Virginia-Carolina Chemical Co. v. Ruffin

1. Sales. Whether contract of sale of consignment must he determined from, whole agreement; contract for delivery of fertilizer held one of consignment. In determining whether a contract is one of sale or consignment, and the terms involve essential elements both of sale and consignment, its meaning is to be gathered and ascertained from a consideration of these essential elements in the light afforded by the whole contract; accordingly held, that the contract set out herein is one of consignment, and not one of sale, since the provisions peculiar to consignment contracts predominate and evince that consignment'was intended. 2. Appeal and Error. Evidence. Oral testimony not contradicting written contract admissible; oral testimony immaterial to issues harmless error. Oral testimony which does not vary or contradict the terms of the written contract is admissible; and, where such testimony shows a fact which is immaterial to the issue in the case, it is harmless and is not reversible error.

Appeal from circuit court of Joues county. Hon. R. S. Hall, Judge. Action by tbe Virginia-Carolina Chemical Company against L. W. Ruffin. Judgment for defendant, and plaintiff appeals. Counsel quotes tbe rule as laid down in 33 Cyc. on page 655, to be as follows: “A conditional sale is distinguished from a bailment in which the bailee receives possession of the goods for a particular purpose upon an, agreement to re-deliver to the bailor after the purpose has been fulfilled.” So counsel for appellee did not complete the quotation, we will complete it for him. “While in a conditional sale possession is delivered upon an agreement to sell and buy tlie property in tbe goods to remain in tbe seller until payment of tbe price.” We are willing to have this rule of law apply to the facts in this case. We will also quote for the court’s benefit the citation in support of the above rule of law which appears as note 58 on said page: “Whatever it may be called and however hedged about with conditions, where there is a positive engagement on the part of the so-called bailee or lessee to pay a stipulated sum, upon which payment, without more, the goods are to be his, and a bill of sale to be executed therefore, this is nothing but a sale, and not a bailment which the trustee in bankruptcy, representing creditors, may assert. In re Morris, 156 Fed. 597.” There is no dispute over tbe facts that appellant filed its claim for the fertilizer, or the proceeds of the same, with the referee in bankruptcy, and endeavored to recover possession of the fertilizer, or the proceeds thereof, from the trustee of the estate of the Ruffin Mercantile Company, Bankrupt, but we most respectfully deny that the appellant contended in that court that the contract which is now before this court was a consignment contract instead of a conditional sale. We further state that we have at no time changed our position in this matter. We have always contended that this-surely was a conditional sale under the contract, but under the terms of the same we were entitled to the possession of the fertilizer, or the recovery of the proceeds of the same from the trustee in bankruptcy. There'is no evidence, in the record that appellant contended in the bankrupt court that this was a consignment contract, and if there' was such testimony and counsel for appellee could have produced the same, we would gladly have submitted to the decision of the lower court. In the 35th Volume of Cyc, just quoted from the brief of counsel for appellee, but on page 652 instead of 655, we find the following rule, which not only authorized us but made it our duty to pursue the course that we did in the bankrupt court: “It is the distinguishing feature of the so-called conditional sale that the title to or property, in the goods remains in. the seller until payment of the -price; but the buyer is entitled to the possession and use of the goods until default in payment. The security retained by the seller is not a lien, but a reservation of title and the right to pursue the property in specie, if the transaction shows an intent to pass the title , as well as the possession with a mere reservation of a lien, the sale is not conditional but absolute.” We further submit that the clause in the contract requiring appellee to account for the proceeds of the sale of the fertilizer sold by him be kept separate and remitted to appellant is not inconsistent with appellant’s claim to the title to the property as security for the purchase money of the fertilizer. Of course, whenever appellee had paid for the fertilizer in full this was not required of him for the reason that the fertilizer became his on the payment of the purchase price. We further call the court’s attention to the fact that this litigation is between the’parties to the contract, and even if the contract was invalid as to creditors or purchasers for value, yet it remains binding on the original parties to the contract. This kind of a contract is approved by the United States supreme court in the case of Brown, Trustee, v. 8 to off or d Brothers Dry Goods Company, reported in 53 U. S. Reports (Lawyers Edition) on page 997, the court saying, in part: “A contract which gives the purchaser the right to resell in the ordinary course of business, but provides that title shall remain in the seller um til such resale, and that the proceeds derived therefrom, in whatever form existing, shall be the property of the seller, is, in Arkansas, a conditional sale and valid without record.” We again ask the court in its examination of the contract to especially notice that throughout the same the appellee admits an indebtedness from the date of the delivery of the fertilizer, the title to which is retained in appellant until the .purchase price is paid in full. For the reasons hereinbefore set forth, we respectfully ask that the judgment of the lower court be set aside and that g judgment be entered here in favor of appellant for five hundred seventy six dollars and seventy-six cents, with interest thereon at the rate of six per cent, per annum from May 1, 1917, until paid. The best discussion of the law as applied to this case and question we have been able to find'is in the notes to the Ferry case and on 628 L. R. A. 1917B, and we find this: “But where title is reserved by the consignor in a contract containing apt words of consignment, it cannot be held to be a conditional sale rather than a bailment for sale, unless other provisions therein have the legal effect of rendering it in fact a sale without regard to the declared intent of the parties.” Again on page 631: “In consignment the bailee is merely the agent of the bailor, and the bailor cannot force him to pay for the goods, unless he has sold them.” See McKenzie v. Roper Wholesale Oro. Go., 9 Ga. App. 185, 70 S. E. 981; Williams Moicer and Reaper Go. v. Raynor, 38 Wis. 119. “If a contract provides that the proceeds of the sales by the consignee are the property of the consignor and must be remitted to him by the consignee, less, perhaps, a designated commission to be deducted by the latter, it constitutes a consignment and agency contract, and not a sale.” L. R. A. 1917B, page 338, second column, and also Ludvigh v. American Woolen Go., 231 U. S. 522, 58 L. Ed. 345, 34 Sup. Ct. Rep. 161; Re Reynolds, 203 Fed. 102. “There is no conflict among the authorities as to what a bailment is; they all agree in holding that when the identical thing delivered, though in an altered form, is to be restored, the contract is one of bailment, and the title to the property is not changed.” Mallory v. Willis, 4 N. Y. 76. In Walker v. Butterick, 105 Mass. 237, it was held that a contract was a consignment contract, and not a sale, where by its terms the consignee was to take goods for the consignor and at désignated times remit the proceeds of the sales at prices charged by the latter. In Seed Co. v. Queen Mill & Elevator Co., 23 Okla. 675, 101 Pac. 1130, it was held that a contract is one of agency, and not of sale, where it purports to bind one party thereto as the other’s ag'ent for the sale of its products at a certain place for a specified commission, the property to be sold at a price fixed by the seller, and the title to remain in him until it is sold, together- with the proceeds of the sales, and the agent to remit the proceeds upon designated- dates. To the same effect see Music House v. Fairbanks, 80 Wash. 379,141 Pao. 885. In Barrett v. Grade, 34 Barb. (N. Y.) 20, holds that as between the parties, the transaction is one of agency and not "one of sale, where property is delivered for resale, the proceeds to belong to the principal and to be collected and transmitted to him by the agent, except á stipulated sum or commission, to be retained by him, and this is true though the maximum price for which the agent may sell is not stated, the only restriction in this regard being the fixing of a minimum price. But whether this be a conditional sale or consignment, we think that there can be no question that the appellant cannot recover here for the reason that “a retail dealer receiving goods to be sold for the consignor and paid for as sold, as it was here, the goods remaining the property of the consignor until sold, is not liable'for the purchase price of the unsold goods.” Levi v. Allen, 15 Ind. App. 38. The actual re-sale of the goods is a condition precedent to the liability of the consignee to the consignor as a debtor. Depew v. Key ser, 3 Duer, (N. Y.) 335; See, also, Holleman v. Bradley Fert. Co., 106 Ga. 156, 32 S. E. 83. Then again, if the factor undertakes to guarantee the payment of debts arising from the sales by him of articles, he is construed to sell on a del credere commission, and this will make a del credere commission contract and not a sale. Re Galt, 56 C. C. A. 470, 120 Fed. 64. In Sturtevan Go. y. Dugan, 106 .Md. 587, 68 Atl. 351, 14 Ann. Cas. 675, it .was held that where goods are consigned for sale to net the consignor a certain price, the consignee to have all received above that price, and to guarantee the payment of all of the purchase price of all sales made by him, the transaction creates a del credere agency. What thing is needed to- be done here as between the parties that prevents Ruffin under this contract from being the agent of the appellant? We call the attention of the court to the fact that as between the parties, the effect of a contract1 may be one thing, and as between third parties another. In Rose v. Story, 1 Pa. St. 190, it was said: “So where one receives goods upon, contract, by which he is to keep them a certain period, and if in that time he pays for them, he is to become the owner, but otherwise he is to pay for the use of them, he receives them as bailee, and the property in the goods is not changed until the price is paid.” In Becker v. Smith, 59 Pa.' St. 469, it was also said: “Becker, by articles, sold real estate to Linn, and agreed that he. should have the use of certain personal property, and might sell materials belonging to Becker on the premises on commission and when the payments deposited with the banker reached a certain sum, Linn was to become the owner of the personal property if any remained; held not to be a conditional sale, but a bailment.” Was Ruffin, the appellee, a mere purchaser of the goods for the appellant, or was he the agent of the appellant for the sale of its merchandise? If a mere purchaser, then why all of the unnecessary Avording of the agreement? What good purpose could be accomplished by this long and complicated contract? We contend that a simple reading of the agreement between the parties will show that it was sought to. establish some other relation between the parties other than that of mere vendor and purchaser. When this contract is analyzed, and all unnecessary wording eliminated, there is left a simple agreement that provides that the appellant was to ship Ruffin fertilizer; that Ruffin was to store it, sell it, if he could; account for all sales. He must sell at a price not to come below a certain figure; the money from the sales and all notes, etc., were to be kept separate and belong to the appellant, and Ruffin was prohibited from selling for another than cash unless the sale was first approved by the appellant. A strange sale indeed, if it be a sale; On the other hand, we contend that Ruffin, became the mere agent of the appellant because of the reasons stated above and for the further reason that the appellant retained title to the property, and made Ruffin agree to hold it. subject- to its orders if any remained unsold. As the general manager says: “The debt to come due when the fertilizer was sold and not before.”’ If Ruffin was the -agent or factor and not the purchaser, what duty did he owe to the appellant? He only oVed the duty to use reasonable care to protect the property, 19 Cyc, (D-l-118); DesJiler v. Beers, 32 111. 368'. If he followed the instructions of the appellant, then any loss must fall Qn the appellant and not him. 19 Cyc. D-3-119. If the depositor of the goods reserves the right to take them back, the transaction is regarded as a consignment and not a sale, and the consignee is a factor, 19 Cyc, D-5-120. And the fact that the agreement provides that the consignee may retain all of the selling money above a certain fixed price, does not destroy the relation of factor and principal, and does not render the transaction a conditional sale. 19 Cyc, D-5-121. The factor is not liable if. the goods are taken from his possession by vis Major. Wilkinson v. Williams, 35 Tex. App. 181. We respectfully submit that measuring the contract in this case by every rule of law and all of the decisions that Ruffin was merely the agent of the appellant in this case and not a purchaser and the appellant named its own terms; -it sought the business and Ruffin did nothing to mislead the appellant at all. The intention of the parties is easily understood from the whole contract, and -that intention is that the appellant held onto its property until Ruffin actually sold the property and then hound him up to remit, not the amount that the fertilizer might bring, but the identical money that he received for the same. ' Under the terms of the contract and by the-sixth (6) clause or provision, and' this provision alone determines that the identical money and not an amount of money equal to it, from the sale of the goods must, even be kept separate from all other moneys in the hands of the customer. In other words the appellant proposed not only to direct the sales, but retained ownership of the property and in case of sale followed this up by requiring the identical money to be kept where it could be identified, and this is what Ruffin actually did. The goods were taken by law; appellant asserted its rights thereto in the courts; it lost out; it contended there that it was the owuer, and having lost out on that contention, now turns around and contends that the whole thing was a sale to Ruffin and not a consignment. It appears to us that the -attitude now assumed by the appellant is inconsistent with its former contention, but does appear to be in keeping with its evident purpose to draw, if possible, a contract whereby it might blow both hot and cold. The appellant having selected the man to contract with; having worded its contract .as it wanted it; having shipped the goods after sending its salesman to look over the local conditions, and it knowing' the local situation as it did from the actual visit of its salesman; having taken the chance it did; having claimed the property as its own and having lost out on this claim, should not now be permitted to hold an innocent party for the loss that'it must suffer. Ruffin never benefitted by the agreement; the appellant did, and thought it would more and would have, had not misfortune overtaken it in its deal and the creditors of the Ruffin Mercantile Company claimed the property of the appellant, ■ and had it subjected to their claims, or rathér to have it sold and the proceeds go into the general assets of the bankrupt. The right result was reached in the lower court, which held that the property was that of the appellant and it lost it, because of a judgment of a court of competent jurisdiction. It was no fault of Ruffins that there was a loss; he never did one thing with reference to the property except what he was authorized to do by the appellant, and the appellant does not deny what Ruffin says about the directions as to storing the goods. Taking the testimony of appellant’s general manager that the account was not to be due until the goods were sold, and they having never been sold, unless the appellant can show that Ruffin breached the contract in some particular then Ruffin cannot be held liable, and to show any breach of the contract by Ruffin, the appellant has wholly failed, and has not even made an attempt to show a breach, and the goods not having been sold by Ruffin, we submit that there is no reasonable theory on which Ruffin can be personally held for the value of the goods. We submit that the right result has been reached and the case should be affirmed.