Case Name: MICHELIN TIRE COMPANY OF CALIFORNIA v. T. G. WILLIAMS
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1928-06-12
Citations: 125 Or. 689
Docket Number: 
Parties: MICHELIN TIRE COMPANY OF CALIFORNIA v. T. G. WILLIAMS.
Judges: Rand, C. J., and Rossman and Coshow, JJ., concur.
Reporter: Oregon Reports
Volume: 125
Pages: 689–702

Head Matter:
Argued March 13,
reversed June 12, 1928.
MICHELIN TIRE COMPANY OF CALIFORNIA v. T. G. WILLIAMS.
(268 Pac. 56.)
For appellant there was a brief over the name of Messrs. Hodges & Gay, with an oral argument by Mr. Charles M. Hodges.
For respondent there was a brief over the names of Mr. G. L. Bauch and Mr. E. M. Morton, with an oral argument by Mr. Bauch.

Opinion:
McBRIDE, J.
This case was very loosely tried. At least one third of the transcript is taken up with objections and long arguments of counsel in regard to the admission and rejection of testimony, at the end of which the case probably appeared to the jury about as clear as the mud which perpetually gushes up on the devil's caldron in Yellowstone Park. They made a conscientious guess at results and that was necessarily all that they could do. The case comes here with the whole transcript of testimony as a bill of exceptions, and this court is expected to wade through this chaos of objections and make clear what the briefs of counsel should have developed. There is little of value to the profession or to the future administration of justice that can be brought out in the discussion and, therefore, the opinion will be brief.
The first separate defense considered in the light of the contract is properly pleaded and the defendant was entitled to go to the jury on that defense.
As to the second cause of defense, counsel for plaintiff urge that it does not state facts sufficient to constitute a valid counterclaim, because it is not "a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of plaintiff's claim," and cites subdivision 1 of Section 74, Or. L., as authority therefor, but entirely ignores subdivision 2 of the same section which provides that a counterclaim may be pleaded "in an action arising on contract, any other cause of action arising also on contract and existing at the com mencement of the action. ' ' It suffices to say that the agreement to extend additional credit in case defendant should furnish additional security was clearly a contract in itself and was a complete contract so far as defendant was concerned when the security was furnished, unless it is rendered ineffectual by Section 8168, Or. L., which is as follows:
"(1) A contract to sell or a sale of any goods or choses in action exceeding the value of $50 shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment or unless some note or memorandum in writing of the contract or sale be signed by the party to be charged or his agent in that behalf.
"(2) The provisions of this section apply to every such contract or sale, notwithstanding that the goods may be intended to be delivered at some future time or may not at the time of such contract or sale be actually made, procured or provided, or fit or ready for delivery or some act may be requisite for the making or completing thereof, or rendering the same fit for delivery; but if the goods are to be manufactured by the seller especially for the buyer and are not suitable for sale to others in the ordinary course of the seller's business, the provisions of this section shall not apply.
"(3) There is an acceptance of goods within the meaning of this section when the buyer either before or after delivery of the goods, expresses by words or conduct his assent to becoming the owner of those specific goods."
This is a case where the plaintiff says to the defendant in effect: "If you will give me an additional guaranty to the amount of $15,000, I will sell you goods on credit to the amount of $25,000." The guaranty is given, but the goods are not delivered nor is any earnest given to bind the contract. Whatever may be the rule in equity the contract could not be enforced at law. The writer at first impression was inclined to the opinion that the delivery to plaintiff of the guaranty might be construed as an "earnest" to take the contract out of the statute, but the authorities are to the contrary: Walker v. Nussey, 16 Mees. & W. 302. We reluctantly conclude that while plaintiff's repudiation of the contract is censurable in morals its only effect legally was to discharge the guarantor from any legal liability to the plaintiff upon it. The guaranty was not in evidence. If it had recited the terms of the contract and had been accepted in writing by plaintiff or any authorized agent of plaintiff, such acceptance might have been a sufficient memorandum to have authorized this defense; but there is no evidence to that effect. While partial performance of an oral contract in regard to the conveyance of lands has been sometimes held in equity to take a contract out of the statute, such has never been the rule in regard to a contract for the sale of goods: Browne on the Statute of Frauds (5 ed.), § 118 et seq. The court erred in submitting this counterclaim to the jury upon the evidence adduced by defendant.
We are of the opinion that there is evidence sufficient to justify the submission of defendant's third counterclaim to the jury. The plaintiff was in a position to know and must have known that at the time defendant took over the stock, fixtures and lease of the Western Tire Sales Company the business had practically no goodwill or standing, and that, beyond the value of the stock on hand and tangible property, it was selling to the defendant a ruined business of no value whatever and which had practically failed to be a success. The defendant, who for a short time, a year or so before, had been engaged as a bookkeeper for the preceding corporation and a small stockholder in it, had, according to the substance of his testimony, sold his stock before the inferiority of plaintiff's goods had become apparent and quit the business upon such terms with Mr. Steele, the manager and principal stockholder, as to render it improbable that Steele would give him any useful inside information as to the prosperity and goodwill of the company at the time he turned it over to plaintiff. Defendant, in the light of his testimony, had left the company when it was at its best, and, after it had lost standing and goodwill, was induced to take it over and attempt to carry it on entirely ignorant of its change. Plaintiff knew all these things, and the representations of its manager were not mere "puffing" or expressions of opinion but expressions which he must have known to have been untrue. A more shrewd business man than defendant might have investigated further, but it was not unreasonable for him to have taken the representations of a large business corporation at their face value, and it would come with poor grace for the company to say: "You should have investigated further and not have relied on the statements of our representative." We do not approve of the action of the. court in admitting testimony tending to show that the plaintiff attempted to compromise debts owing by Steele and which it had assumed thereby, as defendant claims, alienating former customers of the defunct corporation. The conclusion is too far-fetched and plaintiff's contract with Steele did not compel it to do more than to save Steele harmless. How they did this was a matter of their own concern and plaintiff nowhere hound itself to conduct the settlement with reg'ard to defendant's interest. They had a right to be steelly selfish and, if defendant's testimony is true, they were.
We have no means of knowing how far the submission of the second counterclaim to the jury may have influenced their verdict, but in a case where a plaintiff sues upon an indisputed demand for $7,000 and a verdict of $8,000 is rendered against it, it is clear that this counterclaim must have cut a considerable figure.
The judgment will be reversed and a new trial directed. Reversed.
Rand, C. J., and Rossman and Coshow, JJ., concur.