Arbuckle v. Kirkpatrick

• Citation: 39 S.W. 3,98 Tenn. 221
• Parties: ARBUCKLE et al. v. KIRKPATRICK et al.
• Decision Date: 17 February 1897
• Court: Supreme Court of Tennessee

39 S.W. 3

98 Tenn. 221

ARBUCKLE et al. v. KIRKPATRICK et al.

Supreme Court of Tennessee.

February 17, 1897

Appeal from chancery court, Davidson county; Thomas H. Malone Chancellor.

Bill by Arbuckle Bros. against Kirkpatrick & Co. and others to impress a trust on property of Kirkpatrick & Co. in the hands of their assignee for the benefit of creditors, and to establish complainants' ownership of certain accounts assigned. Decrees for defendants were rendered by the chancery court of Davidson county, Thomas H. Malone chancellor, and by the court of chancery appeals, and complainants appeal. Affirmed.

J. C McReynolds, for appellants.

D. F Wilkins, Hamilton Parks, and P. D. Maddin, for appellees.

WILKES J.

The complainants are dealers in Ariosa coffee, and claim that Kirkpatrick & Co. were their factors to sell this coffee. Kirkpatrick & Co. failed April 5, 1896, and assigned all their accounts, goods on hand, etc., to Keith & Wilkin, to pay several classes of creditors; Arbuckle being in the tenth class. Among the property so assigned were sums due to Kirkpatrick & Co. for Ariosa coffee sold by them, and not collected. They had also collected considerable sums from these sales, and had used the money. The bill seeks to reach (1) all accounts for the coffee which Kirkpatrick & Co. had not collected; (2) to impress a trust on all the assets assigned for the sums which Kirkpatrick & Co. had collected from sales of Ariosa coffee before the assignment, and which they had used and appropriated. No goods on hand are sought to be reached, because there was only about $65 worth on hand when the firm failed, and this was surrendered to Arbuckle's agent before taking advice upon the contract, by the assignee. The goods sold by Kirkpatrick & Co. were obtained from Arbuckle Bros. under a contract called a "Special Selling Factor Appointment." The contract in question is dated January 28, 1895. A similar contract had been in force between the parties for many years before that date. It is as follows:

"Form C.

"Special Selling Factor Appointment.

"Arbuckle Brothers.

"Subject to prompt acceptance we take pleasure in appointing you a special selling factor for our roasted coffee, restricting and defining your duties and obligations by the following provisions, to wit:

"I. That all goods consigned on your requisitions on us shall, until sold in regular course of business, and to bona fide retail customers, remain our property, with the title in us, and shall merely be held by you as our factor, and shall at all times be subject to our order for disposal or removal on payment of all claims against them for advances of money made to us, and all charges for drayage, storage, and insurance.

"II. That you shall never purchase such goods for your own account.

"III. That such goods shall be sold and billed by you in your own name, but only as our factor, according to the laws relating to factors, and only at such prices and on such terms as we may give you from time to time.

"IV. That you shall guaranty the sale of each consignment, and the payment therefor, within sixty days from its date, and shall assume all risk as to the credit of the parties to whom you sell, and make all collections for goods sold, at your own expense.

"V. That you shall remit us the full amount of each consignment, less the commissions as herein provided, by the end of such sixty days, at a price designated to you at the time of the consignment, whether the whole of said consignment shall have been sold by you or not, and whether or not you shall have collected the proceeds thereof.

"VI. That you shall insure us against any decline in the price of the unsold goods held by you as our factor.

"VII. That you shall be entitled to any advance in the price of such unsold goods; and

"VIII. That you shall be entitled to the following allowances and commissions, to wit:

"(1) For carting and storing, one-eighth cent per pound.

"(2) For insuring against fire, wind, and water, one-eight cent per pound.

"(3) For insuring payment, one-eighth cent per pound.

"4) For insuring against decline in price, one-eighth cent per pound.

"(5) For selling the goods, one cent per pound.

"IX. That, in addition to the above, we shall, on all advances made to us prior to ten days from date of consignment, allow a discount of one per cent., and on advances made after ten days, but prior to sixty days, we shall allow interest at the rate of six per cent. per annum for the time between date of said advance and said sixty days.

"X. That if you neglect to remit to us the full amount of any consignment, less the commissions as herein provided, by the end of sixty days from its date, we shall make draft upon you, and allow you a selling commission of only one-half of one cent per pound; and if said draft be returned unpaid, we shall only allow you a selling commission of one-fourth of one cent per pound; and if you do not remit us within four months from date of each consignment, no commissions or discounts of any nature whatever will be allowed.

"XI. That you will maintain our established selling price, terms, conditions, and limitations of consignment in such states and territories as may be designated by us; but, in the event of any violation thereof, you are to pay to us the sum of fifty dollars ($50) for every such violation.

"XII. That this factor appointment may be revoked by us at any time at our option. Copyright, 1891, by Arbuckle Bros."

This appointment was accepted by Kirkpatrick & Co. on January 28, 1895, in the following language: "Dear Sir: We beg to herewith accept your appointment as 'Special Selling Factor' of your roasted coffees, subject to all the provisions, limitations, and obligations expressed in your notice of appointment, Form C, dated at New York, January 28th, 1895."

Under this contract, from February 5, 1895, to April 3, 1895, 25 different lots of five cases each of this coffee were received by Kirkpatrick & Co., the value of which was $3,041.70. The coffee was sold usually in one-case lots, and almost daily, and Kirkpatrick & Co., before making their assignment, April 6, 1895, had collected upon such sales $830.55, and used the proceeds in their business. Four cases were on hand when the assignment was made, and these were delivered up to the plaintiffs upon their demand, by the assignee, as before stated. For the remainder there were accounts on the books of Kirkpatrick & Co. against their customers, and these accounts were transferred, and went into the hands of the assignee. The accounts for coffee sold by Kirkpatrick to their customers were not kept separate from other items sold them, but the amounts and names of customers can be traced from the books by culling out the items relating to coffee. Kirkpatrick & Co. had never paid or advanced anything on consignments now in question, and complainants have received nothing thereon.

Complainants claim that Kirkpatrick & Co. were their "special selling factors," so constituted by the written agreement above set out, and that coffee was consigned to and sold by Kirkpatrick & Co. as such. It is therefore maintained for them: (1) That the money collected by Kirkpatrick & Co. upon sales of coffee consigned to them was complainants' money; and, as Kirkpatrick & Co. mingled same with their own, and finally used it in their business, the claim, therefore, is a preferred one, and must be first paid out of assets in hands of assignees; and (2) complainants are entitled to follow into assignees' hands all unpaid accounts created for sales of Arbuckle coffee on or subsequent to February 5, 1895. Such indebtedness belongs to complainants because created upon sales of their goods by their factor. These contentions were denied by the chancellor and the court of chancery appeals, the latter holding that the contract between the parties amounted, in legal effect, to a sale of the coffee to Kirkpatrick & Co. Complainants have appealed, and assign the above-stated actions of courts below as error.

Defendants contend, on the other hand: (1) That the contract itself is a sale, and not an agency or factor contract. The mere name given it does not determine its status or effect. (2) That even if, under the contract, the title to the goods delivered to Kirkpatrick & Co. would remain in Arbuckle Bros. until they were sold by Kirkpatrick & Co., when sold, Kirkpatrick & Co. became mere debtors of Arbuckle Bros. for what was due for the coffee.

The correct determination of this case must depend upon the proper construction of the written agreement between the parties, and their course of dealing between themselves. Complainants claim that agreement above set out constituted Kirkpatrick & Co. their factors under a del credere commission, and that this firm in all things acted as such. The court of chancery appeals report that: "This firm operated under a previous contract with these complainants for several years. This prior contract was quite similar in its provisions to the one in this case. It was slightly different in one or more of its terms, but the course of dealing of the parties between themselves, so far as we can see from the record, did not change in any particular material to the issue in dispute. The complainants had a warehouse in Nashville, with a man in charge of it, in which they kept a supply of their coffees. When the defendant firm wanted any coffee, it notified the agent of complainants of the quantity wanted, and it was supplied, with a bill or statement, on a prescribed form, of the price and terms of the transfer or consignment, conforming in general outline with the provisions of the contract made with their merchants dealing in their coffees. When delivered, the firm...