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VICEROY FLUID POWER INTL., INC. v. BANKS ENGG. CO.

March 8, 1988

Viceroy Fluid Power International, Inc., Successor to Viceroy Fluid Power, Division of Baxter Technologies, Plaintiff
v.
Banks Engineering Company, Inc., Defendant



The opinion of the court was delivered by: WEBER

 Plaintiff Viceroy has sued to recover the balance due for certain goods invoiced and delivered to defendant Banks. Banks in turn filed a counterclaim seeking to recover past due commissions and discounts under a distributorship agreement with Viceroy's corporate predecessor. Viceroy has now filed 2 motions in limine to preclude the introduction of certain evidence on the counterclaim and Banks has responded.

 A) Bulk Transfers Act

 First of all, Viceroy contends that it cannot be liable on the counterclaim for the obligations of its corporate predecessor because through the auspices of a Canadian bankruptcy trustee, Viceroy purchased only the assets of the predecessor and none of its liabilities. Banks argues that such a transaction is in violation of the Bulk Transfer provisions of the Pennsylvania and Michigan Uniform Commercial Codes, 13 Pa.C.S.A. § 6101 et seq., Mich. Comp. Laws Ann. § 440.6101 et seq., which require prior notice to creditors. Banks claims it never received such notice and Viceroy's purchase cannot extinguish Banks' claim against the assets.

 The salient question is whether the Pennsylvania or Michigan statutes are even applicable here. Viceroy is a Canadian corporation, as was its corporate predecessor. That predecessor either sought or was forced into the Canadian equivalent of bankruptcy proceedings. The sale of assets to Viceroy was made at the direction of the Canadian Bankruptcy Trustee and approved by a Canadian court. On the other hand, Michigan has no apparent relevant relationship with this matter and Pennsylvania's only connection is that Banks is located here.

 The Uniform Bulk Transfers Act, as incorporated in both Michigan and Pennsylvania versions of the UCC, applies to "all bulk transfers of goods located within this Commonwealth." 13 Pa.C.S.A. § 6102(d); Mich. Comp. Laws Ann. § 440.6102(d). There has been no allegation that the assets transferred to Viceroy were wholly, predominantly, or even partly within either Michigan or Pennsylvania. Furthermore, Ontario has its own Bulk Transfers Act. *fn1" Choice of law principles and international comity would dictate that the Canadian statute apply to the sale of assets of one Canadian corporation to another Canadian corporation under the auspices of a Canadian bankruptcy trustee.

 Even if we assume that either the Pennsylvania or Michigan Act applies, the sale in issue falls within a statutory exception:

 The following transfers are not subject to this division:

 
(4) Sales by executors, administrators, receivers, trustees in bankruptcy, or any public officer under judicial process.

 13 Pa. C.S.A. § 6103 (emphasis supplied).

 Banks argues, without support, that we should not recognize the acts of the Canadian trustee. We reject this argument and conclude that the sale in issue falls squarely within the above-quoted exception.

 For the reasons stated we conclude that the Uniform Bulk Transfers Acts of Pennsylvania and Michigan do not apply to the transfer at issue. Consequently, Banks may not present evidence of any claim for past due commissions, discounts or other benefits which predate October 3, 1985, the date when Viceroy purchased the assets of its predecessor.

 B) Parol Evidence

 After purchasing the predecessor's assets, Viceroy continued to employ Banks as a distributor pursuant to the distributorship agreement between Banks and Viceroy's predecessor. Banks now claims that it was the exclusive distributor within its specified region and is due commissions from Viceroy for sales in Banks' territory made directly by Viceroy or by other distributors. Banks also claims that it was ...


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