Sturtevant Co. v. Dugan Co. , 106 Md. 587 ( 1907 )

This is an appeal from the Superior Court of Baltimore City. The appellant (plaintiff below) is a Massachusetts corporation, doing business as a manufacturer of machinery, in or near Boston. The appellees (defendants) are a firm in Baltimore City, and have for nearly a half a century been engaged in handling and selling machinery as factors or commission merchants, and as such have been dealing with B.F. Sturtevant and the appellant for 35 or 40 years before this suit was brought. Having for that period of time, received consignments of B.F. Sturtevant's and the appellant's machinery to be sold by them as factors, their principals being first B.F. Sturtevant, and next the appellant.

When the great Baltimore fire occurred, the appellees had in their custody in consignment, a lot of machinery of the appellants known as "blowers and fans." The great Baltimore fire destroyed this machinery, which was not insured. The appellant claims that it was the duty of the appellees as its factors, to have insured this machinery for the benefit of the appellant, and not having so insured it the appellees are liable to the appellant, and this suit is accordingly brought to recover the equivalent of the insurance, namely the market value of the machinery on the date of its destruction by fire. This claim of the appellant is based solely upon this contention — which is denied by the appellees — that the only instruction the appellant ever gave the appellees to insure said machinery were the printed words, "Stock to be kept covered by insurance for the benefit of the consignor," printed in the smallest type at the extreme bottom edge of long invoices, which it is claimed, which is also denied, accompanied the consignments of machinery.

It is also virtually admitted by the appellant, that no letter was ever written, or verbal instruction given, to the appellees to effect any such insurance; nor was there ever made of the appellees any inquiry, as to whether any such insurance had been made. The sole reliance of the appellant upon which it bases its right to recover, is the alleged instruction contained in these printed words on the invoice. The whole testimony of the appellant, its letters and depositions of its employees, attest the correctness of this statement. The appellees, in reply to this claim of appellant, prove by the uncontradicted evidence of Mr. Cumberland Dugan, Sr., the senior member of the appellee's firm, that 35 or 40 years before the beginning of this suit he, through correspondence, by letters (destroyed by fire) had with Mr. B.F. Sturtevant then the owner and conductor of the business, an express and special contract, under which, all machinery was to be consigned to his firm, the appellees, as factors; that this contract has been ever since the time it was made in operation and effect, and the machinery destroyed by the fire was consigned to his firm, the appellees, under said contract and by the appellees so accepted. Mr. Cumberland Dugan, Senior, having testified that all the letters in reference to this contract had been destroyed by the great Baltimore fire, gave the contract as made and set forth in these destroyed letters virtually as follows: That about 1869 the correspondence took place by which Mr. B.F. Sturtevantthen agreed to consign to the appellees for sale as his agents, the machinery made by him, and to pay the appellees certain compensation for selling the machinery, and one specified charge for expense was to be paid by the appellees on said machinery, which was to be put f.o.b. in cars at Boston for Baltimore consigned to the appellees. That the appellees were to be allowed for their services and this one charge, twenty-five per cent, from the list or invoice prices of said machinery, and that the only thing above-mentioned the appellees were to pay out of this discount, was the freight from Boston to Baltimore. That insurance, was not named as an item, which his firm had to pay out of this discount for the benefit of Mr. B.F. Sturtevant or the appellant. That under this express contract his firm had received consignments from B.F. Sturtevant until his death, and subsequently from the appellant, and that the machinery destroyed by the fire was accepted by the appellees under this contract. He further testified without contradiction, that from the first consignment of the machinery until the great Baltimore fire, his firm had never received a word by letter or otherwise, modifying or altering this contract, or instructing his firm to insure the machinery for the benefit of B.F. Sturtevant or the appellant; that his firm always supposed B.F. Sturtevant and the appellant effected and carried its own insurance, on its consigned machinery, as was done by other machinery firms with which the appellees dealt as factors.

As to the invoices with printed words on them, Mr. Cumberland Dugan, Sr., and Mr. Cumberland Dugan, Jr., the two appellees, who composed the firm of Cumberland Dugan and Company, and Mr. Lannon, their bookkeeper, without eontradiction testified that they only received consignments with invoices about two or three every two years; that the invoices accompanying these consignments so far as they saw, had on them no such printed words, directing the appellees to insure the machinery for the benefit of the appellant; that if such printed words had been on the invoices they would certainly have seen them. Mr. Dugan, Sr., further testified, that these printed words were not on the invoices accompanying the consigned machinery. They all testified that no instruction was ever given by the appellant to appellees to insure the machinery for the benefit of the appellant, and that no inquiry was ever made as to whether any such insurance had been made. On this testimony the Court of its own motion gave the following instruction covering the case, and submitted the case to the jury on this instruction, and the verdict of the jury was for the appellees.

By the Court:

"If you find that the goods, the subject of this suit, were consigned by the plaintiff to the defendants with invoices plainly requiring "stock to be covered by insurance for the benefit of the consignor," that the goods were accepted by the defendants without objection, that no such insurance was made, and that the goods were destroyed by fire, then the plaintiff is entitled to recover.

"But if, on the contrary, you find that the goods were consigned and accepted under a prior subsisting contract between the parties not requiring such insurance, then the defendants are entitled to your verdict.

"This means that whether the defendants are or are not liable to the plaintiff, depends upon the terms of the contract under which the goods mentioned in the evidence were held by the defendants. It means that the question of what were the terms of this contract is a question for the jury to decide from all the evidence in the case.

"It means that there is sufficient evidence from which the jury may find that the clause upon the invoices requiring "stock to be covered by insurance for the benefit of the consignor" whether or not read by the defendants or their agents was upon the invoices sent with the goods above mentioned and did in fact form a part of the contract under which the said goods were held at the time of the fire.

"And if they so find their verdict must be for the plaintiffs.

"It means that there is sufficient evidence from which the jury may find on the other hand, that the said goods were held by the defendants at the time of the fire under a contract which was entered into prior to the sending of whatever invoices were sent and which was at the time of the fire still subsisting in which contract there was no provision requiring insurance.

"And if they so find their verdict must be for the defendant.

"It means that the jury are to look at the whole evidence in the case and from it to determine whether by express agreement or by such conduct on the part of the defendants as the plaintiff had the right to rely upon as evidencing an acceptance of the insurance clause above mentioned printed on the invoices (if the jury shall find that invoices with such clause printed thereon were received by the defendants) the said clause as to insurance was a part of the contract between the parties under which the said goods were held at the time of said fire."

The contention of the appellant is that the relation between the parties to this suit is that of vendor and purchaser and that it has the right to recover the value of the machinery on the count for goods sold and delivered, which is one of the counts declared on.

The appellant offered a prayer on this theory which was rejected by the lower Court, and this forms one exception. There were two other prayers offered by the appellees and granted, which relate to minor questions and to which exceptions were taken; one was the often approved prayer by this Court, relating to the burden of proof being on the appellant to prove its case to the satisfaction of the jury by a preponderance of evidence. The other granted prayer of the appellees was based on the theory of the appellant as to the printed words as to insurance being on the invoices for the benefit of the appellant. The jury were told if these printed words were not on the invoices, under the evidence, the verdict of the jury should be for the appellees. To the granting of this prayer the appellant also excepted. There was no special exception to these granted prayers as to the insufficiency of the evidence to support their hypothesis or that a question of law was submitted to the jury.

Another prayer offered by the appellant which was refused by the lower Court, also forms an exception. This prayer segregated solely the appellant's evidence and omitted all of the appellees,' as to a prior and subsisting contract between the parties as to the terms or conditions of the consignment of the machinery in question. This refused prayer of the appellant, in its exact words, was incorporated in the Court's instruction and given to the jury. The fault of the appellant's first prayer is that it segregated the plaintiffs testimony on a certain point, and omits entirely the defendants on the same point, and directs the jury, if they believed them to find for the plaintiff, while if the jury found the defendants' testimony to be true, would not have justified the conclusion of the prayer or the findings of the jury. The prior subsisting contract between the parties as sworn to by the appellee was entirely omitted from the prayer. And again the plaintiff had the benefit of the law it was intended to embrace in the exact words of the lower Court's instructions. Again the plaintiff's third prayer was properly refused because there was no sufficient evidence to support it. The testimony of both parties we think conclusively show that the dealing as to the machinery in question, was a clear and distinct bailment for sale, and not a sale. The machinery was to be sold to purchasers for not less than the list or invoice price, and was not purchased by the appellees. The machinery could not be sold by the appellees at any price they liked, or payment received at any time they liked. Until a sale to a third party, the machinery belonged to the appellant, and at any moment it could have revoked the factor's agency and had the machinery returned to it. This prayer was properly refused by the lower Court.

Prayers must be consistent, and a fatal objection to this prayer is, that the plaintiff's second granted prayer, is in direct conflict in theory and conclusion to this prayer.

In order that instructions shall be binding upon the factor, it is necessary that they be clear and distinct, as it is only a reasonable and just rule, that the factor shall not be liable for a departure from instructions which lack these characteristics. 12 A. E. Encyc. Law, 646. Even admitting that the invoices had the notice to insure which is flatly denied by the appellee, can it be said that they were "clear and distinct?" It is not the duty of a factor to insure goods of his principal, unless instructed to so do, unless a usage of trade makes it his duty so to do, unless some understanding exits between the principal and factor that the goods in question shall be insured. 19 Cyc., 123. Though a factor has power to insure the goods of his principal, and may even do so in his own name, still, as a general rule, he is under no obligation to do so. The obligation to insure may however, be imposed upon the factor by a general usage or custom to that effect, or by instructions of the principal, or by an agreement or course of dealings between himself and his principal imposing such duty upon him. 12 A. E. Ency. Law, 659. There is no proof of any general usage or custom in this case for the factor to insure; on the contrary the defendant swears positively that he never insured the machinery consigned to him by the appellant or other consignors. The uncontradicted testimony is that the appellant never by letter, verbally or otherwise, instructed the appellees to insure the machinery in question for the benefit of the appellant. Nor was any inquiry ever made by the appellant as to whether the machinery was insured. The only agreement between the parties was an express and special one impliedly that there was to be no insurance by the appellees for the appellant's benefit in the machinery — because freight alone from Boston to Baltimore, was to be paid by appellees out of the discount received by them, and nothing else. Again for 35 or 40 years the question of insurance had never been suggested in the remotest manner by the appellants, nor in point of fact had there ever been any insurance placed upon the machinery of the appellants in the appellees' possession, by the appellees, although their dealings for 35 or 40 years had been carried on along the same lines between these parties. Contracts are not made or unmade, modified or altered, on invoices. An invoice "Is a list sent to a purchaser, factor or consignee, c., containing the items together with prices and charges of merchandise sent or to be sent to him." 23 Cyc., 357. "An invoice is not a bill of sale, nor is it evidence of a sale." Even when the goods were described as bought and shipped on account of and at the risk of the drawee. Dows v. Nat. Ex.Bank, 91 U.S. 630. Again the Supreme Court has said that, "A printed bill head can have little or no influence in changing the clear and explicit language of the letters, and it in no way controls, modifies or alters the terms of the contract. The contract having been clearly expressed in writing, the printed bill heads of the invoice can, upon no well settled rule, control, modify or alter it. Sturm v. Boker, 150 U.S. 326.

Applying this to the case before us, we have a contract of consignment made by letters, which were destroyed it is true, but their contents were sworn to by Mr. Cumberland Dugan, Sr. In that contract the only payment to be made out of the discount received by the appellees was freight; no duty to insure was imposed upon them. The question of insurance if required by appellants might have prevented any dealings between these parties. We do not think that the device suggested, if it ever existed, could modify, change or alter the prior, subsisting contract made by the destroyed letters. For when a contract has been entered into between two parties, neither party alone, has the legal right to add to it new terms or conditions. Such attempts are nullities, and carry with them no legal obligation to be respected or obeyed by the other party, for if the consignor can add one, he can add a dozen. "Where the consignment is made upon the express agreement, the factor of course is not bound to follow subsequent instructions, inconsistent with such agreement." 12 A. E.Ency. Law. 643. For having shipped the goods under one contract, it had no right on its own motion, to modify the terms thereof. It is an elementary principle that the minds of parties must meet before a contract results. Each of these notices being in itself a nullity, it is inconceivable how, upon any legal principle, the frequency with which they were repeated, could create out of them a contract on the part of the plaintiff, without a scintilla of evidence of assent on the part of the defendant to the terms expressed in them, and not supplemented by some evidence that the original purchase or shipment was made upon such terms. And when we consider the long number of years through which contract had run, the uncontradicted testimony of the appellee that their dealings were under an express contract, and that this contract continued without modification, until the machinery was destroyed by the Baltimore fire, we are forced to the conclusion that the appellees are not liable to the appellants. The law sought by the appellant in his first refused prayer as we have said was based upon a hypothesis which had no evidence to support it, but that prayer cannot be considered in this Court because no special exception to the prayer was taken on this account.

We think the Court committed no error in granting the appellees ninth prayer as well as the sixteenth, 66 Md. 498-500. Rule 4 of this Court, Code, Art. 5. sec. 9. No special exceptions having been taken because of insufficient evidence to support its hypothesis, assumption of facts, or submitting a question of law to the jury.

We have already given our reasons for supporting the action of the learned Judge below in refusing the appellants' first prayer.

As to the appellants' third prayer which asked the Court to rule as a matter of law that there was a sale of the machinery to the appellees, and that they are liable as purchasers or vendees on the common money counts of the declaration for goods sold and delivered. The relation of vendor and purchaser is assumed by the prayer to have existed between the parties as to this machinery. The first fatal error of this prayer is, that there is not a scintilla of evidence to support its hypothesis. We think the testimony of the appellant and appellee as to this machinery shows that the relation of factor and principal existed between them. Indeed the testimony shows that the appellees were del credere agents of the appellants for the sale of this machinery, for it is a conceded fact that they guaranteed the payment of the purchase price due by the purchaser for the machinery. The testimony shows that the contractual relations between these parties was dual. In one of the relations there was a sale, the machinery was "sold" by the appellant to to the appellees. In the other relation there was a bailment for sale; the machinery was "consigned" from the appellant to the appellees to be sold by the latter as agents of the former. These dual relations are most clearly shown in the exhibits and testimony appearing in the record. The intention, as well as the expressed understanding of the parties, as to both of their relations, is unmistakable.

It is the solely consigned machinery which is involved in this suit. In the sold machinery, the invoices always contained, as appears from appellees exhibit No. 1 the words "sold to Cumberland Dugan Co." This sale to the appellees was when the appellant sent machinery direct to the purchaser from its factory, and billed the goods as above, directly to the appellees. While in the case of the machinery "consigned" to the appellees, as appears from the appellants exhibits 7, 8 and 9, the word "consigned" was printed upon the invoices. The contract entered into between the appellant and appellees as to the consigned machinery is uncontradicted, and is thus set out in the appellees letter to appellant of March 6th, 1905, and filed as appellants Exhibit 36 and is as follows: "Some 35 years ago you commenced consigning us fans and blowers. You told us to net you a certain price, being a discount. You allowed us, all over that we sold the machines for, belonged to us." Mr. Cumberland Dugan, Sr., in his testimony confirms this statement in this letter. His testimony is as follows: We solicited the agency from B.F. Sturtevant. The arrangement was: "He was to ship the goods to me, and ship them at a certain price and we were to sell them, and pay freights, and all was over his price, we were to take." Again he said "We never had any special time fixed when we had to remit." Again there was no particular time to pay him. We paid in sixty, ninety days and four months, but he could demand in thirty days. We think that from the evidence in this case that there was a bailment for sale, the letters of both parties, the invoices of the appellant appearing in the record have been critically examined, and they all show, we think conclusively, that the understanding of both parties was that the machinery was a consignment, and the contract between the appellant and appellees as to the machinery destroyed, was a bailment for sale or agency, and not a sale. The Supreme Court of the United States in Sturm v. Boker, 150 U.S. 326, supra, expressly decided in a question of bailment or sale, that the use of the words "consign" and "consigned," employed in letters between the parties, were used in their commercial sense, and that in arriving at the terms and conditions upon which the goods passed from one of the parties to the other, these words must be given due weight and proper consideration. "It is too clear for discussion or the citation of authorities, that the contract was not a sale of the goods by the defendant to Sturm. The terms and conditions under which the goods were delivered to him import only a consignment. The words "consign" and "consigned" employed in the letters were used in their commercial sense, which meant that the property was committed or entrusted to Sturm, for care or sale, and did not by any express or fair implication mean the sale by one or purchase by the other." There is nothing in this record to show, either directly or indirectly, expressly or impliedly "the sale by one or the purchase by the other." Could a creditor of Cumberland Dugan Co. have seized the machinery in question? Can any one doubt that a Court on the evidence of both parties in this case would have promptly recognized the title of B.F. Sturtevant Company, and given it possession of this machinery? That the parties by their correspondence after the shipment construed it as a consignment for sale is conclusive. 19 Cyc. 120 note 49. The fact that goods are consigned for sale with the provision that the factor may retain in a sale of the property all the money in excess of the invoice price does not destroy the relation of factor and principal and render the transaction a conditional sale. 19 Cyc. 121. Exhibit 36 says: "You told us to net you a certain price, being a discount. You allowed us all over that we sold the machines for, belonged to us." And the testimony of Mr. Cumberland Dugan, Sr., was "The arrangement was: he was to ship the goods to me, and ship them at a certain price, and we were to sell them and pay freight and all was over his price we were to take." The distinction between bailment and sale is not difficult of ascertainment, if due regard be had to the elements peculiar to each In bailment, the identical thing delivered is to be restored or the proceeds after sale. In a sale there is an agreement, express or implied, to pay money or its equivalent for the thing delivered, and there is no obligation to return. Has the sender the right to compel a return of the thing sent, or has the receiver the option to pay for the thing in money? In reGalt, 56 C.C.A. 473-474; 120 Fed. Rep. 64 In. re Columbus BuggyCo., 74 C.C.A. 613: 143 Fed. Rep. 859. John Deere Plow Co. v.McDavid, 70 C.C.A. 430; 137 Fed. Rep. 802. Nor do we understand the case of Curtis v. Gibney, 59 Md. 154, to be in conflict with the above decisions, and we think that a careful reading of the same will disclose their harmony.

Without extending this opinion further for the reasons given the judgment must be affirmed.

Judgment affirmed, with costs to the appellee above andbelow.