Meteor Prods. Co. v. Société D'Electro Chimie Et D'Electro Metallurgie

• Decision Date: 28 March 1928
• Citation: 161 N.E. 875,263 Mass. 543
• Parties: METEOR PRODUCTS CO., Inc., v. SOCIÉTÉ d'electro chimie et d'electro METALLURGIE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

263 Mass. 543

161 N.E. 875

METEOR PRODUCTS CO., Inc.,

v.SOCIÉTÉ d'electro chimie et d'electro METALLURGIE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 28, 1928.

Appeal from superior Court, Suffolk County; Marcus Morton, Judge.

Action begun by trustee process by the Meteor Products Company, Inc., against the Société d'Electro Chimie et d'Electro Metallurgie and trustee, in which Charles Hardy, Inc., and another appeared as claimants. From the judgment, claimants appeal. Exceptions sustained. Action dismissed, and trustee discharged.

Joseph N. Welch and Rudolf P. Berle, both of Boston, for plaintiff.

Lee M. Friedman and P. D. Turner, both of Boston, and F. L. Kozol, of South Boston, for defendant.

CARROLL, J.

This action of contract against a corporation which did no business in the commonwealth was begun by trustee process. No service was made on the principal defendant. The trustee, the Central Railway Signal Company, answered that it had funds, and thereupon Charles Hardy, Inc., and the Associated Metals and Minerals Corporation appeared as claimants. The first bill of exceptions is by these claimants. The second bill of exceptions relates to exceptions taken by the defendant. The third bill has reference to the trial on the merits. The fourth bill concerns the allowance of the motion charging the trustee. The claimants hereinafter will be called Hardy, Inc. It contended that the funds attached belonged to it; on this issue the jury found for the plaintiff. At the trial on the merits the jury returned a verdict for the plaintiff.

The plaintiff's action was to recover for breach of warranty in the sale of sodium cyanide to it by the Société d'Electro Chimie et d'Electro Metallurgie, a French corporation, hereinafter called the Société or the French corporation. The trustee purchased potassium perchlorate by two contracts with the Société or its agent, Hardy, Inc. The Société was the manufacturer of chemicals in France and Switzerland. Hardy, Inc., an importer in New York, was given the exclusive sale of the principal defendant's products in the United States. According to the arrangement between the Société and Hardy, Inc., the chemicals were to be shipped to a port designated by Hardy, Inc., and invoiced to Hardy, Inc.; that company was ‘to get the goods at a price cheaper by 4 per cent., to which was added an extra 1/2% for our assuming the financing of the goods.’ Hardy, Inc., was to furnish a letter of credit to the Société, on receipt of which and after the Société received payment in France the goods were to be shipped as designated by Hardy, Inc., and the bank in New York which issued the letter of credit was to be named as consignee. It was not disputed that this course was followed in the shipments to the trustee, and the Société was paid in Paris ‘under that letter of credit.’ The trial judge ruled that the burden of proof was upon the claimant to establish that the funds attached by trustee process belonged to it. This ruling was right. Hubbard v. Lamburn, 189 Mass. 296, 298, 75 N. E. 707. In Jordan Marsh Co. v. Hale, 219 Mass. 495, 496, 107 N. E. 357, the trustee answered no funds. It was there held that the burden was upon the plaintiff to show that the trustee was in possession of funds belonging to the principal defendant. In the case at bar the trustee admitted it had funds of the principal defendant, and on this ground the cases are distinguishable.

The important question is, To whom did the moneys in the hands of the trustee belong? This is the question presented by the first bill of exceptions. Hardy, Inc., and the Société made an oral agreement. There is no contention that the law of France where the contract was made controls. The jury could find from the testimony of Hardy that the goods were not sold by the Société to Hardy or Hardy, Inc.; that the relation between them was not that of vendor and vendee. Hardy testified in cross-examination that the corporation, Hardy, Inc., was acting as agent of the French corporation. It was shown that Hardy, Inc., requested information from the Société by cable as to ‘How much more may we sell.’ The invoices refer to a commission of four and a half per cent. It also appeared that Hardy, Inc., in its dealings and correspondence purported to act as the agent of the French corporation. All the acts of the parties pointed to this and tended to show that Hardy, Inc., was not in fact the purchaser but was the agent of the defendant company. See Boston & Albany Railroad v. New York Central Railroad, 256 Mass. 600, 609, 153 N. E. 19.

It does appear, however, and it is not contradicted, that the French corporation desired to take no credit risk; it wished to be paid in France for all the goods ordered by Hardy, Inc., and it did not intend to look to the customers of Hardy, Inc., for payment. To accomplish this end it was agreed that Hardy, Inc., should obtain the letter of credit; when the French company was paid for the shipment in France by the French bank, that bank was to send the draft with the bill of lading attached to the New York bank issuing the letter of credit, which bank upon receiving payment from Hardy, Inc., or upon its credit, would indorse the order bill of lading to it. This method was pursued in the shipments to the trustee of the goods involved in the transaction in question. The effect of this indorsement of the order bill of lading representing the merchandise was to vest the title and possession to the goods in the Hardy corporation. G. L. c. 106, § 29; G. L. c. 108, §§ 30, 31; National Wholesale Grocery Co., Inc., v. Mann, 251 Mass. 238, 248, 146 N. E. 791; Personal Property Law N. Y. (Consolidated Laws of New York, book 40 [chapter 41], §§ 115, 218; Code of Laws, U. S. A. title 49, §§ 111, 112 [49 USCA §§ 111, 112; Comp. St. §§ 8604p, 8604pp]).

Although Hardy, Inc., was not the purchaser of the merchandise, it has in our opinion established its right to the money in the possession of the trustee; and while a verdict can rarely be directed in favor of the party who has the burden of proof, Kelly v. Halox, 256 Mass. 5, 9, 152 N. E. 236, in the case at bar the plaintiff does not contend that the jury should disbelieve testimony...