Powder Company v. Burkhardt/Opinion of the Court

There is but a single question in the case; to wit, were the acids and other articles seized upon Burkhardt's execution the property of Dittmar? They were nearly all of them articles furnished to him by the Powder Company, under the agreement of July 4, 1871, or purchased with the money supplied by the company under that agreement.

Dittmar, having patents for the manufacture of explosive compounds, seems to have been in the condition, formerly so common to inventors, of possessing more science than money. What he lacked, the Powder Company professed to be ready to supply, and with the expectation of being compensated by receiving the one-half of the net profits to be made by the manufacture and sale of the said compounds. This was the general purpose and intent of the parties.

Among the clauses of the said agreement, the third, fifth, and twelfth may be referred to as illustrating its meaning.

The plaintiff in error contends that the present is the case of a bailment, and not of a sale or a loan of the goods and money to Dittmar. It is contended that the question of bailment or not is determined by the fact whether the identical article delivered to the manufacturer is to be returned to the party making the advance. Thus, where logs are delivered to be sawed into boards, or leather to be made into shoes, rags into paper, olives into oil, grapes into wine, wheat into flour, if the product of the identical articles delivered is to be returned to the original owner in a new form, it is said to be a bailment, and the title never vests in the manufacturer. If, on the other hand, the manufacturer is not bound to return the same wheat or flour or paper, but may deliver any other of equal value, it is said to be a sale or a loan, and the title to the thing delivered vests in the manufacturer. We understand this to be a correct exposition of the law. Pierce v. Schenck, 3 Hill (N. Y.), 28; Norton v. Woodruff, 2 N. Y. 153; Mallory v. Willis, 4 id. 76; Foster v. Pettibone, 7 id. 433.

Adopting this principle, let us examine with more particularity the twelfth clause of the contract. We find:--

1st, That the Powder Company there undertakes to 'advance to the party of the first part' certain materials and certain moneys, some of which are obviously for his personal advantage. To advance is to 'supply beforehand,' 'to loan before the work is done or the goods made.' This is the popular understanding of the language, as well as the accurate definition. Dittmar was to make certain articles of sale, and the Powder Company undertook to supply beforehand, to loan to him before his goods were made, certain materials and moneys, to be used in part in making the goods, and in part for his personal benefit.

2d, This advance or loan was to be made upon the requisition of Dittmar, and was for the purposes following: To pay, semi-monthly, for salaries, $100; for labor, $200; for incidental expenses of manufacture, such sums as may be found necessary; for Dittmar's personal account, $250. These sums must necessarily be paid in money, and the title to the money must necessarily be in Dittmar, to be expended at his discretion. Especially is this true of the amount of $6,000 per annum advanced for 'personal account.'

3d, The Powder Company is to furnish to Dittmar, upon his requisition, all the raw materials needed to manufacture said explosives; or,

4th, Furnish to Dittmar the money necessary for the purchase of said materials.

5th, The said advances and the cost of the raw material are to be charged to Dittmar against the manufactured goods to be consigned to the Powder Company, as before provided.

These various provisions show that the materials to be sent were to be delivered to Dittmar, to be in his actual possession and under his absolute control. We see nothing requiring that the identical acids sent should be used in the manufacture of the explosives, and nothing to prevent an exchange by Dittmar for other materials, if he found any of the articles to be unsuitable, or if he found that he had too much of one kind and too little of another, acting honestly in the interest of both parties. The case is quite different from the single mechanical transaction of turning a specific set of logs into boards or a specific lot of wheat into flour, where there is no room for judgment or discretion.

It will be observed, also, that the agreement to furnish money semi-monthly requires payments for Dittmar's personal account, as well as for the uses of the manufacture. This is significant to show that every thing was intrusted to Dittmar personally, and that the Powder Company relied upon the general result.

The agreement on the subject of providing materials concludes thus: 'Or the money necessary for the purchase thereof.' If the Powder Company had made these advances in money, which was received by Dittmar, and by him placed in his money-drawer, or deposited to his credit in bank, the money would have been his property, subject to the payment of his debts; a part of his estate, in the event of his death or his bankruptcy. The request to charge, on which the only exception in the case arises, included both articles furnished and that purchased with the money furnished by the company. Both were placed by the counsel upon the same basis.

We think the goods in specie and the money, if it had been supplied, are subject to the same rules, and that they became the property of Dittmar, for which he was liable to account to the Powder Company, as for so much in value to be charged against the manufactured goods which are to be consigned to the Powder Company.

The 'advances and the cost of the raw material are to be charged to the said party of the first part, against the manufactured goods to be consigned to the party of the second part.' The charging to Dittmar of money thus advanced to him assumes that the money becomes his, and a debt is thereby created to the joint account. The raw material is also to be charged to him, or charged against him, and in like manner becomes his property, for which he must account to the joint concern. These are to be charged to him against the manufactured goods, and these goods are to be consigned by him to the Powder Company. These expressions are strongly indicative of the intention to make Dittmar a debtor for the moneys and the materials furnished to him under the contract.

While it has been held that the expression 'to be consigned to the party of the second part' is not sufficient to show ownership in the party consigning, yet the general rule is conceded, that the party consigning goods is the presumed owner of them, and it may be taken into consideration in giving construction to a doubtful instrument. In this transaction, as has been already observed, there is no agreement to return or deliver the goods, but the word 'consign' is evidently used in its place.

Again: it is by no means conclusive against the Powder Company that the agreement contains no reservation of title in the goods until they should be manufactured and consigned to them. Yet the New York Reports contain decisions upon many agreements containing such reservations, and its absence may be considered, among other things, in determining the construction of the contract.

So the circumstance that the subject of the contract was a patented article, and that Dittmar was the patentee, is not decisive, and yet is worthy of consideration. No one could law fully use Dittmar's process for the manufacture of the article of 'dualin,' except himself. No one could lawfully sell it when manufactured, except himself. It was lawful for him to mix these materials and to produce the compound, but it was not lawful for the Powder Company to do so. It is, then, at least a fair argument to say, that when materials were sent and delivered to him to use in a manner which he only was authorized to use, and to produce a result which he alone was authorized to produce, that both the process and the materials, when there was no stipulation to the contrary, should be taken to be his.

The arrangement between the parties provided for its continuance for a period of ten years, and that the Powder Company should have the benefit of all improvements or discoveries made by Dittmar during that time; and that, if Dittmar failed to carry out his part of the contract, the Powder Company was licensed to manufacture dualin for the period named, under his patent; and, to enable them to do this, Dittmar promised to give such practical instruction to some person to be agreed upon as would enable the Powder Company to have the benefit of this provision.

These considerations, we think, show that the contract in question is very different from those which have been the subject of decision in the numerous cases cited. The Supreme Court of Massachusetts so considered it in the case of Dittmar v. Norman (118 Mass. 319), where this same agreement came under consideration. That was an action brought by Dittmar to recover the price of certain dualin manufactured by him under the agreement of July, 1871, and before the time when it was alleged by Dittmar that the contract had been violated by the Powder Company. The Powder Company claimed to be the owner of the dualin, and forbade payment by the debtor to Dittmar. The court held that the delivery of the materials to Dittmar did not create a bailment, that the title was in him, and adjudged that he was entitled to recover.

We think the ruling at the trial was correct.

Judgment affirmed.