223 S.W.2d 67 (Tex.Civ.App. 1949), 6445, Garrett v. International Mill. Co.

Docket Nº:6445.
Citation:223 S.W.2d 67
Opinion Judge:LINCOLN, Justice.
Attorney:Grenshaw, Dupree, Milam & Crenshaw, Lubbock, Rollins & McWhirter, Greenville, for appellants. Allen Clark, Greenville, for appellee.
Judge Panel:The District Court of Hunt County, Charles D. Berry, J., rendered judgment for the plaintiff, and the defendants appealed.
Case Date:September 08, 1949
Court:Court of Appeals of Texas, Court of Civil Appeals of Texas

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223 S.W.2d 67 (Tex.Civ.App. 1949)

GARRETT et al.



No. 6445.

Court of Civil Appeals of Texas, Texarkana.

September 8, 1949

Rehearing Denied Sept. 8, 1949.

International Milling Company sued Jack E. Garrett for breach of instruments which plaintiff contended constituted a contract for sale of flour to defendants, and which defendants contended constituted a coutract of consignment.

The District Court of Hunt County, Charles D. Berry, J., rendered judgment for the plaintiff, and the defendants appealed.

The Court of Civil Appeals, Lincoln, J., reversed holding that the instruments and the transaction were ambiguous, so as to justify admission of parol testimony and that such testimony warranted finding that the contract was one of consignment.

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Grenshaw, Dupree, Milam & Crenshaw, Lubbock, Rollins & McWhirter, Greenville, for appellants.

Allen Clark, Greenville, for appellee.

LINCOLN, Justice.

An original submission of this case, the judgment of the district court was reversed and judgment was rendered for appellants. Upon consideration of the appellee's motion for rehearing, said motion is granted to the extent that the original opinion rendered

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herein on June 30, 1949, is withdrawn and the following opinion is substituted in lieu thereof:

This was a suit by appellee against appellants Jack E. Garrett and Ross E. Garrett, doing business under the name of Lubbock Feed, Seed and Grain Company, for liquidated damages alleged to have resulted from a breach of contract of sale. The appellee alleged that on October 23, 1947, the parties entered into a written contract whereby the plaintiff agreed to sell and the defendant agreed to buy 1200 cwt. of Robin Hood Flour at $7.50 per cwt. A copy of the instrument referred to was attached to the petition. The plaintiff further alleged that on October 30, 1947, a like contract of sale involving 1800 cwt. of Robin Hood Flour at.$7.00 per cwt. was executed. After trial to the court judgment was rendered in favor of plaintiff for liquidated damages in the sum of $2,377.47 on the first contract, but the court found in favor of the defendants upon the second contract. There is no appeal nor cross-assignment from the judgment on the second contract referred to.

Prior to June 3, 1947, the appellee was under arrangements with other parties in Lubbock, Texas, as consignment jobbers for appellee's milling products, principally flour. That arrangement was terminated and negotiations resulted in a contract dated June 3, 1947, by the terms whereof the appellants operating under the name of Lubbock Feed, Seed and Grain Company became the consignment jobbers of appellee. The contract of June 3, 1947, is general and provides that the appellee shall ship to the appellants from time to time such products at it shall see fit; that the consignee, appellants herein, will receive the same and store them in the consignee's premises; that the consignee may from time to time sell the goods in the ordinary course of business, at a reasonable profit over and above the wholesale price to be furnished to appellants, making reports from time to time of such sales. The company retained the right at any time to enter on the premises where the goods were stored and inspect and take inventory thereof, take possession of and remove said goods which have not been sold, etc. The contract required the consignee to furnish bond to the company to guarantee the observance of all conditions of the agreement, and the bond was made. The contract specifically provided that the company was not obligated to ship any goods for the purpose of creating a consigned stock, that the company reserved the right to reject any and all of consignee's requests for such shipments, and that the failure or refusal to do so or to maintain the consigned stock should not be construed as a breach of the obligation by the company and would not relieve the consignee from his obligation to carry out his part of the written contract or contracts that he may have heretofore or may hereafter make with the company 'for the purchase from the company of any of its products.'

Immediately after the date of this contract the milling company proceeded to transfer its products to the appellants' warehouse in Lubbock. Shipments and transfers, some from the former jobbers, some from Oklahoma, and some from other points in Texas, were shipped to the Milling Company, care of Lubbock Feed, Seed and Grain Company. The stock so transferred was listed on regular invoice forms but prices were omitted and each shipment or transfer was marked 'Consigned' stock.

Under the arrangements, and by virtue of the contract of June 3, 1947, the appellants were permitted to sell flour and make delivery of same out of the consigned stock. Under all of the testimony, and there is no testimony to the contrary, all flour placed by the milling company in appellants' warehouse at Lubbock was there as consigned stock, title remained in the milling company until it was sold by appellants, and the obligation of appellants was to remit to the appellee at regular intervals for such of the stock as had been sold by them.

Shortly after June 3, additional contracts were executed between appellants and appellee. The record discloses contracts bearing dates July 14, July 30, August 5, October 23 (the instrument now in suit), and October 30, all in 1947. Each of these instruments

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was identical in form with the instrument of October 23, 1947. They were each written on a printed form designated as 'sales contract.' Each of them carried the following language: 'International Milling Company hereby agrees to sell to Lubbock Feed, Seed and Grain Company of Lubbock Texas, who agrees to buy from seller the following described goods (to be manufactured), at the price or prices, in the quantity or quantities, stated below, and on the terms and conditions, and subject to the agreements appearing below and on the back hereof.' Then followed the description of the article sold, in every instance it was flour. The merchandise was to be shipped to Lubbock, Texas, 'on directions to be hereafter furnished by buyer, shipment to be made by seller as follows:' and then followed the period of time and expiration date for shipment. In each instance freight was allowed by seller to Lubbock, Texas. Each instrument had blanks filled in for the merchandise, price and delivery date, and in that respect, together with the respective dates of the contracts they were different; but in one material respect all the instruments referred to differed from the one of October 23, 1947, in that they each had typed in them under 'Terms' the word or words, 'consignment,' or 'consignment basis,' or 'consigned stock.' The instrument dated October 23, 1947 did not have that.

The appellants did not give any shipping instructions under the alleged contract of October 23, 1947. None of the flour mentioned in that instrument found its way into appellants' warehouse at Lubbock. The instrument of October 23, 1947, as well as each of the others, contained numerous provisions authorizing cancellation by seller, among them provisions to the effect that if buyer either informs the seller that buyer will not perform the contract, or if he directs or requests the seller to cancel the contract, or if he admits or asserts buyer's inability to perform the contract, or if he 'fails to pay to seller on due date, any indebtedness heretofore accruing or hereafter accruing to the seller under this or any other contract between seller and buyer, including carrying charges, if any,' then the seller may treat the contract 'as if broken by the buyer and cancel entire contract and recover damages calculated' according to a formula appearing in another paragraph of the instrument. The formula referred to provided for liquidated damages.

On March 20, 1948, appellants made to appellee a report of sales, in which it was shown that the appellants owed to appellee about $952.00. This money was due from sales of flour out of the warehouse, all being consigned stock, and having been shipped under previous contracts, but none of it having been shipped under the contract of October 23, 1947. Appellants did not remit the money owing to appellee when it made that report. On March 22, 1948, appellee acting under the provision last above quoted, terminated the contracts of October 23 and October 30, and demanded damages in the sum of $2,377.47 and $477.49, respectively, calculated in accordance with the formula set forth in paragraph 2 of each contract so cancelled.

The appellants assert that the relationship between them and the appellee was that of...

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