Case Name: The Hauck Food Products Corporation, Respondent, v. E. A. Stevenson & Co., Inc., Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1922-11-15
Citations: 203 A.D. 308
Docket Number: 
Parties: The Hauck Food Products Corporation, Respondent, v. E. A. Stevenson & Co., Inc., Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 203
Pages: 308–316

Head Matter:
The Hauck Food Products Corporation, Respondent, v. E. A. Stevenson & Co., Inc., Appellant.
Third Department,
November 15, 1922.
Sales — action by buyer to terminate contract — counterclaim for failure of plaintiff to accept one carload — contract provided that in case of insolvency of either party other might close contract — contract was for sale “ f. o. b. Pacific Coast ” — seller’s insolvency occurred October 30, 1920, car reached destination November 4,1920 — usual time of shipment was three weeks — title passed at point of shipment and before insolvency — plaintiff had no right to close contract and refuse shipment.
In an action by the buyer to terminate and avoid a contract for the sale of soya bean oil the defendant interposed a counterclaim based on the failure of the plaintiff to accept one carload of the oil. The price stated in the contract was “ f. o. b. Pacific Coast ” and the contract provided that if before Its completion either party thereto should become insolvent the other party, upon notice being given to the defaulter, might close the contract forthwith. In the usual course of transportation a shipment from the Pacific coast to the plaintiff’s place of business would require three weeks’ time. The seller became insolvent on the 30th day of October, 1920, and the ear of oil in question reached its destination on November 4, 1920, and on the same day the plaintiff notified the seller that it elected, under the contract clause, to terminate the contract and requested • that the seller cancel the said car of oil.
Held, that when a sale is made “ f. o. b. the point of shipment ” title passes from the seller to the buyer at the moment of delivery to the carrier, whether the bill of lading runs to the consignor, to the consignee or to the consignor’s agent.
Accordingly, the title to the car of oil must have passed to the plaintiff prior to the insolvency of the seller since four days only elapsed between the seller’s insolvency and the arrival of the car.
Therefore, at the time the plaintiff notified the seller that it elected to terminate the contract the seller had fully performed its contract in every particular and nothing remained for it to do and the plaintiff did not then have the right to close the contract and to refuse the shipment.
Hasbbouck, J., dissents, with opinion.
Appeal by the defendant, E. A. Stevenson & Co., Inc., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Ulster on the 17th day of February, 1922, upon the decision of the court rendered after a trial at the Ulster Trial Term, a jury having been waived.
The judgment included the dismissal of a counterclaim of the defendant upon the merits.
Franc & Becker [Alfred L. Becker of counsel], for the appellant.
Walter N. Gill, for the respondent.

Opinion:
H. T. Kellogg, Acting P. J.:
The only issue in the case is made by the affirmative allegations of the defendant's answer setting forth a counterclaim, and the denials and allegations of the plaintiff's reply.
The answer sets up a contract entered into between E. F. Drew & Co., Inc., and the plaintiff on the 23d day of September, 1920. By that contract E. F. Drew & Co., Inc., agreed to sell and the plaintiff agreed to buy a quantity of soya bean oil. The quantity agreed upon was " Two (2) Sellers tanks of about 60,000 pounds each," and the price was " 10c per pound, f. o. b. Pacific Coast." In relation to deliveries the contract contained the following: " Deliveries — October, 1920. Shipment from Pacific Coast. Buyer to supply seller with shipping instructions within forty-eight (48) hours after request for same by seller." In relation to terms it contained the following: "Terms — net cash. Sight draft against Railroad Bill of Lading Certificate of Weight and Certificate of Analysis." The answer alleged and the proof established that all the rights of E. F. Drew & Co., Inc., arising under the contract had been assigned to the defendant. The defendant seeks to recover damages suffered through the refusal of the plaintiff to accept delivery of one tank car of soya bean oil contracted for.
It would have been difficult for the defendant exercising ingenuity, to have alleged or proven less. It failed to allege or prove that shipping instructions, as required by the contract, were given by the plaintiff, the buyer, to E. F. Drew & Co., Inc., the seller. It failed to allege that the tank cars, or either of them, were consigned by the seller to the plaintiff in accordance with instructions as to destination or otherwise. It failed to state the time when or the place whence the cars, or either of them, were shipped. It failed to state the place to which the cars were shipped. It introduced in evidence a letter from a third party, the New York Central Railroad Company, to the effect that the carload, which is the subject of this litigation, was " consigned to order Koster Company, notify Hauck Food Products Company." It failed to prove the relationship between " Koster Company " on the one hand and the plaintiff or E. F. Drew & Co., Inc., on the other.
The answer contained the following allegation: "Fourth. Upon information and belief, that thereafter, and prior to October 30, 1920, one tank car of soya bean oil to be shipped under said contract, arrived in Kingston, New York, and draft and documents covering same were duly presented to plaintiff, who paid said draft." It, also, alleged: " Sixth. Upon information and belief that the second tank car of soya bean oil to be delivered under said contract, containing 63,500 pounds of said oil, duly arrived in Kingston, New York, on or about November 4,1920, and on or about the same day, in accordance "with the terms of said contract, a sight draft in the sum of six thousand three hundred and fifty dollars ($6,350), covering invoice for said tank car of soya bean oil, together with the documents specified in said contract, was duly presented to plaintiff for payment and payment thereof was refused." These allegations were admitted by the reply.
It was thus admitted that one tank car, arriving at Kingston, N. Y., was paid for by the plaintiff. A letter, written by the plaintiff, is in evidence which shows that the " general office and works " of the plaintiff are at Kingston, N. Y. From these admissions and facts it may, perhaps, be a permissible inference that the place of destination agreed upon for the second car was Kingston, N. Y., and that its alleged arrival at such place was in fulfillment of the contract.
It was admitted that a sight draft for the contents of the second car, " together with the documents specified in said contract, was duly presented to plaintiff for payment and payment thereof was refused." The reply states: "That prior to the arrival of said tank car of oil at Kingston, New York, and prior to the presentment to the plaintiff for payment of the draft for $6,350, together with other documents specified in said contract, as alleged in paragraph or subdivision of the answer designated as ' Sixth ' " a certain notice was given by the plaintiff to E. F. Drew & Co., Inc. From these allegations it may, perhaps, be inferred that a bill of lading, sufficient to place the plaintiff in immediate possession of the second tank car at the contract destination, together with a draft upon the plaintiff for the contract balance due, were tendered to the plaintiff, and a refusal to accept or pay was made.
If these inferences cannot properly be drawn, then, at most, is it true that the defendant failed to make a prima facie case. The plaintiff cannot support the judgment dismissing the counterclaim upon the merits, which it has obtained, by reasoning to the conclusion that no such case was made. We will assume, therefore, in order to test the judgment by the merits, that the seller tendered fulfillment of its promise to sell, that the plaintiff refused to fulfill its promise to buy, and that the case came to the plaintiff to establish legal justification for an avoidance of its contract obligation.
The contract contained the following term: " If before the completion of the contract either party thereto shall suspend payment, or become bankrupt or insolvent, the other party, upon notice being given to the defaulter, shall close the contract forthwith, any difference to be for the account of the defaulter." E. F. Drew & Co., Inc., the party contracting to sell the oil, became insolvent on the 30th day of October, 1920. On or about the 4th day of November, 1920, the plaintiff notified E. F. Drew & Co., Inc., that it elected under the contract clause to terminate the contract, and requested that it-cancel the second car of oil. The car of oil arrived at Kingston, N. Y., on the 4th day of November, 1920. We have not definitely been informed, as already stated, when or from where the car was shipped. The contract called for the payment of a price " f. o. b. Pacific Coast," and for a " shipment from Pacific Coast." The proof shows that in the usual course of transportation, a shipment from the Pacific coast to Kingston, N. Y., would require thirty days' time. In considering the affirmative case of the plaintiff for a termination and avoidance of its contract, under the contract clause quoted above, we must assume, in the absence of proof by it to the contrary, that the car in question was shipped from the Pacific coast at least twenty-five days prior to the thirtieth day of October, the date when the shipper became insolvent. We must assume, also, the contrary not having been proven, that " The Koster Company," the consignee of the car, were the agents of the shipper. When a sale is made " f. o. b. the point of shipment " title passes from the seller to the buyer- at the moment of delivery to the carrier, whether the bill of lading runs to the consignor, to the consignee or to the consignor's agent. (Standard Casing Co. v. California Casing Co., 233 N. Y. 413.) Consequently, we must take it to be the truth that the title to the soya bean oil contained in the car thus consigned passed on delivery to the railroad at the Pacific coast from the seller, E. F. Drew & Co., Inc., to this plaintiff, the purchaser. Such being the situation, the seller had fully performed its contract in every particular prior to the date when it became insolvent, and nothing thereafter remained by it to be done.
The plaintiff contends that because on the 30th day of October, 1920, the contents of the car had not been paid for by it there was no " completion " of the contract, and that the option to " close " the contract by refusing the shipment was still open to it under the quoted clause. We think the contention is not tenable. The sole purpose of the clause was to protect one party to the contract against possible defaults which might arise through the insolvency of the other party. In this case the party which became insolvent had already fully performed. The other party ran no further risk, and needed no further protection. It would be a strange perversion of the clause to hold that the party which had not performed the contract might urge against the party which had performed that, because of its own non-performance, there was no " completion " of the contract, and, therefore, that it might " close " the contract by continuing its non-performance. We think that the only method to " close " this contract which was open to the plaintiff was to pay the draft drawn upon it. We conclude that, upon the meagre facts proven, the plaintiff was not entitled to a dismissal upon the merits.
The judgment should be reversed and a new trial granted.
Kiley and Van Kirk, JJ., concur; Hasbrouck, J., dissents.