The issue in this action is whether a seller of goods performed in accordance with its agreement, by loading the goods into a container supplied by the buyer and by notifying the buyer of such loading, so as to shift thereby the risk of loss of the goods to the buyer. We answer this question in the negative and thereby affirm the holding of the Appellate Division.
In support of its contention that it had fully performed when the goods were loaded in the container, the seller quotes from an examination before trial of the buyer's vice-president, who stated:
In preparation for shipping the goods to South America, the buyer phoned International Shipper's Co. of New York, a customs house broker and freight forwarder, and a third-party defendant in this action, to arrange for a local truckman to pick up and deliver the goods to the pier. International Shippers engaged a local truckman, Ability Carriers, Inc.,
On Friday, June 22, 1973, the local truckman deposited the empty container adjacent to premises located at 57 Thames Street, Brooklyn, New York. There is some dispute between the parties involving, in part, whether these were the seller's premises since Bogart Knitwear, Inc. (apparently related to the seller corporation), another third-party defendant, occupies these premises, but it need not be discussed, since it is not material to our analysis. It is sufficient to say that the container was delivered to the seller for loading.
On Monday, June 25, 1973, the seller had the goods loaded in the container and, on the same day, notified the buyer that the loading had been completed. The buyer then advised its freight forwarder to have the local truckman pick up the loaded container and deliver it to the Moore-McCormack pier. At around 8:00 P.M. that evening, prior to the arrival of the local truckman engaged by the buyer's freight forwarder, an individual driving a tractor arrived at the Thames Street premises where the container was located and hooked up the trailer containing the loaded container to his tractor. The tractor driven by this individual had no descriptive markings thereon or anything to identify its owner. Before leaving the premises, the driver signed a bill of lading, but the signature was indecipherable. It appears that this individual was a thief and had stolen the goods.
Sometime after June 25, the buyer delivered to the seller a check dated July 2, 1973 in the sum of $24,119.10 in payment for the goods loaded in the container. Payment on the check was thereafter stopped by the buyer, apparently when it was learned that the goods had not been received, and the seller brought an action against the buyer to recover payment for the goods.
At Special Term, both the seller and the buyer moved for summary judgment. That court found that the seller's undertaking was to load the goods in a deliverable condition into the carrier's container and that, by doing so and notifying the buyer, delivery was made in conformity with the agreement of the parties. Special Term thus determined that the risk of loss of the goods had passed to the buyer and granted the seller's motion for summary judgment.
The Appellate Division reversed Special Term and granted
Although the seller contends that the F.O.B. term on the buyer's form did not have its ordinary meaning, the Uniform Commercial Code provides that, unless otherwise agreed, the term F.O.B. at a named place "even though used only in connection with the stated price, is a delivery term" (Uniform Commercial Code, § 2-319, subd ). Where the term F.O.B. the place of shipment is used, as in this case with the term F.O.B. plant, the code provides that the seller must ship the goods in the manner provided in section 2-504 of the Uniform Commercial Code and "bear the expense and risk of putting them into the possession of the carrier" (Uniform Commercial Code, § 2-319, subd , par [a]).
With respect to shipment by the seller, the code provides that where the seller is "required or authorized" to send the goods, but not required to deliver them to a particular destination, then "unless otherwise agreed" the seller must "put the goods into the possession of * * * a carrier" (Uniform Commercial Code, § 2-504, subd [a]). Further, with respect to the risk of loss, the code provides that where the contract requires or authorizes the seller to ship the goods by carrier "if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier" (Uniform Commercial Code, § 2-509, subd , par [a]; emphasis added). The risk of loss provision is, however, "subject to contrary agreement of the parties" (Uniform Commercial Code, § 2-509, subd ). Although the seller contends that section 2-509 is not applicable because the agreement between the parties does not "require" the seller to "ship the goods by carrier", it should be noted that the section applies where the seller is "required or authorized" to ship the goods by carrier and is thus applicable here.
The effect of the provisions of the Uniform Commercial Code may be varied by agreement, with exceptions not applicable here (Uniform Commercial Code, § 1-102, subd ). Furthermore, the provisions relevant to this action provide that
Despite the provisions of the code which place the risk of loss on the seller in the F.O.B. place of shipment contract until the goods are delivered to the carrier, here the seller contends that the parties "otherwise agreed" so that pursuant to its agreement, the risk of loss passed from the seller to the buyer at the time and place at which the seller completed physical delivery of the subject goods into the container supplied by the buyer for that purpose. In support of this contention, the seller alleges that the language of the purchase order "Pick Up from your Plant" is a specific delivery instruction and that the language
As often happens in commercial transactions, the parties to this action did not prepare an extensive written agreement, but merely made an arrangement that, under normal circumstances, would have been entirely satisfactory. The intervention of a wrongdoer who stole the goods that were the subject of the agreement forces the court to determine who should bear the loss resulting from the theft. In this respect, although the seller argues that only to the extent that the agreement is silent should the code apply, it should be noted that the underlying purpose and policy of the code is "to simplify, clarify and modernize the law governing commercial transactions" (Uniform Commercial Code, § 1-102, subd , par [a]).
The seller's contention, that the parties intended the F.O.B. term as a price term and not a delivery term, conflicts with the code provision that states that the F.O.B. term is a delivery term "even though used only in connection with the stated price" (Uniform Commercial Code, § 2-319, subd ; emphasis added). That the F.O.B. term was not inserted in the space provided for such an expression in the buyer's own purchase order form does not require a determination that the F.O.B. term was intended as a price term, since the drafters of the code recognized that the term F.O.B. will often be used in connection with the stated price. Thus, the place where the term F.O.B. was typed on the buyer's form is not sufficient to suggest that the parties intended a price term, particularly when one considers that the relevant code provision was specifically intended to negate the decisions which treated this term as "merely a price term" (Official Comment 1, McKinney's Cons Laws of NY, Book 62½, Uniform Commercial Code, § 2-319).
Since the term "FOB PLANT" was a delivery term, the risk of loss was on the seller until the goods were put into the possession of the carrier — unless the parties "otherwise agreed" or there was a "contrary agreement" with respect to the risk of loss. In this respect, the holding in Avisun v Mercer Motor Frgt. (37 A.D.2d 517, supra), cited by the Appellate Division, is illustrative. There, the question was whether the defendant carrier was liable as bailee for goods that were loaded in its trailer but were stolen before it arrived to pick them up. The Appellate Division there determined that until the acceptance of the goods by the defendant carrier, there was no bailment and that making available a vehicle for (p 518) "possible temporary storeage" was not an "acceptance". The seller contends that the Avisun case has no relevance to this case because it involves the issue as to when a bailment arises as a matter of law. The seller's interpretation is, however, too limited. The Avisun case is relevant here because, in the same sense that loading the trailer was not an "acceptance" of a bailment by the carrier, the loading of the container by the seller is not "delivery" to the carrier for purposes of the code, unless the parties so agree.
With respect to the agreement of the parties, the seller contends that the statements in the affidavits of the parties
The issuance of the check by the buyer gives little support to the seller's view. The making of payment is as consistent with the buyer's expectation that delivery had been made to the proper carrier as it is with the seller's contention that payment was made because the buyer considered the seller's performance to be completed upon loading the container.
With respect to the seller's contention as to the meaning of the statements of the buyer's vice-president, the seller has a formidable task in trying to prove that the parties did not intend the ordinary meaning of the term "FOB PLANT", i.e., delivery to the carrier. Although the only written expression in the transaction was the buyer's purchase order form on which the buyer typed the F.O.B. term, if the seller did not agree to this term, the seller should have expressed its disagreement after it received the purchase order form. For example, the seller should have indicated that the term "FOB PLANT" was merely a price term and not a delivery term (see, e.g., 5 McKinney's Forms, Uniform Commercial Code, § 2-319, Form 1) or that the risk of loss was on the buyer after loading (cf. 5 McKinney's Forms, Uniform Commercial Code, § 2-319, Form 2). The code anticipates that a written confirmation by a party may state terms additional to, or even different from, those offered and agreed upon, which terms, depending on certain factors, may become part of the contract (see Uniform Commercial Code, § 2-207). Yet here the seller did not seek to modify the F.O.B. term typed on the buyer's purchase order, but apparently relied on its own understanding of the agreement.
The provisions of the code with respect to risk of loss are subject to the "contrary agreement" of the parties (Uniform Commercial Code, § 2-509, subd ). In this respect, the Official Comment states that "`[c]ontrary' is in no way used as a word of limitation and the buyer and seller are left free to readjust their rights and risks * * * in any manner agreeable to them" (Official Comment 5, McKinney's Cons Laws of NY,
Accordingly, the order of the Appellate Division which granted the buyer's motion for summary judgment should be affirmed, with costs.