Lansdowne Distillery, Inc. v. Duggan's Distillers Products Corp.

• Decision Date: 10 March 1949
• Docket Number: 113.
• Citation: 64 A.2d 727,192 Md. 540
• Parties: LANSDOWNE DISTILLERY, Inc. v. DOUGGAN'S DISTILLERS PRODUCTS CORPORATION.
• Court: Maryland Court of Appeals

64 A.2d 727

192 Md. 540

LANSDOWNE DISTILLERY, Inc. v. DOUGGAN'S DISTILLERS PRODUCTS CORPORATION.

No. 113.

Court of Appeals of Maryland

March 10, 1949

Rehearing Denied April 26, 1949.

Appeal from Court of Common Pleas of Baltimore City; Joseph Sherbow Judge.

Action by Duggan's Distillers Products Corporation against the Lansdowne Distillery, Inc., to recover amount paid by plaintiff to defendant on account of purchase of 10,260 proof gallons of potato spirits, wherein the defendant filed a counterclaim for balance of purchase price. From judgment for plaintiff in original suit and dismissing counterclaim, the defendant appeals.

Reversed and judgment entered for defendant on its counterclaim.

George L. Clarke and Robert F. Skutch, Jr., both of Baltimore (Leonard Weinberg, of Baltimore, on the brief), for appellant.

Raphael Walter, of Baltimore (Nyburg, Goldman & Walter and David S Sykes, all of Baltimore, on the brief), for appellee.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, HENDERSON and MARKELL, JJ.

GRASON Judge.

This case was instituted in the Court of Common Pleas by Duggan's Distillers Products Corporation, appellee (referred to as Duggan's) against the Lansdowne Distillery, Inc., appellant (referred to as Lansdowne) to recover $6156 paid by appellee to appellant on account of the purchase of 10,260 proof gallons of potato spirits for the sum of $14,671.80.

Lansdowne filed a counterclaim asserting its right to the balance of the purchase price. After appropriate pleadings, the case was tried before the court below, without the aid of a jury, and it dismissed the counterclaim of Lansdowne and found a verdict for Duggan's for $6156. Judgments being entered thereon, Lansdowne appealed.

Lansdowne is in the wholesale liquor business, with offices in Baltimore City. Duggan's is also in the wholesale liquor business, with offices in Elizabeth, New Jersey. The Commercial Solvents Corporation (herein called Solvents) operates a distillery at Terre Haute, Indiana. Lansdowne had Solvents distil for it a large quantity of potato spirits, which it held in bond for Lansdowne's account. This commodity was in short supply and Duggan's was in considerable need of it for use in its business. It discovered that Lansdowne had a supply of this article. It called Lansdowne on the telephone on the 16th day of July, 1946, and it ageed to buy, and Lansdowne agreed to sell to it 10,260 proof gallons of potato spirits at the price of $1.43 per proof gallon, in bond, including drums, f. o. b., Solvents' registered distillery at Terre Haute, Indiana. Duggan was to pay 40 cents per gallon immediately and balance when the goods were received in Elizabeth, N. J. Duggan's desired the potato spirits transferred in bond from Solvents' distillery to Lehigh Warehouse & Transportation Co., Inc., Elizabeth, New Jersey (herein called Lehigh), a bonded warehouse. By holding the spirits in bond at the Lehigh warehouse, Duggan's deferred the payment of the Federal tax of $9 per gallon and could draw it out in such quantities as needed in its business, and pay the tax on the quantity withdrawn, and in this manner postpone the payment of the tax on the balance of the spirits it held in bond. In order to effectuate the transfer in bond of the spirits purchased, from Terre Haute, Indiana, to Elizabeth, New Jersey, it was necessary that Duggan's file United States Treasury Department form 236 with the government. On July 17, 1946, Duggan's wrote Lehigh: '* * * please prepare and forward Forms 236 for transfer to your warehouse in Elizabeth of approximately 10,300 gallons of spirits from Commercial Solvents Corp., Terre Haute, Indiana. This merchandise is presently in the cistern room but will be placed in drums.'

There seems to be a good deal of detail regarding the filing form 236. It has to be approved by government officials in the district in which Lehigh warehouse is situated, as well as approved by officials in the district in which Solevents' distillery is situated. On July 17, 1946, Lansdowne notified Solvents by telephone to release 100 drums of spirits to Lehigh, for Durggan's on receipt of Lehigh's form 236, and confirmed conversation by letter of even date. Under the arrangement between Lansdowne and Solvents, when any of the spirits was sold Solvents procured a government gauger to draw it into drums, so that no costs to Duggan's was occasioned by this operation. On July 17, 1946, Lansdowne billed Duggan's for the full amount of the 10,260 gallons, and on July 22, 1946, Duggan's sent Lansdowne a check for $6156 on account. Duggan's was not sure that the price of the spirits included drums, and on July 18, 1946, wrote Lansdowne asking for written confirmation of the fact that the price included cooperage. On July 22, 1946, the same day Duggan's forwarded Lansdowne check for $6156, Solvents telephoned Lansdowne and advised it that Lehigh form 236 for Duggan's spirits had not been received, and this information was forwarded by Lansdowne to Duggan's by telegam of July 23, 1946, which stated: 'Commercial Solvents advises two thirty sixes one hundred drums not yet received from Lehigh Warehouse.' It appears that form 236 had been filed by Lehigh on Duggan's behalf on July 19, 1946, and it was not approved by the district supervisor of Solvents' warehouse district until July 24, 1946, and was not received at Solvents' office at Terre Haute until July 26, 1946. July 26, 1946, was on a Friday, and shipment of these spirits was not made by Solvents until their next regular shipping date, which was Monday, July 29, 1946. The shipment arrived at Elizabeth, New Jersey, on August 7, 1946, and was received for storage by the Lehigh warehouse for Duggan's account. The Lehigh warehouse issued a non-negotiable receipt for the spirits to Duggan's, which was accepted, and the freight bill in the amount of $309 was paid by Duggan's. Later an agent of Duggan's called Lansdowne and requested the return of the 'deposit,' to wit $6156. On August 23, 1946, Duggan's wrote a letter to Lansdowne contending that the transaction was illegal, for at the time the spirits were shipped from Terre Haute the price on potato spirits was $1.03 per gallon, as fixed by government regulations. Lansdowne declined to return the amount paid on account, and this case was instituted.

The Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901(a), expired on June 30, 1946. Government regulations were reimposed effective July 25, 1946. Between these dates there were no government price regulations.

It is the contention of Duggan's that title to the spirits did not pass prior to July 25, 1946, and, therefore, there was no delivery of the spirits by Lansdowne to it prior to that date; that the contract was an executory contract and was unexecuted on July 25, 1946, when government regulations were reimposed. It argues that the cistern in which the spirits was stored at Solvents' distillery contained a great number of gallons of which the amount it contracted for was a part; that though it was fungible goods it could not be delivered to it without first being drawn off into drums. But we do not think that the cases sustain this proposition.

In Kimberly v. Patchin, 19 N.Y. 330, at page 339, 75 Am.Dec. 334, it is said:

'But it is surely competent for the vendor to say in terms, that he waives that right, and that the purchaser shall become at once the legal owner of the number of gallons or bushels embraced in the sale. If he cannot say this effectually, then the reason must be that two men cannot be owners of separate quantities or proportions of an undistinguishable mass. That conclusion would be a naked absurdity, and I have shown that such is not the law.'

In that case the purchaser bought wheat stored in mass and it was contended that as it was not separated from the mass at the time of the purchase it was not in a deliverable state and delivery could not be effected.

In Brownfield v. Johnson, 128 Pa. 254, 18 A. 543, 544, 6 L.R.A. 48, the defendant ordered 400 hectolitres of Brazil nuts. These Brazil nuts were shipped in mass, which was the usual method of shipping them, and the nuts were uniform in quality. The consignee refused delivery. The court said:

'The weight of American authority supports the proposition that when property is sold to be taken out of a specific mass of uniform quality, title will pass at once upon the making of the contract, if such appears to be the intent. * * * In view of the necessities which grow out of such usage the American courts have...