Students Book Company v. Washington Law Book Co.

• Citation: 232 F.2d 49
• Decision Date: 01 December 1955
• Docket Number: No. 12563.,12563.
• Parties: STUDENTS BOOK COMPANY, Appellant, v. WASHINGTON LAW BOOK COMPANY, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

232 F.2d 49 (1955)

STUDENTS BOOK COMPANY, Appellant, v. WASHINGTON LAW BOOK COMPANY, Appellee.

No. 12563.

United States Court of Appeals District of Columbia Circuit.

Argued June 6, 1955.

Decided December 1, 1955.

Certiorari Denied March 12, 1956.

Mr. Nathan L. Silberberg, Washington, D. C., for appellant.

Mr. William E. Leahy, Washington, D. C., with whom Messrs. William J. Hughes, Jr., and Ben Ivan Melnicoff, Washington, D. C., were on the brief, for appellee.

Before EDGERTON, Chief Judge, and BAZELON and FAHY, Circuit Judges.

Certiorari Denied March 12, 1956. See 76 S.Ct. 474.

BAZELON, Circuit Judge.

Appellant sued for treble damages for injuries allegedly caused by appellee's sales of student law books to appellant's competitors at preferential prices and under preferential terms in violation of the Robinson-Patman Act.¹

Appellant operates a retail store supplying law books and other supplies to law students. Appellee, majority owned by the West Publishing Company of Saint Paul, Minnesota, is the exclusive distributor in Washington, D. C., of West and some other publications. It is the source of between 80 and 90 per cent of the books used by law students in the Washington area. Before the fall of 1947, it supplied books to appellant at a discount of 20 per cent off list price and allowed appellant to return all unsold books for full credit. This is the usual and customary basis for distribution of student law books and other books in the educational field.

In 1947, appellee-seller informed appellant-buyer that, beginning with the fall semester, the discount would be cut to 6 per cent and returns would no longer be permitted. However, the appellee-seller thereafter allowed more favorable terms to the campus book stores of various Washington law schools.² This is the discrimination of which appellant complains.

The Robinson-Patman Act makes it unlawful to discriminate between "purchasers of commodities * * * for * * * resale" as to price³ or as to services or facilities.⁴ Appellee's defense was that the statute is inapplicable because, while appellant was a purchaser of its books, the campus book stores were only agents selling books for appellee and receiving a commission therefor.⁵

With respect to one of the allegedly competitive book stores, that at Howard University, appellee's president admitted that its deliveries of books were sales up to September 1951, but asserted that subsequent transactions were consignments. The manager of the Howard store testified, however, that the only change that occurred in September 1951 was a change in the discount from 6 to 20 per cent. Orders were placed in the same manner, billing and invoicing were unchanged, the method of payment was the same, unsold books were returned for credit against future purchases, just as before. So far as he was aware, he had never been a consignment agent for appellee.

A second alleged competitor, the George Washington University book store, rendered periodic "consignment sales" reports to appellee for books received. But the assistant comptroller of the University testified that, as to the 20 per cent which the store made on each book sold, he did not know "whether you would call that handling them on commission or not." At an earlier trial, he testified, "I wouldn't call it a commission."⁶

Thus there was a conflict in the evidence from which the jury could have found that the transactions with the campus book stores were either consignments or sales. To enable the jury to resolve this conflict, the court charged, in essence, that if title to the books passed to the campus book stores, they were purchasers, but that if title did not pass to them, they were merely consignment agents.⁷ Since the jury's verdict sustained the defense, it must have found that the transactions were consignments.

The primary question on this appeal is whether the trial court erred in denying appellant's request for two instructions. The first relates to certificates which the campus book stores executed under the District of Columbia Sales Tax Law to exempt appellee from collecting and paying sales taxes, and in which they represented that they were purchasers for resale from appellee:

"Plaintiff\'s Request No. 3

"Under the District of Columbia Sales Tax Law, the definition of `retail sale\' laid down by Congress specifically excludes any sales to one who re-sells those goods. That law also provides that a re-seller\'s exemption certificate must be obtained by the vendor or the vendor is liable for the sales tax. (47 D.C.Code 2601 (14a), 2607) These definitions under our Sales Tax Law may be considered by you in deciding whether Defendant was merely a retailer of these student books or a distributor to the stores which actually made the sales to the students."

The second relates to the distinction between consignment and sale:

"Plaintiff\'s Request No. 5

"There has been testimony by Defendant that it did not sell books to some of the college stores, but merely consigned them. Now it is for you to determine whether, in truth, those were sales or consignments. There were no contracts between those parties so you must judge from the manner in which the arrangement operated. `The term "consign" . . . may express the true state of the case . . . or it may be a mere subterfuge, and if it be the latter, there is no magic in that word which can take from the transaction its real character,\' (1 Mechem on Sales 43; Butterick v. F.T.C. 2 Cir. 1925, 4 F.2d 910; Standard Patterns Fashion Co. v. Magrane-Huston Co., 1922, 258 U. S. 346 42 S.Ct. 360, 66 L.Ed. 653; In re Wells, D.C.Pa., 140 F. 752)."

My colleagues are of the view that the first quoted request is too involved and obscure for its rejection to furnish ground for reversal, especially as it was not necessary for the court to pinpoint this aspect of the evidence in charging the jury. As to the second quoted request, they are of the view that the charge given by the court told the jury, in effect, that they were to decide whether the transactions were sales or consignments upon the whole evidence, without giving undue weight to the fact that the parties to the transactions sometimes used the word "consign." Accordingly, they find no error affecting substantial rights. The judgment below must therefore be affirmed.

I think, however, that denial of the requested instructions is error requiring a new trial. I state my reasons.

The trial court's instruction on the difference between a "consignment" and a "sale" was correct as far as it went, but in light of the evidence there was a plain need for elaboration.

The evidence in this record justified an instruction that the jury's choice was not restricted to that between unconditional sale and mere agency but that it might find the transactions between appellee and the campus book stores were conditional sales or "sale or return" arrangements in which "title passes to the purchaser subject to his option to return the property within a time specified or a reasonable time."⁸ The jury needed to be told not only that sale depends upon passage of title but also what the indicia of title are, e.g., the exercise of dominion over the goods.⁹ It is not always easy, even for a court, to decide whether a transaction is a sale or an agency.¹⁰ Where that question is entrusted to a jury, the charge should contain substantially the criteria which the court would invoke in resolving the question without a jury. The instant charge, in defining a sale, uses the language of subparagraph (2) of the first section of the Uniform Sales Act,¹¹ but does not refer to the provision in subparagraph (3) that "a sale may be absolute or conditional."¹² The only recognition of this provision in the charge is this statement:

"The fact that there was this privilege of returning is not conclusive one way or the other on whether it was a sale or not. It might be consistent with a consignment."

Though the jury was told that the privilege of returning goods might be consistent with a consignment, it was not told that there is a well-recognized class of sales in which title vests in the buyer upon delivery subject to divestment upon return of the goods,¹³ or that, in this type of case, the locus of title is tested "not so much from the standpoint of the sender (bailor or seller) as from that of the receiver (bailee or buyer)."¹⁴

The instructions requested by the plaintiff and denied by the trial court do not, of course, articulate all the foregoing criteria applicable to the jury's consideration of the evidence. But they do supply some of the much needed elaboration which I have described.

Under the instruction relating to "consignment" versus "sales" which the trial court denied, the jury would have been advised that the recurring use of the word "consignment" in the documents did not preclude a finding that the transactions were, in fact, sales.¹⁵ The jury would also have been advised that, since use of the word "consignment" in the documents is not controlling, it should consider "the manner in which the arrangement operated," i.e., "the acts and circumstances of the parties, especially * * * the construction which they themselves put upon the contract in executing it."¹⁶ Pertinent in this connection is the denial of the instruction which reflected the fact that the various campus book stores had represented themselves to be resellers of appellee's books under the District of Columbia Sales Tax Law¹⁷ by filing exemption certificates with the appellee. Upon the state of this record, I think both of the denied instructions would have provided information essential to the jury's consideration.

Appellee argues that, even if the charge is inadequate, the judgment must be affirmed since appellant failed to prove any damages. This argument springs from the fact that the discriminatory treatment, in large part, began at the same time that the campus book stores began to compete with ...