Opinion ID: 3009789
Heading Depth: 2
Heading Rank: 1

Heading: Was this a Consignment?

Text: Generally, there are two types of consignments -- true consignments and security consignments. Armor All Products v. Amoco Oil Co., 533 N.W.2d 720, 725 (Wis. 1995). A true consignment creates an agency pursuant to which goods are delivered to a dealer for the purpose of resale; the consignor usually requires the consignee to charge a certain price for the goods. Id. A security consignment, on the other hand, occurs 10 when the delivering party agrees to take the goods back in lieu of payment by the receiving party if the latter fails to sell them; to provide security to the consignor, title to the goods remains in the consignor's name. Id. In both situations, goods are delivered for sale -- that is, for sale by the receiving party. In contrast, a bailment occurs when property is entrusted to a party temporarily for some purpose; upon the fulfillment of that purpose the property is redelivered to the person who delivered it, otherwise dealt with according to his directions or kept until he reclaims it. Smalich v. Westfall, 269 A.2d 476, 480 (Pa. 1970). Although every consignment involves a bailment of sorts because the goods are entrusted for the purpose of sale, not every bailment is a consignment. Armor All Products, 533 N.W.2d at 727 (a bailment without more does not create a consignment). We conclude that the transaction was a bailment, but not a consignment. Neither the Processing and Storage Agreement nor the Purchase Agreement, whether read individually or collectively, gives Keystone the right to sell the Grape Growers' product. The grapes were delivered to Keystone only for processing and storage. Afterwards, the grapes were to be redelivered to the Grape Growers or otherwise dealt with according to the Grape Growers' directions. Furthermore, the fact that the grape product would ultimately be sold to other parties by the Grape Growers does not alter the foregoing analysis because the Grape Growers, the 11 bailor, would both conduct and control the eventual sale. In re Zwagerman, 125 B.R. 486, 491 (W.D. Mich. 1991) (no consignment when holder of the goods would process them and return them for later sale by the owner). The fact that Keystone held an option to purchase some of the grapes pursuant to the Purchase Agreement does not make the transaction a consignment; indeed, that fact militates against such a result. E.g., In re Sitkin, 639 F.2d 1213, 1217 (1st Cir. 1981) (citations omitted), (A bailment may still exist where the bailee has a continuing option to purchase or to sell.). As to those grapes that Keystone did opt to purchase, the Grape Growers made the sale, received a sales commission, and exercised no control over the grapes or their resale pricing thereafter. Therefore, to the extent that the district court found that the Grape Growers delivered the grapes to Keystone for sale, this finding was clearly erroneous. The record demonstrates that, consistent with the contracts and the parties' course of dealing, the grapes were delivered to Keystone merely for processing and storage.