City of San Antonio v. Chas. M. Stieff, Inc.

• Citation: 83 S.W.2d 357
• Decision Date: 27 March 1935
• Docket Number: No. 9437.,9437.
• Parties: CITY OF SAN ANTONIO v. CHAS. M. STIEFF, Inc.
• Court: Court of Appeals of Texas

Page 357

83 S.W.2d 357

CITY OF SAN ANTONIO v. CHAS. M. STIEFF, Inc.

No. 9437.

Court of Civil Appeals of Texas. San Antonio.

March 27, 1935.

Rehearing Denied May 22, 1935.

Appeal from District Court, Bexar County; F. Stevens, Judge.

Action by Charles M. Stieff, Inc., against the City of San Antonio. Judgment for plaintiff, and defendant appeals.

Reversed and rendered.

Al. J. Klein and T. D. Cobbs, both of San Antonio, for appellant.

Wm. Aubrey, of San Antonio, for appellee.

MURRAY, Justice.

Appellee, Chas. M. Stieff, Inc., a Maryland corporation, as plaintiff, instituted this suit against appellant, city of San Antonio, as defendant, seeking to recover the sum of $1,300, together with interest, representing the purchase price of a certain piano delivered to the city of San Antonio by Walthall Music Company, a Texas corporation. Appellee's petition also contained a count seeking in the alternative to recover the reasonable market value of this piano.

The facts are as follows: The Walthall Music Company had been in the retail music business in the city of San Antonio for a number of years. Chas. M. Stieff Inc., was engaged in the wholesale piano business. These two corporations, on March 4, 1929, entered into a contract or agreement, in the form of a letter written by a representative of Stieff, Inc., to Walthall Music Company and accepted by Leon N. Walthall, as president of the Walthall Music Company. This agreement is as follows:

"(Letterhead of Walthall Music Company.)

"San Antonio, Texas, March 4, 1929.

"Walthall Music Company, San Antonio, Texas

"Dear Sirs: We will ship in accordance with your order, the following instruments:

                #185 Stieff Petit-Figured Mahogany, dull  670.00
                # 66 Davis & Son, Mahogany dull           180.00
                # 60 Bennett-Bretz, Mahogany              340.00
                

—on consignment for four months. It is understood that Walthall Music Company is to pay the freight from Baltimore and to carry the insurance at our wholesale prices as above quoted. If the instruments shipped under this agreement are paid for within thirty (30) days from date of shipment, a cash discount of three per cent (3%) will be allowed from billing prices.

"Should these instruments not be sold at the expiration of four months, and should we order them returned at that time, or at any future time, Walthall Music Company agrees to pay the freight and for any unreasonable wear and tear.

"Monthly stock reports will be sent Chas. M. Stieff, Inc. showing location of all unsold consigned pianos.

"Should the instruments remain, by mutual consent, above the term of four months it is understood that Walthall Music Company is to pay Chas. M. Stieff, Inc. interest at the rate of six per cent (6%) per annum. In the event the instruments are sold, the firm of Chas. M. Stieff, Inc. will receive from Walthall Music Company cash settlement in full plus the interest charge, if any.

"It is agreed that should Walthall Music Company sell an instrument consigned to them by Chas. M. Stieff, Inc. on time or on installments, Walthall Music Company may as agents of Chas. M. Stieff, Inc., sell to a finance Company such contract resulting from such sale, with recourse on the Walthall Music Company but not on Chas. M. Stieff, Inc., for a sufficient amount to enable the Walthall Music Company to settle with Chas. M. Stieff, Inc., for the instrument involved. Said settlement to be made by Walthall Music Company to Chas. M. Stieff, Inc. immediately after proceeds from sale of such contracts are returned by Walthall Music Company.

"Such additional shipments as may be agreed upon will be made on the same basis and at the then prevailing prices. Your acknowledgement and acceptance of the foregoing will constitute the contract.

                    "Very truly yours
                       "Chas. M. Stieff, Inc
                "Per [Signed] Frederick Phillip Stieff
                                           Vice Pres
                "Accepted and agreed to
                   "Walthall Music Co.
                   "By: Leon N. Walthall."
                

Pursuant to this agreement, appellee, Stieff, Inc., shipped a number of pianos to Walthall Music Company. These pianos were sold by the Walthall Music Company to various customers and settlement made with appellee by Walthall Music Company executing its trade acceptances to appellee, and attaching thereto as collateral the notes and sale contracts of the various customers. This practice continued until the music company was indebted to appellee in the sum of more than $8,000.

On November 27, 1929, appellee wrote a letter to the music company in which it stated as follows: "On receipt of your letter of November 18th we wrote you, under date of November 23rd that we were willing to accept collateral from you. Such instruments as you may have bought between November 23rd and this date you may send us collateral if you so desire, but on future orders it will be necessary for us to revert back to our original understanding covered by our contract of March 4th, 1929. This understanding is to the effect that the pianos will be consigned to you for four months, after which time interest at the rate of six per cent will be charged. Immediately upon the sale of a piano you are to pay us in cash for such piano. What arrangement you have with other finance companies is of course of no concern of ours. This is the only basis on which we would be willing to sell."

On December 2, 1929, the music company wrote a letter to appellee in reply to its letter of November 27, in which reply the music company made the following statement: "We note that it will be agreeable to accept collateral on goods shipped up to the 27th of November as per your letter of November 23rd, but for future shipments it is understood that the same will be in accord with the written contract of March fourth, i. e. on consignment for four months interest 6% after that time. When a sale is made we are to settle for the instrument in cash and will govern ourselves accordingly, although I am afraid this arrangement will curtail the volume that we could otherwise do on your lines."

On November 29, 1929, appellee sent the music company the following telegram: "Can ship five foot eight grand about one week provided you assure us that settlement will be made for cash when sold in accordance with provisions of contract of March fourth. Please wire."

On the same day the following reply was telegraphed by the music company: "Collateral aggregating thirty seven hundred sent you twenty sixth per your letter twenty third. stop. Sale five foot eight for use Municipal Little Theatre will be cash one. Please ship immediately."

The piano delivered to the city of San Antonio was a Stieff grand piano, bearing No. 43936, and was shipped by appellee to the music company on December 13, 1929, subject to the provisions of the agreement of March 4, 1929.

A committee of ladies appointed by the mayor of the city of San Antonio called at the place of business of Walthall Music Company and selected, for the city, the type of piano that was finally delivered to the city. However, the particular piano selected by the ladies was not delivered to the city, but another piano of the same make and style was, in fact, delivered. The piano was delivered by Walthall Music Company to the city of San Antonio in January, 1930, and, in due course, the city authorities approved the bill for the piano and ordered a warrant or voucher issued to the Walthall Music Company in the sum of $1,300. The city auditor declined to deliver the warrant to the music company for the reason that he had discovered that the Walthall Music Company was indebted to the city for past-due taxes in a sum far in excess of the price of the piano. Section 114 of the city charter prohibited his delivering a warrant under such circumstances. Mr. Walthall, as president of the music company, demanded payment in cash for the piano from the city authorities, but never, at any time, undertook to reclaim the piano. In February, 1930, the Walthall Music Company was adjudged a bankrupt, and ceased to be a going concern. The wholesale price of this piano was $720, and the difference between $720 and $1,300 represented the gross profit of the music company. After the music company was adjudged a bankrupt, appellee wrote the city demanding not only the payment of the $720, representing the wholesale price, but the entire $1,300. The city refused this demand, stating, in effect, that they had dealt with nobody but the Walthall Music Company, and that appellee was not known in any way in the transaction. Appellee then demanded the return of the piano, which was also refused. Approximately nine months later, in November, 1930, appellee instituted this suit against the city. The trial was to the court, without the intervention of a jury, and resulted in judgment for appellee against the city of San Antonio in the sum of $1,595.75. The city presented this appeal.

It is plain from the above statement of this case that the piano delivered to the city of San Antonio was shipped by appellee to the music company subject to the provisions of the agreement of March 4th, and, therefore, a proper disposition of this case requires a construction of that agreement.

It is contended by appellee that the agreement of March 4th should be construed as a contract between principal and factor, and that the interpretation of this contract should be governed by the customs and usages of factors and commission merchants. We cannot agree with this contention. One of the first essentials of a factoring contract is that the agent, or the factor, must be engaged in the business of factor, or commission merchant. 25 C. J. p. 342, § 4; R. C. L. 11, pp. 753, 754.

There is no contention that the Walthall Music Company was a factor, or commission merchant, but, on the contrary, the record affirmatively shows that it was a retail dealer in musical instruments.

Another reason why this is not a factoring contract is that under this contract the music company is at...