Rock-Ola Mfg. Corp. v. Music & Television Corp.

• Citation: 159 N.E.2d 417,339 Mass. 416
• Decision Date: 18 June 1959
• Docket Number: ROCK-OLA
• Parties: MFG. CORP. v. MUSIC & TELEVISION CORP. et al.
• Court: United States State Supreme Judicial Court of Massachusetts

Page 417

159 N.E.2d 417

339 Mass. 416

ROCK-OLA MFG. CORP. v. MUSIC & TELEVISION CORP. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 7, 1959.

Decided June 18, 1959.

Franklin N. Flaschner, Boston, for plaintiff.

Edward C. Park and William N. Wheeler, Boston, for defendants.

Before WILKINS, C. J., and RONAN, COUNIHAN, WHITTEMORE and CUTTER, JJ.

CUTTER, Justice.

This is an action in four counts by the plaintiff (hereinafter called Rock-Ola) against Music & Television Corp. (hereinafter called M & T) and one Golumbo, M & T's sole stockholder, its president, treasurer, and general manager, and a director. The action was tried before a judge of the Superior Court without a jury. ¹ In the present action, count 1 was against M & T upon an account annexed for $36,693 showing sums owing upon eleven invoices between March 3, 1955, and July 1, 1955, inclusive. The judge, on count 1, found for Rock-Ola in the sum of $39,460.16 including interest. Count 2 was upon the same account annexed against Golumbo. Count 3 alleged that M & T converted to its own use certain property consisting of fifty-three phonographs worth $36,693. Count 4 was a similar count, alleging conversion, against Golumbo. The trial judge found for the defendants on counts 2, 3, and 4. Rock-Ola's bill of exceptions presents (in addition to certain exceptions waived at the arguments) the question whether the trial judge properly denied Rock-Ola's (a) requests for rulings numbered 2, 6, and 7 in substance that the evidence warranted a finding for Rock-Ola against Golumbo on counts 2 and 4 and against M & T on count 3, and (b) request numbered 3, that Rock-Ola may recover on count 2 if Golumbo participated in the unauthorized use of trust funds. An exception to the exclusion of certain evidence offered by Rock-Ola is also presented.

Golumbo testified that Rock-Ola sold phonographs, and apparently other merchandise, to M & T both on open account and on consignment. The sums claimed by Rock-Ola in the companion case (see footnote 1, supra) were for items delivered to M & T on open account and there was due from it to Rock-Ola for these items, $53,786.97. In the action now before the court each of the items listed in the account annexed represented phonographs received by M & T on consignment and sold by M & T by Golumbo or under his direction, 'on sales * * * for which he received at least $36,693.'

Under the Rock-Ola distributor's agreement for 1955, consignment shipments to distributors were permitted. ² The items so consigned remained the property of Rock-Ola until '1. An order for the purchase of such item has been accepted by Rock-Ola; 2. Rock-Ola has received out of the proceeds of the sale * * * not less than the current distributor's price thereof, and; 3. Such item has been delivered to the purchaser.' Neither Golumbo nor M & T ever sent to Rock-Ola a purchase order for acceptance by Rock-Ola in connection with any consigned phonograph, nor does the record indicate that Rock-Ola made any complaint at M & T's failure to do so.

The consignment procedure was changed by Rock-Ola an February 25, 1955, to provide for arrangements described by Rock-Ola in a letter to M & T of that date, as follows: 'Under this consignment plan, after machines are shipped, you will receive an invoice with a consignment billing. When your remittance is received, we still issue a credit memo to your consignment account and also a cash invoice on a 'do not ship' basis. All machines shipped on consignment must be purchased and converted to a 'sale' under our regular 60 day terms. ³ This new method of billing will not change or restrict in any way your present method of doing business nor will it apply to any machines shipped prior to March 1, 1955. When received, all machines shipped to you on and after March 1st, must be kept separate from your own inventory.'

Golumbo further testified that 'having collected upon sales of consigned goods at least $36,693, * * * he turned * * * that trust money over to * * * [Rock-Ola] by * * * checks; that at the time * * * there were in existence * * * obligations * * * on open account and * * * under the consignment account; that the obligations under the open account were * * * older * * * than those * * * under the consignment account; that * * * [he] knew the moneys * * * from the sale of * * * consigned goods were trust moneys * * *; that he did not designate on any of the checks that they were trust funds rather than payments on the older open account; that each check was forwarded * * * with a letter * * * and that no letter * * * asked that any * * * money be applied to the trust account.' Golumbo said that 'between March and October of 1955, he spoke' with Campen, Rock-Ola's credit manager and head of its collection department, by telephone 'frequently' and asked Campen 'on practically every occasion to apply what checks were being sent to him to our consigned account.' On cross-examination, this testimony was limited by Golumbo to 'some occasions, more than one or two.' Campen testified that Golumbo 'never asked to apply any checks to the trust account.'

Golumbo identified checks shown by the checks themselves to be for an aggregate amount of $35,409.68 (hereinafter, because their application by Rock-Ola to the open account was disputed, for convenience called the disputed checks) ⁴ dated between April 15 and October 21, 1955, referred to below. He also identified an inventory (as of May 31, 1955) showing five consigned phonographs in M & T's possession, and twenty-three consigned phonographs 'out on approval--our [M & T's] responsibility.' In this inventory Golumbo had acknowledged in behalf of M & T 'possession, control and responsibility to you [Rock-Ola] for * * * [the above mentioned] phonographs belonging to you, which the undersigned has * * * received * * * upon consignment and now holds * * * having agreed to hold in trust the proceeds of the sale of each item and to remit to you out of the proceeds of such sale the amount * * * below set opposite each item.' ⁵ Golumbo admitted that he knew, at least at the time of the trial, that M & T had been credited on the open account with the total of the disputed checks. The evidence, as stated in the record, is by no means clear but would warrant an inference that M & T had learned in some way, even prior to trial, that Rock-Ola had elected to apply the disputed checks on the open account. See Restatement: Contracts, §§ 388, 389, 391; Williston, Contracts (Rev. ed.) §§ 1795-1800; Corbin, Contracts, § 1231. Campen testified that he 'had authority to apply funds received from distributors to the oldest open items * * * and it was his general practice to apply receipted funds in this manner in the absence of any indication as to specific application.'

Although the testimony as stated in the record is ambiguous, we think that the trial judge would have been warranted in finding that as much as $35,409.68 had been properly applied by Rock-Ola on the old open account (which amounted to $81,000 as of April 30, 1955), between April 15 and October 21, 1955, on account of checks received from M & T without any specific indication by M & T of the account to which they were to be applied. ⁶ His ultimate findings for Rock-Ola on count 1 for more than the full amount of the balance due on the consignment account suggest that he did in fact find that Rock-Ola had properly applied the disputed checks on the open account. Certainly the judge could have found that of the disputed checks transmitted to Rock-Ola prior to May 31, 1955, those in excess of the invoice value of consigned machines then finally sold were to be applied upon the open account, for he could have found that the open account was then the only account for which there was a matured indebtedness except for the amount of the final sales of consigned merchandise.

1. Rock-Ola by its requests numbered 2, 6, and 7 sought to have the judge instruct himself that there was evidence that would warrant findings for Rock-Ola on counts 2, 3, and 4. The denial of the requests 'involved a ruling as matter of law that there was no [such] evidence.' If there was such evidence, Rock-Ola was entitled to the ruling requested 'or to * * * findings of facts showing that the requested ruling had become irrelevant.' Bresnick v. Heath, 292 Mass. 293, 298-299, 198 N.E. 175, 177; Quality Finance Co. v. Hurley, 337 Mass. 150, 148 N.E.2d 385. The trial judge unfortunately did not disclose the basis of his action in denying the requests by making explicit findings of the facts relied upon by him. Ofgant-Jackson Chevrolet, Inc. v. MacQuade, 338 Mass. ----, 154 N.E.2d 344.

2. There was evidence which would have warranted the trial judge in finding (a) that M & T, acting through Golumbo, made sales of at least a large part of the consigned phonographs without transmitting at once from the proceeds to Rock-Ola the amount shown on the consignment invoice against the item sold; (b) that all or a part of the disputed checks were not transmitted to Rock-Ola as the proceeds of sales of consigned items (see footnote 5, supra); and (c) that there had been no statement in behalf of, or conduct by, Rock-Ola which in any way relieved M & T ⁷ of the obligation under its distributor's agreement to treat the proceeds of sale of consigned items as trust funds and to make prompt payment of such proceeds (up to the consignment invoice price) as a condition of its authority to sell the item. Sale of consigned items under the circumstances could constitute a conversion by M & T and also by Golumbo, who could be found to have participated in M & T's tortious act. Refrigeration Discount Corp. v. Catino, 330 Mass. 230, 233-236, 112 N.E.2d 790. Although the case last cited dealt with merchandise held for sale under trust receipts, as between Rock-Ola as bailor and M & T as bailee, the situation there was analogous to the consignment...