Howland v. Iron Fireman Mfg. Co. , 188 Or. 230 ( 1949 )

ON PETITION FOR REHEARING PETITION DENIED. In our former opinion we found prejudicial errors as stated. Accordingly we set aside the verdict and judgment and granted a new trial. The defendant, however, contends that it was entitled not merely to a new trial, but rather to final judgment. It has therefore filed a petition for rehearing. Considering the question presented to be a most important one, we requested briefs, which have been received and studied.

After holding that the contract relied upon by the plaintiff was within the statute of frauds and was unenforceable unless taken out of the statute by such performance referable to the contract as is required by O.C.L.A., § 71-104, we said:

"* * * The testimony of plaintiff and defendant was in violent disagreement as to the agreement pursuant to which sales, deliveries, and acceptances and payments were made, and since the evidence is conflicting as to whether the sales to plaintiff were pursuant to the alleged exclusive contract or the nonexclusive dealership, it follows that there was a question of fact for the jury to determine and that question was whether the sales, deliveries, etc., were referable to the oral contract claimed by plaintiff. * * *"

In its petition for rehearing defendant presents a single contention, namely, that we "erred in holding that there was a question of fact for the jury to determine whether the sales and deliveries of oil burners to respondent were referable to the oral contract claimed by the respondent."

Considerable attention is devoted by both parties to the evidence that in a few instances the defendant company received inquiries concerning oil burners and referred prospective customers to the plaintiff. In several instances the inquiry came from persons outside Multnomah County and the action of defendant as to them is therefore without any significance. We have considered each case with care and the most that can be said is that upon the evidence the trier of the fact might draw an inference either that defendant's action was or was not done with reference to the exclusive contract claimed by the plaintiff. The practice of thus referring inquiries had been followed both before and after the making of the alleged contract.

Having reference to the terms of the statute: "A contract to sell or a sale of * * * goods shall not be enforceable * * * unless the buyer shall accept * * * and actually receive * * *", (O.C.L.A., § 71-104) the essential question is whether the action of the parties relative to acceptance and receipt was so clearly referable to the contract alleged by plaintiff, as to take it out of the statute of frauds and whether it was for the court or the jury to decide the question.

At the threshold of any discussion of the authorities, two distinctions must be made; the first, between the rule which applies in law and that which applies in equity; the second, between the rule in actions by the buyer and the rule in actions by the seller, on an oral contract for the purchase or sale of goods.

This court has considered many cases in which specific performance has been sought by one in the position of buyer or donee or lessee of an alleged oral contract for the conveyance or devise of land, or for the leasing thereof for a period longer than one year. The relevant statute is O.C.L.A., § 2-909. That section provides that such oral contracts are void unless there is a note or memorandum in writing satisfying the statutory requirements. There is not a word in the statute concerning part performance or suggesting that such cases may be taken out of the operation of the statute and enforced in equity. Courts of equity have developed a body of judge-made law under which relief is granted, notwithstanding the statute, upon the theory that equity will not permit the statute of frauds to become the instrument for the perpetration of fraud. 49 Am. Jur., Statute of Frauds, § 421, p. 725. Accordingly, part, or full performance, as the case may require, if done in pursuance of the contract and referable thereto, showing that the plaintiff relied upon the agreement, and on the defendant's endorsement or acquiescence, is held sufficient to authorize specific performance. The rule operates on the theory of estoppel by conduct to assert the statute. 49 Am. Jur., Statute of Frauds, § 422, P. 727. The authorities are reviewed in the following recent cases: Hunter v. Allen, 174 Or. 261, 147 P.2d 213,148 P.2d 936; Dodge v. Davies, 181 Or. 13, 179 P.2d 735; Tiggelbeck v.Russell et al., 187 Or. 554, 213 P.2d 156. Of the cases cited by defendant in its brief on petition for rehearing, four were suits in equity. Brown v. Lord, 7 Or. 302; Le Vee v. Le Vee, 93 Or. 370, 181 P. 351; Reynolds v. Scriber, 41 Or. 407, 69 P. 48; andTonseth v. Larsen, 69 Or. 387, 138 P. 1080. In each of these cases the court defined, though in somewhat different terms, the test of part performance as employed in equity. Even in equity we have never held that the evidence of part performance must be undisputed. Whether the requirements of equity have been satisfied may be shown by a preponderance of the evidence. Loseyv. O'Hair, 160 Or. 63, 83 P.2d 493.

Actions at law to enforce rights under oral contracts for the sale of goods rest on a different foundation. The statute provides that such contracts are not enforceable "unless * * *", and then follow the statutory provisions, compliance with which may take the case out of the statute. As distinguished from the function of a court of equity which enforces its own rules, the function of a court of law, under the sales act, is primarily that of statutory construction, having in view the presumed intent of the legislature.

In the simple case of an action by the seller on a specific contract, where there is no dispute as to its terms, proof of acceptance and receipt by the buyer, who is the one to be bound, clearly satisfies the statute and establishes the right to recover the price. There is nothing to which acceptance and actual receipt of the goods could be referable except the alleged specific oral contract. Consequently the courts have frequently held that the plaintiff may prevail upon proof of acceptance and receipt without discussing the question of referability. If title and possession passed to the buyer, plaintiff recovers. Even here, however, the decisions construe the statute as requiring action on the part of both parties.

"No act of a seller alone can constitute a delivery taking the contract out of the statute of frauds, without a receipt and acceptance by the buyer." 49 Am. Jur., Statute of Frauds, § 272, p. 590.

"The requirement as to receipt and acceptance demands the action on the part of both parties, for acceptance implies delivery, and there can be no complete delivery without acceptance. No act of the seller alone, however positive and unequivocal, can have this effect. Also, acquisition of possession by the buyer without the consent of the seller cannot operate as a compliance with the statute, as where the buyer without the consent of the seller takes the goods under a writ of replevin." 49 Am. Jur., Statute of Frauds, § 273, p. 590.

"* * * There must be some unequivocal act or conduct over and beyond the mere terms of the verbal agreement indicating, on the one hand, an intent to vest the ownership and absolute dominion in the buyer, and on the other hand, an intent to take the goods as owner of such title as the contract calls for in performance of the agreement. * * *"

49 Am. Jur., Statute of Frauds, § 275, p. 591.

As stated in an Illinois case:

"* * * In order to fulfill the requirements of the statute, so as to avoid its effect, there must be a delivery of the goods sold, from the seller to the buyer, and an acceptance by the buyer, with an intent on the part of both parties of vesting the right of possession in the buyer. In order to determine whether or not the buyer has accepted and received the goods and the seller has delivered them to the buyer, with the intention of vesting the right of possession in him, it is necessary to consider the intention of the parties, as shown by what they did. Of course, the intent must be mutual, on the part of the seller to deliver to the buyer, and on the part of the buyer to accept from the seller. Either party alone may not effect a delivery and acceptance. 27 C.J. 244; Chicago Metal Refining Co. v. Jerome Trading Co., 218 Ill. App. 333." Illinois Meat Co. v. American Malt and Grain Co., 229 Ill. App. 311.

Compliance with the rule thus stated is ordinarily sufficient.

When, in the simple type of case referred to, there is a conflict in the evidence as to whether the defendant buyer accepted and received the goods, the question is one for the jury. Meyer, W. Co. v. Thompson Co., 16 Or. 194; Galvin v.MacKenzie, 21 Or. 184, 27 P. 1039; Richey v. Robertson, 86 Or. 525, 169 P. 99; Barrett Mfg. Co. v. D'Ambrosio, 90 Conn. 192,96 A. 930; Becker v. Holm, 89 Wis. 86, 61 N.W. 307; AugustaCooperage Co. v. Plant, 163 Ark. 49, 259 S.W. 12; Crowley v.Marshall, 80 N.H. 442, 118 A. 673; Castle v. Swift Co.,132 Md. 631, 104 A. 187; Houghtaling v. Ball et al., 19 Mo. 84, 59 Am. Dec. 331; Waite v. McKelvy, 71 Minn. 167, 73 N.W. 727;Charlotte Harbor N. Ry. Co. v. Burwell, 57 Fla. 217, 48 S. 213; Klein-Messner Co. v. Fair Waist Dress Co.,216 N.Y.S. 174; Hinchman v. Lincoln, 124 U.S. 38, 31 L. Ed. 337; Hull v.Marquette Cement Mfg. Co., 208 Fed. 260; Lauer v. RichmondCooperative Mercantile Inst., 8 Utah 305, 31 P. 397; Whiteneck Bassett v. Weaver, 139 Okla. 88, 281 P. 293; Pekin Cooperage Co. v. Wilson, 148 Ark. 654, 227 S.W. 408;Garfield v. Paris, 96 U.S. 557, 24 L. Ed. 821.

In relatively few cases, a more complex situation arises. The parties may agree that there was a contract of sale and purchase, but the evidence may disclose a material conflict as to what the contract was, or there may be evidence of two different contracts. In such cases the mere proof that the plaintiff seller intended to pass title and that the buyer intended to accept and receive, would shed no light on the existence of the specific terms of the contract sued upon. In such cases, in order to carry out the obvious intent of the statute, the courts require the plaintiff seller to show that delivery, acceptance and receipt were referable to the specific contract on which the plaintiff relies.

Newman v. Multnomah Fuel Co., 93 Or. 247, 183 P. 1, was an action by the seller for breach of contract. The seller relied upon an oral contract for 2500 cords of wood and on proof of acceptance and receipt of 150 cords under the oral contract. The buyer asserted a contract for a lesser amount and that the acceptance and receipt of wood had no connection with the oral contract on which suit was brought. The jury found for the plaintiff. The only question raised was upon the overruling of a motion for nonsuit. Held that the issues raised a question of fact for the jury. After stating that no errors of law were committed and that therefore the finding of the jury determined the existence of the oral contract, the court said:

"By the undisputed facts after verdict the defendant did accept and receive at least 150 cords of wood on the oral contract and it did `accept and receive some part of such personal property,' and for such reason the defendant comes within the exception." (Italics ours.)

It is obvious that the court by this statement intended to say that if the jury found that the contract was as alleged by the seller and if no error of law vitiated the verdict on that issue, then they could find that the acceptance and receipt was referable to the contract found.

In Naftzger v. Henneman, 94 Or. 109, 185 P. 233, the seller sued the buyer on an oral contract for the price of onions. The answer was a general denial and the plea that there had been no acceptance and receipt of the goods. The actual delivery of the goods was, however, undisputed, as in the case at bar. The testimony was in sharp conflict as to the terms of the oral contract. If the contract was as claimed by the plaintiff, then, clearly, there was an acceptance and receipt, otherwise not. The court said that the verdict "settles every contradicted fact in favor of plaintiff", and added, "therefore, if the court's instruction properly stated the law" the court would assume the truth of the evidence favorable to the plaintiff. The defendant had requested an instruction to the effect that:

"* * * to constitute a delivery and acceptance within the meaning of the law, there must be some act on the part of the purchaser plainly recognizing the existence of the contract and that the property has been received in accordance thereof. There must be a delivery of the goods by the seller with the intention of vesting the right of possession in the buyer, and there must be an actual receiving and acceptance by the buyer with the intention of taking possession as owner."

It was held that the quoted portion of the requested instruction correctly stated the law but that other errors in instructions given required reversal, and a new trial was ordered. The case is authority for the proposition that the party to be bound (here the buyer) must do some act plainly recognizing the contract and that property has been received and accepted in accordance therewith. The terms of the contract and the issue of acceptance and receipt are for the jury when the evidence is disputed. If, but only if, there is no error of law, the finding of the jury on disputed issues as to the nature of the contract may have a material bearing upon the further question as to whether acceptance and receipt were referable to the contract as found.

In Brister Koester Lumber Corp. v. American LumberCorp., 356 Pa. 33, 50 A.2d 672, the rule was announced that delivery must be made pursuant to the asserted contract and accepted as such, and it was said:

"* * * A delivery and acceptance of goods under a separate contract, independent of an alleged parol agreement, is not such part performance as will take the latter out of the statute:"

The verdict was rendered for the plaintiff but judgment n.o.v. was entered and affirmed. Under the particular facts it was properly held that the evidence offered was legally insufficient to support a finding of acceptance and receipt pursuant to the oral contract. It seems clear that if there had been substantial evidence both ways, there would have been a jury question. To the same effect see Libman v. Fox Pioneer Scrap Iron Co.,175 Wis. 485, 185 N.W. 551; Augusta Cooperage Co. v. Dowdy,149 Ark. 318, 232 S.W. 1.

Especial reference is made to the case of Kansas Flour MillsCorp. v. Dreyfus Bros., Inc., 170 Okla. 325, 40 P.2d 20, where the questions involved in the case at bar received able and thorough consideration. We conclude that in actions at law by seller against buyer, where there is a conflict of testimony as to the terms of an oral contract, it is for the jury to determine what the terms were, and whether delivery, receipt and acceptance were pursuant to the contract sued upon. The following additional authorities support this conclusion: Garfield v. Paris, 96 U.S. 557, 24 L. Ed. 821;Franklin Sugar Refining Co. v. Eiseman, 290 Pa. 486,139 A. 147.

The first point made by the plaintiff in his brief in opposition to the petition for rehearing in the case at bar, is to the effect that when there is a conflict as to the nature of the contract under which goods are delivered, and when the jury finds that such relationship is based upon the exclusive dealership contract, "then it must follow as a matter of law that all such deliveries, receipts and acceptances of merchandise are exclusively and solely referable and pursuant to, and in the performance of that exclusive dealership contract." We reject the contention. It is true that in passing upon the defendant's motion for directed verdict, we assumed the truth of the evidence supporting plaintiff's contention, but the finding of the jury as to the nature of the contract cannot establish that the delivery, acceptance and receipt of oil burners was pursuant to the contract asserted by the plaintiff, when, as we have previously shown, the jury's verdict was based upon erroneous and prejudicial errors of law.

The decided cases are relatively few in which an alleged buyer is suing upon an oral contract for the purchase of goods and is claiming that it has been taken out of the statute of frauds. Upon a superficial consideration of the statute, one might say that to take the case out of the statute, the only acts required are those to be performed by the buyer, for the statute in terms only refers to acceptance of title, actual receipt of possession or payment of earnest money, or of part of the purchase price, all of which are acts performed by the buyer, but if acts, by the buyer alone, are sufficient to take an oral contract out of the statute of frauds, the statute becomes a nullity in all cases in which the alleged buyer is plaintiff. On any such theory the buyer could lift himself out of the statute by his boot straps, first claiming an oral contract and then claiming that his conduct alone made the contract enforceable. The statute of frauds has always been deemed applicable to cases brought by buyer against seller. Clearly, mere part performance of a contract, without any acceptance and actual receipt does not take a case out of the statute of frauds. See Michelin Tire Companyof Calif. v. Williams, 125 Or. 689, 268 P. 56, and Cassidy v.Kraft-Phenix Cheese Corporation, 285 Mich. 426, 280 N.W. 814. Acceptance and receipt must be proven but as said in the quotation, supra, from 49 Am. Jur., Statute of Frauds, § 273, p. 590, receipt and acceptance involves action by both parties, and acceptance implies delivery.

In considering cases in which the buyer sues the seller upon an alleged oral contract, it is important to notice that many authorities state that acts must be done in pursuance of the particular contract relied upon without any reference to whether the seller or the buyer is the plaintiff.

"The receipt and acceptance of the goods or a part thereof relied on to render the parol contract enforceable must be done in pursuance of the particular contract which it is sought to establish by showing such receipt and acceptance. A receipt and acceptance of goods under another contract will not be sufficient, but if the goods are in fact delivered under the contract it is immaterial that no express reference is made to the contract at the time. To constitute an acceptance the buyer must so deal with the property as to prove that he acknowledges the existence of the contract; there must be some act on his part plainly recognizing the existence of the contract and that the property has been received in accordance therewith. The buyer's seizure of the goods by force or under color of legal process is not sufficient." 37 C.J.S., Frauds, Statute of, § 150, p. 636.

Whether or not matters of delivery, receipt and acceptance are matters for the determination of the jury, is also stated in general terms by the authorities, regardless of who may be the plaintiff. The general rule which we adopt is stated by Williston as follows:

"It is for the jury to determine in a doubtful case whether there has been acceptance and receipt. If, however, there is no evidence justifying the jury in finding more than one way, the court may properly decide the question." 1 Williston on Sales, Rev. Ed., § 96.

In Krause v. Bell Potato Chip Co., 149 Or. 388,39 P.2d 363, this court said:

"* * * Generally in actions involving the statute of frauds, questions of law are for the determination of the court, and questions of fact or of mixed law and fact are for the determination of the jury under proper instructions from the court: 27 C.J. 389, § 490."

In Brown v. Sheedy, 90 Or. 74, 175 P. 613, the plaintiff, alleging that he had bought cattle from the defendant, brought an action in replevin to recover them. The defendant denied the agreement to sell, and relied upon the statute of frauds, claiming that there had been no acceptance or receipt of any part of the property. The court held as a matter of law that there was no evidence of delivery or receipt. The court said:

"It is true that when there is a dispute as to the facts it must be solved by a verdict of a jury but as said by Elliott on Contracts, Volume 2, Section 1340:

"`When the facts in relation to a contract of sale alleged to be within the statute are not in dispute, it belongs to the court to determine their legal effect.'

"The crux of the controversy is for the court to determine whether there was a delivery of the cattle by the defendant, for WITHOUT DELIVERY THERE CAN BE NEITHER RECEIPT NOR ACCEPTANCE, and whether the plaintiff accepted and received the property or any part thereof."

See also Milos v. Covacevich, 40 Or. 239, 66 P. 914, andBuchanan v. Remington Rand, Inc., N.J.L. 10, 30 A.2d 832.

In Crystal Ice Co. v. Holliday, 106 Miss. 714, 64 S. 658, the plaintiff testified to a contract for the purchase from defendant of at least 12 cars of ice of 15 tons capacity. The defendant denied making the contract and alleged that he only sold and delivered ice in accordance with each separate order of the plaintiff. The court said:

"* * * Appellee's testimony, if true, discloses a complete contract, partly performed, in which he agreed to purchase, and appellant to sell, the ice therein referred to.

"Appellee testified that the 30 tons of ice delivered to him were delivered in part performance of this contract, and if that is true the contract is valid, and the truth thereof was a question for the determination of the jury. Stonewall Mfg. Co. v. Peek, 63 Miss. 342."

The case was reversed, but only because of error in instructions as to the measure of damages.

In Minton v. McDaniel, 212 Ark. 591, 207 S.W.2d 617, the alleged buyer sued the seller for failure to deliver 24 bales of cotton. The defendant denied the contract and pleaded the statute of frauds. The defendant admitted that he sold to the plaintiff 24 bales, but denied that he delivered any of it. There was a verdict for the plaintiff. The court held upon the evidence that: "* * * it was for the jury to determine whether a partial delivery of the cotton had been made." While holding that the question was for the jury, the court also said that proof must be clear and unequivocal.

The case of Miller Bros. Hat Co., Inc. v. A.D. Smith SonsCo., 237 N.Y. 570, 143 N.E. 747, is directly in point in its application to the case at bar. The action was by the buyer for breach of an oral contract to deliver merchandise. The complaint alleged that the defendant seller had agreed to deliver 880 dozen straw hats of different styles. It was alleged that one dozen hats of each style was delivered and was paid for. The answer denied the oral contract and set up the statute of frauds. The court said:

"The plaintiff made out a prima facie case of breach of contract for the sale of goods. On the facts, the complaint should not have been dismissed, but the jury should have been permitted to pass on the question whether the delivery of the samples was referable to the principal order and in recognition and part performance thereof."

Another case similar to the one at bar isMason-Walsh-Atkinson-Kier Co. v. Stubblefield, 99 F.2d 735. The plaintiff as buyer sued the seller upon an alleged oral contract for the purchase of all steel scrap on hand plus future accumulations thereof. The defendant contended that the contract was only for the sale of existing scrap. Deliveries were made to the buyer of existing scrap and of some accumulations. The seller relied upon the statute of frauds. The court said:

"* * * Appellant concedes that part performance will remove a contract from the operation of this statute, but contends that the part performance relied on here was not necessarily referable to the contract pleaded — in other words, that the performance shown was as consistent with its own version of the agreement as with appellee's. However, scrap accumulating subsequent to the time of the contract, as well as material then in the bins, was delivered to appellee. The agreement testified to by appellant's witness, Meyers, related only to scrap on hand at the time of the engagement. We think the part performance was clearly referable to a contract for the sale of future accumulations.

"* * *

"* * * Without discussing the testimony in detail it is enough to say that there was sufficient on this phase to carry the case to the jury."

In Whiteneck Bassett v. Weaver, 139 Okla. 88, 281 P. 293, the buyer sued the seller for breach of an oral contract for the purchase of 100 bales of cotton. The defendant admitted that it sold the plaintiff 100 bales of cotton. The court said:

"The question of fact as to whether or not there had been a delivery and acceptance of a part of the cotton was submitted to the jury by appropriate instructions, which were not excepted to. We think there was ample evidence to support a finding in favor of plaintiff on this question, and the verdict will therefore not be disturbed upon the ground that such verdict is not sustained by the evidence."

The plaintiff states that the undisputed evidence discloses that there were deliveries, receipts and acceptances of oil burners, either under an exclusive dealership contract, or underseparate contracts arising from individual orders. The record does not support this statement. The evidence reviewed in the original opinion shows that the defendant recognized the existence of an implied dealership agreement under which numerous sales were made, but denies that it was an exclusive one. The defendant gave the plaintiff 30 days notice of termination of the so-called implied dealership. If there was no such agreement, there would have been no reason for giving notice. The plaintiff seeks to distinguish Libman v. Fox Pioneer Scrap Iron Co., andKansas Flour Mills Corp. v. Dreyfus Bros., supra, because in those cases there "existed a contract additional to the oral contract sought to be enforced." Plaintiff states that in cases involving such state of facts, it necessarily becomes a jury question as to which of the contracts the delivery, receipt and acceptance took place. We agree that this is true, but it would be equally true if there was evidence disclosing that each sale was based upon a separate contract. In all cases, of course, the plaintiff sues only upon the contract alleged in his complaint. And in all, the question is whether delivery, etc. was pursuant to that contract or to some different contract or arrangement. If the delivery was pursuant to a different contract, the existence of which was admitted by both parties, or a different one asserted by the defendant, or if it was pursuant to a series of separate contracts for separate purchases, the legal situation would be the same. The plaintiff would fail because delivery, etc. was not pursuant to the contract on which suit was brought.

In its brief on petition for rehearing the defendant states that delivery must be solely referable to the alleged contract, and then asserts the following:

"* * * If there are other and equally reasonable explanations of such actions inconsistent with an intent that deliveries or payments should be referable to the oral contract, then under familiar legal principles announced in such cases as Spain v. O.W.R. N., 78 Or. 355, the jury should not be allowed to speculate as to which was the true intention."

Defendant's "speculative" argument is not in point. The fact that the evidence is conflicting does not raise an inference that the decision must be based on mere speculation. The fact that there is substantial evidence on both sides of the controversy, involving, among others, the issue of credibility, presents a typical question for a jury.

The authorities establish the rules that when a party seeks to enforce an oral contract for the sale of goods he must show by a preponderance of the evidence that there was delivery, acceptance, and actual receipt of some part of the goods, or that something was given in earnest to bind the bargain or in part payment. The party relying upon the oral contract must further show that the other party, whether buyer or seller, in the delivery or in the acceptance and receipt, or in the making or receiving of part payment or earnest money, as the case may be, acted with reference to and in recognition of the existence of the contract on which action was brought. The evidence must show that the party to be charged, so dealt with the property as to prove that he acknowledged the existence of the alleged contract and that what was done relative to delivery, acceptance, receipt, etc., was done solely with a view to its performance. Galvin v.MacKenzie and Brown v. Sheedy, both supra. When the evidence, tending to show delivery, acceptance, etc., referable to the contract, is opposed by substantial contradictory evidence, and particularly when the conflict of testimony relates also to the terms of the agreement, the case is one for the jury. Plaintiff contends that we should have decided as a matter of law that delivery was made in recognition of the alleged contract. The defendant contends for the opposite decision as a matter of law. We reject both contentions in view of the authorities holding that the issue is one for the jury upon a new trial. It must be added that the plaintiff filed no petition for rehearing, and therefore has no standing to urge the allege error.

Defendant's petition for rehearing is denied.