MITCHELL CAMERA CORPORATION v. FOX FILM CORPORATION (1936)

The petition for hearing of the above-entitled cause after decision by the District Court of Appeal was granted for the reason that at the hearing of said petition, we felt that there were questions which deserved further consideration. One of these questions related to the nature of the contract between the parties, that is, whether it was a contract to purchaser articles of personal property, and therefore required by the statute of frauds to be in writing, or whether it was a contract for the manufacture of an article such as the vendor in the ordinary course of his business does not manufacture for the general public market. In the latter case, the contract would not be within the statute of frauds. The District Court of Appeal held that a certain letter written by the appellant to the respondent of date February, 1928, a portion of which letter is set out in the opinion, was decisive of this question. The court held that the quoted portion of said letter indicated that the contract between the parties was simply a contract for the sale of the manufactured articles, and not an agreement to manufacture said articles. The appellant has called to our attention other portions of said letter, which might be construed as indicating that the appellant had agreed to manufacture certain specified articles for respondent, and that the articles so agreed to be manufactured were not such as appellant manufactured for the general public market. This letter in its entirety was before the trial court. It is not free from ambiguity. It may be said that it is reasonably susceptible of either of the two constructions claimed for it. It was the primary duty of the trial court to construe this letter, and if the construction placed upon it by the trial court appears to be reasonable, it is not within the province of an appellate court to give it a different construction, and thereby substitute its construction for that of the trial court. Kautz v. Zurich Gen. A. & L. Ins. Co., 212 Cal. 576, 582, 300 P. 34.

The other question which we felt should be given further consideration was that which related to the right of the respondent to plead the statute of frauds. The claim of appellant was that the respondent was estopped from pleading the statute of frauds for the reason that the appellant had asked for a writing evidencing their contract before it would proceed to manufacture the cameras, and respondent assured it that such a writing would be prepared and sent to appellant. Upon this assurance, appellant proceeded with the work of manufacturing said cameras and in doing so expended a large sum of money. Thereafter respondent repudiated its contract, and not only refused to reduce it to writing, but declined to accept or pay for any of the cameras then or thereafter manufactured. It appears to be well settled that where the vendee is guilty of fraudulent representations inducing the vendor to enter into the verbal contract, he is estopped from pleading the statute of frauds, if the vendor as a result of said fraudulent representations has changed his position in a material respect other than by merely a part performance of his contract. It is equally well settled that a refusal to reduce an oral agreement to writing after a promise so to do constitutes such a fraudulent representation. Conceding that there is evidence in the record to the effect that respondent assured appellant that their contract would be reduced to writing, which was not done, there is nothing to show that by reason of that promise the appellant did anything more than to continue the work of manufacturing the cameras covered by the oral contract. The authorities cited in the opinion clearly indicate that under such a state of facts, the respondent was not estopped from pleading the statute. We therefore find ourselves in accord with the conclusion of the District Court of Appeal as set forth in its opinion written by Mr. Justice pro tempore McComb, and we adopt the same as the opinion of this court. It reads as follows:

‘This is an appeal from an order granting defendant's motion for a nonsuit to the first, second, third, fourth, fifth, sixth, ninth, and tenth causes of action in the complaint as amended.

‘Plaintiff on this appeal does not urge error in the granting of the motion as to the first second, and third cause of action. action.

‘The fourth and fifth causes of action are upon the theory that defendant, through a duly authorized agent, entered into a contract with plaintiff to manufacture especially for the defendant certain cameras not suitable for the general trade.

‘The sixth cause of action is a common count for labor and services performed and materials furnished by plaintiff at the special instance and request of defendant.

‘The ninth and tenth causes of action are upon the theory that plaintiff entered into a contract with defendant for the sale of goods as distinguished from a manufacturing contract. The plaintiff prayed for damages in the sum of $367,148.16.

‘Viewing the testimony most favorably to plaintiff (Newson v. Hawley, 205 Cal. 188, 189, 270 P. 364), the facts in the instant case are:

‘On or about the 26th day of October, 1929, E. I. Sponable, technical engineer in charge of designing and obtaining cameras for Fox Case Corporation, accompanied by Keith Weeks, executive manager of West Coast Studios of defendant, went to the Los Angeles plant of plaintiff and in conversation with officers of plaintiff corporation instructed plaintiff to manufacture fifty 70mm cameras known as Grandeur cameras for defendant. Shortly thereafter plaintiff commenced the manufacture of said cameras. Ten of the cameras were finished and the balance partly completed. The cameras were never delivered to nor accepted by defendant.

‘There are three questions which are determinative of this appeal.

‘First. Was the alleged contract (a) a manufacturing contract or (b) a contract to buy and sell personal property at a price of $200 or more?

‘Second. If the alleged contract was a contract to sell personal property at a price of $200 or more, is the defendant estopped from relying upon the statute of frauds as a defense?

‘Third. Did the evidence establish facts sufficient to warrant a recovery on the common count for labor and services performed and materials furnished?

‘As to the first question, to be classed as an agreement to manufacture, the article must be made for the vendee according to his special design or requirements, so that when made, it will not be suitable for the general trade of vendor (Golden Eagle Milling Co. v. Old Homestead Bakery, 59 Cal.App. 541, 543, 211 P. 56), and a contract for the sale of an article then existing or such as the vendor in the ordinary course of his business manufactures or procures for the general market, whether on hand at the time or not, is a contract for the sale of goods. Golden Eagle Milling Co. v. Old Homestead Bakery, 59 Cal.App. 541, 544, 211 P. 56. Plaintiff in the instant case manufactured the Grandeur cameras for others than defendant and they were suitable for plaintiff's general trade. This is well demonstrated by evidence that as early as February, 1928, defendant asked plaintiff to agree not to sell Grandeur cameras to others. Plaintiff wrote in reply a letter saying in part as follows:

“If this camera were entirely of your design, we would readily agree to something like that, but since it embodies all of our patented features, we cannot close the door to ourselves for other business, which offers the avenue of revenue through these patents. On earnest thought, we know you will agree with us, that even though we did make this guarantee to you and lived up to it, it would not protect you, as every other manufacturer would be permitted to do what we were forbidden to do and cameras would be made just the same, but we would be stopped from sharing in this business. The building of cameras is our life, and we cannot tie ourselves up into a contract that would kill us off. * * *' (The italics in the foregoing letter is that of the plaintiff.)

‘There is evidence that plaintiff in fact sold Grandeur cameras on two different occasions to competitors of defendant.

‘The contract was one for the purchase and sale of personal property of a value in excess of $200 and not a manufacturing contract. Therefore the nonsuit was properly granted as to the fourth and fifth causes of action alleged in the complaint as amended.

‘Turning to the second question, since the alleged contract was one for the sale of personal property of a value in excess of $200, it was one that must be evidenced by a note or memorandum in writing. Section 1624, Civ.Code, prior to 1931 amendment; sec. 1973, Code Civ.Proc., prior to 1931 Amendment. Plaintiff has failed to direct our attention to any evidence of a note or memorandum containing the essential terms of the contract expressed with such a degree of certainty as to show the intention of the parties without recourse to parol evidence. Zellner v. Wassman, 184 Cal. 80, 85, 193 P. 84; Breckinridge v. Crocker, 78 Cal. 529, 535, 21 P. 179; Gordon v. Perkins, 108 Cal.App. 336, 342, 291 P. 644, 646. Mr. Justice Plummer in Gordon v. Perkins, supra, approves the rule as thus stated, 108 Cal.App. 336, at page 342, 291 P. 644, 646:

“To be sufficient as a note or a memorandum under the statute of frauds, a writing must be complete in itself, leaving nothing to rest in parol. The entire agreement must be expressed in the writing. * * * The general rule that a contract which is not entirely in writing is to be treated as a parol or verbal contract, is applicable in determining whether the contract is within the inhibition of the statute of frauds. The memorandum must contain all the essential elements or material parts of the contract. * * * The memorandum required by the statute of frauds must show the subject matter of the agreement and so describe it as to render it capable of certain identification.'

‘As the evidence fails to disclose a sufficient note or memorandum in writing of the agreement of the parties to satisfy the requirement of the statute of frauds, it is necessary to determine the second question, i. e., is defendant estopped from relying upon this defense?

‘There are two elements essential for an estoppel.

‘First, there must be an irreparable change of position upon the part of plaintiff independent of mere part performance of the contract. Seymour v. Oelrichs, 156 Cal. 782, 793, 106 P. 88, 134 Am.St.Rep. 154.

‘Second, there must be fraud, that is, the party relying upon the defense of the statute of frauds must have made a fraudulent representation e. g., as in Seymour v. Oelrichs, supra, where the fraudulent representation was that the oral contract would be reduced to writing. Zellner v. Wassman, 184 Cal. 80, 87, 193 P. 84.

‘In the instant case both of the foregoing elements of estoppel are lacking, as the sole evidence of change in plaintiff's position was that it partly performed the contract and there was no evidence that defendant ever promised to reduce the alleged oral agreement to writing or made any other fraudulent representations. Therefore, the statute of frauds was a complete defense to the ninth and tenth causes of action alleged in the complaint as amended, and the nonsuit was properly granted as to these counts.

‘The remaining question to be determined is whether there was sufficient evidence to warrant a recovery on the common count for labor and services performed and materials furnished. In order to recover on this count, it was necessary for plaintiff to prove the following elements:

‘First, the rendition of services or furnishing of materials at the request of defendant;

‘Second, intent to charge defendant; and

‘Third, acceptance or retention of benefits by the defendant. 27 Cal.Jur. 199 et seq.

‘For the purpose of the instant case, we assume that there was evidence of the first two elements hereinbefore mentioned, however, there was absolutely no evidence of the acceptance or retention of benefits by the defendant. Therefore, the motion for a nonsuit was properly granted as to the sixth cause of action in the complaint as amended.

‘Plaintiff urges error in the rulings of the trial court in the admission and exclusion of evidence. Suffice it to say that none of the evidence received or rejected over plaintiff's objection had any bearing on the points we have heretofore discussed. Hence it is unnecessary for us to make further comment upon these alleged errors. An examination of the lengthy record discloses that the learned trial judge was extremely patient with counsel and careful in his rulings during the course of the long and tedious trial.’

The order appealed from is affirmed.

PER CURIAM.