You Can't Sell What You Don't Own -- Can You?

Newsday ^ | December 1, 2003 | Jamie Herzlich

[sarcasm]

Carey Turnbull can see his antique furniture in the window of Morgansen's Auctioneers and Appraisers in Southampton, yet he can't touch it.

In fact, he's not sure if he'll even see a penny from the $25,000 worth of goods he says he consigned with the shop for sale. And if he wants any of them back, he'll have to bid on his own property at an auction that is to be held on Thursday.

< SNIP >

Turnbull isn't alone in his frustration. Some consignors are appealing a decision by a judge in U.S. Bankruptcy Court in Central Islip that everything in the store must be auctioned off to satisfy creditors, including ones that didn't belong to the store.

[montag813]

We do not live in a free country. It is a judicial dictatorship.

[joesnuffy]

Black Robed Thug....would be like a car wash or a dry cleaner keeping your car or your clothing if suddenly a judge declares everything in the building to be sold...to clear debts

[azhenfud]

Solution: advertise to auction off the Judge's assets to satisfy the creditors. Get the judge's attention.

[TheConservator]

This is a dispute between creditors.

Under Article 9 of the uniform commercial code, persons who consign goods for sale to merchants must file a financing statement, or take other action to protect their interest in the goods. If the consignor does not do so, creditors of the merchant are entitled to assume the goods held by the merchant are part of the merchant's stock. Therefore, the merchant's creditors can lend on, obtain a security interest in, and foreclose upon, the consigned goods. That is what happened here.

Perhaps this rule of law needs to be changed. But for a bankruptcy court to apply this presently well-established rule is hardly "judcial tyranny."

[Maceman]

He should have filed a UCC-1. Let that be a lesson.

[autoresponder]

Like the unaccountable lib federal judge problem this has a dark future.

Complete disregard and contempt for "balance of powers".

Tyranny by SCOTUS 5.

It is time the protected and unelected face the fates of their victims.

The voluntary payment of income taxes in the USA has dropped to below 80% some government and think tank sources have said.

In Russian the income tax payment rate is very low, but I cannot cite an accurate %age.

I predict that many honest American citizens will find "ways" (as the Clintons did for for over 12 years and still do and as ex NYC Mayor David Dinkins did {did not even file!} for 3 straight years) to decrease their "taxable" income levels.

Favors (services) will be done for friends, "old trash" &/or "unneeded" products/goods will be "discarded" and friends/relatives will help out by volunteering to "take out the trash".

Sophisticated barter systems will evolve, "gross income" and "net income" levels will plummet.

Untaxable material goods, services, "entitlements", and "perks" will be readily available to Joe 6-Pack just as they are to illegal aliens and politicians.

Much of this is already done by billionaires and millionaires thru "foundations" and "trusts"; most "professionals" seem to never need to pay for surgery, medical care, dental work, legal services, accounting services, antiques, office furniture, etc.

While Suzie Soccermom takes furniture to the Salvation Army, her physician trades his services for an office coffee table and waiting room chairs.

Her attorney barters his legal work for beautiful antique leather upholstered chairs for his office.

Her accountant's "old" Chevy Caprice suddenly has a new paint job, 5 "take-off" Michelin tires, and a "junkyard" engine that is better then it came with new.

The middle class rarely takes advantage of these little taxfree goodies.

They are "too classy"; they like those big credit card bills and the unbelieveable interest rates rates.

They love to scrimp to meet their mortgage payments and skyrocketing property taxes.

One example; some years back a top local attorney called me up with a tip on how to handle an incident that seemed beyond my quick and cheap solution; he told me what he would do in 5 minutes.

Then he named three luxury cars he was looking at and asked for my opinion. Within 5 minutes I gave the pluses and minuses of all and my choice after first asking him several questions about him, his family, driving habits, travel, what he liked in an automobile, his favorite former car(s), length of time he keeps cars, why he trades cars in, etc.

The next day he bought (not leased as he had intended) a classic "pre-owned" fine vehicle from a friend of mine who is an ex-hot rodder and now races sports cars and "collects" old heaps.

I understand my friend then changed his attorney.

The big 460ci Lincoln engine from the attorney's "old car" is still running strong in my friend's vintage Ford PU.

Go figure!

They still play golf together every week.

Networking.......

I took a private jet last month with friends.

His plane was "going there anyway"!

[TaxRelief]

Turnbull is one of more than 50 people...who left merchandise with Morgansen's and now find they can't get it back because the business is in bankruptcy. Worse still, a quirk in the law means their [personal] property is going to be sold off to pay Morgensen's debts -- even if they dropped it off just to be appraised.

"I'm stunned," said Turnbull, 51, of Amagansett, who was selling excess furniture he had from a house sale, including a Victorian dining room table and 19th century stove. "I'm astounded at the law. This is a case where you can't depend on common sense."

Turnbull isn't alone in his frustration. Some consignors are appealing a decision by a judge in U.S. Bankruptcy Court in Central Islip that everything in the store must be auctioned off to satisfy creditors, including ones that didn't belong to the store.

How could this be? Judge Stan Bernstein in his decision writes that under an amendment to the uniform commercial code, which governs business transactions, "goods which are consigned for sale are property of the bankruptcy estate ... and subject to the claims of the creditors of the entity doing the sale."

In other words, Turnbull and the other customers may be stuck.

So the consignment industry is under attack. Could it have something to do with Walmart? Or do these laws date back to "The Wiz"?

[MeekOneGOP]

[gcruse]

So, if Fidelity Mutual Funds goes bankrupt, the judge can order customer's shares of NYSE and Nasdaq companies auctioned off the pay the debt?

[Britton J Wingfield]

Claimant June Kessler.

I find in her favor.

[Snardius]

So, if Fidelity Mutual Funds goes bankrupt, the judge can order customer's shares of NYSE and Nasdaq companies auctioned off the pay the debt?

No. The shares are owned by the shareholders of the fund...not the company which hires the managers of the fund.

[gcruse]

I don't see how furniture being held for later sale is any different than stocks at a brokerage being held, you guessed it, for later sale.

[Snardius]

More specifically, the shares of the companies owned in a mutual fund are held in the mutual fund company, the shares of which are owned by the shareholders of the fund. Fidelity is a mutual fund management company whose managers run, for a fee, the funds offered by their family of funds.

[Snardius]

The furniture was held on consignment. The ownership of the furniture didn't change. Stocks held in a mutual fund are owned by the fund and their value makes up the net worth of the fund. The value of the stocks (or bonds) held in a fund is determined at the close of each market day.

The value of the furniture in the consignment shop is the value of the percentage the consignment gets from the sale. Therefore, the only way that value could be determined is to sell the furniture.

[ColdSteelTalon]

Property rights mean nothing in this country. If it were me I would break in and take my property back. And defend my rights with a 45.

[Snardius]

I find in her favor.

I think you're a sucker for a pretty face... :)