Reiter v. Anderson

Plaintiff brought this action to recover the purchase price of certain sewing-machines alleged to have been sold to defendants by plaintiff’s assignor, the Standard Sewing Machine Company. The evidence shows without dispute that the machines were ordered and received by defendants, and that they were not paid for. But defendants claimed and the trial court found that the machines had been shipped to defendants on consignment, under the terms of a written contract of agency which was later terminated by defendant and the machines stored subject to the company’s disposal; that therefore the transaction did not constitute a sale. Judgment was rendered accordingly in defendants’ favor, and plaintiff appealed.

The goods were shipped pursuant to said order to the defendants at San Jose, where they were conducting a music store, and they acknowledged receipt of the same. Monthly statements of the account were thereafter sent to them for a period of several months; and during that period of time they ordered and paid for other goods shipped to them under the terms of said contract.

About two months after the shipment of the goods in ques- . tion said company wrote to defendants calling attention to the maturity of the “invoice dated April 20th, 1925, amount $1,452.50, covering sewing machines shipped” from San Francisco pursuant to their order, and, among other things, stated: “The terms on this sale provide for sixty days trade acceptance”; and an early remittance was requested. Under date of July 9, 1925, defendants replied, stating: “We are in receipt of your letter of June 30th, 1925, calling attention to the maturity of your invoice for sewing machines recently purchased by us. Because of the absence of the manager from San Francisco at this time, we are writing to you so that our account will be taken care of directly and after referring to certain suggestions claimed to have

In response the company telegraphed from its office in Cleveland, Ohio, to the effect that the terms of payment mentioned were not satisfactory, that the “terms of sale specified for payment sixty days following shipment” and that defendants “should comply strictly with those terms”; that the company would not settle on a basis of installment contracts. After some further correspondence, defendants, under date of August 11, 1925, wrote to said company terminating the contract. In this letter defendants stated: “After going over the situation carefully we have decided to discontinue handling sewing machines and wish to cancel at once the contract which we entered into as well as the verbal arrangements made at the same time,” giving as the main reason for the cancellation the unsatisfactory develop^ ment of the business, and the letter concluded: “Arrangements for closing up our account will be made when your representative calls.” . Replying, the company wrote: “Replying to yours of the 11th inst., in reference to the past due account with the Standard Sewing Machine Co., of Cleveland, Ohio, amounting to $1,452.50 which was due June 30th, would say that it is not necessary to wait until the arrival of our representative as mentioned in your letter to bring about a settlement of this account”; and after expressing regrets because of the discontinuance of the business stated that the “contract will be attended to by Mr. Knowlden” on his next visit to San Jose, but that “this arrangement has nothing whatever to do with the collection department, we are supposed and expected to collect all bills at maturity and all we know about the transaction is the order which you signed and is in our possession a copy of which I am herewith enclosing, we ship the goods to you in good faith and expect a prompt payment, but as there has been through Mr. Knowlden, talked extension of a portion of this bill.” Concluding, the letter stated: “Now gentlemen, if you will remit by return mail $726.26

In discussing the same question as to the legal relationship created by the form of contract such as the parties here entered into, Professor Mechem says: “A qualified form of ‘agency’ which has grown up in modern times is that which exists when the owner or manufacturer of patented or other proprietary articles grants the privilege of sale or of exclusive territory to one who otherwise might not be at liberty to sell the goods in question. It is entirely consistent with this arrangement that the so-called agent is to buy, of the proprietor or manufacturer, the goods which he is thus authorized to sell, and when this is the fact there is little more of ‘agency’ in the case than the name itself. It is also entirely consistent with the arrangement that the ‘agent’ is to sell the goods at a price or upon terms or conditions fixed by the proprietor or manufacturer. A person so situated is often, in popular language, said to have obtained the ‘agency’ for the goods, when all that is meant is that he has obtained a more or less exclusive right to buy and resell them in a prescribed territory. The transaction is simple enough, but the reports show many eases in which the parties have, perhaps, deceived themselves and have certainly attempted to deceive others by calling that an ‘agency’ which had no resemblance to agency in fact, but was simply a sale of a proprietary article with a right of resale under terms and conditions fixed by the proprietor.” (1 Mechem on Sales, pp. 41, 42.) And in announcing a test to be applied in differentiating between a sale and an agency to sell on consignment, the same author says: “Sale, further, is to be distinguished from the creation of an agency to sell. The essence of sale is, as has been seen, the transfer of the title to the goods for a price.paid or to be paid. Such a trans

We are of the opinion that the contract and the order in the present case, construed together as respondent contends they should be; clearly prove that, although an agency was created conferring upon defendants the exclusive privilege to resell the company’s goods at a specific price within certain territory, it was contemplated thereby that the delivery of the goods by the company to defendants should constitute a sale thereof to the latter and not a consignment. This is made evident first by the language of the contract itself, from which it appears that the consideration for the creation of the exclusive agency to sell said goods was that defendants agreed “to purchase” from said company not less than twelve machines every month; and again by the order which shows that defendants agreed “to pay” said company for the goods ordered according to the schedule of prices therein specified upon the following terms: “2% Discount 30 days or 60 days Net.” Furthermore, it is a well-established rule of the law of sales that where there is nothing indicating a contrary intent, the delivery of the possession of goods operates to pass title; and that in the ordinary sale on credit title to the goods passes on delivery (Phillips v. Stark, 186 Cal. 369 [ 199 Pac. 509 ]). Neither of the documents under consideration here indicates that title to the goods should remain in the company after

It is evident, we think, from the facts and circumstances above set forth that the contract and order in question implied a sale and not a mere agency to sell; that is, that defendants were to purchase the goods from said company to resell on their own account. All of the essential elements of sale are present, including the passing of title and assumption of risk and exclusive control by defendants following delivery. Furthermore, it would appear that defendants themselves regarded the transaction of delivery as a sale, because they proceeded to resell the goods on their own account and on terms of their own choosing; they also acknowledged the debt and offered to liquidate the same in various ways, first, by making three separate payments, secondly, by turning over the installment contracts which they had taken from their customers or the cash received therefrom as the contracts were paid, and finally, by returning to the company the unsold machines. For the foregoing reasons we are unable to sustain the trial court’s finding that the shipment of said goods to defendants constituted a consignment and not a sale.

The situation is not altered by the fact that the contract employs the word “agency.” As stated in the case

Defendants also urge in support of the judgment that whether the contract be deemed to be one of agency or of sale plaintiff may not recover because defendants terminated the contract in the manner therein provided. We find no merit in the point. It is evident that the thirty days’ notice of termination given by defendants, dated August 11, 1925, operated to release the defendants from further obligation to purchase goods after the notice became effective; but obviously said notice could not serve to extinguish the indebtedness which defendants had incurred under the contract prior to giving the notice,

Further. contention is made by defendants that as a result of the conference with Knowlden in September, 1925, following the termination of the agency, the written contract in question was superseded by an oral one made by Knowlden whereby he agreed to accept a return of the machines, and that he actually did take one of them with him. Knowlden’s testimony was somewhat at variance with the foregoing claim. However, novation of contract was not pleaded as a defense, nor was any finding made on such an issue; there was no evidence offered to prove that

The evidence, in our opinion, being legally insufficient to support the finding that there was no sale of the goods, the judgment is reversed.

Tyler, P. J., and Cashin, J., concurred.