Court Opinion

ID: 5396659
Source: CourtListenerOpinion
Date Created: 2022-01-08 10:19:07.654403+00
Date Added: 2024-06-11T08:30:23.001489
License: Public Domain

Dore, J.
(dissenting in part). The basic issue on these cross appeals is: whether, as plaintiff contends, William H. Shetzline, Jr., in the transactions in question was defendant’s agent, or, as defendant contends, was an independent contractor.
Out of a great many purchases and sales of the yarn in question only two are involved in these appeals. The first transaction is the sale of 509 pounds of nylon yarn on June 19, 1951, alleged in the first cause of action for goods sold and delivered by plaintiff and not paid for, and in the second cause *119of action on a dishonored check presented in payment for the same sale; and also in the fourth cause of action on quantum valebat for the same sale. The second transaction, set forth in the third cause of action, is the sale of 3,208 pounds of nylon yarn on June 29,1951, at the agreed price of $36,749.13, plaintiff alleging performance and claiming defendant’s breach by refusal to accept delivery, alleging also resale within a reasonable time for $29,361.85, and demanding the balance of the damages claimed in the sum of $7,387.28.
On both transactions, defendant’s basic contention is that Shetzline was not its agent but a completely independent contractor and that, therefore, defendant is not indebted to plaintiff as an undisclosed principal and the complaint should be dismissed. Plaintiff’s contention is that Shetzline was an agent for defendant as an undisclosed principal and defendant is responsible for its agent’s acts.
The only testimony to establish that Shetzline was an independent contractor is defendant’s oral testimony on the trial that plaintiff’s officers, the two Korns, and Tunick orally agreed with Shetzline to buy from him whatever nylon yarn he would choose to sell without knowing from whom Shetzline bought or at what price. The narrow issue on the appeal therefore is: can that claimed oral arrangement,,made in defendant’s office before any of the documents in evidence were drawn, be reconciled with the documentary evidence concededly thereafter made by or on behalf of defendant and used throughout the transactions before the litigation began?
I have reached the conclusion that the documentary evidence drawn or executed on behalf of defendant and used throughout the course of the transactions, including the two sales in issue, destroys the oral explanation made after the litigation began. Substantially that documentary evidence is:
1. Resolution duly adopted and signed by defendant’s president, vice-president and treasurer on January 16, 1951, authorizing the opening of an account in the People’s National Bank and Trust Company of Langhorne, Pa. in the name of “ Wm. IT. Shetzline, Jr., Agent for Bangor Mills, Inc.” and designating in the resolution itself Shetzline as defendant’s “ Agent ” authorized to draw checks on the account even as defendant’s own president, vice-president and treasurer were also similarly authorized;
2. The bank account in Penndel, Pa., concededly opened by defendant and used throughout the whole period of Shetzline’s activity for defendant labeled “ Account of Wm. H. Shetzline, *120Jr., Agent for Bangor Mills, Inc.” (italics mine throughout);
3. The bank’s statements from that account sent to defendant every month from its opening to its close, characterizing the account as an account of Shetzline, “ Agent for Bangor Mills, Inc. ’ ’;
4. Defendant’s employer’s fidelity bond in the sum of $50,000 which refers about twenty times to defendant as “ employer ” and Shetzline as “ employee ” and specifically identifies Shetzline as defendant’s “ Agent
5. The printed blanks, hundreds of them, called “ Purchase orders — Bangor Mills, Inc.” which defendant supplied to Shetzline and the latter used and returned to defendant reporting the numerous purchases of nylon yarn, and signed by Shetzline as follows: ‘ ‘ Bangor Mills, Inc. William H. Shetzline, Jr. Purchasing Agent
6. Defendant’s claim in June, 1951, under the still uncancelled surety bond against the surety company based on the contention that Shetzline was defendant’s agent, and prosecution of that claim against the insurer. Such claim has not as yet been abandoned by defendant.
During the short time that Henry Mills, Inc., a dormant corporation owned by defendant, was used in the transactions, the address of that corporation left with the bank was: William A. Shetzline Penndel, Pa.; and Shetzline continued to operate as he had before and to pay for purchases out of the old agency bank account opened in his name as defendant’s agent.
To have merely prepaid an independent contractor as defendant now claims, surely did not require defendant to set up a bank account in Shetzline’s name as agent, to obtain a surety bond covering his operations as an employee and agent or to furnish him with hundreds of formal blanks reporting his sales as defendant’s “ purchasing agent ”. On this record it is in my opinion most unlikely that defendant, one of the largest dealers in the merchandise in question, always aided and assisted by capable accountants and lawyers, would have procured and used throughout the dealings the numerous documents characterizing Shetzline as its agent without ever a reference to him as an independent contractor, if in fact he was such contractor.
Under the third cause of action plaintiff was an unpaid seller (Personal Property Law, § 133) and as such had the right of resale (Personal Property Law, § 134) and properly sold when acceptance, delivery and payment were in default for an unreasonable time. Although under section 141 of the Personal *121Property Law plaintiff could sell without notice, here notice was given both oral and written to defendant’s authorized agent.
Even the claimed oral arrangements with Shetzline did not provide for payment to Shetzline for yarn sold to defendant. No payments whatever for yarn as such were ever made by defendant to Shetzline. The funds remained Bangor’s funds at all times until paid out, not to Shetzline but to yarn suppliers such as this plaintiff. Shetzline was prohibited from using the funds for any other purpose. But Bangor retained ownership of the bank funds merely authorizing Shetzline, as it did others, to draw checks thereon. What Shetzline sold to Bangor was not yarn, but his special skill in buying nylon yarn at a period in which it was in great demand. The overwhelming and uncontested documentary evidence demonstrates that Shetzline was defendant’s agent for the purchase of yarn for defendant in the transactions in question and plaintiff, an innocent seller for value, has the right to hold the principal liable when finally disclosed (Restatement, Agency, § 186, comment a, comment b, par. 1; § 186, comment d). Obviously it was defendant who was responsible for putting it in Shetzline’s power to cheat third persons such as this plaintiff who knew nothing of the so-called oral and purely intramural arrangements.
If judgment is granted to plaintiff on the first cause of action for goods sold, delivered and unpaid for, the second and fourth causes of action for the sale and delivery of the same goods become academic; and accordingly the judgment in plaintiff’s favor on the second cause of action should be reversed, and the second and fourth causes of action dismissed as academic in view of the recovery I recommend on the first cause of action involving the same sale. Plaintiff is entitled to recover under the third cause of action as an unpaid seller and there is no proof in the record that; assuming that Shetzline was defendant’s agent, the amounts involved are erroneous.
With regard to the contention basic to the majority opinion that the sales in question were on credit, in the first place the documentary evidence, the invoices as to both sales, expressly provide the terms were ‘1 net cash — fob our whse. ’ ’; and plaintiff’s witness on redirect testified that even as to sales for $10,000 or more, no credit was extended to Shetzline: “ we sold him the merchandise on a net cash basis ”. With regard to transactions of $10,000 or over payment “ in advance ” was required. The transactions in question both required immediate payment when the yarn arrived on presentation of invoice and bill of lading. Obviously that should not be deemed extension *122of credit. Shetzline had the same authority as the president, vice-president and treasurer of defendant to draw checks on the account in question, in fact as well as in express form as defendant’s agent; he had authority to draw, as agent, on plaintiff’s bank account for payment after the orders had been given and accepted by third parties such as this plaintiff. The accepted practice, even on defendant’s oral contentions, was that after Shetzline had ascertained the availability of the nylon yarn and defendant had approved the purchase at the price that Shetzline mentioned, he was then authorized first to close the deal with the third parties and thereafter to draw upon the Bangor account in payment.
Shetzline was authorized to obtain yarn for Bangor and to pay for it on Bangor’s behalf and Bangor should be obligated to pay on the first transaction for goods sold by plaintiff and received by Bangor and on the second for goods sold and not paid for.
For the reasons stated, I dissent and recommend that (1) judgment be granted plaintiff on the first cause of action for goods sold, delivered and unpaid for in the sum of $5,796.10 with interest from June 19,1951; (2) that the judgment in plaintiff’s favor on the second cause of action be reversed in view of the judgment granted plaintiff on the first cause of action involving the same sale and for the same reason also that the second and fourth causes of aption be dismissed as academic; and (3) that judgment be granted to plaintiff on the third cause of action for the balance of $7,387.28, with costs to plaintiff-respondent-appellant.