John Deere Plow Co. v. McDavid

• Decision Date: 19 April 1905
• Docket Number: 2,117,43.
• Citation: 137 F. 802
• Parties: JOHN DEERE PLOW CO. v. McDAVID. In re JOHN DEERE PLOW CO.
• Court: U.S. Court of Appeals — Eighth Circuit

137 F. 802

JOHN DEERE PLOW CO. v. McDAVID.

In re JOHN DEERE PLOW CO.

No. 2,117, 43.

United States Court of Appeals, Eighth Circuit.

April 19, 1905

The following is the opinion of the court below (Philips District judge):

The statute of this state (section 3412, Rev. St. 1899) provides that: 'In all cases where any personal property shall be sold to any person, to be paid for in whole or in part in installments, or shall be leased, rented, hired or delivered to another on condition that the same shall belong to the person purchasing, leasing, renting, hiring or receiving the same whenever the amount paid shall be a certain sum, or the value of such property, the title to the same to remain in the vendor, lessor, renter, hirer or deliverer of the same until such sum, or the value of such property, or any part thereof, shall have been paid, such condition shall be evidenced by writing executed, acknowledged and recorded as provided in cases of mortgages of personal property. ' This statute was enacted to put an end to the abuses incident to what is known in this state as 'conditional sales of personal property ' whereby, under agreements between the vendor and vendee, undisclosed to the public, the title to the property should remain in the vendor in the nature of a lien until the purchase money should be paid. Upon the faith of the ostensible ownership of the party in possession, credit would be extended to him by third parties, and when they sought to subject the property to attachment or execution such vendor would interpose, and claim the property under the assertion that the title had never passed from him. To effectuate the declared public policy of the state in this statute, the courts of this state have given to it a broad and rigid construction, to the effect that its policy was for 'inspiring confidence that in all sales of personal property, when possession was delivered to the vendee, as to creditors and purchasers the vendor's title must be held to have been absolutely passed, unless upon the public registry books of the land there appear in the manner provided by law some reservation of a right therein. ' Straus v. Rothan, 102 Mo. 266, 14 S.W. 940. Or, as stated in Johnson-Brinkman Co. v. Central Bank, 116 Mo. 571, 22 S.W. 813, 38 Am.St.Rep. 615, it 'was manifestly intended to invalidate numerous devised which had sprung up for the evasion of the statute. ' This court's observation is that no class of business concerns so assiduously and persistently seek to circumvent and get around this statute as manufacturers and vendors of machinery, and the like, who seek to exploit their products in the country districts through local agents. Unwilling, for trade reasons, to sell outright on credit, or to not have it known to the public the terms upon which the goods are committed to the given party for sale, they call to their assistance the most astute counsel to construct contracts after such a fashion that, while imposing upon the retailer all the burdens of a purchaser, if insolvency or bankruptcy overtake him he may be held technically to be a mere factor. This court is constantly plagued with these controversies when it is within the power of such merchants by a plain and unambiguous contract to place its relationship to such goods beyond reasonable debate. And it is a wholesome rule that where such contracts, drawn by such claimants, are ambiguous or uncertain, to construe them most strongly against the claimant. Gillet v. Bank, 160 N.Y. 549, 55 N.E. 292.

In re Rabenau, 118 F. 471, this court took the pains to discuss in detail a contract quite germane in many important respects to the one under review. In recognition of the principles of law therein announced this court thought, in affirming the action of the referee, that was decisive of this case. The propositions there asserted, supported by controlling authorities, may be summarized as follows: If the goods are consigned to be sold for the consignor, who is to regulate the price and terms of sale, the factor is an agent, and the contract is one of bailment. But if the consignee is to sell upon terms fixed by himself, and is bound to pay to the consignor a fixed price, the contract is one of sale. If the consignor may sell at any price he likes, and receive payment, though he is bound if he sells the goods to pay the consignor for them at a fixed price and a fixed time, it is a sale. When the identical thing delivered is to be restored, or in its altered form of money, the contract is one of bailment, and the title to the property is not changed; but when there is no obligation to restore the specific article, and the receiver is at liberty to return another thing of equal value or the money value, he becomes a debtor to make a return, and the title to the property is changed; it is a sale. And, further, it is of no consequence how often or positively it may be asseverated, in the form of the contract, that the party of the first part, as principal, consigns to the party of the second part, as agent, on commission, and the like. This will be treated by the courts as mere words without controlling effect, if, taking the whole instrument by its four or eight corners, and all the collateral facts, in pari materia, it appears in its essence to be that the consignee is at liberty to sell at a price and on terms fixed by himself, being answerable to the owner for a fixed price, it is none the less a sale.

Stripped of mere formalism, it is apparent from the contract in question that the burdens cast upon the Hymes & Implement Company are what would be imposed upon and assumed by any vendee. It was to pay freightage, the taxes, the insurance, to house and care for the goods, pay all expenses of their sale, and to bear any and all loss of their destruction or deterioration, while answerable to the party of the first part for the fixed price. I am unable to find in this contract any express provision fixing a time when the consignee could, of his own motion, return the goods. The only provision touching this aspect of the case is the following: 'It is further agreed that this contract is to remain in force unless cancelled and annulled by said first party until Oct. 1st, 1904, at which time said second party agrees if required by said first party, to return all goods remaining on hand unsold at the expiration of this contract to them at their warehouse in Kansas City, in good order and free of all freights and charges. ' From which it appears that the return of any unsold goods depended solely upon whether it be 'required by said first party.' If the party of the first part does not require the return, the party of the second part cannot compel it. The contract in this respect is wholly unilateral.

Turning to the testimony of the managing representative of the claimant, it appears that at the end of each year the agent of the company visited the house of Hyman Buggy & Implement Company and took an inventory of the goods on hand, and left them there. In its practical effect, this was nothing more than means of ascertaining whether or not the house had sold more goods than it had accounted and paid for. There was no time fixed when this process or course might end, except that, 'should the second party hereto sell out or otherwise dispose of his business at any time prior to the expiration of this contract, the right to declare this contract cancelled and annulled from and after the date of such sale or transfer is reserved to the party of first part without prejudice. ' Aside from this provision, bearing the earmarks of a conditional sale, its evident purpose was to safeguard the vendor against loss in such contingency. If the Hymes Buggy & Implement Company sold the goods on time, it was required to take good notes, guarantied by its indorsement thereon. The object of this clearly was to better the security of the vendor for the purchase money. The balance, after satisfying the vendor's claim, was to be returned to the vended. Just as in the case of other conditional sales, the goods were to be paid for when sold by the vendee for cash. The so-called consignee, like any other vendee, was left at full liberty to sell the goods at any price he might obtain, and pocket the profits; and, if he saw fit to sell at a less sum than that for which he was to respond to the vendor, he must pocket the loss. The fact that the consignee was to report monthly his sales, and make payments thereon, does not alter the status of the vendor and vendee. In re Rabenau, 118 Fed.,loc.cit. 475.

The Court of Appeals of this state (which has most to do with these transactions because the amount in controversy usually makes that the court of last resort) gives to such contracts under the state statute the construction in harmony herewith. In Bicking v. Stevens, 69 Mo.App. 168, it is held that, where the consignee is to sell the consigned goods upon terms fixed by himself, and is bound to pay the consignor a fixed price at stated times, the contract is one of sale 'and the fact that the payment is to be made on the contingency of the consignee's selling does not affect the character of the transaction as a sale. ' The contract there provided that the consignor should ship out the goods on consignments, to be sold on the consignor's account. The consignee was, on the 1st of each month, to render an account of the amount of sales made during the previous month; and, just as in the case at bar, he was to itemize the goods remaining unsold in stock. The accounts of sales were rendered, accompanied with note or cash for goods sold during the previous month. The court held that 'the time in which the purchase money was to be paid-- whether in so many days or months, or upon the happening of some...