Must the sale of a restaurant by an executrix under a nonintervention will comply with the Bulk Transfers Act, which exempts "[s]ales by executors, administrators, receivers, trustees in bankruptcy, or any public officer under judicial process", RCW 62A.6-103(4)? We hold that the sale need not comply with the Bulk Transfers Act and reverse the trial court's judgment.
Gerald L. Griffin, owner of the Ebbtide Restaurant in Kent, died on October 3, 1979. His will was admitted to probate on October 5. Under the will, the executrix was given nonintervention powers
Sylvester Brown purchased the restaurant from Griffin's estate on January 15, 1980. The lawyers for the buyer and the seller could not agree whether the sale was subject to the Bulk Transfers Act, RCW 62A.6. A notice of the sale and list of creditors, dated January 4, 1980, and prepared in accordance with the act, was mailed to the restaurant's creditors. On March 7, 1980, the buyer's lawyer, as escrow agent, filed an interpleader action to determine how the sale proceeds should be distributed.
The trial court held that the Bulk Transfers Act did apply to the sale and that the sale proceeds should be distributed accordingly. Griffin's estate has appealed, contending that the sale was exempt from the act under RCW 62A.6-103(4). The estate has settled the debts with the restaurant's creditors, and none of the creditors are participating in this appeal.
How would distribution of the sale proceeds differ if the money were distributed in accordance with the probate
Unlike the probate statutes, which treat debts arising before death differently from debts arising after death, the Bulk Transfers Act operates simply. If the sale of a business qualifies as a bulk transfer, RCW 62A.6-102(1), (2), and is not otherwise exempt, RCW 62A.6-103, the seller must prepare a list of his existing creditors for the buyer, RCW 62A.6-104. RCW 62A.6-105 requires the buyer to give notice of the sale to each creditor. If the buyer furnishes new consideration, he must "assure that such consideration is applied so far as necessary to pay those debts of the [seller] which are either shown on the list furnished by the [seller] ... or filed in writing in the place stated in the notice [to creditors] ..." RCW 62A.6-106(1). If the debts cannot be paid in full, each creditor receives a pro rata share. RCW 62A.6-106(3).
While the difficulties that would be encountered by applying both the probate statutes and the Bulk Transfers
Cintron, at 1150. Here, all predeath creditors of the estate are on notice of the need to file claims in the estate pursuant to RCW 11.40.010 while those postdeath creditors dealing with the estate through an executor or administrator are bound to know the capacity in which such a fiduciary acts and protect themselves accordingly.
The transfers exempted from the act are listed in RCW 62A.6-103. At issue is the meaning of subsection (4).
The restaurant's creditors, arguing below for the application of the act, contended that "under judicial process" modifies "sales by executors." Accordingly, an executor's sale under a nonintervention will did not fall within the act's exemption because the executor was not "under judicial process." See footnote 1, supra.
(Citation omitted.) In re Estate of Kurtzman, 65 Wn.2d 260, 263, 396 P.2d 786 (1964); accord, In re Renton, 79 Wn.2d 374, 376, 485 P.2d 613 (1971).
(Citations omitted.) Davis v. Gibbs, 39 Wn.2d 481, 483, 236 P.2d 545 (1951); accord, In re Renton, at 376-77; Martin v. Aleinikoff, 63 Wn.2d 842, 846, 389 P.2d 422 (1964); In re Estate of Kurtzman, at 264; In re Andy, 49 Wn.2d 449, 451, 302 P.2d 963 (1956); 2A C. Sands, Statutory Construction § 47.33 (4th ed. 1973).
"Public officer" is the last antecedent that "under judicial process" can refer to without impairing the meaning of the sentence. "Under judicial process," therefore, does not modify "executors" or any of the other nouns preceding "public officer." No contrary intention appears in the statute. A plain reading of the statute also supports this conclusion. See In re Renton, at 376.
RCW 62A.6-103(4) changed the statute it replaced, RCW 63.08.010 (repealed 1965). The former law exempted from the Bulk Transfers Act "sales or transfers of property by executors, administrators, receivers, or public officers, acting under judicial process." Laws of 1939, ch. 122, § 4, p.
(Footnote omitted.) 2A N. Singer, Statutory Construction § 47.33 (4th ed. Supp. 1981).
In conclusion, the estate is correct in its contention that the sale of the Ebbtide Restaurant was not governed by the Bulk Transfers Act. The sale proceeds should be distributed in accordance with the will and the probate statutes, and not in accordance with the Bulk Transfers Act. The judgment is reversed.
SWANSON, J., concurs.
RINGOLD, J. (dissenting)
I respectfully dissent and would affirm the trial court's decision requiring compliance with the Bulk Transfers Act (BTA) as incorporated into the Uniform Commercial Code (U.C.C.) in 1965. The majority opinion serves no justifiable policy and turns on an overly technical and erroneous analysis of the BTA. RCW 62A.6-103 states:
The majority places inordinate emphasis on the lack of a comma following the word "officer." Before adoption of the U.C.C., the Legislature enacted versions of the BTA without apparent regard for the placement of the comma:
1901: "Nothing in this act contained shall apply to executors, administrators, receivers, or any public officer acting under judicial process." Laws of 1901, ch. 109, § 5, p. 224.
1925: "[N]othing contained in this act shall apply to sales or transfers of property by executors, administrators,
1939: "[N]othing contained in this act shall apply to sales or transfers of property by executors, administrators, receivers, or public officers, acting under judicial process." Laws of 1939, ch. 122, § 4, p. 343.
The Washington Comments to the U.C.C., RCWA 62A.6-103(4), support the view that no substantive change was intended from the prior law, which included the comma: "[Subsection 4 is] in substantial conformity with the prior Washington rule. RCW 63.08.010 [Laws of 1939, supra] expressly excluded transfers by `executors, administrators, receivers, or public officers, acting under judicial process.'"
The critical difference between the U.C.C. and the prior statutes is the omission of the word "acting," which in the prior statutes made the phrase "under judicial process" modify the individual actors, the executors, administrators, receivers, and public officers. Without the word "acting," the phrase "under judicial process" must be taken to modify the word "sales." It makes no sense to speak of an executor or a public officer under judicial process. The exemption relates only to those sales made under the supervision of a court because in such sales the court would presumably exercise due regard for the rights of the business creditors.
The probate code and the BTA were not enacted in a vacuum. The sections of the probate code dealing with creditors apply only, except for expenses of administration, to debts incurred by the decedent. The specific purpose of the Bulk Sales Act is to protect the creditors of a business.
The probate code does not, nor was it intended to, provide protection to postdeath business creditors. In the case at bench, the death occurred on October 3, 1979, and a notice to creditors was first published October 8, 1979. The business continued operation after death until the time of sale to Sylvester Brown on January 15, 1980. The creditors of a decedent are put on notice by the requirement of publication of notice to the creditors that may suffice if the
The absence of the word "acting", the insignificance of the missing comma, the policy in favor of protecting creditors' rights following a bulk transfer, all speak in favor of applying the BTA to a sale of the business by an administrator or executor with nonintervention powers. The sale here was not made under the direction or order of the court and thus was not "under judicial process."
I would therefore hold that the sale, by the personal representative with nonintervention powers, requires compliance with the BTA. We should affirm the trial court's holding and order distributing the proceeds of the sale pursuant to the BTA.
RCW 11.68.020. Subject to certain notice requirements, RCW 11.68.040, and the entry of an order of solvency, RCW 11.68.010, the personal representative has "the power to administer the estate without further intervention of [the] court", RCW 11.68.030. The personal representative also may be required to post bond. RCW 11.68.030.
RCW 11.68.090 sets forth the powers of a personal representative under a nonintervention will.
When the estate is ready to be closed, the personal representative may either apply to the court for a final decree under RCW 11.68.100 or file a declaration of completion under RCW 11.68.110; the declaration is the equivalent of a decree of distribution under RCW 11.76, "Settlement of Estates".