Standard Casing Co. v. California Casing Co.

• Decision Date: 31 May 1922
• Parties: STANDARD CASING CO., Inc., v. CALIFORNIA CASING CO., Inc.
• Court: New York Court of Appeals Court of Appeals

233 N.Y. 413

135 N.E. 834

STANDARD CASING CO., Inc.,

v.CALIFORNIA CASING CO., Inc.

Court of Appeals of New York.

May 31, 1922.

Action by the Standard Casing Company, Inc., against the California Casing Company, Inc. From a judgment of the Appellate Division (197 App. Div. 187,188 N. Y. Supp. 358), affirming a judgment of the Trial Term, entered on a directed verdict for plaintiff, defendant appeals.

Reversed, and new trial granted.

Appeal from Supreme Court, Appellate Division, First department.

Frederick C. McLaughlin, of New York City, for appellant.

M. E. Kelley, of New York City, for respondent.

CARDOZO, J.

The plaintiff, the buyer, sues the defendant, the seller, for the breach of a contract, made in San Francisco, Cal., upon terms which are stated as follows in the seller's letter of confirmation:

‘San Francisco, December 18, 1917.

‘The Standard Casing Co., Inc., 206 East 56th Street, New York City, N. Y.:

‘We have this day sold you the following: Twenty (20) casks of salted pig guts, each about three thousand bundles.

‘Shipment: January, February, and not later than the fifteenth of March, 1918.

‘Quality: Salted pig guts, as previous shipment.

‘Price: Eighteen cents United States Gold coin per bundle f. o. b. San Francisco.

‘Packing: Bundles of not more than three pieces measuring in all thirteen meters, no piece to be shorter than one meter. Width, 60 per cent. from 25/29 mm. and 40 per cent. from 29/31 mm.

‘Payment: Sight draft, bill of lading attached with the privilege of examining the goods on arrival.

‘California Casing Company, Inc.,

‘Per B. Neustadter, President.’

None of the shipments were made, and the seller's breach is conceded. The only question before us is the extent of the recovery. The plaintiff, to prove its damages, gave evidence of the market value in New York. The defendant offered evidence, which the court would not receive, of the market value in San Francisco. Judgment has been rendered on the theory that performance by the seller involved delivery to the buyer at the point of destination, and not merely delivery to the carrier at the point of shipment. We read the contract differently.

The general rule is that, upon a sale ‘f. o. b. the point of shipment,’ title passes from the seller at the moment of delivery to the carrier, and the subject to the sale is thereafter at the buyer's risk. Williston, Sales, § 280, p. 409; U. S. v. R. P. Andrews & Co., 207 U. S. 229, 241, 28 Sup. Ct. 100, 52 L. Ed. 185;Detroit Southern R. Co. v. Malcomson, 144 Mich. 172, 107 N. W. 915,115 Am. St. Rep. 390. The operation of the rule is, of course, subordinate to intention. We find nothing in this contract by which an inconsistent intention is adequately revealed. The plaintiff sees in two provisions the tokens of a purpose that arrival at the point of destination shall be a condition of performance.One is the provision that, after arrival at New York, the buyer may inspect. The other is that, subject to such inspection, payment shall be made on presentation of a draft with bill of lading attached. We think that each is inconclusive.

The reservation by a consignee of the privilege of inspection does not place the goods while in transit at the risk of the consignor. Pierson v. Crooks, 115 N. Y. 539, 546, 548,22 N. E. 349,12 Am. St. Rep. 831;Pope v. Allis, 115 U. S. 363, 6 Sup. Ct. 69, 29 L. Ed. 393;Delaware, L. & W. R. R. Co. v. United States, 231 U. S. 363, 371, 34 Sup. Ct. 65, 58 L. Ed. 269. The privilege is often implied. Williston, Sales, §§ 473, 474. Its expression in this instance qualifies any inference of acceptance resulting from the requirement of payment upon presentation of the draft. Pers. Prop. Law (Cons. Laws, c. 41), § 128, subd. 3. Whether expressed or implied, it does not change the incidence of the risk. Title passes upon shipment, though subject to the right of rescission upon the discovery of defects. Delaware L. & W. R. R. Co. v. United States, supra.

[2] The incidence of the risk is unaffected also by the right, retained by the defendant, to determine whether the bill of lading should run to consignor or to consignee. It is true that--

‘where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the seller or of his agent, the seller thereby reserves the property in the goods.’ Personal Property Law, § 101, subd. 2.

The reservation, however, is not absolute.

‘If, except for the form of the bill of lading, the property would have passed to the buyer on shipment of the goods, the seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract.’ Personal Property Law, § 101, subd. 2.

A property thus reserved as security only does not relieve the buyer from subjection to the perils of the transit.

‘Where delivery of goods has been made to the buyer, or to a bailee for the buyer, in pursuance of the contract, and the property in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery.’ Personal Property Law, § 103, subd. a; Alderman Bros. Co. v. Westinghouse Air Brake Co., 92 Conn. 419, 421, 103 Atl. 267;Kinney v. Horwitz, 93 Conn. 211, 105 Atl. 438.

[3] We assume in favor of the plaintiff that the law of California, the place of the making of the contract, controls the obligation of the seller in respect of shipment and delivery. We are not advised that the Uniform Sales Law has been adopted in that state. We think, however, that the statute in the provisions above quoted is declaratory of the rule at common law. There was, indeed, more or less or uncertainty in the commonlaw decisions, for general statements that there was reservation of the property, if the bill of lading was made out to the order of the consignor, were not always coupled with the qualification that the property, if it would otherwise be divested, might be deemed to be retained as security, and nothing more. Williston, Sales, § 284, supplemented by the same author's review of the authorities in 34 Harvard Law Review, 751. There were cases, none the less, where the qualification was not ignored. Browne v. Hare, 4 Hurl. & N. 822, 823; Inglis v. Stock, 10 App. Cas. 263; Joyce v. Swann, 17 C. B. (N. S.) 84; Dows v. Nat. Exch. Bk. of Milwaukee, 91 U. S. 618, 634, 23 L. Ed. 214;Higgins v. Murrary, 73 N. Y. 252, 255;Farmers' & Mechanics' Nat. Bk. of Buffalo, v. Logan, 74 N. Y. 568, 579, 581, 582; Williston, supra; Benjamin on Sales (5th Ed.) p. 386. The framers of the statute extracted from uncertain judgments the rule which they found to be in principle the soundest, with the purpose, here at least, to codify, but not to change. The record does not inform us that a different rule has been established by the courts of California. In the absence of such a showing, we accept the codification...