pays the carrier for delivery of the goods to the buyer (Uniform Sales Act 19, Rule 5). The Court found that under the defendant's arrangement for doing business, title passed in the District of Columbia. The New York law which the diversity jurisdiction invokes would apply the substantive law of the District of Columbia to the facts in the case. My construction of the stipulation of facts in the case at bar renders the decision in the Masters case inapposite.
From the stipulation and the annexed exhibits, the factual background for the contentions of the respective parties is generally as follows:
Plaintiff, hereinafter Club, is a New Jersey corporation with its principal office in the City of Newark in that State.
Through appropriate advertising media it invites the public to apply for membership in Club by signing and forwarding an application therefor, in form annexed to or included in the advertisement, together with a sum of money purporting to entitle the applicant to receive, at his own address, postpaid, an article of merchandise manufactured in or supplied from a foreign country, each month during the period of membership for which he applies. The nature and identity of the particular item of merchandise which the Club Member will receive in any month is determined by the Club without advance disclosure to the Member.
Upon receipt by Club of an application for membership therein, together with the required amount of money appropriate to the duration of membership sought, a label or labels bearing the name and address of the applicant for membership is prepared and transmitted by Club to one or more suppliers or manufacturers abroad, with whom Club has a contract for the supplying and transmission to the Club's members of specified articles of merchandise.
Typical of the Club's contract with a foreign supplier is the written agreement embodied in exhibit 10-A annexed to the stipulation of facts in this case, between Club and 'Anri, Srl. S., Cristina-Gardena Prov. Bolzano, Italy'. By the terms of that agreement, which is signed by or in behalf of both parties thereto, the supplier agrees to deliver to Members of the Club '1,000 hand carved shadow boxes kitchen scene, your reference #72118 in accordance with the sample submitted by you on September 12, 1955 modified by the addition of two hand carved figures and four hooks.' The supplier agrees that the appearance and quality of each item sold under the agreement will be at least as good as those of the sample submitted, with the modification stated. For this merchandise, the Club agrees to pay the supplier, in United States currency, '60 cents per shadow box, such price to include individual packaging, outer markings, publicity insert, and delivery to the local post office in Innsbruck, Austria, for mailing to the members of AWSC (Club). AWSC also agrees to pay the postage at the sample postage rate.' Club agrees to pay supplier promptly for all shipments upon receipt of invoices substantiated by packing slips. Each item of merchandise to be mailed by the supplier under the agreement is to be clearly and legibly marked 'Austria'. The supplier further agrees with Club to mail the merchandise ordered under the agreement to persons and at the times specified by Club, and to package and hold ready for mailing all 1,000 shadow boxes ordered thereunder during the month of November, 1955. Further provisions of the agreement embody the undertaking of the supplier to box and wrap each article attractively but strongly enough to prevent breakage, and in the event of damage to send a replacement at supplier's expense to the Club Member who has received the damaged article, but upon the order of the Club. Club retains the right to approve the type of boxing and wrapping in advance, and supplier agrees to advise Club promptly the date and quantity of each mailing. It is further provided that the supplier shall promptly forward to Club any correspondence which supplier may receive either from Club Members or from any other person, in connection with the operations of Club, and the supplier further agrees not to answer any such correspondence. Club retains the right to inspect the merchandise delivered and in the event of rejection, supplier agrees to refund the cost of or replace the item. Finally, if any merchandise is returned to supplier because of non-delivery to addressee, supplier agrees to credit Club with the full value of such merchandise if received by supplier in good and acceptable condition.
I agree with the Government's contention that the chain of transactions through which a given article of merchandise, subject to the excise tax, moves from the foreign supplier to the Club Member consists of two sales or contracts to sell. To only one of these transactions are both Club and Member parties. By Club's acceptance of an application for membership and its retention of the accompanying fee, a contract for the sale of future goods arises between the Club, as seller, and the applicant for membership, as buyer. This contract of sale contemplates that performance is complete upon the receipt by the Member, at his home address, of an article or articles of merchandise, to be appropriated to the contract by the Club, in accordance with the terms of its invitation which evoked the application for membership.
In its advertising, the Club represents that by reason of the purchasing power advantage of the American dollar, it (Club) is able to purchase merchandise abroad at a lower cost than that at which it would be available to the Club Member in this country. Typical of this advertising is the following:
'How, you ask, can members receive such valuable gifts for just $ 2.00 each? Foreign nations are in urgent need of American dollars to support native industry. They are glad to offer tremendous merchandise values in exchange. Thus you get more for your money -- and at the same time you are doing your bit to improve world conditions by lending a helping hand to our world neighbors. * * * It costs nothing to join the club and there are no dues or fees. You pay only for the regular monthly selections on any of these plans:
" 3 consecutive shipments $ 6.00
" 6 consecutive shipments 11.50
"12 consecutive shipments 22.00"
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