432 F.2d 722 (4th Cir. 1970), 13889, Toyomenka, Inc. v. Mount Hope Finishing Co.

Docket Nº:13889.
Citation:432 F.2d 722
Party Name:TOYOMENKA, INC. and Wilmington Shipping Company, Appellees, v. MOUNT HOPE FINISHING COMPANY, Appellant.
Case Date:September 18, 1970
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

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432 F.2d 722 (4th Cir. 1970)

TOYOMENKA, INC. and Wilmington Shipping Company, Appellees,



No. 13889.

United States Court of Appeals, Fourth Circuit.

Sept. 18, 1970

Argued May 7, 1970.

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[Copyrighted Material Omitted]

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George W. Miller, Jr., Durham, N.C. (Egbert L. Haywood, and Haywood, Denny & Miller, Durham, N.C., on brief), for appellant.

Ellis L. Aycock, Wilmington, N.C. (Stevens, Burgwin, McGhee & Ryals, Wilmington, N.C., on brief), for appellee Toyomenka, Inc.

Alan A. Marshall, Wilmington, N.C. and A. Dumay Gorham, Jr., Wrightsville Beach, N.C. (Marshall & Williams, Wilmington, N.C., on brief), for appellee Wilmington Shipping Co.

Before HAYNSWORTH, Chief Judge, and BUTZNER, Circuit Judge, and RUSSELL, District Judge.

DONALD RUSSELL, District Judge:

This action for conversion involves title to certain textile goods imported into this country for sale. The plaintiff Toyomenka, Inc., 1 the importer, claiming ownership, sought recovery for their value both from (1) the defendant Wilmington Shipping Company, 2 which, acting as customs broker for Toyomenka in the receipt of such goods, had erroneously shipped the goods for finishing from port of entry to its co-defendant, Mount Hope Finishing Company, 3 a textile finisher, as the property of one Harold A. Jason, Inc., 4 a textile converter, and (2) from the defendant Mount Hope Finishing Company3 which, claiming that, as a result of its billing, the goods were the property of Jason, had sold them, following finishing, to Hampton Shirt Company under a claim of authority from Jason and applied the proceeds of such sale towards Jason's past-due indebtedness to it.

Wilmington, by its answer, admitted its error and, for all practical purposes conceded its liability. By way of a cross-complaint, and assuming a recovery over against it, it sought recovery over against its co-defendant Mount Hope on the ground that after notice of Toyomenka's ownership, the latter had wrongfully 'sold, converted or diverted same to its own use'. Mount Hope, by its answer, alleged that the goods arrived at its plant 'by truck with the shipper being designated as Harold A. Jason, Inc.', and that, acting under an agreement with Jason, it sold the goods 'in the usual course of its business' 'prior to receiving any notice that said goods belonged or were claimed by any other party'. Specifically, it alleged that, if Wilmington had made an error in billing, that error was 'in all respects

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imputed to the plaintiff' since Wilmington 'was acting as and for the agent of plaintiff'.

The cause was tried with a jury. At the conclusion of the testimony, Mount Hope moved for a directed verdict on grounds not stated in the record. The Court overruled the motion and submitted the case to the jury. Without objection from any party, it instructed the jury that Wilmington's status was that of bailee. The jury returned a verdict for the value of the goods, less finishing charges, in favor of the plaintiff against Wilmington and, in turn, for Wilmington in like amount against Mount Hope. The net result was a verdict for the value of the goods in favor of the plaintiff against both defendants, since the recovery from Mount Hope was for its benefit. Thereafter, Mount Hope moved for judgment n.o.v. Such motion was denied.

Mount Hope now appeals, contending that the District Court should have granted its motion for a directed verdict and its motion for judgment n.o.v., and asserting error both in the Court's Charge and in the admission of evidence. We affirm.

The facts surrounding the controversy are:

On September 11, 1967, Toyomenka, an importer, contracted to sell one Jason, a textile converter, certain textile goods to be imported from Japan. While providing that payment for the goods should be made sixty (60) days after customs clearance, the contract of sale gave the seller authority to change the terms of credit, including even the right to revoke credit entirely. Prior to the arrival of the goods in America, Toyomenka was advised by its own factor that the latter declined to accept any responsibility for credit extended to Jason. On the same day, Toyomenka, acting under the provision of the contract of sale, demanded of Jason a guarantee of payment prior to delivery. Responding on March 7, 1968, Jason wrote Toyomenka that there was some confusion about its factoring arrangements and recommended that Toyomenka 'ship any goods for our account to the designated finishing plant, in your (i.e., Toyomenka's) name and release to us for finishing instructions only. We agree to pay for these goods before you release the goods to our account'. This proposal of Jason was accepted as a modification in the terms of the contract of sale by Toyomenka, which evidenced its acceptance by issuing a new invoice to Jason dated March 19, 1968. This new invoice established the terms of sale as 'cash prior delivery'. 5

The textile goods themselves had been shipped from Japan in the name of Toyomenka. Anticipating the arrival of such goods at Wilmington, North Carolina, Toyomenka had on March 8, 1968, employed Wilmington to enter and clear the goods through customs in the name of Toyomenka and to hold for shipping instructions. In accordance with the understanding between it and Jason, Toyomenka instructed Wilmington, by telephone on March 20, 1968, as confirmed by letter on the day following, to ship the goods 'Freight prepaid: in the name of TOYOMENKA INC., (shipper), to: MOUNT HOPE FINISHING CO., BUTNER, N.C. VIA: STANDARD TRUCKING CO.-- All charges to be billed to: Harold A. Jason Inc., 10 West, 33rd Str. New York, N.Y.' The statement with reference to hauling charges was inserted, according to Toyomenka, because its agreement with Jason contemplated a cash sale, which would include 'the trucking charges'. Incidentally, Jason never paid the 'trucking charges'.

The textile goods were received in Wilmington on March 28, 1968, and it was at this point that the mistake creating

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this lawsuit occurred. Wilmington, through a freely admitted mistake of its billing clerk, shipped the goods on or about April 2nd to Mount Hope for finishing in the name of Harold A. Jason, Inc. Toyomenka, unaware of the mistake in billing, contracted on April 16, at the suggestion of Jason, to sell to Hampton Shirt Company the finished goods. On April 19, 1968, while the goods were still in the possession of Mount Hope, Toyomenka...

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