Alvarez v. Felker Mfg. Co

In Alvarez v. Felker Mfg. Co. (1964) 230 Cal.App.2d 987, the plaintiff sought to prove for purposes of his claims of express warranty and negligence an agency relationship between the exclusive supplier of a product (a blade for a cutting machine) and its manufacturer, the defendant Felker. (Id. at p. 993.) Following a jury verdict in Felker's favor, the plaintiff on appeal made claims of instructional error, including the trial court's failure to instruct the jury on general propositions of agency. (Id. at pp. 996, 1001.) The Court of Appeal in Alvarez observed that Civil Code section 2323 applies to one already determined to be an agent: "With respect to express warranties, a principal may be bound by such warranties made by his agent because an agent authorized to sell personal property has the authority to warrant the quality of the property." (Alvarez, supra, 230 Cal.App.2d at p. 997, citing Civ. Code, 2323.) It concluded the plaintiff's evidence did not demonstrate the necessary elements of agency, even though he had demonstrated the supplier was Felker's exclusive distributor, Felker literature was given to the distributor to promote sales of Felker products, Felker acknowledged the manufacturer-distributor relationship in letters and referred purchasers to the distributor for assistance and service of the product, the supplier showed clients how to use the blade, and an accounting of Felker sales was necessary to compute the amount owed to the distributor for sales. (Id. at pp. 998-999.) According to the court, the record showed only that the distributor bought goods outright from the manufacturer and then resold them to customers, and the manufacturer did not become legally bound by the contract of sale between the distributor and the ultimate consumer. (Id. at p. 999.) Further, the distributor sold products of other competitors and had no duty to promote or sell a certain number of products. (Ibid.) These facts were insufficient to show a fiduciary relationship. (Id. at pp. 999-1000.) Finally, the court rejected the argument that the evidence demonstrated sufficient control by the manufacturer even though the manufacturer referred customers to its distributor, because the distributor was "free to decide whether it would deal with the customers referred to it by Felker." (Id. at p. 1000.) The court concluded: "Under the state of the record the only inference that could be drawn as to the relationship between Felker and the distributor was that it was one of buyer and seller. The applicable principle is stated in the Restatement as follows: 'One who receives goods from another for resale to a third person is not thereby the other's agent in the transaction: whether he is an agent for this purpose or is himself a buyer depends upon whether the parties agree that his duty is to act primarily for the benefit of the one delivering the goods to him or is to act primarily for his own benefit.'" (Alvarez, supra, 230 Cal.App.2d at p. 1000.)