BARE v. RICHMAN SAMUELS INC OF NEW YORK (1943)

The defendant, Richman & Samuels, Inc., has appealed from a judgment of $2,224.10 and interest, which was rendered against it in a suit in assumpsit upon an alleged oral agreement modifying a previous written contract to market grapes in consideration of a stipulated percentage of the purchase price thereof. The complaint contains a second cause of action based on alleged conversion of the grapes. The court found that the local managing agent of the corporation orally agreed, with the consent of the company, to sell the grapes f.o.b. Turlock, California, for the market price thereof, which was determined at the trial to be $27.50 per ton. The judgment was rendered on the theory that the oral agreement of the agent was subsequently ratified by the principal and constituted a binding modification of the original written contract.

The defendant, Richman & Samuels, Inc., is a marketing corporation having its home office in New York City. It operated a fruit packing shed at Turlock, California, which was in charge of the defendant, Frank C. Belier. The plaintiff owned and operated a vineyard in Stanislaus County. July 3, 1935, Frank C. Belier, in behalf of the corporation, called the “distributor,” executed a written contract with the plaintiff, who is referred to as to the “grower,” by the terms of which the plaintiff “appoints the distributor his agent with exclusive right to market fifteen cars of Alicante Buschet grapes * * * to be delivered to the distributor during the season of 1935.” That contract contains the following covenants:

“For and in consideration of the covenants herein provided to be kept and performed the grower hereby irrevocably appoints the distributor his agent with exclusive right to market fifteen (15) cars of Alicante Buschet grapes. * * * The grower agrees to deliver at a shipping point to be designated by the distributor, to be marketed by the distributor in accordance with the terms, conditions and for the compensation set forth in this agreement. * * *

“The distributor agrees to use his best efforts to sell said grapes at the best possible price, agreeing * * * To make prompt settlement with the grower, from receipt of returns from sale of the said grapes at its office in Turlock, California. * * *

“The grower agrees to pay the distributor a reasonable packing and loading charge. The grower agrees to pay to the distributor a selling or marketing charge of seven per cent of the gross sales on all auction and delivered sales and ten per cent on all f.o.b. sales.

“To irrevocably assign to the distributor for collection any claim or interest therein that it may have against any carrier, arising out of the transportation of said fruit, * * *.

“All moneys advanced by the distributor, or charges incurred in the handling of said fruit for transportation, selling commissions, loading and packing, * * * shall be first charges against the proceeds of said fruit, and shall be deducted by the distributor therefrom. * * *

“When fruit of the grower is loaded in cars with fruit furnished by other growers, such cars may be handled as a car pool and distributor may sell such car, or cars, as a unit without discriminating between the various growers' lots and the returns for the sale thereof may be prorated on a car pool basis, or upon the basis of lots according to sizes and grades as may be determined by distributor.

“The distributor's inspector shall be the sole judge of the quality of the fruit furnished by the grower as complying with this contract and as being proper for Eastern shipment.

“Should market conditions be such that any variety of fruit shipped will not, in the opinion of the distributor, pay charges the grower will not render such grapes for shipment and the distributor shall not be obligated to accept such fruit. * * *

“This contract is agreed and understood as containing the entire contract between the parties hereto, * * * it being particularly understood that no representation has been made or relied upon by either party hereto not incorporated herein.”

Incident to the foregoing contract, and referred to therein, the plaintiff also executed to the corporation a crop mortgage on the grapes produced on his Stanislaus County ranch as security for all money advanced or paid by the distributor to the producer under the terms of that agreement. The distributor advanced the sum of $1,500 to the plaintiff. The mortgage contains this language: “It is further agreed that the distributor may sell and dispose of the said crop either at public auction or private sale with or without notice to the grower.”

The plaintiff delivered to the marketing company's packing house at Turlock, six carloads of grapes between the dates of October 8 and 14, 1935, which were sold by the distributor for a price equal to the market value thereof at Turlock, which was determined to be $27.50 per ton, net. Nine other carloads of grapes were delivered by the plaintiff to the distributor at its packing house in Turlock on October 15, 16 and 17, 1935. These nine carloads of grapes were accepted by the defendants pursuant to the terms of the agreement, shipped by them and sold in Eastern markets. Two of the carloads were shipped to a prospective purchaser in New York, who failed or refused to accept delivery, and they were subsequently sold at auction for a comparatively small price. On the theory that the modified contract was executed by the delivery, acceptance and sale of the grapes, the plaintiff claims he is entitled to recover the market value of the grapes f.o.b. Turlock.

The plaintiff brought suit against the marketing company and Frank C. Belier, its local managing agent in charge of the Turlock packing house, for the unpaid balance of the alleged “market value” of the grapes at Turlock. The complaint contains two causes of action. The first count recites the execution of the previously–mentioned written contract, which is attached to the pleading as exhibit “A” and made a part thereof. It is then alleged the fifteen carloads of grapes were delivered to the defendants at Turlock “pursuant to the terms of said marketing contract,” as modified, specifying the dates of each delivery from October 8 to 17, 1935. The complaint states that “plaintiff delivered each and every carload of said grapes as aforesaid, to said defendant Frank C. Belier with the definite and positive instructions of plaintiff to sell all of said grapes f.o.b. Turlock, California; that the f.o.b. market price of said grapes at Turlock * * * was and remained at the sum of $27.50 per ton net. That said defendant Frank C. Belier, accepted said grapes and all thereof and promised and agreed to sell the same f.o.b. Turlock.” It is then alleged on information and belief that all of said grapes were sold “in accordance with the instructions of plaintiff” for the sum of $27.50 per ton net. Judgment was demanded in the sum of $2,224.10 and interest from October 17, 1935.

The second cause of action alleges the delivery to the defendants for sale of the same fifteen carloads of grapes but asserts that the defendants, and each of them, “converted the said grapes” and appropriated them to their own use without the knowledge or consent of the plaintiff, to his damage in the sum of $3,728.19, no part of which was paid.

A general and special demurrer to the complaint was overruled. The marketing company answered the complaint denying the material allegations thereof. It also filed a cross–complaint for reimbursement of the sum of $60.78, alleged to have been expended in behalf of the plaintiff, no part of which was paid.

The court adopted findings favorable to the plaintiff in every respect, except that it was not determined that the grapes, or any part of them, were converted or appropriated by the defendants. The court specifically found that Frank C. Belier was the duly authorized agent of the marketing company with the power to, and that he did, modify the written marketing contract and that the defendants accepted them f.o.b. at Turlock and sold them for $27.50 per ton net, which was the market value thereof. Judgment was rendered against the corporation only for the sum of $2,224.10 and interest from August 26, 1936. From that judgment the marketing company has appealed.

It is contended the findings and judgment are not supported by the evidence; that there is not sufficient proof that the market value of the grapes was $27.50 per ton net at Turlock; that there is no evidence that Frank C. Belier was authorized as the marketing company's agent, to, or that he did, rescind or modify the written contract as alleged by the plaintiff, or at all, and that the court erred in receiving oral evidence, over the objection of the defendants, tending to prove either a novation or a modification of the original written agreement.

The appellant contends that the court erred in failing to require plaintiff to elect whether he would rely upon his first cause of action in assumpsit, or upon the second cause of action for alleged conversion of the grapes, since the first cause is founded on contract and the second upon tort and that the two counts are inconsistent and irreconcilable. Bank of America N. T. & S. Ass'n v. Hill, 9 Cal.2d 495, 71 P.2d 258. The court properly reserved its ruling on that motion until the introduction of the evidence was completed. The court inadvertently failed to pass upon that motion. That omission was, however, harmless, since the court assumed that both counts were founded on assumpsit and depended upon the same set of facts and adopted findings accordingly. The court did not find that the grapes had been converted. Moreover one judgment only was rendered for the market value of the grapes and interest thereon. Under such circumstances it has been held the defendants are not prejudiced by a failure to require the plaintiff to elect his remedy as between two causes of action. Bank of America N. T. & S. Ass'n v. Hill, supra; Glantz v. Freedman, 100 Cal.App. 611, 280 P. 704.

We are of the opinion the evidence does not support the findings and judgment to the effect that the original marketing contract, which by clear and unambiguous terms provided merely that the “distributor agrees to use his best efforts to sell said grapes at the best possible price,” was subsequently modified so as to require the sale of the grapes for “market value f.o.b. Turlock.” There is no substantial evidence that Frank C. Belier, the “local manager” of the corporation, had authority to so modify the contract, or that the alleged modification was accepted or ratified by the marketing company. The plaintiff assumed that he had a right to direct the marketing agent how to sell and where to sell and the price for which he should sell the grapes. But the reservation of those rights is in conflict with the terms of the written contract.

It is true that a written contract, under proper circumstances may be modified or even replaced by a subsequent executed oral agreement between the parties. Sec. 1698, Civ.Code; State Finance Co. v. Hershel California Fruit Products Co., 8 Cal.App.2d 524, 47 P.2d 821; Curtiss v. Starr, 85 Cal. 376, 24 P. 806; 6 Cal.Jur. 375, sec. 226; 17 C.J.S., Contracts, p. 866, § 377b; 2 Williston on Contracts, rev. ed. 1702, sec. 591; 1 Witkin's Summary of Calif. Law, p. 100. But such modification or substitution of a written contract by a subsequent oral agreement will be enforced only upon clear and satisfactory proof. Houghton v. Lawton, 63 Cal.App. 218, 223, 218 P. 475; Columbia Casualty Co. v. Lewis, 14 Cal.App.2d 64, 72, 57 P.2d 1010; Mackenzie v. Hodgkin, 126 Cal. 591, 597, 59 P. 36, 77 Am.St.Rep. 209.

Frank C. Belier, the “local manager” of the marketing corporation, did not have the authority to bind that company by his agreement to modify the written contract by a subsequent oral agreement to require the grapes to be sold for market value f.o.b. Turlock, contrary to the express terms of the written contract, without the consent or ratification of the corporation. The testimony of Louis Richman, taken from his deposition which was read in evidence, is positive in that regard. The plaintiff recognized that fact. He testified that when he told Mr. Belier to sell the grapes f.o.b. Turlock that Belier informed him he had notified Richman & Samuels, Inc., to that effect. The fact that Frank C. Belier signed the original written contract in behalf of the corporation is not satisfactory proof that he had the authority to modify or substitute another contract to bind the corporation without its consent or ratification. The record indicates clearly that Belier was merely the “local manager” without authority to modify or change contracts. The presumption of law, in the absence of evidence to the contrary, is that an agent who is empowered to make contracts for his principal is not authorized to rescind or modify them. State Finance Co. v. Hershel California Fruit Products Co., supra; Thomas v. Anthony, 30 Cal.App. 217, 222, 157 P. 823, 824; 6 Cal.Jur. 374, sec. 225. In both of these last cited cases the principle of law is stated that: “ ‘Presumptively an agent is employed to make contracts, not to rescind or modify them; to acquire interests, not to give them up, and no power to cancel or vary an agreement is to be inferred from a general power to make it, nor has the agent any implied power to waive or give up rights or interests for his principal * * * unless the principal knew or approved of such modifications by the agent.’ ”

In the present case the written contract contained no provision requiring the grapes to be sold for market value f.o.b. Turlock. It was a mere consignment of grapes to be sold in consideration of stipulated commissions. The contract contained no guarantee of selling prices. It merely provided that the distributor would use his best efforts to procure the highest possible price. It clearly contemplates that the grapes might be sold in Eastern markets at public auction. A reasonable construction of the contract precludes the inference that the plaintiff reserved the right to direct the agent to sell the grapes for market value f.o.b. Turlock.

It is true that several carloads of grapes were sold for $27.50 per ton. There is some evidence to the effect that $27.50 per ton was the market value of grapes at Turlock during the time of deliveries of the fifteen carloads which are involved in this suit. In view of our conclusion regarding the merits of this case, it is not necessary for us to determine whether there is adequate evidence of the market value of the grapes f.o.b. at Turlock. We think such market value is not controlling. The evidence of an alleged modification or substitution of the original written contract is unsatisfactory. It consists chiefly of the testimony of the plaintiff. Mr. Belier, the agent, was not called as a witness. He was absent from the county at the time of the trial. Evidently he was employed elsewhere by another fruit industry. There is evidence that he moved to the town of Biggs, north of Sacramento.

The plaintiff did not testify to a specific date when the consignment contract was modified or substituted by the alleged oral agreement. His evidence seems to indicate that, contrary to the terms of the written contract, he assumed he had a right at any time to direct the sale of his grapes for market value f.o.b. Turlock, and that he so instructed the agent, Belier. He testified in that regard:

“[The Court] During all the shipping season you went upon the basis that it was f.o.b. $27.50? A. Right. It was all sold f.o.b. I didn't question the price. * * * I thought if I could get $27.50 a ton or even less f.o.b. I would be willing to take it.”

The plaintiff admitted that he read the written contract before he signed it and that he knew it did not provide that the grapes should be sold f.o.b. Turlock. He said in that regard:

“Q. You read this contract before signing it? A. I did, yes sir. * * *

“Q. And you also knew there was no provision in there that growers reserved the right to determine how the car should be sold? A. That right was given to me, I had that right, they were my grapes.

“Q. You knew it was not given to you in the contract? A. It didn't have to be, it was always mine, it was my property, I had a right so say how they should be sold unless I give that right away. I didn't give the right away, I reserved that right.”

Evidently the plaintiff was mistaken in that regard. The right to determine how the grapes were to be sold was not reserved in the contract. The contract consigned the grapes to plaintiff's marketing agent to be sold, without reserving the right to require them to be sold for market value f.o.b. Turlock, or otherwise. The contract is silent regarding the manner, price or place where the grapes were to be sold.

The plaintiff testified that “We entered into this contract with the idea of selling grapes f.o.b. We started operating, selling f.o.b. and my conversation to him [Mr. Belier] at all times was ‘sell f.o.b.’ ”

Regarding plaintiff's instructions to Belier to sell the grapes f.o.b. Turlock, this colloquy occurred:

“Q. When were these instructions of yours given to Belier? * * * A. All through the season and before we entered into the contract, sell them f.o.b., that was the idea of giving them 15 cars to sell for me, f.o.b.; nothing else in mind.

“Q. Why didn't you have that put in the contract? * * * A. It wasn't necessary.”

It is true that six carloads of grapes were sold in Eastern markets for $27.50 per ton, but that does not mean those grapes were accepted by the distributor with a guarantee of market value of $27.50 f.o.b. Turlock.

Assuming that the plaintiff instructed Belier, the agent, to sell them for market value f.o.b. Turlock, and that those instructions were conveyed to the corporation in New York, there is no satisfactory proof that modification or change of the written contract was accepted or ratified. Mr. Richman testified positively that the corporation did not accept or ratify that demand. The only evidence offered to prove acceptance or ratification of that change of contract consisted of the evidence of the attorney for plaintiff who testified that on January 28, 1936, he made memorandums of certain telegrams from the corporation to Mr. Belier, which he read in his office in the presence of plaintiff and Belier's secretary. On the theory that the original telegrams were lost or could not be procured, the attorney was permitted over objections to testify to their contents. The first message dated October 10, 1935, two days after the first load of grapes was delivered to Belier, reads:

“We have good market & you can tell growers can sell cars US–1 Alicante Carignanes 27.50 net perhaps more.”

It is true the first six carloads were actually sold in Eastern markets for $27.50 per ton. But evidently this message had no application to plaintiff's instructions to Belier to change the contract so as to guarantee market price f.o.b. Turlock. It does not even refer to George Bare's contract. It is merely information to growers generally.

October 15th another message was received by Belier, which reads:

ACEQA net have AOOAB open [unsold] will work hard trying to sell them today you explain this to Bare tell him not to worry that will work hard sell his grapes f.o.b. Quote $27.50 local.”

This telegram does not purport to be an acceptance of a proposed change in the written contract. It does not refer to either the contract or a proposed change thereof. It appears to be a mere message of encouragement in which the agent says, in effect, that he will work hard “trying to” sell his grapes f.o.b. Then it says “Quote $27.50 local.” We are unable to construe these messages as an acceptance or ratification of a proposed modification of the written contract. The evidence in this case fails to meet the requirement of the law that proof of a subsequent oral modification of a written contract shall be clear and satisfactory.

The effect of the evidence of the plaintiff that he informed defendants “before we entered into the contract” that the grapes must be sold for market value f.o.b. Turlock is that the written contract failed to include his alleged stipulation regarding the selling price of the grapes. All previous negotiations and stipulations are deemed to have been included in the written contract. Sec. 1625, Civ.Code; 12 Am. Jur. 755, sec. 232.

For the foregoing reasons the judgment is reversed.

THOMPSON, Justice.

ADAMS, P. J., and PEEK, J., concurred.