Harry Rubin & Sons, Inc. v. Clay Equipment Corp.

OPINION OF THE COURT Harvey, J. In the early 1970’s, plaintiff, a retail dealer of farm equipment, entered into an oral agreement with defendant pursuant to which plaintiff was to sell and service defendant’s equipment and to carry defendant’s repair parts in its store. This arrangement apparently proceeded smoothly for some time until 1989, when plaintiff’s president decided that the store would go out of business. At that time, plaintiff notified its suppliers, including defendant, and requested that they buy back all parts that plaintiff had in stock. Defendant refused to accept all inventory but offered to accept the return of any parts shipped within the preceding 90 days. Unhappy with defendant’s response, plaintiff commenced this action pursuant principally to General Business Law article 33-A, seeking damages in the amount of 115% of the value of the inventory, costs and counsel fees as provided by General Business Law § 696-f. In defendant’s answer it asserted a counterclaim for the outstanding balance of plaintiff’s [170] account that was still allegedly owed to defendant. Following a nonjury trial, Supreme Court found that General Business Law § 696-f did not apply and dismissed the complaint. The court also found in favor of defendant on its counterclaim. This appeal by plaintiff followed. Initially, plaintiff contends that Supreme Court erred in concluding that General Business Law § 696-f did not apply to plaintiff’s situation. We must agree. General Business Law article 33-A was enacted to "maintain harmonious relationships between those persons involved in all aspects of [the farm equipment] industry” (Mem of Sen. Kehoe, Bill Jacket, L 1988, ch 688). General Business Law § 696-f (1) provides, "Whenever any dealer enters into a dealer agreement with a supplier wherein, the dealer agrees to maintain an inventory of equipment or repair parts and the dealer agreement is subsequently terminated, the supplier shall repurchase the inventory as provided in this article” (emphasis supplied). In construing this statute, Supreme Court concluded that because plaintiff was apparently not required by defendant to maintain the inventory by the oral dealer agreement, General Business Law § 696-f did not apply. We cannot accept this reasoning. Statutory language should generally be construed according to its most natural and obvious sense whenever possible (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 94). Where the language used by the Legislature is clear and unambiguous, resort to the legislative history is inappropriate (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 120). Here, the meaning of General Business Law § 696-f (1) is readily apparent without resort to extrinsic materials. As a result, Supreme Court erred in its legal conclusion which reads into the statute a condition that was not included by the Legislature, i.e., that the supplier must "require” the dealer to maintain the inventory before the statute is triggered. Leaving aside the question of whether plaintiff was required to maintain an inventory, we look next to the question of whether any agreement was made by the parties concerning the stocking of inventory. In its decision, Supreme Court found that pláintiff never agreed to maintain any inventory of defendant’s equipment or repair parts. It must be remembered, however, that this Court has broad authority to review a verdict after a nonjury trial and, in an appropriate case, we may render the judgment we find warranted by the facts (see, D. C. Leathers v Gelmart Indus., 125 AD2d 738, 739). [171] Here, our review of the relevant, testimony, and evidence indicates that plaintiff did agree to maintain an inventory. For example, plaintiff’s president testified that plaintiff agreed to be a dealer for defendant and that, as a dealer, plaintiff would "stock parts to take care of repairs and * * * sold and installed the equipment * * * stocked parts and * * * took care of warranty work”. Plaintiff’s president also testified that he discussed with defendant’s representative what the local market for defendant’s parts was and what parts would wear and need to be replaced. He also stated that his agreement to order these parts was based upon defendant’s recommendation and that plaintiff always maintain a stock of defendant’s parts. This and other proof indicates the existence of an agreement pursuant to which plaintiff maintained and sold defendant’s inventory. Therefore, we find that plaintiff was entitled to relief under the statute upon termination of the agreement. Upon remittal, Supreme Court should determine the appropriate amount of damages. As a final matter, we agree with plaintiff that Supreme Court erred in awarding interest on defendant’s counterclaim in which it alleged that plaintiff had an outstanding balance on its account with defendant in the amount of $1,418.21 when it went out of business. Supreme Court awarded prejudgment interest on that amount at the alleged contract rate of 18% per annum, from February 1, 1989 to October 31, 1991. Nevertheless, the only proof on the record remotely supporting the proposition that plaintiff agreed to pay any interest on its account with defendant is the fact that plaintiff accepted parts accompanied by invoices which included as a term a "service charge at the rate of 1-1 Vi % per month * * * charged on all past due accounts”. Although acceptance of goods may create a contract upon terms specified in any accompanying document (see, UCC 2-204, 2-206), proof such as that submitted in this case has been held to be inadequate to establish a claim for prejudgment interest at a contract rate (see, Levy, King & White Adv. v Gallery of Homes, 177 AD2d 967, 968). Accordingly, we find that the award should be reduced to reflect prejudgment interest at the statutory rate of 9% (see, CPLR 5001 [a]; 5004; Levy, King & White Adv. v Gallery of Homes, supra).