Case Name: EBERHARD MANUFACTURING COMPANY v. BROWN
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1975-05-28
Citations: 61 Mich. App. 268
Docket Number: Docket No. 19595
Parties: EBERHARD MANUFACTURING COMPANY v BROWN
Judges: Before: J. H. Gillis, P. J., and Quinn and R. M. Maher, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 61
Pages: 268–274

Head Matter:
EBERHARD MANUFACTURING COMPANY v BROWN
Opinion of the Court
1. Sales — Risk of Loss — Shipment Contract — Destination Contract — Statutes.
The risk of loss generally passes to the buyer when goods are duly delivered to a carrier where the contract is a shipment contract; the risk of loss generally passes to the buyer when the goods are duly tendered at the destination where the contract is a destination contract (MCLA 440.2509[1]).
2. Sales — Sellers—Delivery of Goods — Destination Contract— Risk of Loss — Statutes.
A seller of goods in a contract for the sale of goods is not obligated to deliver the goods at a named destination and bear the concurrent risk of loss until arrival unless he has specifically agreed so to deliver or the commercial understanding of the terms used by the parties contemplates such delivery (MCLA 440.2503).
3. Sales — Sales of Goods — Risk of Loss — Failure to Allocate Loss.
The risk of loss passes to the buyer of goods at the time the goods are delivered by the seller to the carrier where the contract for the sale of goods requires or authorizes the seller to ship the goods by carrier and contains neither an F.O.B. term nor any other term explicitly allocating loss.
4. Sales — Sales of Goods — Contracts—Terms—Risk of Loss.
A "ship to” term in a contract for the sale of goods has no significance in determining which party to the contract bears the risk of loss since a "ship to” address must be supplied in any case in which carriage is contemplated.
References for Points in Headnotes
[1, 2] 67 Am Jur 2d, Sales § 340.
[3] 67 Am Jur 2d, Sales §§ 250, 338, 348, 349.
[4] 67 Am Jur 2d, Sales § 254.
[5] 4 Am Jur 2d, Appeal and Error § 76.
Formal requirements of judgment or order as regards appealability. 73 ALR2d 250.
[6] 67 Am Jur 2d, Sales §§ 311-313.
5. Appeal and Error — Trial Courts — Court Rules — Findings of Fact.
Findings of fact by a trial court are not to be set aside unless clearly erroneous (GCR 1963, 517.1).
Dissent by Quinn, J.
6. Contracts — Distributorship Agreements — Rescinding of Contract-Reliance — Counterclaims.
Judgment for the defendant on his counterclaim for breach of a sole distributorship agreement, in a suit for the price of goods sold and delivered, was error where the counterclaim was ñled after the contract had been mutually rescinded, the defendant never expected to recover expenses experienced in preparing for and acting as plaintiffs distributor, and no claim for recovery of the expenses would have been made if the plaintiff had not started suit against the defendant.
Appeal from Oakland, Arthur E. Moore, J. Submitted Division 2 April 17, 1975, at Detroit.
(Docket No. 19595.)
Decided May 28, 1975.
Leave to appeal denied, 395 Mich 752.
Complaint in district court by Eberhard Manufacturing Company against Stanley M. Brown for recovery of the price of goods sold and delivered to defendant pursuant to a distributorship agreement. Counterclaim by defendant for breach of the distributorship agreement. Judgment for defendant. Plaintiff appealed to circuit court. Affirmed. Plaintiff appeals by leave granted.
Affirmed in part and reversed in part.
Hertzberg, Jacob & Weingarten (by Dennis S. Kayes), for plaintiff.
Hartman, Beier, Howlett, McConnell & Googasian (by Eric J. McCann), for defendant.
Before: J. H. Gillis, P. J., and Quinn and R. M. Maher, JJ.

Opinion:
J. H. Gillis, P. J.
Plaintiff brought action to recover for the price of goods sold and delivered to defendant pursuant to a distributorship agreement. Defendant counterclaimed for damages for breach of the agreement. The matter was tried in the 48th District Court and the judge, sitting without a jury, gave judgment for defendant on his counterclaim in the amount of $6,315.82.
Plaintiff appealed to the circuit court, which affirmed the district court judgment. Application for leave to appeal was denied in this Court. Subsequently the Supreme Court granted leave to appeal and remanded the cause to this Court..
Plaintiff has made five assignments of error. Only two of these require discussion. First, the plaintiff alleges that the court erred in giving defendant a credit of $559.03 for goods which were apparently lost in transit.
At trial, the plaintiff introduced evidence that the goods were sold to defendant F.O.B. plaintiff's factory, and the goods were placed by plaintiff on board a common carrier with instructions to deliver to defendant. This evidence was not controverted by any evidence of defendant's. It is plaintiff's contention that the risk of loss passed to defendant buyer when the goods were put on board the carrier.
On appeal both parties point to MCLA 440.2509(1); MSA 19.2509(1) as controlling. Plaintiff, however, cites subsection (a) and defendant subsection (b). Subsection (a) states the rule where the contract is a "shipment" contract, in which case risk of loss passes to the buyer where the goods are duly delivered to the carrier; subsection (b) states the rule where a contract is a "destination" contract, in which case risk of loss passes to the buyer when the goods are duly tendered at the destination.
An agreement of the parties would control as to who has the risk of loss. MCLA 440.2509(4); MSA 19.2509(4); MCLA 440.1102(3)(0fficial UCC Comment 3); MSA 19.1102(3); MCLA 440.2303; MSA 19.2303. See Hayward v Postma, 31 Mich App 720, 723; 188 NW2d 31, 32 (1971).
The parties here did not expressly agree on who was to bear the risk of loss. The contract contained no F.O.B. term. See MCLA 440.2319; MSA 19.2319. There was testimony by plaintiff that its goods are sold F.O.B. place of shipment, plaintiff's factory. That testimony might be evidence of a usage of trade. See MCLA 440.1205; MSA 19.1205. It was not proof that the parties had agreed, expressly or in fact, as to who had the risk of loss.
Under Article 2 of the Uniform Commercial Code, the "shipment" contract is regarded as the normal one and the "destination" contract as the variant type. The seller is not obligated to deliver at a named destination and bear the concurrent risk of loss until arrival, unless he has specifically agreed so to deliver or the commercial understanding of the terms used by the parties contemplates such delivery. MCLA 440.2503 (Official UCC Comment 5); MSA 19.2503. Thus a contract which contains neither an F.O.B. term nor any other term explicitly allocating loss is a shipment contract.
Defendant argues that since the goods were to be shipped to defendant's place of business in Birmingham, the contract required plaintiff to deliver the goods "at a particular destination". See MCLA 440.2509(l)(b); MSA 19.2509(l)(b). Defend ant's position is that "ship to" substitutes for and is equivalent to an F.O.B. term, namely F.O.B. place of destination. But that argument is persuasively refuted by the response that a "ship to" address must be supplied in any case in which carriage is contemplated. Thus a "ship to" term has no significance in determining whether a contract is a shipment or destination contract for risk of loss purposes.
Other buyers have occasionally argued that the "ship to" term made the contract into a destination contract. Courts have properly rejected this argument. See, e.g., Electric Regulator Corp v Sterling Extruder Corp, 280 F Supp 550, 557-558; 4 UCC Rep Serv 1025, 1032 (D Conn, 1968). See also White & Summers, Handbook of the Uniform Commercial Code, pp 140-145.
Since the presumption of a shipment contract controls in this case, the trial court should not have given defendant the $559.03 credit for the lost shipment.
Plaintiff also assigns as error the judge's finding that the parties agreed that defendant would be sole distributor in Michigan of plaintiff's products, viz., truck and trailer body hardware. Plaintiff also asserts that the trial court erred in finding that defendant relied upon the promise, since defendant knew that plaintiff could not prevent others from selling in Michigan and also knew that such a provision was illegal. However, review of the record fails to disclose any evidence supporting the allegation that defendant had such knowledge.
GCR 1963, 517.1, provides that findings of fact by the trial court are not to be set aside unless clearly erroneous. The findings of fact here, on the contrary, were clearly supported by testimony.
Therefore, judgment for defendant is affirmed in part and reversed in part. Defendant's recovery is reduced by $559.03, from $6,315.82 to $5,756.79. No costs, neither party having prevailed in full.
R. M. Maher, J., concurred.