Adams Machinery, Inc., In re

• Decision Date: 01 October 1963
• Citation: 123 N.W.2d 558,20 Wis.2d 607
• Parties: In re Voluntary Assignment of ADAMS MACHINERY, INC., a Wis. corporation. WORTHINGTON CORPORATION, Respondent, v. Paul L. MOSKOWITZ, Rec'r for Adams Machinery, Inc., Appellant.
• Court: Wisconsin Supreme Court

Page 558

123 N.W.2d 558

20 Wis.2d 607

In re Voluntary Assignment of ADAMS MACHINERY, INC., a Wis corporation WORTHINGTON CORPORATION, Respondent, v. Paul L. MOSKOWITZ, Rec'r for Adams Machinery, Inc., Appellant.

Supreme Court of Wisconsin.

Oct. 1, 1963.

John J. Ottusch, Milwaukee, for appellant.

Heft, Coates, Boggs & Heft, Racine, for respondent.

CURRIE, Justice.

This appeal presents the following three issues:

(1) Does sec. 241.26, Stats. require filing of a consignment agreement when consignment and delivery are initially for the purpose of fulfilling rental agreements between the consignee and third-party lessees, but ultimately for the purpose of increasing the probability of sale (upon approval by the consignor) to the lessees?

(2) Does a ch. 128 receiver obtain title to property consigned to the assignor, by reason of consignor's failure to record the consignment agreement pursuant to sec. 241.26, Stats.?

(3) Is ch. 128, Stats. unconstitutional insofar as it (in conjunction with sec. 241.26, Stats.) gives the receiver title to property which would be in a third-party consignor but for the latter's failure to file and record the consignment agreement pursuant to which the property was consigned to the assignor?

Applicability of Sec. 241.26, Stats.

Subs. (1) and (2) of sec. 241.26, Stats., provide:

'(1) Whenever goods, wares or merchandise are consigned and delivered to any person for the purpose of sale or merchandising, and the title thereto remains conditionally or unconditionally in the consignor the consignment agreement shall be in writing and filed in accordance with the provisions of sections 122.06, 122.11 and 122.14.

'(2) If a consignment agreement is not so made and filed, the title to any such goods, wares or merchandise shall be deemed to be in the consignee as to purchasers thereof and creditors of such consignee.' (Italics supplied.)

Secs. 122.06, 122.11, and 122.14, Stats., referred to above in sub. (1) of sec. 241.26 contain the filing provisions of Wisconsin's Uniform Conditional Sales Act. It is undisputed that Worthington made no attempt to comply with sub. (1) of sec. 241.26 by filing anything in the office of any Wisconsin register of deeds.

The problem before us is primarily one of statutory interpretation. The key words of sub. (1) of sec. 241.26, insofar as material to the issues presented on this appeal, are 'consigned' and 'merchandising.'

The legislative history of sec. 241.26, Stats. does not reflect any clear legislative intent as to what types of consignments were to be covered. ¹ Thus it is permissible, and, under sec. 990.01(1), Stats., mandatory, to construe sec. 241.26(1), Stats., and in particular the words, 'consigned' and 'merchandising', according to their common and approved usage. With respect to the former it should be noted that the word 'consigned' should be distinguished from the phrase 'consignment for sale.' While most consignments are ordinarily for the purpose of sale, the relationship does not require authority to sell. The United States supreme court in Sturm v. Boker (1893), 150 U.S. 312, 326, 14 S.Ct. 99, 37 L.Ed. 1093, held that the word 'consigned' used in its commercial sense means that the property is committed or entrusted to the consignee for 'care or sale.' The Connecticut court in Harris v. Coe (1898), 71 Conn. 157, 163, 41 A. 552, declared that the term 'consignment' imports an agency, and that title is in the consignor. A more recent case holding that 'consignment' does not imply a sale but imports an agency is Terminal W. & Refrigeration Co. v. Cross Transp. Co. (M.D.App., D.C.1943), 33 A.2d 617, 619. It necessarily follows that goods may be 'consigned' to another under any kind of an agency-relationship whether it be for sale, warehousing, or for leasing to others as was the case here.

We now turn to the proper interpretation of the statutory word 'merchandising.' Here we are met by Worthington's contention that the trial court's finding, that the compressors were not shipped by it for the purpose of sale or merchandising, cannot be upset by this court because not against the great weight and clear preponderance of the evidence. The pertinent issue, however, is not whether this finding is unsupported by sufficient evidence. None of the material evidence bearing on the purpose of shipment is in dispute. Therefore, whether under such undisputed facts the purpose of the shipment was 'merchandising' within the meaning of sub. (1) of sec. 241.26, Stats., presents a question of law rather than a question of fact and renders inapplicable the great weight and clear preponderance of the evidence rule. We consider apposite the pronouncement of this court in Dairy Queen of Wisconsin, Inc. v. McDowell (1952), 260 Wis. 471, 474, 51 N.W.2d 34, 36, 52 N.W.2d 791:

'Most of the facts were stipulated, there being few, if any, in dispute, and those not in sharp conflict. Here we have the trial court applying the law to the facts or the facts to the law, as it sees it. In such cases this court is not bound by the findings of the trial court, and the rule that the findings must be sustained unless against the great weight and clear preponderance of the evidence is not applicable. In re Will of Mechler, 1944, 246 Wis. 45, 16 N.W.2d 373.'

Sub. (1) of sec. 241.26, Stats., employs the phrase 'sale or merchandising.' In interpreting the meaning to be attributed to 'merchandising' we begin with the premise that it is not merely synonymous with the word 'sale.' This is because a statute should be construed so as to avoid rendering part of it superfluous by giving a particular word the same meaning as the word preceding. 50 Am.Jur., Statutes, p. 365, § 359. Platt v. Union Pacific R. Co. (1878), 99 U.S. 48, 59, 25 L.Ed. 424. Webster's New International Dictionary (3d ed.) defines the verb 'merchandise' as follows:

'1: to buy and sell: deal in: make merchandise of 2: to carry on sales promotion of: advertise, publicize, or present attractively or effectively'

Under the undisputed facts before us there was an element of sales promotion on the part of Worthington in consigning the four compressors to Adams to be leased by the latter to ski resorts. The 'Consignment Addendum' of November 4, 1961, to the distributor agreement of March 4, 1960, obviously was drafted by Worthington because the first page thereof is typed on Worthington's printed letterhead. Worthington drafted this addendum after the leases with the three ski resorts had been negotiated by Adams, for the purpose of enabling those leasing arrangements to be carried out. Therefore, the sentence of the addendum that Worthington appoints Adams 'as its consignee to lease or sell Worthington 900' portable compressors on commission' is particularly significant. Furthermore, prior to the signing of the addendum Worthington delivered to Adams a two-paged typed memorandum entitled '900' Consignment Plan' whereby it outlined the terms under which it would agree to consign its 900' portable compressors for leasing by a distributor such as Adams. This memorandum contained the following significant introductory paragraph:

'Objective

'The objective of the plan is to obtain maximum 900' sales by providing 900' compressors to distributors for rental without purchase obligation.'

The trial court in it memorandum decision quoted the abovequoted objective of the instant consignment plan, and then went on to state:

'The title to the units did not pass to Adams merely because there was a hope upon the part of both Adams and Worthington that a lessee user of a compressor might buy the compressor ultimately. Until that stage was reached by agreement, including fixing the price therefor in advance, the relationship was only a rental one and not a sale or merchandising. Locke v. Bort, 10 Wis.2d 585 [103 N.W.2d 555, 81 A.L.R.2d 1331]. Had the transaction included a price for the unit and that the rentals or portions thereof would be applied thereon in the event that a user would exercise an option to buy it, then the situation would be different.'

It is apparent from the abovequoted extract of the memorandum decision that the trial court has placed an erroneous interpretation on the statutory word 'merchandising,' and has construed sub. (1) of sec. 241.26 as being equivalent with the preceding word 'sale.' This ignores the element of sales promotion which also is part of the commonly accepted meaning of 'merchandising.'

Worthington advances the further argument that sec. 241.26, Stats. was only intended to cover situations where the consignee has the consigned goods in his actual possession and where creditors might thereby be misled into thinking the consignee is the owner. In this respect Worthington points out that it was only contemplated that Adams would have the compressors in its possession temporarily in order to add battery acid and anti-freeze and then they would pass to the possession of the lessees. We believe that there are two effective answers to this argument. First, there is nothing in the statute itself to suggest such a restrictive interpretation. Secondly, the fact that it is contemplated that the consignee will lease the consigned property to others nevertheless creates a situation where creditors might be misled into believing that the leased property constitutes part of the consignee's assets. For example, a dealer in construction equipment such as Adams might both sell and lease equipment. In seeking credit the leased machinery, as well as the machines actually in Adams' possession, would be assets which any prospective creditor would be likely to take into consideration in extending credit.

Worthington further points to the fact that all four compressors bore plates which stated that Worthington was the owner, and, therefore, that, if any prospective creditor had inspected the compressors, he would have ascertained that the lessor Adams was not the owner. We view this situation...