Cownie v. Local Board of Review in and for City of Des Moines

• Decision Date: 12 December 1944
• Docket Number: 46587.
• Citation: Cownie v. Local Board of Review in and for City of Des Moines, 235 Iowa 318, 16 N.W.2d 592 (Iowa 1944)
• Parties: COWNIE v. LOCAL BOARD OF REVIEW IN AND FOR CITY OF DES MOINES.
• Court: Iowa Supreme Court

16 N.W.2d 592

235 Iowa 318

COWNIE v. LOCAL BOARD OF REVIEW IN AND FOR CITY OF DES MOINES.

No. 46587.

Supreme Court of Iowa

December 12, 1944

Wm. L. Hassett, of Des Moines, for appellant.

Herrick Sloan & Langdon, of Des Moines, for appellee.

BLISS, Justice.

Since the intent of the contracting parties is the controlling factor in the determination of the issues of who was the owner, and who was in possession, of the personal property sold, on January 1, 1942, and since intent is a question of fact, we will set out the pertinent facts. It is to be kept in mind that the only relationship involved is that of the seller and the purchaser, uncomplicated by any third party claiming an interest in the property. There is no material dispute about any of the facts. The plaintiff, for over fifty years, had been engaged in the manufacture and wholesaling of leather coats, gloves, etc., on its own property in Des Moines, Iowa. Some time prior to September, 1941, negotiations were begun between the plaintiff and the Kenosha Full Fashioned Mills Inc., of Kenosha, Wisconsin, looking to a sale of plaintiff's business and property, excepting the real estate, book accounts, and certain other items, to the Kenosha company. Representatives of the latter spent some time in plaintiff's plant in September, 1941, and on or prior to October 8, 1941, the seller and the purchaser reached a complete agreement as to the sale and all of its terms. And on the latter date a written contract evidencing the sale and its terms was executed by plaintiff as the seller and the Kenosha company as the purchaser. By its terms the seller agreed to sell and the purchaser agreed to buy '(a) the name, good will, trademarks, machinery manufacturing equipment including office equipment, cutting tables, sewing machine tables, books, records and files and stationery of the seller, * * * (b) The goods and merchandise of the seller, that is, its merchandise inventory consisting of raw materials, materials in process of manufacture and finished materials as of the close of business on the 31st day of December, 1941.' (Italics ours.)

The contract provided that the purchase price 'shall be computed as follows: $25,000.00 plus seller's cost price of the said merchandise inventory taken as of the close of business on the said 31st day of December, 1941. In arriving at such cost price with respect to raw materials the same shall be taken at the actual acquisition cost (price paid plus all transportation charges) to the seller; merchandise in process of manufacture or completely manufactured shall be computed at the actual acquisition cost to the seller of the raw material used to which shall be added the seller's cost of processing as determined and disclosed by the books of the seller for the processing of like merchandise during the year 1941; providing however, that the purchaser shall not be required under this contract to purchase such inventory in excess of $25,000.00 computed as above specified, nor shall the purchaser be required to purchase unusable scraps of raw materials.'

Under the contract the purchase price was to be paid to the seller as follows: '$25,000.00 upon the execution of this contract and shall pay the balance due as determined by the inventory taken at the close of business December 31, 1941 (not however in excess of $25,000.00) on or before the 31st day of January, 1942, failing which the amount or amounts theretofore paid to the seller by the purchaser shall be forfeited as liquidated damages.' The first payment of $25,000 was made on October 8, 1941, on the execution of the contract.

The contract provided that the seller would not permit any waste or removal of the machinery or operational equipment while in its custody; that the 'bulk sales' law would be complied with; that the sale did not include book accounts of the business remaining unpaid as of December 31, 1941, or the books and records necessary in their collection; 'that from and after the execution of this contract the purchaser may install and keep on the business premises of the seller during all business hours its President and/or other business representatives for the purpose of familiarizing itself with the business of the seller;' that the purchaser will not contract any debts or liability upon the credit of the seller, and will advise all to whom it becomes indebted that it is the successor to the seller, and that it will so indicate on any stationery of the seller which it uses; that 'in the event the purchaser sees fit to remove from the premises of the seller any of the machinery, equipment, merchandise or supplies, such removal shall be so conducted with such care as to avoid undue damages to the said premises;' that the seller would not engage in a competing business prior to January 1, 1947. Just before Christmas, 1941, the plaintiff mailed to the trade or the mills, tanners, etc., from whom it had purchased goods or transacted business, a notice that it was discontinuing its business, and would dissolve its partnership on December 31, 1941, and that it was not to be liable for any debts contracted in its name thereafter.

In the same envelopes in which these notices were mailed, another communication signed by the purchaser was enclosed. It stated in substance that in supplementing the seller's letter it was glad to advise it had purchased the assets of the Cownie Company, except the book accounts and the real estate, which property it intended to remove to its home location in Kenosha, where it would continue to carry on the business as operated by the Cownie Co., under the name of the J. H. Cownie Company, Division of the Kenosha Full Fashioned Mills, Inc.

After the execution of the contract on October 8, 1941, the seller continued to operate its business of manufacturing and selling about as it had before. Several officers or representatives of the buyer were about the plant during December, 1941. The seller stopped manufacturing about December 20, 1941. It did no more cutting and finished all garments several days before December 31, 1941. Prior to that time they filled such orders as they could, and such as they did not fill they turned over to their purchaser. As of December 31, 1941, they had some raw materials and some finished goods, but no partly-processed materials. Plaintiff stopped purchasing materials early in the fall in order to cut the inventory down, and to avoid small odd lots and pieces of small yardage. Mr. Schiltz, of the plaintiff, testified: 'There was no argument with Mr. Edge (president of purchaser) about unusable scraps because we did not have anything like that. The stock was very clean, and odds and ends towards the tail end of the season, we would work all these odds and ends so we wouldn't have to put them in the inventory. Enough to make a garment, we would make it up, try to get rid of it.'

The inventory of the merchandise stock was made and completed in the last week of December, 1941. This inventory included only the raw materials and manufactured goods, and not the machinery or equipment. This inventory, computed in accord with the formula of the contract, at the close of business on December 31, 1941, was $20,500.

The contract did not provide when the purchaser would remove the purchased property to Kenosha, as it stated it was going to do in its letter to the trade. The terms of the contract, however, were such that all of the merchandise could not be removed until the inventory was completed at the close of business on December 31, 1941. There was testimony that the purchaser may have moved some of the property before December 31, 1941. There is testimony that the property had to be crated and packed, and there was some delay in getting vans.

On December 15, 1941, plaintiff sold the building and ground, where its business had been conducted, to Harry Lang of St. Paul Minn., excepting certain shelving, tables, benches and other property belonging to the firm or its partners which had not been sold to the Kenosha company. Under this real estate contract Lang was entitled to possession of the premises as of the close of business on December 31, 1941, but the seller was to have until January 31, 1942, to remove from the premises all trade fixtures, machinery equipment, shelving, tables, cabinets, benches and other personal property. This reservation was to enable the plaintiff and the Kenosha company to remove such property as belonged to either. On January 1, 1942, and thereafter until it was removed by the purchaser, sometime during that month, the personal property sold, except such as may have been removed previously by the purchaser, was in the building sold to Lang, and, as Mr. Schiltz testified, over objection, 'it was in the possession of Mr. Edge' (president of the purchaser). Mr. Olson, who had been an employe of plaintiff, was an employe of the Kenosha company as of January 1, 1942, and thereafter, and carried keys to the building. The plaintiff leased the office of the premises of Lang, the purchaser of the building, for occupancy and use from and after December 31, 1941, in collecting their accounts. Mr. Schiltz testified: 'I was around the premises * * * after December 31, 1941. Mr. Edge had about a half dozen of his employees there after January 1st. They were getting the stock in shape to move, finishing up the machines, packing and so on. Q. Did you or any of the partners of your firm or any employees of your firm fill any orders, make any shipment after December 31st? A. (over objection) Absolutely not. * * * The unpaid balance due under the contract figured up to $20,501 and some cents, but there were a number of items there was a dispute as to the price, and in order to close the matter I finally offered...