EDGEWOOD SHOE FACTORIES, ETC. v. Stewart

• Citation: 107 F.2d 123
• Decision Date: 10 November 1939
• Docket Number: No. 9184.,9184.
• Parties: EDGEWOOD SHOE FACTORIES, DIVISION OF GENERAL SHOE CORPORATION, v. STEWART.
• Court: U.S. Court of Appeals — Fifth Circuit

107 F.2d 123 (1939)

EDGEWOOD SHOE FACTORIES, DIVISION OF GENERAL SHOE CORPORATION, v. STEWART.

No. 9184.

Circuit Court of Appeals, Fifth Circuit.

November 10, 1939.

A. F. Whiting, of Montgomery, Ala., for appellant.

Bernard Lobman and Silas D. Cater, both of Montgomery, Ala., for appellee.

Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.

HUTCHESON, Circuit Judge.

The proceeding was for reclamation of shoes delivered under a consignment contract. The defense was: That the contract, on its face, evidenced not a consignment but a sale; and that if sufficient on its face, as a consignment contract, it was a mere subterfuge for dealings, intended to result, and resulting in, sales so that as to the shoes sought to be reclaimed, claimant was not the owner, but a creditor for their price. Submitted to the referee on a record consisting wholly of the contract and an agreed statement of facts, there was a finding and order denying the claim. The District Judge on petition to review, affirmed, expressing the view: that the transactions between claimant and the bankrupt were not those of "bailment or agency; that the bankrupt had exercised dominion and control over the property inconsistent with either bailment or agency, or what is uniformly called a consignment; and that the title, if any, retained by the vendor in the shoes was for security and a fraud against the trustee." Appellant is here insisting that the record does not at all support this view; that the most that appellee can make out of the agreed statement is, that the bankrupt, in some particulars, departed from the letter of the injunctions of the agreement; but, that nowhere in the agreed statement, does it appear that any of these departures¹ were known, much less consented to, by appellant. Neither does it appear that any of these departures from the letter of the contract, were intended to be, or were breaches of its spirit, or that they in any manner, effected any substantial change in the relations the agreement created, or prevented the bankrupt from carrying it out with appellant, substantially as it had agreed to do. For, the same agreed statement shows that, just as had been agreed in it, a remittance was made to it on the first of each week, for all shoes sold the preceding week, whether for cash or credit, that is, as between consignee and appellant, there were no sales on credit, they were all for cash, and the consignee accounted in cash to the appellant, for all of the shoes sold, strictly under the terms of the agreement. Thus, it appears, that such departures as there were from the letter of the agreement, were not made known to appellant, but appellant supposed, and had a right to suppose, since settlements were being made exactly as agreed, that the agreement was being carried out strictly as made.

In addition to these departures, appellee relies on the fact that the agreed statement shows that in some instances, appellant issued to the bankrupt, a credit memo, at the invoice price, for defective shoes, but the same agreed statement shows that remittances were made to appellant on account of sales, before the customer had returned the defective shoes to the bankrupt, and the bankrupt had made claim on appellant, on account of the defects. Appellee relies too on the fact, that no separate tax assessment was made on behalf of appellant, and that no shoes were ever returned. As to the taxes, appellant counters that the agreement expressly provided, that the consignor was to pay no taxes, accruing on account of the handling of the shoes, and that the consignee would have no authority to bind consignor to pay them. While as to the fact that no shoes were returned for credit at the invoice price, appellant points to the fact that the consignment contract contains no agreement, either that the consignee should buy any of the shoes or should return any. It merely provided that the shoes were sent on consignment, with the right in the consignee, to sell the shoes, to return them from time to time, under a liquidated damage agreement to cover broken lot and shop wear losses, or to cancel the contract and return them all, free of the liquidated damage clause. Pointing to the fact that, as agreed in the contract, insurance was carried on the stock of merchandise, made payable jointly to the bankrupt and to appellant as their interest might appear; that payments were made weekly in cash as provided in the contract, and no effort was made by the consignee to involve the consignor in his credit transactions; and, finally, that no goods were returned under the return privilege, appellant insists; that, these facts show, not disregard of but compliance with, the terms of the contract, and establish that the relation began and continued as one of consignment.

Finally, appellant urges upon us, that the most strained construction cannot spell out of the contract by itself, or taken in connection with the agreed facts, a single word which points or tends to point toward, an agreement or obligation on the part of the consignee to buy from consignor or pay him for one single pair of shoes, and that when on March 10, 1939, appellant filed notice terminating the contract and asking the return of its shoes, the consignee should have returned them, and having failed to do so, the reclamation petition should have been granted.

We agree with appellant. There is nothing in the contract of date, March, 1937,² the provisions of which, unambiguously and in the most careful, simple and detailed way, make provision, not for a sale to the bankrupt, but for consignment to and sale by it, as appellant's agent, to support the Judge's view that it was a contract, not of consignment, but of sale. Nor in the agreed facts on which the District Judge placed his reliance, is there anything of agreement or of conduct, on the part of appellant to deprive it of the title, which it was the purpose of the contract to reserve and retain in it, and which it did retain; nothing in the contract or agreed facts to justify enriching the creditors at its expense.

Nowhere in the contract or in the facts,...