Opinion
3 Div. 762.
January 22, 1927. Rehearing Denied March 31, 1927.
Appeal from Circuit Court, Montgomery County; Walter B. Jones, Judge.
Weil, Stakely Vardaman, of Montgomery, for appellant.
Where goods are sold with retention of title until fully paid for, repossession of a part of the goods by the seller does not constitute such rescission of the contract as to preclude the seller from holding the buyer responsible for the price of the goods not repossessed. The contract here is one of conditional sale, or a consignment contract. 1 Williston on Contr. (2d. Ed.) 790; Emerson-Brantingham Imp. Co. v. Lawson (D.C.) 237 F. 877; Tyson v. Jennings Prod. Co., 16 Ala. App. 374, 77 So. 986; Ex parte Tyson, 201 Ala. 331, 77 So. 993. Where goods are delivered from one state into another state, the shipment is interstate, and the fact that title is retained does not affect the character of the shipment. Rearick v. Penna, 203 U.S. 507, 27 S.Ct. 159, 51 L.Ed. 295; Dozier v. Ala., 218 U.S. 124, 30 S.Ct. 649, 54 L.Ed. 965, 28 L.R.A. (N.S.) 264; 12 C. J. 26; 5 R. C. L. 770; 9 Fletcher, Cyc. Corp. 9982; D. M. Ferry Co. v. Hall, 188 Ala. 178, 66 So. 104, L.R.A. 1917B, 620. The fact that a foreign corporation is doing business in a state without qualifying therefor is not available to an agent as a defense to enforce a liability growing out of the agency. Georgia Home Ins. Co. v. Boykin, 137 Ala. 350, 34 So. 1012; Phœnix Ins. Co. v. Seegers, 192 Ala. 103, 68 So. 902; 132 Tenn. 265, 177 S.W. 949, L.R.A. 1916A, 640; 14A C. J. 1306. The notes sued on are in legal effect the obligation of Arrington. Hendley v. Bittinger, 249 Pa. 193, 94 A. 831, L.R.A. 1915F, 711; 8 C. J. 107; Wright v. Forgy, 126 Ala. 389, 28 So. 198.
Steiner, Crum Weil, of Montgomery, for appellee.
Plea 8 states a good defense, if the contract be considered one of conditional sale. Jefferson v. Sawyer, 206 Ala. 73, 89 So. 168; Alexander v. Mobile Auto Co., 200 Ala. 586, 76 So. 944; Davis v. Millings, 141 Ala. 378, 37 So. 737; Madison River L. S. Co. v. Osler, 39 Mont. 244, 102 P. 325, 133 Am. St. Rep. 561; In re Atlantic G. P. S. S. Co. (D.C.) 289 F. 145. Replication 1 to plea 8 neither denies nor confesses and avoids the averments of the plea. Shearin v. Pizitz, 208 Ala. 244, 94 So. 92; Burnett Bean v. Miller, 205 Ala. 606, 88 So. 871. The facts stated in the replication were available under a traverse of the plea. Long v. Myers, 202 Ala. 238, 80 So. 76. The contract was one of agency; plaintiff had not complied with the requirements for doing business in the state, and pleas 9, 10, and 11 set up a good defense. Bowdoin v. Ala. Chem. Co., 201 Ala. 582, 79 So. 4; Ferry v. Hall, 188 Ala. 178, 66 So. 104, L.R.A. 1917B, 620; Cable Piano Co. v. Estes, 206 Ala. 95, 89 So. 372; Langston v. Phillips, 206 Ala. 174, 89 So. 523; Thomas Mfg. Co. v. Knapp, 101 Minn. 432, 112 N.W. 989; Woodson v. Hopkins, 85 Miss. 171, 37 So. 1000, 38 So. 298, 70 L.R.A. 645, 107 Am. St. Rep. 275; Grace v. State, 108 Miss. 767, 67 So. 212; Ins. Co. v. Kennedy, 96 Tenn. 711, 36 S.W. 709. The doctrine of estoppel of an agent from pleading failure of the principal to comply with the statutes is not applicable. Replication 4 to pleas 4 and 5 is defective and subject to demurrer. Patterson Lbr. Co. v. Daniels, 205 Ala. 520, 88 So. 657.
It is the settled law in this state that the vendor in a conditional sale of chattels, who successfully asserts his right to repossess the property, thereby abandons his right to recover the purchase price. Sandlin v. Maury Nat. Bank, 210 Ala. 349, 98 So. 190; Sanders v. Newton, 140 Ala. 335, 37 So. 340, 1 Ann. Cas. 267. This principle is very generally recognized by the American courts. 24 R. C. L. 491, § 785.
The proposition presented by defendant's special plea numbered 8 is that when a conditional vendor has exercised his right to repossession by taking from the vendee a part of the property sold to him, he elects to pursue that remedy in toto, and loses the right to recover, not merely the whole of the purchase price, but even such part thereof as covered that part of the property which has not been reclaimed.
The theory of the plea is that, although the sale in this case was for numerous items of machinery, each item separately priced, the sale was in fact a single transaction, or else became by statement a single account, for the whole of which an aggregate price was due; and that this claim or account could not be split into two or more parts, one part to be satisfied by rescission of the sale as to its items, and the other part by recovery of the price applicable to its items.
Counsel have cited no case, and our own search has discovered none, in which this proposition has been discussed. This case seems, therefore, to be one of first impression, and it must be determined by the application of general principles.
In the case of Oliver v. Holt, 11 Ala. 574, 578 (46 Am. Dec. 228), it was said:
"This rule of law, that a demand not divisible in its nature, cannot be split up into several causes of action, has been recognized by this court in two cases. * * * A consequence of this rule is, that a judgment in a suit for a part of the claim, is a bar to an action for the remainder. This results necessarily from the entirety of the contract; being incapable of division, so as to be the foundation of several suits, a recovery of a part, is an election to take that for, and is therefore equivalent to, a recovery of the whole. This principle has been asserted in a great many cases. Guernsey v. Carver, 8 Wend. [N.Y.] 492, (24 Am. Dec. 60), was an action for goods sold and delivered upon an account, consisting of distinct items, delivered on different days, but all due. It was held to be an entire demand, and that a recovery for a part was a bar to an action for the residue. * * * Modifications of the rule may be found in some cases, which seem to invade this principle; but the rule itself is, we believe, universally recognized, and indeed the only question would seem to be, whether a continuous running account, is an entire thing, or whether each item of which it is composed is a separate debt. That it is an entire thing, is expressly decided in many of the cases referred to, and on principle it would seem difficult to attain any other conclusion."
And it was so held, though the items of the account formerly recovered, and those presently sued for, were separate and distinct. This view is sustained by an overwhelming weight of authority. 1 Corp. Jur. 1113, § 288. A fortiori, stated accounts are held to be entireties, so that separate items are not suable separately except by abandoning all others. 1 Corp. Jur. 1113, § 290.
In McLane v. Miller, 12 Ala. 643, it was declared that no action will lie for the recovery of a balance of a claim, a part of which has been used as recoupment of damages in a former suit. That case was reaffirmed in S. N. Ala. R. R. Co. v. Henlein, 56 Ala. 368 374, wherein the court quoted approvingly from Guernsey v. Carver, 8 Wend. (N.Y.) 492, 24 Am. Dec. 60, that —
"The whole account being due when the first suit was brought, it should be viewed in the light of an entire demand, incapable of division for the purpose of prosecution. The law abhors a multiplicity of suits."
It is elementary law that a party "cannot hold onto such part of the contract as may be desirable on his part and avoid the residue; but must rescind in toto, if at all." Stephenson v. Allison, 123 Ala. 439, 447, 26 So. 290, 292; Kelly v. L. N. R. R. Co., 154 Ala. 573, 578, 45 So. 906; 35 Cyc. 139 (sales); 13 Corp. Jur. 623, § 682 (contracts).
The application of these principles to the instant case lead to the conclusion that, in retaking possession of any material part of the machinery sold, the plaintiff rescinded the entire contract of sale, thereby canceling the consideration which supported the obligation to pay either the note or the purchase price due on the account, and so lost the right to have any recovery thereon, either total or partial; provided that it is made to appear, by appropriate allegation in the plea, that the residue of the machinery was still in the possession of the vendee. If the vendee had sold any parts of the machinery, that of course effected a severance of that part of the account; and for the invoice price of that part an action could be maintained, notwithstanding the vendor's repossession of the other part. This is plainly the purpose and effect of the contract.
The plea is defective in the particular noted, and did not bring the defense within the principle under discussion, and the demurrer should have been sustained.
Defendant's pleas numbered 9, 10, and 11, seek to avoid liability on the notes and account sued on, upon the theory that plaintiff is a foreign corporation and has not qualified to do business within the state as required by the laws of Alabama; and that the claims sued on are founded on a transaction which constituted the doing of business within the state.
The question presented by the demurrer to these pleas is whether the shipment of the machinery, under the terms of the contract exhibited, was interstate commerce, or was, on the contrary, doing business within the state, and therefore subject to its laws.
Notwithstanding some of its minor provisions, the dominant and distinguishing features of this contract are the unconditional promise of the purchaser to pay a stipulated price for the articles to be shipped, and the reservation of title in the vendor until they were paid for, as security for that payment. These features clearly constitute the transaction a "conditional sale," as distinguished from a mere agency to sell on consignment or otherwise. Sumner v. Woods, 67 Ala. 139, 42 Am. Rep. 104; Industrial Finance Corporation v. Turner (Ala. Sup.) 110 So. 904; Note to Fleet v. Hertz, 94 Am. St. Rep. 238, 242. This identical contract was so construed in the case of Emerson-Brantingham Implement Co. v. Lawson (D.C.) 237 F. 877, 881, the court saying:
"There can be no question but that the orders signed by Brom, and the delivery of the goods thereunder, constituted a conditional sale. Language could not be plainer."
The machinery in question was shipped by the vendor from Nashville, Tenn., to the purchaser at Montgomery, Ala. The theory of these pleas seems to be either that plaintiff was selling this machinery in Alabama through the local agency of this defendant — the transaction with defendant being a consignment merely — or that the mere fact that the contract was made in Alabama excludes it from the field of interstate commerce, and stamps it as intrastate business.
The first theory, as we have seen, is invalid, because the transaction was in fact a sale to defendant. And, it may be observed, if the theory of consignment and agency were conceded, defendant, as agent, could not, it seems, take advantage of the failure of plaintiff to qualify for doing business within the state, so far as concerns his own obligations to plaintiff, growing out of their mutual contract of agency. Georgia Home Ins. Co. v. Boykin, 137 Ala. 350, 368, 34 So. 1012; In re Hovey, 198 Pa. 385, 48 A. 311; Memphis, etc., Co. v. Agnew, 132 Tenn. 265, 177 S.W. 949, L.R.A. 1916A, 640, 646; 14a Corp. Jur. 1306, § 4010. The demurrers, however, do not present that question.
The second theory is contrary to the decisions of this court, and to those of the federal courts. Ware v. Hamilton Brown Shoe Co., 92 Ala. 148, 9 So. 136; Culberton v. American Trust Banking Co., 107 Ala. 457, 19 So. 34; Dozier v. State of Ala., 218 U.S. 124, 30 S.Ct. 649, 54 L.Ed. 965, 28 L.R.A. (N.S.) 264; Sioux Remedy Co. v. Coke, 235 U.S. 197, 35 S.Ct. 57, 59 L.Ed. 193, 196, 197.
On the face of the pleadings, the transaction in question — the sale and shipment of the machinery — was interstate commerce, and not subject to the laws of Alabama. The case of Cable Piano Co. v. Estes, 206 Ala. 95, 89 So. 372, is not in point, since in that case the property sold was within the state, and hence a sale made within the state was in no sense interstate commerce. It is of no consequence that a clause of the contract provides for a resale to or for the vendor, at its option, of goods remaining unsold in the vendee's hands at certain times, because no such sale is relied on by plaintiff. So, also, the case of Langston v. Phillips, 206 Ala. 174, 89 So. 523, is not in point, because the business done was not an act of commerce.
It results from the foregoing considerations that pleas 9, 10, and 11, set up invalid defenses, and the demurrers thereto should have been sustained.
Plea 4 is a plea of non est factum in Code form. The replication to this plea sets up a good estoppel against the defense presented by the plea, and the demurrer to the replication was erroneously sustained. The elimination of this replication cannot be held as error without injury, since estoppels must be specially pleaded, and are not available under the general issue.
For the errors noted, the judgment of nonsuit will be reversed, and the cause remanded for further proceedings.
Reversed and remanded.
ANDERSON, C. J., and THOMAS and BOULDIN, JJ., concur.
On Rehearing.
We are satisfied of the correctness of our conclusion that defendant's plea 8 is defective in its omission of any allegation showing that when plaintiff repossessed itself of a part of the goods, as alleged, the other goods were still in defendant's possession, and subject to repossession by plaintiff. The plea exhibits the contract of purchase, showing that the goods were purchased for resale to defendant's customers, and that they would be thus resold in the ordinary course of business. It will not be presumed, in favor of the pleader, that any part of these goods remained unsold; and the burden is unquestionably on him to allege the facts showing the conclusion upon which he relies as a defense to the suit.
Our attention is directed by counsel for defendant to the case of Bowdoin v. Ala. Chemical Co., 201 Ala. 582, 79 So. 4, as in conflict with our holding that the contract herein evidenced a conditional sale, and with the further observation that that case should be overruled if the present decision stands. It will suffice to say that in that case the contract expressly provided that the goods were "shipped on consignment to the customer as trustee for the company" — a provision not found in the present contract. The distinction is clear and decisive, and too obvious to require exposition.
Counsel insist with much earnestness that plaintiff's replication to defendant's plea of non est factum, as to the notes sued on, is not a valid answer to those pleas. The replication is, of course, by way of estoppel. The nature of such a plea has been correctly stated as follows:
"The issue which a plea of estoppel presents is not to determine the truth or validity of the particular facts pleaded, but the right and power of the party to insist upon them. A plea of estoppel is not a plea of confession and avoidance, although it resembles a plea in avoidance in that it alleges new matter. While the plea is usually spoken of as a plea in bar, it is not technically such, although, like a plea in bar, it denies the right of action or defense, by denying the right to assert the facts. So the rule that the pleader, if he does not demur, must either traverse or confess and avoid all the material allegations to which he makes answer, has no application to pleadings in estoppel, which are considered an exception to the rule." 21 Corp. Jur. 1247, § 258.
It is, of course, true that estoppels are grounded on injury resulting from the pleader's reliance upon his adversary's conduct or declarations; and the pleader must show that his position has been so changed by that reliance that he would be substantially prejudiced if his adversary be now allowed to assert and show the contrary. Carter v. Darby, 15 Ala. 696, 50 Am. Dec. 156; Adler v. Pin, 80 Ala. 351, 354; 21 Corp. Jur. 1135, § 136.
The replication here in question is defective in not showing the fact or the threat of such an injury, but no ground of the demurrer points out that defect. The grounds assigned — other than several inapt special grounds — are general only, and are not sufficient, under our rules of pleading, to present the objection.
Counsel cite the cases of Cunningham v. Bragg, 37 Ala. 436, and Harwell, Adm'r, v. Phillips, 123 Ala. 460, 26 So. 501 (to which may be added Myatts v. Bell, 41 Ala. 222), to the proposition that when a partner has retired from the firm, though he is liable for pre-existing debts, he cannot be bound by notes given by the remaining partners in payment or extension of those debts. We are not dealing here with the obligation of a retired partner; but, conceding the analogy, the cases relied on involved no question of estoppel, but merely a joinder of issue on the defendant's plea of non est factum.
On the other hand, this court held, in Grady v. Robinson, 28 Ala. 289, that —
"A relinquishment by one ostensible partner to another, of all his interest in the partnership, does not discharge him from liability as a partner to third persons who afterwards deal with the company without notice of such relinquishment."
See, also, Mauldin v. Branch Bank, 2 Ala. 502, where the subject is fully discussed. In such cases, as noted in 20 R. C. L. 982, § 216, "the liability is based on principles of estoppel." The same authority declares:
"Secret articles of dissolution of partnership of which no notice is given will not terminate the liability of each for the acts of the other partners. For example, where no notice has been given, a new note or contract made by one partner in the name of the firm and within the scope of the partnership business operates to bind the firm notwithstanding the dissolution." (Italics supplied.) 20 R. C. L. 966, § 194.
As already observed, this is not the case of a retiring partner, but of a retiring proprietor and his successor in business, both operating continuously under a trade-name which prima facie imported a partnership if there was no incorporation; but the analogy, both legal and moral, is strong and persuasive.
We see no reason for changing any of the views and conclusions originally declared, and the application for rehearing will be denied.
ANDERSON, C. J., and THOMAS and BOULDIN, JJ., concur.