February 1, 2005, Introduced by Rep. Taub and referred to the Committee on Regulatory Reform.
A bill to regulate insurance, bankruptcy, mortgage,
insolvency, assignee's, executor's, administrator's, receiver's,
trustee's, removal, and going-out-of-business sales and sales of
damaged goods; to require licenses to conduct those sales; to
provide for the powers and duties of certain local governmental
officers and entities; to prescribe penalties; and to repeal acts
and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"liquidation sale licensing act".
Sec. 2. As used in this act:
(a) "County clerk" means the clerk of a county in this state
where a regulated sale is conducted.
(b) "Going-out-of-business sale" means a sale of goods
advertised, presented, or conducted in a manner that indicates or
implies that the business will cease and discontinue at the
premises where the sale is conducted. The term includes, but is not
limited to, sales commonly known as a "closing-out sale",
"liquidation sale", "lost-our-lease sale", or "forced-to-vacate
sale".
(c) "Goods" means all tangible personal property except money.
(d) "Person" means an individual, partnership, corporation,
limited liability company, association, or other legal entity.
(e) "Regulated sale" means an insurance, bankruptcy, mortgage,
insolvency, assignee's, executor's, administrator's, receiver's,
trustee's, removal, or going-out-of-business sale of goods or a
sale of damaged goods.
(f) "Removal sale" means a sale of goods advertised,
presented, or conducted in a manner that indicates or implies that
the business will cease and discontinue at the premises where the
sale is conducted and move to and occupy another location after
disposal of the goods on hand.
Sec. 3. (1) Subject to subsection (2), a person shall not
conduct a regulated sale or advertise, represent, or hold out that
a sale of goods is an insurance, bankruptcy, mortgage, insolvency,
assignee's, executor's, administrator's, receiver's, trustee's,
removal, or going-out-of-business sale or a sale of damaged goods
without obtaining a license to conduct that sale from the county
clerk.
(2) The licensing requirement of this act does not apply to a
sale of goods by a person regularly engaged in insurance or salvage
sale of goods or a sale of goods by a sheriff, another public or
court officer, or any other person acting under the license,
direction, or authority of any court, in the course of his or her
official duties.
Sec. 4. An applicant for a license to conduct a regulated sale
under this act shall file a written application with the county
clerk. The application shall include all of the following
information about the proposed sale:
(a) The name and street address of the applicant for the
license and, if the applicant is a partnership, corporation,
association, or other legal entity, the name and the position of
the individual filing the application on behalf of the entity.
(b) The name under which the applicant will conduct the sale,
the street address of the location where the applicant will conduct
the sale, and the type of regulated sale the applicant will
conduct.
(c) The dates and period of time during which the applicant
will conduct the sale.
(d) The name and street address of the individual who is in
charge and responsible for the conduct of the sale.
(e) A full explanation with regard to the condition or
necessity that is the occasion for the sale, including a statement
of the descriptive name of the sale and the reasons why the name is
truthfully descriptive of the type of regulated sale. If the
application is for a license to conduct a going-out-of-business
sale, it shall also contain a statement that the applicant will
discontinue business at the premises where the applicant is
conducting the sale upon termination of the sale. If the
application is for a license to conduct a removal sale, it shall
also contain a statement that the applicant will discontinue
business at the premises where the applicant is conducting the sale
upon termination of the sale, in addition to the location of the
premises to which the applicant is moving the business. If the
application is for a license to conduct a sale of damaged goods, it
shall also contain a statement as to the time, location, and cause
of the damage.
(f) A full, detailed, and complete inventory of the goods that
will be sold. The inventory shall do all of the following:
(i) Itemize the goods to be sold and contain sufficient
information concerning each item, including any make or brand name,
to clearly identify it.
(ii) List separately any goods that were purchased during the
90-day period preceding the date of the license application.
(iii) Show the cost price of each item in the inventory, the
name and street address of the seller of each item to the
applicant, the date of purchase of each item by the applicant, the
date of delivery of each item to the applicant, and the total value
of the inventory at cost.
(g) A statement that the applicant will not add goods to the
inventory after the application is made or during the sale and that
the inventory does not contain goods received on consignment.
(h) A copy of each advertisement to be published in connection
with the sale. Each advertisement must display the license number
issued by the county clerk, the name and street address of the
applicant, and the applicant's state sales tax number.
Sec. 5. (1) If a county clerk receives an application
containing all of the information required by this act and the
appropriate license fee, the county clerk may issue a license to
the applicant. A license authorizes the applicant to advertise,
represent, and sell the particular goods described in the inventory
at the time and place stated in the application, in accordance with
the provisions of this act.
(2) If a county clerk issues a license, it shall issue the
license in duplicate. The license shall show a license number and
an expiration date.
(3) A license issued under this act is valid only for the sale
of the inventoried goods that are the property of the licensee. The
license shall apply only at the premises specified in the
application and may not be transferred or assigned. If a licensee
is engaged in business at another location, the licensee shall not
represent or imply in any advertisement or offer of goods that
goods available from the other location are part of the regulated
sale or that goods available at the regulated sale are part of the
goods available from the other location.
(4) Subject to subsection (5), the county clerk shall not
issue a license to a person that meets any of the following:
(a) The applicant is requesting a license to conduct a
regulated sale of goods in the name of another person and the
applicant acquired a right or title to those goods in the 6-month
period preceding the application.
(b) The applicant is requesting a license to continue a sale
that is in progress under the name of another person in the name of
the applicant and the applicant acquired a right or title in the
goods while that sale is in progress.
(c) The applicant is requesting a license to conduct a
regulated sale, other than an insurance sale, a salvage sale, or a
sale of damaged goods, within 1 year after the conclusion of
another regulated sale at the same location.
(5) Subsection (4) does not apply to a person who has acquired
a right, title, or interest in goods as an heir, devisee, or
legatee or pursuant to an order or process of a court of competent
jurisdiction.
Sec. 6. (1) A person shall comply with any applicable law or
judicial process in conducting or advertising a regulated sale.
(2) A person shall not conduct or advertise an assignee's or
insolvent sale if there is not a bona fide assignment for the
benefit of creditors.
Sec. 7. (1) A county clerk shall not issue a license to
conduct a regulated sale that is valid for a period that exceeds 30
days. A licensee may conduct a regulated sale only during the
period set forth in the license.
(2) A licensee may renew a license not more than twice, and
the period of each renewal shall not exceed 30 days. A licensee
shall submit an affidavit of the licensee with the application for
renewal that states that the goods listed in the filed inventory
have not been disposed of and that no new goods have been or will
be added to the inventory by purchase, acquisition on consignment,
or otherwise. The licensee shall submit the application for renewal
of the license within 13 days before the expiration date of the
license that contains a revised inventory of goods remaining on
hand at the time the application for renewal is made. The licensee
shall prepare and furnish the revised inventory in the same manner
and form as the original inventory. The county clerk shall not
grant a renewal of a license if any goods have been added to the
stock listed in the inventory since the date of the issuance of the
original license.
(3) A fee of $100.00 shall accompany an application for a
license and for a renewal of a license.
Sec. 8. (1) The applicant shall post a copy of the application
for a license to conduct a regulated sale, including the inventory
filed with the application and any revised inventory prepared under
section 7(2), in a conspicuous place in the sales room or place
where the regulated sale is conducted, but the copy does not have
to show the purchase price of the goods. The applicant shall attach
a duplicate copy of the license to the front door of the premises
where the regulated sale is conducted in such a manner that it is
clearly visible from the street.
(2) Any advertisement or announcement published in connection
with a regulated sale shall conspicuously show on its face the
number of the license and the date of its expiration, the name and
business address of the applicant, and the applicant's state sales
tax number.
Sec. 9. If an application for a license or renewal under this
act is filed with a county clerk, the county clerk shall note the
date of the filing on the application, retain the application in
the county clerk's records, and make an abstract of the facts
contained in the application in a book kept for that purpose. The
county clerk shall maintain an index of the abstract book. Each
abstract shall contain the name of the person applying for the
license, the type of the proposed regulated sale, the place where
the licensee is conducting the regulated sale, the duration of the
regulated sale, the inventory of the goods to be sold, a general
statement of where the goods came from, and a notation of whether a
license was issued or refused. The county clerk shall note the date
the license is granted or refused on the application. An
application and abstract are prima facie evidence of all statements
contained in the application.
Sec. 10. Within 10 days after the last day of a regulated
sale, the applicant shall file in duplicate with the county clerk a
list of all merchandise sold at the regulated sale and the prices
received and a detailed list of all merchandise unsold at the close
of the regulated sale. The county clerk shall forward a copy of the
lists to the department of treasury.
Sec. 11. A license to conduct a regulated sale is valid only
for a sale of the goods inventoried and described in the license
application and at the time and place described in the license. If
any goods described in the application are removed from the place
of sale, those goods shall not be sold at another regulated sale or
advertised or sold as an insurance, bankruptcy, mortgage,
insolvency, assignee's, executor's, administrator's, receiver's, or
trustee's stock of goods, a stock of goods being removed or closed
out, or a stock of damaged goods.
Sec. 12. A person who intends to conduct a regulated sale
shall not acquire any goods for the purpose of selling and
disposing of those goods at the regulated sale. Any unusual
acquisition of goods within the 90-day period preceding the license
application is presumptive evidence that the acquisition was made
in contemplation of the regulated sale and for the purpose of
selling those goods at the regulated sale.
Sec. 13. A person conducting a regulated sale shall not add
any goods to the stock of goods described and inventoried in the
license application during the regulated sale or sell any goods
that are not described and inventoried in the application. Each
addition of goods to the stock of goods described and inventoried
in the application and each sale of goods not inventoried and
described in the application is a separate violation of this act,
and any violation of this section terminates the license to conduct
the regulated sale.
Sec. 14. (1) A person shall not make a false statement in an
application for a license to conduct a regulated sale. A person who
violates this subsection is guilty of a felony punishable by
imprisonment for not more than 5 years.
(2) A person that advertises, represents, or holds out a sale
of goods as an insurance, bankruptcy, mortgage, insolvency,
assignee's, executor's, administrator's, receiver's, trustee's,
removal, or going-out-of-business sale, or a sale of goods damaged
by fire, water, smoke, or otherwise, without having first complied
with this act, is guilty of a misdemeanor punishable by a fine of
not more than $1,000.00.
(3) Except as provided in subsections (1) and (2), a person
who violates this act is guilty of a misdemeanor punishable by
imprisonment for not more than 93 days or a fine of not more than
$5,000.00, or both.
(4) Whether or not a person has an adequate remedy at law, a
person may bring an action to do either or both of the following:
(a) Obtain a declaratory judgment that a practice is in
violation of this act.
(b) Enjoin by temporary or permanent injunction a person who
is engaging or is about to engage in a practice in violation of
this act.
Enacting section 1. 1961 PA 39, MCL 442.211 to 442.226, is
repealed.