Case Title: Farm & Auto Supply v. Phoenix Fuel Co.

Citation: 103 Ariz. 344, 442 P.2d 88

Docket Number: 

State: arizona

Court: Arizona Supreme Court

Date: 1968-06-12T00:00:00Z

Document:
103 Ariz. 344 (1968) 442 P.2d 88 FARM & AUTO SUPPLY, an Arizona corporation, doing business as Farm Service & Auto Supply, and Donald W. Harvey and Ethel N. Harvey, doing business as Farm Service & Auto Supply, Appellants, v. PHOENIX FUEL CO., Inc., an Arizona corporation, Appellee. No. 8558. Supreme Court of Arizona, In Banc. June 12, 1968. Herbert Mallamo, Phoenix, for appellants. Cox & Cox, by Alfred S. Cox, Phoenix, for appellee. McFARLAND, Chief Justice: Plaintiff-appellee, Phoenix Fuel Co., Inc., a corporation, sued defendant-appellant, *345 Farm & Auto Supply, a corporation, for over eleven thousand dollars, stating that its complaint was on "open account," and alleging that defendants owed plaintiff the money for "goods sold and delivered according to the account annexed as exhibit `A'." After plaintiff garnisheed several parties, defendant paid the account in full. The parties then stipulated that the action should continue solely to dispose of two questions: (1) whether defendant was liable for attorney's fees, and, if so, how much, and (2) whether defendant was liable for the costs of the action, including the cost of serving process on all defendants. The case was tried before a judge, sitting without a jury, and plaintiff was awarded judgment for $212.85 costs and for $3,816.74 attorney's fees. Defendant appealed. Plaintiff's proof is inconclusive on nearly every point, and it is therefore difficult to determine on what facts the lower court based its judgment. Plaintiff was a wholesaler of petroleum products. Defendant had one or more tank trucks and purchased plaintiff's products regularly over a period of a year and a half; delivery was always made into defendant's truck at plaintiff's place of business. The original contact with defendant was made by plaintiff's salesman, who appears to have made arrangements for the sales to be made on credit. Plaintiff carried as an account receivable, an open account to which he posted each sale to defendant. Defendant's truck would enter plaintiff's yard, and the driver would do his own loading. He would then enter plaintiff's office and tell the bookkeeper what he had loaded, and the latter would make out an invoice which the driver would then sign, after which it would be posted to defendant's account owing to plaintiff. At the trial, plaintiff introduced in evidence Exhibit 2, which it stated were all of the invoices pertaining to defendant's account. These consisted of 174 printed forms each entitled "invoice," dated, and reading "Sold to"; followed by a blank in which defendant's name had been inserted. Each invoice had a blank space filled in with the description, quantity, price, and total amount of the purchase. Each had a line for the customer's signature. 37 invoices, totalling nearly $7,000, were not signed by any one on the lines for customer's signature; 137 invoices, totalling approximately $38,000, had assorted signatures of: "Jerry," "James J. Hill," "Pliad Watt," "D. Dallas Hyde," "W.G. Vaughn," "D. Brown," etc. 74 of these invoices have printed on their faces: while one hundred bear the following statement: We see no problem with plaintiff's recovery of costs. Since defendant paid the account in full only after the action was started, it is liable for costs. If the issue referred to in the stipulation is whether those costs should include the expense of serving process by private process-servers, the authority for including the cost of process serving by private process servers is found in A.R.S. § 11-445, subsec. F: The remaining question is whether defendant is liable for attorney's fees. In Commercial Standard Insurance Company v. Cleveland, 86 Ariz. 288, 345 P.2d 210, we affirmed a long-standing rule that The evidence indicates that some form of agreement was made as to price and terms of payment, between plaintiff's salesman and defendant, prior to delivery of the goods in question, and that they were thereafter sold and delivered on open account in accordance with such an agreement. Defendant certainly did not agree to buy from plaintiff without some assurance of a price or of a method for ascertaining the price, and it seems to have been admitted that the sales were to be made, and were actually made, on credit. Therefore, it may be said that the parties, before any purchases were made, had created a situation where the seller had made an offer for a series of contracts at a mutually-agreeable price. The burden is upon the party attempting to show that such agreement included a promise to pay attorney's fees, and not upon defendant. If he has failed in this respect he must fail in the lawsuit. The evidence does not show that when this agreement was made there was even any discussion of attorney's fees. Plaintiff, having failed to show agreement to pay attorney's fees, seeks to fill this gap by claiming that the invoices contained in Exhibit 2 are individual contracts, providing for the payment of attorney's fees, signed by defendant's agents. In support of this argument it cites two cases: Slim Olson, Inc. v. Winegar, 122 Utah 180, 246 P.2d 608; and Braun v. S.F. Hess & Co., 187 Ill. 283, 58 N.E. 371. In Olson, supra, defendant personally signed 47 invoices, and the court said that he did so "without protest on his part," and that: It will be noted that the court based its opinion largely on the fact that Winegar had personally signed 47 of the invoices, and for this reason the court did not go into the question of apparent authority of employees to so sign. Olson, supra, is not in point with the instant case because the facts are different. In the instant case none of the invoices was signed by defendant, many were not signed at all, and there was an absence of proof that defendant had any personal knowledge of the contents of the invoices. Braun v. S.F. Hess & Co., 187 Ill. 283, 58 N.E. 371 (1900), the second case cited, is not in point. In that case the invoices were sent to defendant at *347 the time the goods were shipped, and on them appeared the following: The court, in holding defendant liable for interest, stated: It will be noted that the court based its decision largely upon the fact that under the law the invoices were payable upon delivery of the goods, the extension of the time was in defendant's favor, and since he made no objection, assent would be implied. In other words, taking advantage of the extension by failure to make payment when the goods were delivered were acts which constituted the assent to the agreement. We do not have similar facts in the instant case. The original agreement provided for credit. There was no basis on which it could be held that the failure to act was an acceptance of the printed matter upon the invoices, particularly in the absence of proof of actual knowledge by defendant of the provisions in regard to attorney's fees contained in the invoice, and in the absence of proof that those who signed the invoices had authority to modify the previous agreement or to make a contract binding defendant to pay attorney's fees. While there is authority (discussed infra) holding that silence in regard to provisions contained on invoices where the party receiving the goods has knowledge of its contents, is not binding upon the buyer, we are not called on to pass upon this question in the instant case, because it was not proved that defendant had any personal knowledge of the provisions on the invoices in regard to attorney's fees. Under any theory of the law the question of whether silence would amount to assent to the provisions contained on an invoice would depend upon the agreement, and upon the facts surrounding the transaction in each individual case. In the instant case the evidence shows that defendant was permitted to serve himself, and, after the truck had already been filled, the driver went to plaintiff's bookkeeper and was given an invoice for the number of gallons taken. Each time defendant picked up some product it would become obligated to pay the agreed price and on the agreed terms. At this point there was no agreement to pay any attorney's fees, and no claim is made for such fees except insofar as the invoices, written after each purchase, constitute written contracts to such fees. An invoice is "an account or catalogue of goods, with the value, marks, or particular description thereof annexed; a list of goods sold and the prices charged for them * * *" State v. Standard Oil Co. of Indiana, 222 Iowa 1209, 271 N.W. 185. An invoice "is not a bill of sale, nor is it evidence of a sale. It is a mere *348 detailed statement of the nature, quality, and cost or price of the things invoiced * * *" Dows v. Natl. Exch. Bank, 91 U.S. 618, 630, 23 L. Ed. 214. An invoice is a business device, generally issued in duplicate, with a copy for the buyer and one for the seller. It is designed to expedite the bookkeeping of both the buyer and the seller. The seller's bookkeeper gets one copy and uses it to record in the seller's books, the amount which the buyer is obligated to pay; the buyer's bookkeeper gets the other copy and uses it to record in the buyer's books the amount which the buyer owes the seller for the purchase. The invoices have other uses such as to keep track of the quantities bought and sold for cost-accounting purposes, for excise-tax reports, etc. It is very possible that no one in the buyer's employ saw the invoices, other than the bookkeeper who was interested only in the dollar amounts. The burden of proving a written contract is on the seller, since it is the party who seeks to collect the attorney's fees. In order to modify the prior offer for a series of unilateral contracts, it is necessary that both parties agree to the modification. It is necessary that the seller intend to make an offer to modify, and that the buyer intend to accept such an offer. We approve the reasoning in Tanenbaum Textile Co. v. Schlanger, 287 N.Y. 400, 40 N.E.2d 225. In that case there was a series of sales arranged by telephone. In no case was arbitration of disputes mentioned. The sales were accompanied or followed by invoices on which was stamped in red ink, "All controversies arising from the sale of these goods are to be settled by arbitration." Buyer received and retained the invoices. The court stated: See also Joseph B. Cooper and Son, Inc. v. Finlay Departments, Inc., 11 Misc.2d 382, 174 N.Y.S.2d 265. In the case of India Paint & Lacquer Co. v. United Steel Products Corp., 123 Cal. App. 2d 597, 267 P.2d 408, the court held: We hold that where none of the invoices containing provisions in regard to attorney's fees are signed by the buyer, and it is not proved that employees who signed the invoices had authority to make such an agreement in regard to attorney's fees, the mere signing by such employees of some of such invoices, does not constitute a binding contract of the buyer to pay attorney's fees as provided in the invoices. Judgment reversed, and case remanded with instructions to eliminate plaintiff's judgment for attorney's fees. UDALL, V.C.J., and STRUCKMEYER and BERNSTEIN, JJ. NOTE: Justice LOCKWOOD, having disqualified herself, did not participate in the determination of this appeal.