Germany 27 October 2003 Appellate Court Rostock (Trucks case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/031027g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 3 U 205/02
CASE HISTORY: 1st instance LG Schwerin (3 O 316/97) 27 November 2002 [affirmed]
SELLER'S COUNTRY: Netherlands (plaintiff)
BUYER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Trucks
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
11B [Proof of contract by any means,including witnesses]; 53A [Buyer's obligation to pay price of goods]; 58A [Time for payment: buyer to pay when goods placed at buyer's disposition]; 62A [Seller may compel performance of any of buyer's obligations]
11B [Proof of contract by any means,including witnesses];
53A [Buyer's obligation to pay price of goods];
58A [Time for payment: buyer to pay when goods placed at buyer's disposition];
62A [Seller may compel performance of any of buyer's obligations]
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CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): cisg-online.ch website <http://www.cisg-online.ch/cisg/urteile/815.pdf>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
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Queen Mary Case Translation Programme
27 October 2003 [3 U 205/02]
Translation [*] by Friederike Schäfer [**]
Edited by Todd Fox [***]
The 3rd Senate for civil matters of the Court of Appeals Rostock through Presiding Judge Eckert and Associate Judges Gombac and Feger:
The Defendant [Buyer]'s appeal from the final judgment of the District Court [Landgericht] Schwerin of 27 November 2002 - docket no. 3 O 316/97 - is dismissed. The [Buyer] bears the cost of the appellate proceedings.
The judgment is preliminary enforceable. The [Buyer] may avert the enforcement by providing security for costs in the amount of 110% of the amount enforceable under the judgment if the Plaintiff does not post security in the same amount before the time of the enforcement.
The appeal on questions of law [Revision] is admitted. The amount in dispute in the appellate proceedings is €61,087.78.
REASONS FOR THE DECISION
I. In the first instance proceedings, the Plaintiff [Seller] claimed payment of the price for the delivery of an E. brand trailer, a tri-axel tank-trailer with pump, and the price for additional services (labeling, etc.) in the amount of €67,729.81 (Deutsche Mark [DM] 132,468.00). In the appellate proceedings, the parties still dispute the payment of the price for the tri-axel tank-trailer with pump as well as payment for the additional services, for a total amount of €61,087.78 (DM 119,477.32).
Concerning the facts of the case, the Court refers to the statement of facts in the final judgment appealed from. These facts are to be supplemented as follows:
The [Buyer] submitted that the [Seller] had supplied the former with both vehicles in anticipation of the joint foundation of a firm by [Buyer] and [Seller]. The vehicles had not been used only by the [Buyer] itself but also to the same extent by S.-H. GmbH Perleberg, whose majority-owner was the [Seller]'s managing director. Only in November 1993, when the business activities of S.-H. P. had ceased, did the [Buyer] employ the vehicles exclusively for its own business.
With the final judgment of 27 November 2002, the District Court [Landgericht] Schwerin ordered the [Buyer] to pay to the [Seller] the sum of €61,087.78 (DM 119,477,32) plus 10 % interest thereon from 25 July 1995. The remainder of the claim was dismissed.
The District Court gave the following reasons: By producing an extract of the commercial register and by examination of witness V. during the oral proceedings, the [Seller] had proven that it was the successor in title of the former Plaintiff, S. F. BV. Moreover, the testimony of witness V. had shown that the [Seller] and the [Buyer] had concluded a contract of sale of the tank-trailer with pump including the [Seller]`s obligation to supply additional services for a price of DM 119,477.32 (gross amount). With regard to the M.-truck of the [Buyer], the [Seller] had performed its additional obligations. The [Buyer] was precluded from asserting defects in quality since it had failed to give notice of the defects immediately as required by § 377 HGB [*]. Since the [Buyer] had not given concrete and consistent statements on this point, it was not to be assumed that the parties had agreed on a current account. Also, the [Buyer] did not prove an alleged set-off.
[Buyer] appealed from the final judgment of the District Court [Landgericht] Schwerin entered on 29 November 2002 by filing its memorandum on 30 December 2002. Following Appellant [Buyer]'s request of 29 January 2003, the period of time to substantiate the appeal was extended for another month. The [Buyer] substantiated the appeal in its memorandum of 28 February 2003.
The [Buyer] submits the following reasons for the appeal: The current Plaintiff [Seller] had not proven its succession in title from the original Plaintiff. The Court had not been allowed to examine witness V. in the oral proceedings of 6 November 2002 on this factual issue since a corresponding offer of proof was not presented by the [Seller]. Furthermore, the [Buyer] submits that it could not state its position on the extract of the commercial register, which was subsequently produced by the Plaintiff. Also, it was not certain that witness V. was not party to the dispute itself. This is because, according to the extract of the commercial register, he was the authorized representative of the former limited liability company S. F. BV [original Plaintiff] and S. B. BV registered in the Netherlands. Finally, the [Buyer] submits that witness V. himself conceded that he did not know of the merger agreement.
The [Buyer] also asserts that the District Court's evaluation of the evidence was incorrect because the court had not taken into account the contradiction between V.'s statements on 6 November 2002 and on 16 April 1997. Additionally, communications between the parties had taken place that were at odds with V.'s statements.
Finally, the [Buyer] asserts that there was a current account relationship between the original Plaintiff and the [Buyer]. This was supported by the fact that the [Seller] paid DM 10,000.00 on 16 July 1993 and DM 40,000.00 on 28 July 1993 with the notation "current account". Even witness V. confirmed the current account in a letter dated 3 January 1995 which he had written at [Buyer]'s request to its tax adviser. It was not the [Buyer]'s burden to prove a compensatory claim, but rather the [Seller]'s to show an outstanding current account.
The [Buyer] requests the Court to dismiss the claim of the [Seller]-Appellee revising the final judgment of the District Court [Landgericht] Schwerin; alternatively, the [Buyer] requests according to § 712(1) ZPO [*] that the enforcement may be averted irrespective of the [Seller] posting security.
The [Seller] requests that the Court dismiss the appeal.
The [Seller] defends the decisions of the District Court by repeating and consolidating its submissions presented in the first instance.
Following the order of this Court of 6 March 2003, the [Seller] produced the documents of the merger agreement of 29 May 2002, 30 May 2002 and 31 May 2002 concerning the succession in title.
II. The appeal is admissible but dismissed on the merits.
The [Seller] is entitled to the purchase price in the amount of €61,087.78 (DM 119,477.32) according to the contract and Arts. 53 and 62 CISG.
1. The [Seller] is successor in title of the original Plaintiff.
It is conceded that, in the first instance, the [Seller] had not fully proven its succession in title by merely producing the extract of the commercial register and the testimony of witness V. - regardless of the question whether a motion for the admission of evidence by the [Seller] was given and whether the parties were given sufficient opportunity for explanation.
Notwithstanding this failure in the first instance, in the appellate proceedings the [Seller] produced the documents of the merger agreement in the original version as well as in translation. These documents show the complete succession in title of the [Seller], who took over all rights and obligations of the original Plaintiff.
With the merger of 29 May 2002, the firm S. B. BV took over the original Plaintiff. Next, the firm J. S. Holding BV took over the firm S. B. BV with the merger of 30 May 2002. Finally, the [Seller] took over the J. S. Holding BV with the merger of 31 May 2002. According to Art. 4 of the respective merger documents, the company taking over shall become successor in title and receive the assets of the dissolved company. The merger is entered in the commercial register.
2. Under the contract and Arts. 53 and 62 CISG, the [Seller] is entitled to the purchase price in the amount of 61,087.78 (DM 119,477.32).
a) The CISG is applicable to the present case.
According to Art. 1(1)(a) CISG, the Convention is applicable to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States.
The [Seller] has its place of business in the Netherlands. Ratified on 13 December 1990, the CISG entered into force in the Netherlands on 1 January 1992. The [Buyer] has its place of business in the Federal Republic of Germany. Ratified on 21 December 1989, the CISG entered into force in Germany on 1 January 1991.
b) The District Court correctly held that the [Seller] possessed a claim for payment against [Buyer] under the sales contract concluded by the parties.
Under Art. 53 CISG, the buyer is obligated to pay the price for the goods as required by the contract and the Convention. Accordingly, the seller may require the buyer to pay the price under Art. 62 CISG. Pursuant to Art. 11 CISG, the contract of sale need not be concluded in or evidenced by writing. The contract may be proved by any means, including witnesses.
In the case at hand, the District Court [Landgericht] Schwerin considered the existence of the sales contract as sufficiently evidenced by the statement of witness V. The evaluation of the evidence does not reveal any error of law. Neither are there grounds to suppose that the District Court's fact-finding was incorrect or incomplete.
aa) According to § 529(1) No. 1 ZPO, [*] the Court of Appeals must base its hearing and decision on the determination of the facts in the first instance insofar as there are no concrete grounds to doubt the correctness or completeness of the relevant facts, which would require a new determination of the facts. Consequently, the evaluation of evidence in the first instance is subject to review by the appellate court only to a limited extent. (Ball, Die Berufung nach dem ZPO-Reformgesetz, [Appeal Under the Act Reforming the ZPO] ZGS [*] 2003, p. 49). Where the submission of the Appellant is limited to an error in the evaluation of evidence, the Appellant must show sufficient grounds which raise doubts as to the correctness of the evaluation. These doubts of the evidence taken must be of such nature as to force a renewal of the taking of evidence (Court of Appeals [Oberlandesgericht] Dresden, Decision of 13. September 2002, NJW-RR [*] 2003, p. 210 et seq.).
No other appraisal can be taken from the decision of the BVerfG [*] of 12 June 2003 (NJW [*] 2003, p. 2524). According to this decision, merely the possibility of variant evaluation can raise doubts as to the correctness and completeness of the evidence relevant to the court. The BVerfG thereby refers to the Commentary of Zöller/Gummer (Kommentar zur ZPO [*], 23. ed., § 529 para. 4 et seq.). However, this comment is based on the decisions of the BGH [*] with regard to the former version of the ZPO [*]. Accordingly, a renewed examination of a witness is required if the Court of Appeals wants to deviate from the evaluation in the first instance as to the importance or the significance of the witness' statement (BGH, Decision of 10 March 1998, NJW [*] 1998, p. 2222 et seq.). The same applies after the reform of the ZPO [*]. Yet, pursuant to the wording of § 529(1) no. 1 ZPO, an extension of situations in which a repetition of the taking of evidence is required beyond that stated above is not admissible. This result corresponds with the purpose of the reform since the aim of the legislator was to strengthen the first instance (Schumann/Kramer, Die Berufung in Zivilsachen [Appeal in Civil Matters], 6. ed., para. 441). The appellate level should no longer be a second instance of full fact-finding, but rather serve to review and eliminate errors. (Zöller/Gummer, supra, § 529 para. 1; Baumbach/Albers, Kommentar zur ZPO [*], 61. ed., § 529 para. 1; Ball, supra). This aim is only to be realized if the Court of Appeal is generally bound to the legally correct determination of the facts by the court of first instance. Only if there are concrete grounds to doubt the correctness and completeness of the determination of the facts should the Court of Appeal again hear evidence. Such doubts do not exist when there is a mere possibility, but only if there is a certain probability that if the Court of Appeal heard evidence the determination of the first instance would not be upheld. (Cf. Begründung des Rechtsausschusses, Bundestagsdrucksache [Reasoning of the Law Commission, Parliament Printed Matter] 14/6036, p. 159; Greger NJW [*] 2003, p. 2882).
bb) The District Court correctly examined witness Mr. V.
In a proceeding, anyone can be a witness who at the time of the examination is not a party to the dispute and therefore would have to be examined as a party. Hence, a witness can be any natural person except a party to the dispute which has the capacity to sue, a party's statutory representative if the party does not have the capacity to sue, and a statutory organ representing a legal person or body of persons with capacity to be a party in legal proceedings (Zöller/Greger, Kommentar zur ZPO [*], 23. ed., § 373 para. 4). Decisive is the legal relationship regarding representation.
At neither the time of the examination of 16 April 1997, nor at the time of the examination of 6 November 2002, was witness V. the legal representative of the former or the current Plaintiff. He was merely acting as "Prokurist" [a business power of attorney] authorized by the company's managing director. This is also shown by the extract of the commercial register in which it is stated that V. is "authorized" with regard to the settlement of transactions concerning the former limited liability companies under the laws of the Netherlands S. F. BV [original Plaintiff] and S. B. BV. A representative appointed by a party, [i.e., a non-statutory representative] can be examined as witness.
cc) The District Court took into account the situation of witness V. when it evaluated the evidence. There is no objection to the fact that the District Court followed the testimony of witness V. This is because, on the one hand, the witness had given specific information about the agreements during the relevant time and, on the other hand, he had admitted having gaps of knowledge even to the [Seller]'s disadvantage.
dd) The Appellate Court does not find contradictions between the testimony of witness V. given in the oral proceeding of 6 November 2002 and the testimony given in the oral proceeding of 16 April 1997. In accordance with his testimony of 6 November 2002, the witness had already stated in the first examination that Mr. S. had ordered the vehicle in the Netherlands and afterwards had sold it to the [Buyer] for the same price. His further declaration that Mr. S. and Mr. T had intended to found a corporation together and needed a trailer for that purpose does not exclude the conclusion of a sales contract. Rather, this provides an explanation for why the [Seller] sold the tank-trailer to the [Buyer] without profit for the same price it had paid itself.
ee) The [Buyer]'s submission that the S.-H. GmbH Perleberg had used the tank-trailer to the same extent as itself has no influence on the existence of the sales contract. This submission merely demonstrates that the [Buyer] and S.-H. GmbH had an agreement allowing S.-H GmbH to also use the tank-trailer. The [Buyer] itself conceded to have used the vehicle exclusively after the business activities of S.-H. GmbH had ceased in August 1993. The [Buyer]'s motion to examine the managing director of S.-H. GmbH, Mr. M. L. on the issue of use of the tank-trailer is refused. As stated above, this issue is not decisive.
ff) The [Buyer]'s allegation that negotiations had taken place at the [Buyer]'s place of business in Hagenow which contradict the testimony of witness V. are unsubstantiated. The [Buyer] does not submit when and with whom these negotiations took place, or what their specific content was.
c) The District Court came to the correct conclusion that there was no current account agreement between the parties.
Contrary to the legal opinion of the [Buyer]'s representative, the [Buyer], as the party relying on the fact, must substantiate and prove that an agreement on a current account had come to existence. The [Buyer] failed to do so.
Account statements showing payments of the [Seller] in the amount of DM 10,000.00 on 16 July 1993 and in the amount of DM 40,000.00 on 28 July 1993, both specifying "current account" as purpose of use, as well as a letter dated 3 January 1995 signed by witness V, are not sufficient to prove the existence of a current account agreement. All of those documents refer to a period of time from 1993 on, while the sales contract in dispute had already been concluded in 1992. During this time period it is undisputed that the [Buyer] had separately paid the [Seller]'s invoice of 15 July 1992 for the trailer of the type ESVE. In this context, the [Buyer] conceded to have paid separate deliveries separately.
No other set-offs against the purchase price claim were substantiated by the [Buyer]. At the latest when the accounting records were handed over in accordance with the partial judgment of the District Court of 15 March 2000, the [Buyer] had the possibility to sufficiently substantiate its defense that it had already fulfilled its obligation to pay the purchase price.
d) Through its examination of witness V., the [Seller] has proven that the parties had agreed that the [Buyer] would pay the amount of the purchase price. The [Seller] had purchased the tank-trailer from the firm MS T. at a price of 114,352.50 Dutch Florin [HFL]. Added to this are the costs for the performance of supplemental obligations according to the invoice of 22 October 1992 in the amount of 21, 929.28 [HFL]. The District Court correctly determined in its evaluation of the evidence that the [Seller] also had to pay these costs for the accessories of the M. truck. The amount of the claimed purchase price results from the undisputed rate of conversion of 1 HFL = 1.13 DM.
3. According to Art. 58 CISG, the [Buyer] was obligated to pay the purchase price after the tank-trailer was delivered in 1992.
4. The [Buyer] lost the right to rely on a lack of conformity.
Pursuant to Art. 39(1) CISG, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it. Pursuant to Art. 38(1) CISG the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. The [Buyer] failed to do so here.
5. The [Seller] may claim interest under Art. 78 CISG.
III. The decision as to costs is in accordance with § 97(1) ZPO [*].
The decision as to the preliminary enforceability follows from §§ 708 no. 10, 711 ZPO. Protection from enforcement was not to be granted to the [Buyer], since it neither submitted nor established the prerequisites of § 712 ZPO.
The appeal on questions of law is admitted in accordance with § 543(2) ZPO. The question of law regarding the extent to which the Court of Appeal may re-examine the determinations of the fact finder under § 529(1) no. 1 ZPO (new version) is of fundamental importance and should be answered by the Federal Supreme Court.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Defendant-Appellant of Germany is referred to as [Buyer], and the successor of Plaintiff-Appellee of Netherlands is generally referred to as [Seller].
Translator's note on abbrevations: BGH = Bundesgerichtshof [Federal Supreme Court of Germany]; BverfG = Bundesverfassungsgericht [Federal Constitutional Court of Germany]; HGB = Handelsgesetzbuch [German Commercial Code]; NJW = Neue Juristische Wochenschrift [German law journal (New weekly journal of law)]; NJW-RR = Neue Juristische Wochenschrift, Rechtsprechungsreport [German law journal (New weekly journal of law, decisional report)]; ZGS = Zeitschrift für das gesamte Schuldrecht [German law journal (Journal for the complete law of obligations)]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].
** Friederike Shäfer, who has served as Coach at the Willem C. Vis Moot, is a Ph.D. candidate at Albert-Ludwigs-University Freiburg under supervision of Professor Peter Schlechtriem. Effective May 2004, she will be an Academic Assistant of Professor Martin Schmidt-Kessell at the University of Osnabrück.
*** Todd Fox received his J.D. from Rutgers University and his LL.M. summa cum laude from the University of Freiburg. A member of the Bar of the State of Pennsylvania, he is an Associate of the Institute of International Commercial Law.Go to Case Table of Contents