Hazell Mach. Co. v. Shahan, 42900

• Decision Date: 16 March 1964
• Docket Number: No. 42900,42900
• Citation: 249 Miss. 301,161 So.2d 618
• Parties: HAZELL MACHINE COMPANY, Defendant-Appellant, v. Earl G. SHAHAN, Plaintiff-Appellee.
• Court: Mississippi Supreme Court

Page 618

161 So.2d 618

249 Miss. 301

HAZELL MACHINE COMPANY, Defendant-Appellant, v. Earl G. SHAHAN, Plaintiff-Appellee.

No. 42900.

Supreme Court of Mississippi.

March 16, 1964.

Scales & Scales, Jackson, for appellant.

Watkins & Eager, Elizabeth Hulen, Jackson, for appellee.

PATTERSON, Justice.

This is a suit for the balance due on an open account in the alleged amount of $2,231.48, arising out of an oral contract, as well as for damages resulting from the breach of this oral contract in the alleged amount of $22,000, these two remedies being consolidated in the same declaration. Subsequent to the filing of the suit plaintiff below filed in such cause an ancillary affidavit together with a bond for attachment. The writ of attachment issued but no property was found. An ancillary writ of attachment issued and there was attached a 1960 model tractor and truck. Thereafter a supplemental declaration in attachment was filed containing the same provisions as in the original declaration. The appellant filed his answer to this declaration in attachment as well as answering in full the entirety of the original, amended declaration. From an adverse judgment in the sum of $10,353.33, defendant below appeals here.

The appellant contends the trial court erred in the following particulars: (1) It failed to sustain appellant's motion to dismiss for lack of jurisdiction and insufficiency of the process had on the defendant. (2) It failed to sustain appellant's motion to segregate the two separate and distinct causes of action, one being ex contractu and the other ex delicto. (3) It refused to exclude testimony offered by the plaintiff in regard to the oral contract allegedly entered into between appellee and appellant in violation of the statute of frauds, Sec. 264, Miss.Code 1942, Anno., and further refused defendant a peremptory instruction for the same reason. (4) It permitted testimony to be introduced in violation of the best evidence rule. (5) It gave plaintiff two certain unnumbered instructions contrary to the law of the case, and (6) it refused to set the verdict of the jury aside as being contrary to the law and the overwhelming weight of the evidence.

These assignments of error will be dealt with in their numerical order following the facts as reflected by the record.

The evidence reflects that appellant and appellee entered into an oral contract about June 1, 1961, after negotiating a regard thereto for a period of time from May 19. This oral agreement appointed appellant distributor or sales agent in a designated area to market rebuilt automobile motors, called 'Apco' motors. The purpose of this distributorship, and the contract relating thereto, as the sale of Apco motors in this territory for the mutual advantage of both parties. Various duties and obligations were placed upon both parties by the agreement. The primary provisions of such contract were: Appellee was to be the distributor or sales agent of Apco motors in an exclusive area of one hundred miles surrounding the City of Jackson. Initially both would work together in the promotion of Apco products. Appellee was to obtain the use of a building agreeable to appellant as the site of the business in Jackson. In addition thereto, he was to maintain at all times an inventory of 150 Apco motors of approximate value of $25,000. This inventory was to consist of all kinds of motors, including not only fast selling motors such as Chevrolets and Fords but slow moving motors as well. The appellee was to have the aid of appellant in the arrangements for financing this inventory, and he was to have a line of credit with appellant in the sum of $5,000. The motors were to be delivered by appellant's truck on a regular schedule as ordered by appellee, payment to be made therefor upon delivery.

Special orders of motors needed between scheduled deliveries were to be made by regular freight to be paid by appellee, but for which he was to be refunded by appellant. The appellant was also to pay for shipments made by appellee to out of town customers if made by regular freight, or in the event appellee used his own trucks for such deliveries he was to be paid the sum of $3.00 per motor. These Apco motors were to be delivered to appellee only upon a guarantee by him to supply appellant with a damaged or used motor for each rebuilt motor delivered. Appellee was required to pay a 'block deposit' to secure this guaranty. The deposit varied from $30 to $100 per motor depending upon the kind and type delivered. This deposit was to be repaid as the used or damaged motors were picked up by appellant. It was subject to being forfeited in proportion to appellee's failure to have used or damaged motors available at his place of business for delivery to appellant. A deposit was also required upon the skid or frame to which the motor was attached, appellant agreeing to repay this 'skid deposit' at the time such frames or skids were picked up by its trucks.

The sale price of the rebuilt motors as supplied to appellee was fixed. He was required to sell wholesale jobbers at appellant's catalogue price, this being the same amount he paid therefor. The profit to appellee in selling to jobbers was by way of a flat fee of approximately $16.00 per engine to be paid by appellant. He could, however, sell to dealers, fleet owners and individuals at another catalogue price which allowed a profit of about 33 1/3% per motor. Further profits by way of labor charges were permitted appellee under the contract in that he could maintain an installation department in his place of business in which he could remove old engines from customers' automobiles and replace them with rebuilt engines. Appellee was also permitted to adjust claims under the warranty on the motors of appellant. Under this he could either authorize repairs or make them himself, in the latter event he was to be paid by appellant.

No time was specified for the continuance of the contract and there was no mention made of the time in the preliminary discussions leading up to it. Apparently both parties considered the contract to be for an indefinite period. Both parties realized the business was a progressive one and that profits, if any, would be small at first, the hope of both being that the business would grow to the mutual benefit of manufacturer and distributor.

The parties began performance of the contract about June 1, 1961. An agent of the appellant aided appellee in securing temporary storage space, which was to be used until a permanent site could be located, in anticipation of the first shipment of rebuilt motors. This agent also accompanied appellee to the First National Bank of Jackson, Mississippi, where arrangements were made so the distributor could borrow money to purchase his initial inventory as well as to maintain the inventory required by the contract. This financial arrangement was that the bank would furnish ninety percent of the invoice cost of the motors as received, securing the name by a trust receipt covering the property. The appellee was to pay the remaining ten percent and sign a note and trust receipt for the balance, the appellant's part in such financial arrangement being its assurance to the bank that it would repurchase the motors, if repossession thereof became necessary, at ninety-five percent of the invoice price.

The initial invoice listed 34 rebult engines at a cost of $4595.00, 'block deposit' of $1340.00, 'skid deposit' of $46.00, or a grand total of $5481.00. This invoice was paid by the bank and in turn appellee gave the bank a check for ten percent of the grand total and signed a note and trust agreement for the balance.

Thereafter appellee and appellant's agent found a permanent place of business which was suitable and adequate. It was leased on June 15, 1961 for a three-year period at a price of $300 per month. Appropriate signs were placed on the building advertising the business. Appellant contributed to the expense of these signs. In addition thereto it furnished the appellee with literature, etc., to be used in the advertisement of Apco motors.

The appellee and his wife spent all their time in operating the business in an attempt to make it profitable. They drew no pay therefor, putting all income back into the business. The appellee visited jobbers and other prospective purchasers throughout the area promoting the sale of Apco motors. His wife served as secretary and bookkeeper.

The business continued on an amicable basis until early in November 1961. Appellee maintained his inventory and made sales where he could. The agent of appellant came by on occasion to check the inventory and to aid in the promotion of the business. At the special request of this agent, appellee purchased on August 17, 1961, an additional inventory of 76 motors on the agreement that they would be picked up from him within thirty days. This extra purchase required financing beyond the $25,000 credit allowed by the bank, but by special arrangement the bank agreed to increase its credit on a temporary basis. The motors were not picked up within the time limitation as agreed. In September a shipment of motors for the invoice price of $1576.00 was received by appellee and his check in payment thereof was issued. When this invoice was taken to the bank it refused appellee further financing due to information it had in regard to appellant's business structure. Appellee stopped payment on this check and promptly notified appellant of this action and requested this amount to be placed on his open account so that he might retain the motors. Appellant acquiesced in the request of appellee but thereafter their business relationship became strained.

The business progressed slowly, as was anticipated by both parties. The total of 54 engines in the amount of $9693.00 was received and paid for in October. Other phases of the business, the installation of motors, the adjustment of warranties, the...