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Timestamp: 2019-04-22 20:04:06+00:00

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ROCK-OLA MANUFACTURING CORPORATION vs. MUSIC & TELEVISION CORP. & another.
TORT AND CONTRACT. Writ in the Superior Court dated December 12, 1955.
The action was heard by Meagher, J.
Franklin N. Flaschner, for the plaintiff.
Edward C. Park, (William N. Wheeler with him,) for the defendants.
the present action, count 1 was against M & T upon an account annexed for $36,693 showing sums owing upon eleven invoices between March 3, 1955, and July 1, 1955, inclusive. The judge, on count 1, found for Rock-Ola in the sum of $39,460.16 including interest. Count 2 was upon the same account annexed against Golumbo. Count 3 alleged that M & T converted to its own use certain property consisting of fifty-three phonographs worth $36,693. Count 4 was a similar count, alleging conversion, against Golumbo. The trial judge found for the defendants on counts 2, 3, and 4. Rock-Ola's bill of exceptions presents (in addition to certain exceptions waived at the arguments) the question whether the trial judge properly denied Rock-Ola's (a) requests for rulings numbered 2, 6, and 7 in substance that the evidence warranted a finding for Rock-Ola against Golumbo on counts 2 and 4 and against M & T on count 3, and (b) request numbered 3, that Rock-Ola may recover on count 2 if Golumbo participated in the unauthorized use of trust funds. An exception to the exclusion of certain evidence offered by Rock-Ola is also presented.
Golumbo testified that Rock-Ola sold phonographs, and apparently other merchandise, to M & T both on open account and on consignment. The sums claimed by Rock-Ola in the companion case (see footnote 1, supra) were for items delivered to M & T on open account and there was due from it to Rock-Ola for these items, $53,786.97. In the action now before the court each of the items listed in the account annexed represented phonographs received by M & T on consignment and sold by M & T by Golumbo or under his direction, "on sales . . . for which he received at least $36,693."
The items so consigned remained the property of Rock-Ola until "1. An order for the purchase of such item has been accepted by Rock-Ola; 2. Rock-Ola has received out of the proceeds of the sale . . . not less than the current distributor's price thereof, and; 3. Such item has been delivered to the purchaser." Neither Golumbo nor M & T ever sent to Rock-Ola a purchase order for acceptance by Rock-Ola in connection with any consigned phonograph, nor does the record indicate that Rock-Ola made any complaint at M & T's failure to do so.
The consignment procedure was changed by Rock-Ola on February 25, 1955, to provide for arrangements described by Rock-Ola in a letter to M & T of that date, as follows: "Under this consignment plan, after machines are shipped, you will receive an invoice with a consignment billing. When your remittance is received, we will issue a credit memo to your consignment account and also a cash invoice on a `do not ship' basis. All machines shipped on consignment must be purchased and converted to a `sale' under our regular 60 day terms. [Note 3] This new method of billing will not change or restrict in any way your present method of doing business nor will it apply to any machines shipped prior to March 1, 1955. When received, all machines shipped to you on and after March 1st, must be kept separate from your own inventory."
count were . . . older . . . than those . . . under the consignment account; that . . . [he] knew the moneys . . . from the sale of . . . consigned goods were trust moneys . . .; that he did not designate on any of the checks that they were trust funds rather than payments on the older open account; that each check was forwarded . . . with a letter . . . and that no letter . . . asked that any . . . money be applied to the trust account." Golumbo said that "between March and October of 1955, he spoke" with Campen, Rock-Ola's credit manager and head of its collection department, by telephone "frequently" and asked Campen "on practically every occasion to apply what checks were being sent to him to our consigned account." On cross-examination, this testimony was limited by Golumbo to "some occasions, more than one or two." Campen testified that Golumbo "never asked to apply any checks to the trust account."
Golumbo admitted that he knew, at least at the time of the trial, that M & T had been credited on the open account with the total of the disputed checks. The evidence, as stated in the record, is by no means clear but would warrant an inference that M & T had learned in some way, even prior to trial, that Rock-Ola had elected to apply the disputed checks on the open account. See Restatement: Contracts, Sections 388, 389, 391; Williston, Contracts (Rev. ed.) Sections 1795-1800; Corbin, Contracts, Section 1231. Campen testified that he "had authority to apply funds received from distributors to the oldest open items . . . and it was his general practice to apply receipted funds in this manner in the absence of any indication as to specific application."
amount of the balance due on the consignment account suggest that he did in fact find that Rock-Ola had properly applied the disputed checks on the open account. Certainly the judge could have found that of the disputed checks transmitted to Rock-Ola prior to May 31, 1955, those in excess of the invoice value of consigned machines then finally sold were to be applied upon the open account, for he could have found that the open account was then the only account for which there was a matured indebtedness except for the amount of the final sales of consigned merchandise.
1. Rock-Ola by its requests numbered 2, 6, and 7 sought to have the judge instruct himself that there was evidence that would warrant findings for Rock-Ola on counts 2, 3, and 4. The denial of the requests "involved a ruling as matter of law that there was no [such] evidence." If there was such evidence, Rock-Ola was entitled to the ruling requested "or to . . . findings of facts showing that the requested ruling had become irrelevant." Bresnick v. Heath, 292 Mass. 293, 298-299. Quality Finance Co. v. Hurley, 337 Mass. 150, 152, 157. The trial judge unfortunately did not disclose the basis of his action in denying the requests by making explicit findings of the facts relied upon by him. Ofgant-Jackson Chevrolet, Inc. v. MacQuade, 338 Mass. 144, 149.
of the obligation under its distributor's agreement to treat the proceeds of sale of consigned items as trust funds and to make prompt payment of such proceeds (up to the consignment invoice price) as a condition of its authority to sell the item. Sale of consigned items under the circumstances could constitute a conversion by M & T and also by Golumbo, who could be found to have participated in M & T's tortious act. Refrigeration Discount Corp. v. Catino, 330 Mass. 230, 233-236. Although the case last cited dealt with merchandise held for sale under trust receipts, as between Rock-Ola as bailor and M & T as bailee, the situation there was analogous to the consignment arrangement here considered. See Crohon & Roden Co. Ltd. v. Rudnick, 232 Mass. 555, 557; Restatement: Torts, Sections 223, 232, 234, 888; [Note 8] Restatement 2d: Agency, Sections 349, 402. See also Coe v. Ware, 271 Mass. 570, 573; General Exch. Ins. Corp. v. Driscoll, 315 Mass. 360, 365; New England Box Co. v. Gilbert, 100 N. H. 257, 259; McDonald v. First Natl. Bank, 353 Pa. 29, 32; Williston, Sales (Rev. ed.) Section 338; Prosser, The Nature of Conversion, 42 Corn. L. Q. 168, 179; Annotation, 152 A. L. R. 696, 705. Cf. Handy v. Miner, 258 Mass. 53, 63; Kabatchnick v. Hanover-Elm Bldg. Corp. 331 Mass. 366, 368-369.
It may be that other findings would have been warranted on the evidence, as, for example, that in correspondence or conversations with Golumbo or otherwise Rock-Ola had consented to a variation of the consignment arrangement, but findings for Rock-Ola on each of the counts (3 and 4) in tort, standing alone, would have been warranted. Requests numbered 6 and 7 should have been given.
Section 128, esp. comments c, f, h, l. Cf. Stadmiller v. Schirmer, 248 Mass. 244, 248-249. The judge's finding on count 1 for Rock-Ola against M & T for the proceeds of the sale of the consigned items must have been based on this principle.
Corbin, Waiver of Tort and Suit in Assumpsit, 19 Yale L. J. 221, 226-227. See also Rabinowitz v. People's Natl. Bank, 235 Mass. 102, 103-104; Trafton v. Custeau, 338 Mass. 305, 308. Cf. General Exch. Ins. Corp. v. Driscoll, 315 Mass. 360, 364-365. Cf. also Sherman v. Werby, 280 Mass. 157, 160-161; Flavin v. Morrissey, 327 Mass. 217, 220. Request numbered 2 (that a finding for the plaintiff on count 2 was warranted) could not have been given. The judge could properly deny request numbered 3 as being insufficiently related to specific assumptions of fact and as too general in terms.
contract counts, prior to findings for or against each defendant on the several counts, would disregard the mandate of the Legislature in G. L. c. 231, Section 7, Sixth, in a case to which that clause is applicable. There is no indication in the record that the trial judge at any time required Rock-Ola to elect among the four counts in any way, even as between the two contract counts to which Section 7, Sixth, would not be applicable.
of ruling on requests with reference to the other three counts and making findings with respect to them. See Restatement: Restitution, Section 144.
5. On redirect examination by Rock-Ola's counsel, Campen, Rock-Ola's credit manager, testified that the invoice figures on the consigned phonographs were "the fair market value of these machines." Subject to the exception of Rock-Ola, the question and answer were struck from the record and an offer of proof was made. Although the exclusion of this testimony, offered first upon redirect examination, was within the discretion of the trial judge (see Chase v. Chase, 271 Mass. 485, 491), it would have been more appropriate to have admitted it as testimony omitted on direct examination. It was highly relevant upon the conversion counts, and no prejudice would have been caused to the defendants by receiving this testimony when it was offered. Wigmore, Evidence (3d ed.) Sections 1896-1900. Cf. Lawrence v. O'Neill, 317 Mass. 393, 397 (where the exclusion of an explanation of an answer made on cross-examination was held erroneous). Even without this testimony there was ample evidence of damages to support recovery on the conversion counts. The measure of damages for the conversion (in the absence at least of special circumstances not here shown to be present) was the fair market value of the machines when sold by Golumbo. See Welsch v. Palumbo, 321 Mass. 399, 403; Manhattan Clothing Co. Inc. v. Goldberg, 322 Mass. 472, 475-476. Cf. Restatement: Torts, Section 927, comment h; Restatement: Restitution, Sections 151, 154. Golumbo had testified that he had in fact received at least the aggregate invoice prices of the consigned items for the sale of some fifty-three machines. This in itself was sufficient evidence of minimum market value to warrant recovery of at least this amount.
[Note 1] At the same time was tried another action by Rock-Ola against M & T on an account annexed to recover the amount, $53,786.97, claimed to be owing on eight invoices dated from October 20, 1954, through February 24, 1955, for phonographs and on a number of other invoices for merchandise and parts. In this other action, the judge found for Rock-Ola in the sum of $61,344.04, including interest.
[Note 2] The contract which M & T as distributor had with Rock-Ola provided that M & T "shall keep all such consigned . . . equipment separate . . . from his own property . . . and shall clearly mark [it] . . . to show that it is the property of Rock-Ola." The contract also required M & T "immediately upon the sale of any item of consigned equipment to remit to Rock-Ola out of the proceeds of such sale an amount not less than the then current distributor's price for such item, the excess over such distributor's price to be retained by distributor as his compensation for making such sale. Distributor shall keep the proceeds of the sale of all consigned merchandise as trust funds, separate . . . from his own funds . . . shall in no way commingle such trust funds with his own funds . . . and shall clearly identify such trust funds to show they are the property of Rock-Ola."
[Note 3] The meaning of this sentence is ambiguous and could have been explained by parol evidence. On the present record, the judge was not required as a matter of law to rule that it meant either (a) that consigned merchandise held by M & T for sixty days must be purchased, or (b) that, upon the sale of consigned merchandise, M & T could hold the proceeds for sixty days before transmitting the proceeds.
[Note 4] At various places in the bill of exceptions the total of these checks, because of a mistake of listing and addition, is referred to as $36,554.
[Note 5] The aggregate amount to be remitted upon the sale of the machines shown in this inventory as of May 31, 1955, was $18,411. According to the account annexed, prior to May 31, 1955, there had been aggregate consignment shipments to M & T invoiced at $22,733. If, as seems likely, the phonographs covered by one invoice dated May 27, 1955, had not been received by M & T by May 31, 1955, and if they were not included in the inventory, the total invoice price of the consignments to that date would have been only $19,243. Six of the disputed checks in the aggregate amount of $30,460 had been dispatched to Rock-Ola prior to May 31, 1955. Rock-Ola argues that checks in this large sum could hardly have been intended to be payments only for the relatively few items in the consignment account which had then been sold. If they were payments for consignment merchandise, they must have been payments in advance of the final sale of a substantial number of items. On the somewhat ambiguous record the judge would have been warranted in drawing inferences consistent with Rock-Ola's argument. Comparing the consignment shipments as shown on the account annexed with the consigned merchandise for which M & T was still accountable as of May 31, it would seem that M & T on May 31 had then finally sold only $4,322 worth of consigned merchandise if it had then received the May 27 shipment, and only $832 worth, if it had not then received the May 27 shipment. Of course, M & T may have transmitted receipts from payments on machines "out on approval" which had been paid for, subject to return if found to be unsatisfactory.
[Note 6] The only payments received on the consigned account, according to Campen's testimony, were two checks of October 10 and 28 (not included in the disputed checks) which reduced the amount due for consigned merchandise on the account annexed to $34,599.
[Note 7] On this record, there are involved no rights of third persons, as to which see G. L. c. 104, as amended. See Restatement 2d: Agency, Section 175. The present cause of action arose before the enactment of the Uniform Commercial Code. See G. L. c. 106, Sections 2 -- 326, 2 -- 327, as appearing in St. 1957, c. 765, Section 1; 4 Annual Survey of Mass. Law (1957) Section 3.5.
[Note 8] See also Restatement 2d: Torts, Sections 222A, 232 (Tent. Draft No. 3, Apr. 18, 1958).

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