Sanders v. Carmichael Enterprises

• Decision Date: 27 August 1953
• Docket Number: No. 5630,5630
• Citation: 57 N.M. 554,260 P.2d 916,1953 NMSC 75
• Parties: SANDERS v. CARMICHAEL ENTERPRISES, Inc.
• Court: New Mexico Supreme Court

Page 916

260 P.2d 916

57 N.M. 554

SANDERS v. CARMICHAEL ENTERPRISES, Inc.

No. 5630.

Supreme Court of New Mexico.

Aug. 27, 1953.

Rehearing Denied Sept. 24, 1953.

Thomas D. Schall, Albuquerque, for appellant.

Simms, Modrall, Seymour, Simms & Sperling and Fitzwilliam Sargent, Jr., all of Albuquerque, for appellee.

McGHEE, Justice.

The plaintiff, Grover Sanders, appeals from a judgment of the lower court refusing rescission and damages under a conditional sales contract whereby he agreed to purchase an ice-making machine. Joining him at the trial below was John Meeks, a party working for Sanders at the time of the negotiations hereafter discussed who was to have been a partner with Sanders in the operation of the ice plant. The signature of Meeks appears on the contracts in question, but he paid none of the consideration for them, and was joined in this action solely for completeness of parties. Also appearing below was the First National Bank of Albuquerque, Inc. As found by the trial court, its interest in the matter in controversy was solely that of collection agent for the defendant, Carmichael Enterprises Incorporated, a California corporation which was assignee of the original vendor under the conditional sales agreement, Zenith Air Conditioning Corporation, an Iowa corporation. For clarity of parties the appellant Sanders will be referred to as plaintiff, and the appellee, Carmichael Enterprises Incorporated, will be designated as defendant.

The case arose in the following manner: The plaintiff was proprietor of a grocery store and meat market in Albuquerque, New Mexico. Believing the sale of ice would increase his trade, he entered upon the series of negotiations here in dispute for the purchase of an ice-making machine, during the course of which he signed three instruments of contract. He dealt originally with one Polachek, an officer and agent of Zenith Air Conditioning Corporation, agreeing to purchase a three-ton Zenith movable ice plant for the total price of $9,850. He signed a paper termed 'Purchase Contract' on August 27, 1949, under the terms of which he was to pay $500 with the order and an additional $1,500 in thirty days. The balance of the contract price was payable in 36 monthly installments of $225. This instrument provided the machine or plant was to be shipped 'f. o. b. factory,' (Des Moines, Iowa), and contained a warranty provision in favor of the purchaser and another provision for payment of royalties to the plaintiff in the event he were to procure other purchasers for the same type plant. No provision for interest or carrying charges appeared in this agreement.

Although the second instrument in question, the conditional sales contract between the plaintiff and Zenith Air Conditioning Corporation, hereafter called the Zenith Contract, is undated, the plaintiff testified it, too, was executed by him on August 27, 1949. Under this contract the provision the ice plant was to be shipped 'f. o. b.' was not included. The 'cash purchase price' was specified to be, as in the Purchase Contract, $9,850, but $1,233 was added to such figure to make the 'term price' $11,083, and monthly payments were set at $250 each month for 35 months and a final payment of $333. This contract contained a provision, among others, that upon default by the purchaser the seller could take possession of the property and retain, as liquidated damages for such default, etc., all payments made by the purchaser.

The third contract before us was entered into by the plaintiff and the defendant, Carmichael Enterprises Incorporated. It was executed on a form provided by the First National Bank of Albuquerque, as the defendant was endeavoring to discount the contract with the bank and it requested or required the contract to be executed on their form. The discount not materializing, however, the sole interest of the bank was it was agent for collection for the defendant.

This third contract, referred to as the 'Carmichael Contract', differed from the Zenith Contract in the following particulars: It provided a 'time sales charge' of $1,413, as opposed to that contained in the Zenith Contract of $1,233; the unpaid balance was to be paid in 36 equal monthly installments of $257.31, the deferred payments to bear interest from maturity at the highest lawful rate. Among others was a provision respecting forfeiture by the purchaser of any amount paid the seller in the event of default by the purchaser under the contract. Like the Zenith Contract, the Carmichael Contract was silent on the question of freight charges.

The plaintiff paid $2,000 under the contract and prepared a place in which to house and operate the ice plant at a cost, as he testified, of $2,000. The plant was shipped to Albuquerque on September 21, 1949, and the plaintiff was notified of its arrival, but did not take delivery on it because he was unable to pay the freight charges. The plant remained in storage until the time this suit was instituted, some two years, when the plaintiff used out a writ of attachment for it and it was subsequently released on bond to the defendant.

The plaintiff's theory of the case is contained in this statement from his brief-in-chief:

'* * * that all of the writings came into being as a continuous transaction; that this transaction was conducted from beginning to end by Polachek; the Polachek throughout the transaction made certain false and fraudulent representations to Sanders as to the terms of the various writings, and that Sanders relied upon these representations and signed the writings without reading them.'

In support of this theory he testified Polachek represented to him substantially the following: That he would accept $500 down on the ice-making machine, deliver and install it; when it was operating the plaintiff was to pay $1,500, and thirty days thereafter begin making payments of $225 per month; that the $2,000 in cash and the...