Page images

for purchases amount to five hundred pair (500) then another 5 per cent will be allowed, thus making a total discount from the list price in that event amount to 30-5-5 per cent and the extra 5 per cent for cash. In the event of the maximum discount being reached, permission is given as a matter of convenience to figure a total net discount of 40 per cent.

8. Privilege is given to said second party to call and advertise our product under the name of 'The Armor Plate Tire Protector.'

9. The life of this contract shall be for a term of five (5) years, but shall not be assignable by the party of the second part.”

Annexed to the contract is a schedule containing a list of the prices which the defendants were to pay for the goods consigned to them by the plaintiff under the terms of the agreement and for not less than which they were to sell them to the public.

The complaint avers: “That under and pursuant to said contract plaintiff shipped to defendants at Sacramento, California, at defendants' instance and request, between the eighth day of October, 1910, and the first day of May, 1911, tire protectors of the value $18,700.45, estimated at the price provided for in said contract; that, as plaintiff is informed and believes, and on such information and belief alleges, all of said tire protectors so delivered to defendants as aforesaid have been sold by defendants."

It is alleged that of the sum above mentioned there has been paid by the defendants to the plaintiff the sum of $2,741.75, only, and that there is consequently due the latter from the former the sum of $15,958.70.

A general demurrer to the complaint having been overruled, the defendant Ritchie answered.

The answer admits the making of the contract mentioned in the complaint; admits the shipment to the defendants by the plaintiff of a certain quantity of the protectors, but denies that they were of the value of $18,700.45, averring, however, that they were of the value of $28,333.45; denies that said tire protectors so delivered to the defendants have been sold by said defendants, but admits that of the protectors 80 delivered to the defendants the latter have sold “about $6,275 worth, only," which amount it is alleged has been paid to the plaintiff.

[ocr errors][merged small]
[ocr errors]

The answer sets up a number of special defenses and counterclaims growing out of alleged breaches of the agreement by the plaintiff, said counterclaims amounting in the aggregate to the sum of forty-two thousand dollars. As to these, however, it may here be remarked that the court found, and appears to have been justified in so finding, that the defendant was entitled to nothing on the counterclaims pleaded by him. They, therefore, need not be further noticed.

It is further alleged in the answer that, after the contract in question was made, the partnership existing between Ritchie & Heriot at the time of the execution of said instrument, was, by the mutual consent of said partners, dissolved, and that the said contract was thereupon assumed by the said Ritchie, “who continued to transact the business theretofore conducted by the said copartnership."

The court found that the pleaded contract was entered into between the parties as alleged in the complaint; that the plaintiff shipped to the defendants at Sacramento tire protectors of the value of $18,700.45; that the defendants did not sell all the protectors so shipped, but did sell a portion thereof, amounting in value to the sum of $2,741.75; that all of said goods were shipped to and received by the defendants to be paid for when sold, and not otherwise; that no part of the said sum of $18,700.75, the value of the protectors shipped to the defendants, has been paid by the said defendants, except the sum of $2,741.75, but the court finds that it is not true that there is a balance due from the said de· fendants to plaintiff in the sum of $15,958.70, or any other sum.

It must be conceded that the contract, upon its face, is rather ambiguous and uncertain as to the nature of the relation which the parties thereto intended thereby to establish between themselves. That the construction placed upon it by the trial court, as evidenced by its findings, is reasonable and sustainable by certain language of the instrument, no one reading the writing will for an instant doubt. On the other hand, language is used from which the conclusion might justly be justified that the intention was that, while the defendants were to enjoy the exclusive right and privilege of selling the tire protectors within the territory designated in the contract, they were, nevertheless, to be required to purchase the goods outright from the plaintiff on the terms and

conditions of the agreement, and that each order or shipment was to constitute an absolute sale.

The preamble to the contract contains the declaration that "the party of the first part is willing to permit party of second part to sell said protectors in accordance with the terms mentioned herein.” Among the terms of the contract is a provision that the prices at which the defendants are to sell the article must not be less than the established prices indicated in the schedule attached to the contract exhibiting a list of prices, “nor allow any of their subagents to violate this agreement." This language, viewed by the light of that of the preamble above referred to, appears to make it very clear that the intention was that the defendants were by the contract to act as mere selling agents of the plaintiff.

As counsel for the defendant well suggest: “The idea of subagents must presuppose an agent. ... There could be no reason for the expression, 'subagent,' unless the parties had in mind that the second parties were the agent of the first party in the matter of the distribution of these protectors."

Again, the third paragraph of the contract binds the defendants to the obligation of expending the sum of two thousand dollars each year during the life of the contract for the purpose of advertising the protectors and to render to the plaintiff a verified statement of expenditures for such purpose. Such a provision is a most unusual one in a contract providing for the absolute or unconditional sale of a commodity. If the contract was intended as one for the absolute sale of the article at the prices specified therein, is it reasonable to suppose that the defendants would have bound themselves for a period of five years to the expenditure of such a large sum each year of the five for such a purpose? Indeed, if it had been intended as such a contract, is it reasonably to be supposed that the plaintiff, having received its price for its goods, would have exacted such an agreement from the purchaser The burden imposed by said provision as a condition upon which a party might acquire the rights and authority of a selling agent for another would not be, per se, an unreasonable one; for, as counsel for the defendant suggest, the clause may the more reasonably be construed as involving an agreement on the part of the defendants to expend the amount required for advertising as a bonus for the right and privilege of acting as the selling or distributing

31 Cal. App.-36

[ocr errors][merged small][ocr errors]
[ocr errors]

agents of the plaintiff within the designated territory. Then there is the clause whereby it is covenanted that the plaintiff will supply the defendants with a sufficient "stock of said protectors to meet all reasonable demands," the defendants to report to the plaintiff on the first day of each month the amount of stock on hand. Said clause further provides that the defendants were to keep the stock on hand fully insured. Such conditions as these are rarely to be found in a contract of sale, but are peculiarly appropriate to a bailment or some other transaction by which it is not intended that the consignee of the goods shall acquire title thereto.

Thus we could proceed and point out other language of the contract which, taken alone or viewed in connection with the provisions of the instrument above referred to, clearly implies that the contract was intended to establish the relation of principal and agents between the parties and not intended as a contract for the sale of the goods; but it is un. necessary further to examine the contract for this purpose. The instrument is presented herein in full, and there can be no difficulty in observing from its language that the conclusion arrived at by the court below as to its legal nature, scope, and effect involves a reasonable view of the language of the writing.

We do not say that the provisions of the contract above specifically adverted to are wholly inconsistent with the theory that the transaction was intended as a contract of sale. What we do say is that the provisions are perfectly consistent with a contract creating an agency. Indeed, as declared, some of them are very rarely to be found incorporated into a contract for the absolute or unconditional sale of goods. And it should further be noted that the plaintiff appears to have proceeded in this action upon the theory that the transaction involved only a conditional sale of the protectors to the defendants. The complaint alleges, upon the information and belief of the plaintiff, that all of the protectors shipped to the defendants had been sold by the latter. If the transaction was in fact an absolute sale of the goods, why such an allegation in the complaint! What material difference could it make to the plaintiff whether the goods were or were not sold by the defendants if, in truth, the sale was absolute and title to the goods passed to the de

fendants? The averment is obviously wholly inconsistent with the theory of an absolute or unconditional sale.

As suggested, however, it must be admitted that the contract contains some language which, if considered by itself or without reference to or consideration of other language of the instrument, might warrant the construction to which the writing is subjected by the plaintiff, viz., that it involves an agreement for the absolute sale of the tire protectors to the defendants. Indeed, it may justly be assumed to be true that the instrument is so characterized by ambiguity and uncertainty as to the nature of the relation which the parties intended thereby to create between themselves that either of the two constructions of the contract urged by the respective parties might, upon reasons equally cogent, be sustained. The question, therefore, then arises, assuming, of course, that no competent testimony extrinsic to the writing itself reflecting light upon the real intention of the parties has been received: Is it, in such a situation, within the proper or legal functions of a court of review to declare that the construction given the writing by the trial court should be rejected and supplanted by the other construction of which the instrument is susceptible? Manifestly, no reason can be conceived which would support an affirmative reply to that question. The appeal court could not adopt such a course in such a case without resorting to the exercise of arbitrary power. So, if there were no other evidence in this record but the instrument itself which throws or. tends to throw any light on the relation which the parties by the contract intended to establish between themselves, we would feel constrained -indeed, it would be our duty—to uphold the construction given the contract by the trial court, as evidenced by its findings.

But there was introduced and received in the case some evidence extrinsic to the instrument itself which we think tends to support the trial court's construction. After the contract was made and a large stock of protectors had been shipped to the defendants, considerable correspondence by mail was carried on between the parties. Some of these letters were introduced in evidence. Excerpts from a few will be sufficient to indicate that the plaintiff understood the contract to call for a payment for the goods shipped to the defendants only when the latter sold the same.

[ocr errors][merged small]
« PreviousContinue »