected security agreement with Pastimes was effective against all Pastimes\u2019 creditors. Under sections 6 \u2014 104 (1) and 6 \u2014 105 of the Commercial Code, a bulk transfer without notice to the transferor\u2019s creditors is ineffective against any creditor of the transferor. (Ill. Rev. Stat. 1969, ch. 26, par. 6 \u2014 104 (1), par. 6 \u2014 105.) Ineffective means voidable at the instance of a creditor of the transferor. Midland and Pastimes failed to give notice to creditors as required by sections 6 \u2014 105 and 6 \u2014 104 of the Commercial Code and consequently the sale of Saalfield was ineffective against Pastimes creditors who without notice of the assignment were unable to protect their claims against Pastimes.\nSince the sale was ineffective against Pastimes\u2019 creditors, nothing was conveyed to Saalfield out of which an account receivable could have come into existence. Midland does not possess a perfected security interest in the account receivable which is good against Pastimes\u2019 creditors.\nFor these reasons, the judgment of the Circuit Court of Cook County is affirmed.\nJudgment affirmed.\nDIERINGER, P. J., and BURMAN, J., concur.",
        "type": "majority",
        "author": "Mr. JUSTICE ADESKO"
      }
    ],
    "attorneys": [
      "Kessler, Greenhouse and Brusso, of Chicago, (Hyman J. Addison and Mark A. Greenhouse, of counsel,) for appellant.",
      "Ettelson, O\u2019Hagan, Ehrlich & Frankel, of Chicago, (Robert F. Nix and John F. Salmon, of counsel,) for appellee."
    ],
    "corrections": "",
    "head_matter": "Pastimes Publishing Company, Plaintiff, v. Advertising Displays et al., Defendants \u2014 (Midland Paper Company, Defendant-Appellant\u2014 Jupiter Press, Inc., Defendant-Appellee.)\n(No. 56064;\nFirst District\nJune 28, 1972.\nRehearing denied July 26, 1972.\nKessler, Greenhouse and Brusso, of Chicago, (Hyman J. Addison and Mark A. Greenhouse, of counsel,) for appellant.\nEttelson, O\u2019Hagan, Ehrlich & Frankel, of Chicago, (Robert F. Nix and John F. Salmon, of counsel,) for appellee."
  },
  "file_name": "0414-01",
  "first_page_order": 436,
  "last_page_order": 440
}