Court Opinion

ID: 9474730
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:07:14.211173+00
Date Added: 2024-06-11T17:44:18.155426
License: Public Domain

POOLE, Circuit Judge,
dissenting:
I respectfully dissent, believing that sufficient contact existed to justify venue in the Southern District of California.
Water West relies upon the April 1983 sale of approximately 1,000 feet of Leaky Pipe to Joseph Fleming, an Imperial Valley farmer, for a price of $300.00. The Imperial Valley is located in the Southern District. Fleming read about Leaky Pipe in a full page advertisement in “Drip/Trickle Irrigation” magazine. To obtain additional information, Fleming contacted Entek, which was identified in the ad as the manufacturer of the pipe, at its Texas address. After several communications with the Entek office in Texas, Fleming, in the Imperial Valley, was contacted by Bridges, who later made the sale.
Entek argues that this sale does not suffice for venue because Bridges was acting as an independent contractor pursuant to his contract with Entek,1 and therefore Bridges’ conduct cannot be imputed to En-tek. The district court disagreed. In its order of December 9, 1983, the court found that a consignment relationship in fact existed between Bridges and Entek.
On appeal, we do not disturb findings of fact made by a district court unless those findings are clearly erroneous. Fed.R. Civ.P. 52(a); Dunn v. Trans World Airlines, Inc., 589 F.2d 408, 414 (9th Cir.1978). A finding is “clearly erroneous” when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Id.; United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948).
The district court’s finding of a consignment relationship between Bridges and Entek is not clearly erroneous, despite the express contractual provision to the contrary. Bridges received a sizeable shipment of pipe from Entek on March 4, 1983. The invoice for that shipment indicated no price. One important factor in determining whether an agreement may be termed a consignment or a sale is whether the person receiving the goods is obligated to purchase or pay for those goods. In re Lexington Appliance Co., 202 F.Supp. 869, 871 (D.M.D.1962). When a conditional sale is intended, as opposed to a consignment, the person to whom the goods are delivered incurs an absolute obligation to buy the goods and pay the price. Id.; Royal Indemnity Co. v. Aetna Insurance Co., 231 F.Supp. 657, 660-61, aff'd, 338 F.2d 700 (4th Cir.1964). A consignment relationship, on the other hand, imposes upon the consignee no obligation to pay. Fowler v. Pennsylvania Tire Co., 326 F.2d 526, 532 (5th Cir.1964). Moreover, the acts of the parties prevail over any designation of the nature of the relationship. In re Lexington Appliance Co., 202 F.Supp. at 871.
The conduct of the parties in this case supports the district court’s finding of a consignment agreement. The absence of a price on the invoice for the large shipment of Leaky Pipe sent to Bridges by Entek indicates that Bridges assumed no immediate obligation to pay. Moreover, Bridges characterized the relationship as one of consignment in an affidavit submitted in *631support of Entek’s opposition to venue. The trial court’s analysis of facts on this issue is not clearly wrong, and its determination that a consignment existed should be upheld.
A contract of consignment creates a bailment with authority in the bailee as the bailor’s agent to sell property to third parties. See Miniature Vehicle Leasing Corp. v. United States, 266 F.Supp. 697, 701 (D.N.J.1967); In re Lexington Appliance Co., 202 F.Supp. at 871. Consequently, it is a type of agency in which the acts of the consignee may be imputed to the consignor. Porter v. Hermann, 8 Cal. 619, 624 (1857); Harbor Supply Co. v. Motor Boat Astorian, 116 Cal.App. 563, 567, 2 P.2d 1004 (1931).
Since Bridges, in his consignment relationship with Entek, was Entek’s agent, his sale of pipe to Fleming and his other activities in the Southern District of California are imputable to Entek. This sale to Fleming alone constituted a significant contact justifying venue in the Southern District. That sale was expressly prohibited under Water West’s exclusive distributorship agreement and resulted in injury warranting relief.
But the sale to Fleming was not the only contact between the Southern District and Water West’s claim for enforcement. At least one other sale of pipe was made by Entek in the Southern District to John Scott, a resident of San Diego County, who purchased pipe from Turner in November or December 1982.
Entek, through Bridges, also conducted ah extensive Leaky Pipe promotional campaign targeted at residents of the Southern District. Bridges placed Leaky Pipe advertisements, which were provided and paid for by Entek, in magazines published and circulated in the Southern District. Entek also supplied Bridges with other advertising materials, including brochures and photographs. Additionally, Bridges conducted a direct mail campaign to residents of the Southern District advertising meetings on Leaky Pipe to be held in Fresno and Lagu-na Hills by Entek in conjunction with Bridges.
As the result of Entek’s conduct in promoting and selling Leaky Pipe in the Southern District of California, Water West suffered direct and immediate injury. Dale Stein, Director and Vice-President of Marketing for Water West, submitted an affidavit in which he stated that the injury to Water West in Southern California was particularly acute, because San Diego and Imperial Counties together constituted the “most important target market of Water West, Inc. outside of Nevada.” Because of Entek’s breach of the exclusive distributorship agreement, Water West’s efforts to develop a market for Leaky Pipe in that area were being severely hampered.
The district court was persuaded that these facts demonstrated sufficiently substantial contacts to establish venue in the Southern District of California. I agree. Water West should be entitled to enforce its judgment, and secure appropriate relief from the illegal conduct of Entek in the Southern District of California.
Because the majority declines to accord proper respect to the district court’s findings as to contacts within the district of the forum, I respectfully dissent.

. Paragraph four of the Agricultural and Non-Agricultural Distributorship Agreements entered into between Entek and Bridges provides:
NO AGENCY, PARTNERSHIP, ETC.
The parties hereto are independent contractors and nothing contained in this Agreement shall be deemed or construed to create the relationship of partnership or joint venture or principle and agent of or any association or relationship between the parties other than that of buyer and seller.