Appeal from the District Court of the United States for the Eastern District of Illinois; John P. Barnes, Judge.
Before MAJOR, KERNER, and MINTON, Circuit Judges.
The United States, claiming as a creditor under the Illinois Bulk Sales Law,*fn1 sued defendant as the purchaser of the major part of the assets of the Mew Dahl Corporation, to recover an indebtedness for unpaid taxes owing by New Dahl. There was a trial without a jury and the court made findings of fact, stated its conclusions of law thereon, and rendered judgment for the plaintiff. From that judgment, the defendant appeals.
Defendant is the owner of ten department stores located in Chicago and vicinity. Prior to November 22, 1937, New Dahl operated the shoe repair concessions in the stores. Defendant had no share in the ownership of these concessions and no voice in their management; the control was in Norman Dahlman and the members of his immediate family.
For quite sometime prior to November, 1937, New Dahi had been having financial difficulties, and in July of that year matters grew worse and creditors began to complain to the defendant about New Dahl's unpaid bills. Thereafter defendant's vice-president had a number of meetings with Dahlman concerning his corporation's financial troubles. Yet, the aggravation continued, and in November the pay checks of New Dahl to its employes "bounced." Finally, on November 22, 1937, in a sale which was not in the regular course of the business, New Dahl sold to the defendant the bulk of its assets - consisting of all the physical assets, machinery and equipment which New Dahl had used in its business - and retained nothing but the accounts receivable owing to it by certain of its officers and by its subsidiary, the Crest Shoe Repair Company. These obligations were uncollectible.
At the time of the sale, the parties prepared the agreement and the affidavit required by the Illinois Bulk Sales Act. The affidavit was in the usual form and attached to it was the list of purportedly all of the New Dahl creditors as of the date of the sale. The Government's name appeared nowhere on that list. By the terms of the agreement, the defendant assumed to discharge all of the listed obligations of New Dahl in return for all of the assets, save the accounts receivable owed by the officers and the subsidiary.
The defendant sent to all the listed creditors the notice of sale required by the Bulk Sales Act; it sent none to the plaintiff, although on the date of the sale, New Dahl had the following federal tax liability, and the defendant had knowledge of the existence of the plaintiff as a creditor of New Dahl:
1936 Social Security Taxes--Title IX 373.07
1937 Social Security Taxes--Title VIII 78.74