UNITED STATES RUBBER COMPANY v. Pulliam

• Decision Date: 31 May 1957
• Docket Number: Civ. A. No. 680.
• Parties: UNITED STATES RUBBER COMPANY Plaintiff, v. H. Doyce PULLIAM, d/b/a Pulliam Tire Service, Defendant.
• Court: U.S. District Court — Western District of Arkansas

151 F. Supp. 491

UNITED STATES RUBBER COMPANY Plaintiff, v. H. Doyce PULLIAM, d/b/a Pulliam Tire Service, Defendant.

Civ. A. No. 680.

United States District Court W. D. Arkansas, Hot Springs Division.

May 31, 1957.

Albert Graves, Hope, Ark., for plaintiff.

Lawson E. Glover, Malvern, Ark., R. Julian Glover, Hot Springs, Ark., for defendant.

JOHN E. MILLER, District Judge.

Statement

This case was tried to the Court without a jury on May 1, 1957, and at the conclusion of the trial the Court took the case under advisement pending receipt of briefs of the parties in support of their respective contentions.

The briefs have been received, and the Court, having considered the pleadings, the evidence, and briefs of the parties, now makes and files herein its Findings of Fact and Conclusions of Law, separately stated.

Findings of Fact

1.

Plaintiff is a New Jersey corporation. The defendant, H. Doyce Pulliam, is a citizen of the State of Arkansas and resides in the City of Malvern, Arkansas. He is doing business under the name of Pulliam Tire Service. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.

2.

In 1952, the defendant began doing business with the plaintiff. The parties entered into a written agreement entitled "United States Distributor's Consignment Agreement". Each year a contract was entered into between the parties, the latest contract being dated January 1, 1955.

Among other things the agreement provided:

"1. The Consignor at the Consignor's option shall from time to time consign to the Consignee and the Consignee will receive, accept and/or hold, upon consignment, under the terms of this agreement, such shipments of the Consignor's United States brands of tires and tubes as shall be ordered from the Consignor by the Consignee or as may have heretofore been consigned to the Consignee by the Consignor under any other agreement and are now in the possession, custody or control of the Consignee. * * * Regardless of the foregoing, shipments by Consignor shall be made consistently with its capacity and ability to procure and deliver and the requirements of its other consignees, customers and agents, and the stock of goods consigned to the Consignee, shall never exceed in value the sum of Six Thousand and No/100 Dollars ($6,000) at the current `Billing Prices' of the Consignor for any time being.

"2. The Consignee shall exercise due care in the housing, protecting and preserving of said goods as the Consignor's property, it being agreed that the title to such of said goods as at any given time shall have not been sold by the Consignee, and to the accounts receivable or the proceeds, as the case may be, from the sale of the remainder of such goods, shall always be vested in the Consignor, and such goods, accounts receivable and proceeds shall be at all times subject to and under the direction and control of the Consignor.

* * * * *

"4. On the 25th day of each month the Consignee shall render to the Consignor an accurate account of the quantity and character of all goods sold and delivered by the Consignee during the period since the 25th day of the preceding month and on the 10th day of the following month (with respect to Heavy Service tires and tubes, on the 10th day of the second month following) shall pay to the Consignor out of the said proceeds on account of the sale of goods so sold, at the rates determined in paragraph 21 below, less 2% allowance for payments so made. * * *

* * * * *

"7. The Consignee guarantees payment of all bills and accounts for goods sold by him under this agreement and hereby agrees that in case any goods delivered to him by the Consignor are not accounted for to the Consignor either in kind or by the payment specified in clause 4 of this agreement whether the inability to account for them has resulted from the Consignee's fault or not, he shall pay to the Consignor on account of such goods the amounts at which said goods shall have been last billed to the Consignee by memorandum invoice, and thereupon title to such goods or the accounts receivable theretofore or the proceeds thereof so paid for shall pass to the Consignee and shall be exempted from the provisions of this agreement. The Consignee shall not place or permit to be placed, any lien or encumbrance of any kind on said goods.

"8. * * * In addition to the foregoing events of termination, this agreement may be terminated by either party, irrespective of cause, upon the giving of thirty (30) days notice in writing to the other. * * *

* * * * * "9. The expiration or termination of this agreement shall be without prejudice to the rights of the Consignor against the Consignee and shall not relieve the Consignee of any of his obligations or guarantees hereunder. Upon the expiration or termination for any reason of this agreement all of the indebtedness of the Consignee to the Consignor, however created, under this agreement or otherwise, shall immediately become due and payable and the Consignee will immediately deliver over to the Consignor or his representative or representatives all of the unsold consigned stock then in his custody and will perform all of his obligations to the Consignor then unfulfilled; but all or any part of the consigned merchandise then in the possession of the Consignee may, at the election of the Consignor remain in the place of business of the Consignee for a period not exceeding thirty (30) days, during which period it will be delivered to the authorized representative or representatives of the Consignor upon demand. Upon the demand of the Consignor at any time, whether or not this agreement has been terminated, the Consignee shall deliver all of the consigned stock then on hand to the representative or representatives of the Consignor. All merchandise so delivered shall be in as good condition as when delivered to the Consignee, ordinary stock usage excepted. If at any time the Consignee refuses to make such delivery the representative or representatives of the Consignor shall be entitled to enter the premises of the Consignee and take immediate possession of all consigned merchandise then in the possession of the Consignee by force if necessary, without being guilty of trespass in so doing. At the expiration or upon any termination of this agreement, the Consignee shall not be entitled to any commission or compensation of any nature with respect to merchandise of the Consignor then in the custody of the Consignee and not delivered or withdrawn from the consigned stock, nor for any services or expenses in connection therewith."

3.

The parties operated under these Consignment Agreements from 1952 until May 1955. The defendant's business was primarily that of a retail dealer in tires and related services. Defendant would order tires from plaintiff, and the tires would be shipped to him on consignment. On the 20th of each month defendant would take an inventory of the consigned merchandise on hand and send an inventory to plaintiff. Having the inventory figures and the figures on the amount of merchandise which had been ordered, plaintiff could then ascertain the amount of consigned merchandise that had been sold by defendant to his customers, and plaintiff would then charge that amount to defendant on an open account. Plaintiff carried these amounts on open account in order to save defendant the interest defendant would have been required to pay had he used bank or other financing.

In most cases the merchandise was sold by defendant to his customers on conditional sales contracts and defendant kept a record of his accounts receivable from his customers.

In addition to ordering merchandise on consignment, defendant also purchased some items from plaintiff on open account, including some special purchases of tires, tubes, batteries, etc. Defendant also purchased some items from others, such as tread rubber for recapping, wheel weights, repair material, used tires, etc.

A part of the services offered by defendant to his customers included recapping of tires, repair work on tires, and wheel balancing.

4.

As the parties continued to do business the balance owed by defendant to plaintiff on open account grew larger and larger. The parties had several conferences, and finally on May 25, 1955, plaintiff decided to close out the consignment account. On that date, Charles R. McCallister, plaintiff's credit manager, went to defendant's place of business in Malvern, Arkansas, for the purpose of closing out the account. Most of the consigned merchandise in defendant's place of business was returned to plaintiff and defendant was given credit therefor. In addition to the consigned merchandise, $2,599.57 worth of other merchandise was returned to plaintiff and defendant was given credit therefor based on the defendant's cost price.

Plaintiff also took an assignment of defendant's accounts receivable in the total amount of $13,062.86. Of that amount $3,632.73 was for merchandise not covered by the Consignment Agreement.

With regard to the accounts receivable representing consigned merchandise, it was the understanding of McCallister that his company was taking an assignment of said accounts receivable in an effort to facilitate the collecting of said accounts. It was further his understanding that defendant would be given credit for all collections made by plaintiff, but not for the face amount of the accounts receivable. On the other hand, it was defendant's understanding that he would be given credit for the entire face amount of the accounts receivable regardless of whether or not plaintiff was successful in collecting them.

With regard to the accounts receivable in the sum of $3,632.73 based on merchandise not covered by the Consignment Agreement, both parties understood that the assignment of said accounts receivable was taken by plaintiff at full face value in part payment of the indebtedness owed by defendant to plaintiff.

At the time the...