RUSTENBURG KLOOF KIOSK v. FRIEDLAND, HART, COOPER. & NOVIS.
(TRANSVAAL PROVINCIAL DIVISION.)

1972. November 2 December 6.  BOSHOFF, J., and DE WET, A.J.

Trade,-Sale of business.-Purchaser summoned on cheques signed by seller.-Purchaser's business in another name.-Summons made out in original name and served on purchaser.-Sec. 34 (1) of Act 24 of 1936, as amended, no longer applicable.-Rule of Court 54 not applicable to seller.-Purchaser entitled to invoke defence under Rule 19 (5).

In 1970 S had carried on business, in a leased building, in the name of Rustenburg Kloof Kiosk. In November; 1970 an action against her was settled and she had given respondents certain post dated cheques. At the end of 1970 S sold the business to I and I thereafter carried on business in the building under a different name. In an action by respondents on the cheques the summons, in the name of Rustenburg Kloof Kiosk, was served on I. A magistrate's court had granted judgment against her. In an appeal, 

Held, as the business had been alienated at the end of 1970, that the provisions of section 34 (1) of Act 24 of 1936 no longer applied.

Held, further, that Rule of Court 54 was also not applicable to S because it could not be said that, when the summons was .issued, she was carrying on business. Indeed. she was already deceased.

Held, further, that I was entitled to invoke the defence under Rule 19 (5) that she was not the defendant named in the summons, and that the magistrate should therefore have upheld such defence with costs.

Appeal against a decision in a magistrate's court. The facts appear from the judgment.

L. T; C. Harms, for the appellant.
N. S. Page, for the respondent.

Cur. adv. vult.
Postea (December 6th).
 
BOSHOFF, J.: In this appeal, wherein the identity of the defendant is in issue, judgment was given for the plaintiffs with costs in the magistrate's court. For the sake of convenience the parties are referred to as plaintiffs and defendant firm.

In order to get a proper insight into the point which was argued, it is meet first to refer to the facts of the case as they appear from the evidence and the papers placed before the Court below.

A certain Patricia Jane Shandler traded under the name Rustenburg Kloof Kiosk in the Rustenburg Kloof, in a building which she rented from the town council of Rustenburg. During·1969 she bought certain goods from Capital Tobacco.(Pty), Ltd., on credit and in April 1970 she was sued for certain outstanding amounts. She defended the action and in November 1970 the case was settled. She undertook to pay a part of the outstanding amount in cash and to give the attorneys for Capital Tobacco (Pty.) Ltd., four post-dated cheques for the balance. Shandler then drew three cheques for R150 and one cheque for R141,54 on the account of Rustenburg Kiosk in favour of the attorneys, plaintiffs in the present case, and post-dated them. respectively to 3rd January, 1971, 3rd February, 1971, 3rd March, 1971, and 3rd April, 1971, and handed them over. The cheques were not signed by her personally but by Norman Shandler, who signed on her behalf, trading as Rustenburg Kloof Kiosk. Subsequently only the first cheque was paid out to plaintiffs. At the end of 1970 Shandler sold the business to Molly Georgina Interisano with all the stock and her interest in the contract of lease, and on 1st January, 1971 the latter started trading for her own account in the said building under the name of Rustenburg Kloof Kiosk and Restaurant. At the time of these transactions Shandler was ill and her husband Maurice Gerald Shandler acted on her behalf. She eventually died in May, 1971. Reference was made to a contract of sale concluded on 30th September, 1970, but there was no evidence that the parties proceeded with the contract of sale. Be that as it may, no notice of the sale of the business by Shandler to Interisano was given in the Government Gazette or any other newspaper.

Mention of the facts is made only because, during the argument of the appeal, the point was made that for this reason the sale of the business was void in terms of sec. 34 (1) of the Insolvency Act 24 of 1936, as amended and sec. 11 (2) read with sec. 3 (1) of the Registration of Businesses Act, 36 of 1909. These provisions, however, appear to be irrelevant. Sec. 3 (1) merely provides that an alienation without the prescribed notice is void as against the creditors of the traders for a period of six months after such alienation and is void as against the trustee of his estate if his estate should be sequestrated at any time within such period. Sec. 3 (1) deals with a change in the name, composition, personnel or premises of a business registered under the Act and requires a special prescribed notice. Sec. 14 makes it an offence not to comply with the requirements of the Act. According to sec. 11 (2) an agreement to transfer or sell any business, or to sell any stock or other assets kept or used in respect of any business with a view to the sale or abandonment of such business, or to reconstitute any business, is void as against creditors of the business unless all the provisions of the said Act applicable to the business have been complied with. Sec. 4 (1) which provides for notice of transfer of a business or the transfer or sale of stock or assets kept or used in connection with the business, with a view to the transfer or abandonment of such business, was repeated years ago by sec. 13 of Act 46 of·1944 and has now in essence been replaced by sec. 34 (1) of the Insolvency Act, 24 of 1936, as amended.

In the present case we are not dealing with a re-organisation or reconstitution of a business as envisaged by sec. 3 (1) and sec. 11 (2), but in fact with the total sale of the business with all its assets and only sec. 34 (1) is applicable. The effect of this section in broad outline is, that for the purposes of any recourse that creditors have against assets used in connection with the business, an alienation of the business without the prescribed notice, is void for a period of six months. Since the alienation in the present case already took place at the end of 1970 the provisions of the section no longer apply to the facts of the present case.

To return to the facts of the case, we therefore have the position that, as from 1st January, 1971, Shandler ceased to trade under the name of Rustenburg Kloof Kiosk, and Interisano started to trade under the name of Rustenburg Kloof Kiosk and Restaurant.

The remaining three cheques were not paid out by the bank on presentation and on 20th July, 1971 the plaintiffs as holders of the cheques caused summons to be issued against Rustenburg Kloof Kiosk for the amounts owing under the cheques, viz. R150, R150 and R141,54. The summons ·was served by the messenger of the court by handing a copy thereof to D. Interisano, who was described by him as the owner. Together with the summons, a notice in terms of Rule 54 of the Rules of Court was served wherein Rustenburg Kloof Kiosk was requested to furnish a list of the names and residential addresses of persons who were co-partners in the firm. Molly Georgina Interisano entered notice of intention to defend and then when summary judgment was applied for, she handed an affidavit in to the court, wherein she stated that she was a public trader, trading under the name of Rustenburg Kloof Kiosk and Restaurant, and that neither she nor Rustenburg Kloof Kiosk and Restaurant owed any money to plaintiffs and further that she had no knowledge of the three cheques. The application for summary judgment was refused and leave was granted to her to defend the action. In her plea she alleged the same facts which she had alleged in her affidavit and further alleged that plaintiffs were unknown to her and that she had never had any transactions with them. After a request for further particulars she stated that she had become the owner of Rustenburg Kloof Kiosk and Restaurant on 1st January, 1971.

After the case had been heard, the magistrate gave judgment for the plaintiffs with costs. In his reasons for judgment his approach in broad outline was as follows. The cheques were drawn by defendant, Rustenburg Kloof Kiosk and the amounts claimed thereon are owing to plaintiffs. According to the pleadings and evidence the case is being defended by a business known as Rustenburg Kloof Kiosk and Restaurant. It is clear that there is no connection between this firm and the defendant firm. The Court is satisfied that if an attempt is made to obtain execution against the property of Rustenburg Kloof Kiosk and Restaurant, the latter could successfully resist such an attempt. The court was consequently satisfied that judgment should be given in favour of plaintiffs against defendant as cited, since this defendant had no valid defence.

The only inference which can be made from these reasons is that Interisano succeeded in proving that her business had nothing to do with the transactions and that she is not liable for the amounts claimed. The assets of her business can be legally protected against execution by her. Since the actual defendant, however, placed no defence before the court, the magistrate was compelled to give judgment against the defendant.

If this interpretation of the magistrate's reasons is correct, it would mean that the magistrate gave judgment against a defendant who was not before the court, since the summons was never served on that defendant. It was only served on Interisano who traded as Rustenburg Kloof Kiosk and Restaurant. This is a fundamental error and for this reason the judgment cannot be sustained. Mr. Harms, for Interisano as appellant, argued that the magistrate erred by not finding, in terms of Rule 19 (5) of the Rules of Court, that she was not the defendant cited in the summons. This rule provides, inter alia, that "defendant" includes a person on whom the summons is served and who alleges that he is not the defendant cited in the summons and gives notice of intention to defend for that reason. At the hearing of such a defence the court may order that costs be paid to or by such person as if he were a party to the action.

In terms of Rule 54 (4) of the Rules of Court, a person who trades under a name other than his own, may be summonsed under such name as if it were the name of a firm, and in so far as the nature of the case permits all the provisions of the rules relating to actions against firms are applicable. The sub-rules which are applicable here are sub-rules (1) and (3) which amount to this: that co-partners may be sued in the name of their firm, and that the person who sues, may by notice demand that a list be furnished containing the names and residential addresses of the persons who were co-partners in the firm, at the time when the cause of action arose, when the names of the partners are furnished in this way, the action proceeds in the same way, and all the results arise in all respects as if their names were mentioned in the summons, but the proceedings must nevertheless proceed in the name of the firm. Applied to the case falling under sub-rule (4) it simply means that where a person trades under a name other than his own and is sued, the name and address of the person so trading may·be required, and when it is supplied in respect of the time when the cause of action arose, the action proceeds as if the person's name was mentioned in the summons.

In the circumstances of the present case the same rules do not apply in respect of Shandler because it cannot be said that, when summons was issued, she was trading under the name or style of Rustenburg Kloof Kiosk. Indeed she was then already dead. Interisano could not reply to the notice in terms of Rule 54 (4) because she was not the person whom plaintiffs wished to sue and she wished to rely on the defence in terms of Rule 19 (5). Indeed it could not be expected of her to furnish such a list of the names and addresses of the persons who were so trading when the cause of action arose, particularly as she cannot be presumed to have known anything of the cause of action. Since Shandler was no longer trading under the .name and style of Rustenburg Kloof Kiosk when summons was issued, and was also not residing in the building in Rustenburg Kloof, apart from the fact that she was already dead, the summons could not be served on her as the present summons was in fact served, Cf. Maisel v. Anglo African Furnishing Co., 1931 C.P.D. 223 at p. 225: The Fifty-Six Dry Cleaners v. Capital Electric Co., 1962 (3) S.A. 529 (T).

Interisano was in fact trading at the said place under the .name of Rustenburg Kloof Kiosk and Restaurant and, since the summons which was actually intended for Shandler was in fact served on her, she was, under the circumstances, entitled to raise the defence under Rule 19 (5), that she was not the defendant cited in the summons.

I think the magistrate should have upheld the defence with costs.

The appeal succeeds with costs. The judgment of the magistrate in favour of plaintiff with costs, is amended to:

"Plea of Molly Georgina Interisano that she is not the defendant is upheld with costs."

DE WET, A.J., concurred.

Appellant's Attorney: A. E. Pohl, Rustenburg, Respondent's attorneys: Coetzee, Brink & van der Merwe, Rustenburg.