Southern States Phosphate & Fertilizer Co. v. Barrett & Doughty , 130 Ga. 749 ( 1908 )

Fish, C. J.

(After stating the facts.)

In our opinion, the rights of the plaintiff in this case are not to be determined by the alleged trust provisions upon which it relies, contained in the written contract which it made with Alexander & Alexander, set forth by the petition: We think that the petition shows that in the dealings between the plaintiff and Alexander & Alexander, wherein the indebtedness of the latter to the former arose, the alleged trust feature of this contract was abandoned. This contract clearly contemplated an actual delivery of fertilizers by the plaintiff to Alexander & Alexander, and not a mere constructive delivery to them by actually delivering the goods to their customers, to whom they had previously sold the same. It provided that the fertilizer company would deliver fertilizers to Alexander & Alexander, “F. O. B. cars,” and that “all fertilizers shipped under this contract” should be held by Alexander & Alexander as agent and in trust for the company, until sold for cash, or Alexander & Alexander gave their note for the same. Until one or the other of these events occurred, Alexander & Alexander were to hold the fertilizers in trust for the plaintiff. They could not sell any of the fertilizers on credit, until they gave their note for the same to the plaintiff, when the trust in the fertilizers would terminate. This construction is placed upon the contract in a brief filed for plaintiff in error by one of its counsel, wherein it is said: “The contract first provides that Alexander & Alexander should give their notes for all fertilizers, not delivered as cash purchases, and, secondty, that the title shall be reserved in plaintiff until sales by Alexander & Alexander for cash, or until notes are given. Thus Alexander &' Alexander could not resell, except for cash, until they gave their notes. This partial reservation of title and prohibition upon selling was intended to protect plaintiff in the interval between the delivery of the goods and the receipt of Alexander & Alexander’s notes. After that time Alexander & Alexander might sell; and plaintiff is then protected by clause 3, providing that all proceeds of fertilizers, whether represented.by money or evidences of debt, were to be held in trust until Alexander & Alexander’s debt was paid.” The dealings of the parties to this contract were not in accordance with its terms. As a matter of fact, none of the fertilizer was actually delivered by the plaintiff to Alexander & Alexander, but all the goods were shipped by plaintiff direct to persons to whom Alexander & Alexander had sold the same upon credit, while they were in the plaintiff’s own possession. It is obvious that under this course of dealing it was impossible for Alexander & Alexander to hold any of the fertilizers in trust for the plaintiff, for they never for a single moment had possession of the same. When the plaintiff parted with its possession of the goods, the possession passed from it to the persons to whom it, upon the orders of Alexander & Alexander, shipped them. Delivery by the plaintiff to the railroad company was delivery to the consignee, and both possession and title passed to him. Again, as counsel for .the plaintiff in error says, under the contract, Alexander & Alexander were prohibited from selling any fertilizers upon credit until they had given their note for the same to the plaintiff; and yet they actually sold all of the goods upon credit before they gave their notes to the plaintiff. The plaintiff must have known that they were so selling the goods, as it received no remittance of cash from Alexander & Alexander, who were required by the contract to promptly remit to the plaintiff all cash received from sales of the fertilizers; and yet the plaintiff, without requiring Alexander & Alexander to pay for the fertilizers, or to give their notes therefor, shipped the goods, from time to time, to the persons to whom Alexander & Alexander had sold them upon credit.

The fertilizer company relies upon the third clause of the contract to support its contention that the notes and accounts in which the price of fertilizers sold by Alexander & Alexander to their customers was included were, to the extent that such price was embraced therein, held in trust for it. This clause provides that, “when any fertilizers shipped under this contract are sold by you to others, all proceeds of such sales, whether money, checks,” etc., “are to be received by you in trust, as the special property of the companjr,” etc. This can not be held to refer to credit sales of fertilizers, to be made by Alexander & Alexander before they gave their notes to plaintiff for the purchase-price of the same, for if it were given such a construction, it would be in direct conflict with the second clause, which, as we have seen, prohibited them from selling any of the fertilizers upon credit before giving their notes therefor to the plaintiff. In the brief from which we have quoted, counsel construe this third clause as applying to such sales made after Alexander & Alexander gave their notes to the plaintiff. By its terms this clause applies only to fertilizers shipped under this contract, and, in our opinion, the plaintiff’s petition shows that no fertilizers were shipped under this contract. Under the contract, the fertilizers were to be delivered to Alexander & Alexander, free on board cars, to be held by them in trust for the plaintiff until they either sold them for cash, in which case they were to immediately remit the cash received to plaintiff, or until they gave their notes for the same to the plaintiff. In order for fertilizers, sold by the plaintiff to Alexander & Alexander upon credit, to be shipped under this contract, they had to be so shipped that they could be held by Alexander & Alexander until one or the other of these things occurred; that is, they had to be shipped to Alexander & Alexander, or to some agent of theirs. Fertilizers so sold by the plaintiff, shipped not to Alexander'& Alexander, but direct to persons to -whom they had already sold the same upon credit, were not shipped under this contract. The contract did not cover such a shipment or delivery of fertilizers, sold upon credit to Alexander & Alexander. Alexander & Alexander could not, without first paying for the fertilizers, have demanded that they be so shipped, and the plaintiff could have refused to thus ship them. When they were shipped in this way by the plaintiff, at the request of Alexander & Alexander, the shipments were contrary to the contract, and its trust feature was abandoned.

Another thing which seems to clearly indicate that the trust idea was abandoned by the parties is, that this third clause of the contract required that all notes for sales of fertilizers taken by Alexander & Alexander should be made payable to the fertilizer company and filled out on forms furnished by it, and yet not one of such notes was made payable to the plaintiff, and each of them included indebtedness of the maker to Alexander & Alexander other than for the purchase of fertilizers; and the petition does not even .allege that the plaintiff furnished to Alexander & Alexander any forms upon which to take notes for the price of fertilizers sold to their customers. It hardly seems possible, and it is not alleged, that the plaintiff, while it was from time to time shipping the goods to the customers of Alexander & Alexander, did not know that they were not complying with this provision of the contract; ior it appears, from exhibits attached to the petition, that, upon the orders of Alexander & Alexander, shipments were made by the plaintiff to over one hundred different persons, to whom Alexander- & Alexander had sold fertilizers upon credit. For these reasons, we are of opinion that the plaintiff could not in the present case claim any benefit under the trust feature of the written contract which it made with Alexander & Alexander, and that none of the notes or accounts referred to in the petition, held by Alexander & Alexander against their customers, were, impressed with a trust in favor of the plaintiff. The demurrer was properly sustained, and the judgment is, therefore,

Affirmed.

All the 'Justices concur.