LEON JUDA, DOING BUSINESS UNDER THE FIRM NAME OF JUDA BROTHERS, PLAINTIFF AND APPELLANT, VS. MRS. E. 0. CLAYTON AND E. 0. CLAYTON, HER HUSBAND, DEFENDANTS AND APPELLEES.

This action was brought by the plaintiff to recover the sum of P1,797.80, a
balance alleged to be due on account of merchandise sold and delivered to the
defendant. Plaintiff is a wholesale merchant of San Francisco, California,
dealing in ladies’ wearing apparel, and the principal defendant, Mrs. E. 0.
Clayton, was at the time of the purchase of the goods in question engaged in the
business of retailing ladies’ wearing apparel in the city of Manila.

From an examination of the account rendered by the plaintiff it is evident
that the alleged balance claimed to be due from the defendant is substantially
the amount charged for certain goods which it is admitted were shipped by the
plaintiff to the defendant in Manila, and by her returned as unsatisfactory and
unsalable.

Defendant insists that she is entitled to have the value of the goods
returned credited on her account, while plaintiff denies that she had any right
to make such a return, or to have credit therefor. If defendant is entitled to a
credit on her account for the value of the goods returned by her, the judgment
of the trial court dismissing the complaint must be sustained, it appearing that
the amount of the credit to which she would thus be entitled is slightly in
excess of the amount of the balance claimed under the account.

The principal and, indeed, the only real question for determination is,
therefore, whether under all the circumstances as they appear from the record,
defendant had the right to return goods shipped to her on her order by the
plaintiff but which did not meet with her approval, and to receive credit
therefor on her account.

There does not appear to have been any express understanding in this regard
at the time when the account was opened in December, 1910. The record, however,
clearly discloses that on more than one occasion defendant did in fact return
certain goods shipped her by the plaintiff which did not meet with her approval
and which she considered unsuited to her retail trade. And it further appears,
that up to the time of the return of the particular shipment of goods in
question in this action, plaintiff received and accepted goods returned by the
defendant and credited her account with the amount originally charged thereon
for the goods thus returned.

On Augusts, 1911 the defendant wrote to the plaintiff as follows (Exhibit B):
“I was greatly disappointed in the special lot of thirty dresses which you
forwarded by mail in response to my cable. I am returning by this same mail
twenty-one gowns. I looked these over carefully half a dozen times, and
conscientiously tried to make myself believe I could sell one or two out of this
lot, and I am certain that it is absolutely impossible to do so.”

The letter then continues to explain in considerable detail the demands of
her retail trade in Manila, and after giving some suggestion as to the character
of goods wanted, continues: “I trust, Mr. Juda, that you now thoroughly
understand my position, and in future shipments anything the least bit tawdry or
cheap appearing will be cut out.”

Plaintiff answered this letter under date of September 16, 1911, as follows
(Exhibit 2): “The goods returned checked up correctly, and we have placed the
amount to your credit. At the time we made you this mail shipment we wrote you
that under these conditions we did the very best we could, and have hoped that
the line’s {sic, lion’s) share of this particular shipment will meet your
approval.* * * * Again we say to you if from time to time you will write us a
few lines stating your wants, it will materially assist us in getting out for
you merchandise which will be profitable for you and save us other returns.”

In another letter dated August 21, 1911, plaintiff said: “For such of our
merchandise as you are returning to us, we will mail you credit memorandum on
the next steamer, and will deduct the amount of this credit from your, next
purchase.”

In the month of September, 1911, defendant left Manila for San Francisco and
arrived there early in the month of October, bringing with her some of the
articles received from the plaintiff in shipments made in the months of June and
July, which she herself returned personally to the plaintiff while in San
Francisco, receiving due credit therefor on her account. At that time there was
some conversation between the parties in regard to the practice of defendant in
making returns of shipments which were not satisfactory to her, and she having
made a personal selection of a new shipment made at that time, it was then
agreed that she was not to have the right to make any returns upon that
shipment.

We think that the correspondence between the parties, taken together with
their conduct in connection with the returns made on several occasions by the
defendant, clearly discloses that up to the time when they met in San Francisco
late in the year 1911, defendant believed that she had a right to return goods
shipped to her by the plaintiff which she did not regard as satisfactory or
appropriate for her trade. We think, too, that plaintiff, by acquiescing in the
action of the defendant in making these returns and by allowing her a credit on
her account for the value of the goods thus returned, confirmed her in her
belief as to her right in this respect. In some of the letters written by
plaintiff to the defendant we find regrets that goods were returned to him, but
in none of them does he seem to question the right of the defendant to pursue
the course adopted by her.

Thus in the letter above quoted of September 16, 1911, he says: “We did the
very best we could, and have hoped that the line’s (lion’s) share of this
particular shipment will meet your approval.”

And then again he seems to have anticipated the possibility of other
“returns,” or why should he have written to the defendant to this effect: “Again
we say to you that if from time to time, you will write us a few lines stating
your wants, it will materially assist us in getting out for you merchandise
which will be profitable for you and save us other returns,”

Before leaving for the United States in the month of September, 1911, the
defendant directed the manager of her retail establishment in Manila to select
from the June, July, and August shipments from the plaintiff any articles which
appeared to be unsatisfactory or unsalable, and return them to the shipper. In
accordance with her instructions her manager selected for return goods to the
value of $933.75 (P1,867.50) and forwarded them to the plaintiff in San
Francisco. The question before us is as to defendant’s right to reject and
return these goods and to receive credit therefor. Most of these rejected goods
were included in the August, 1911, shipment, which does not appear to have
arrived in Manila at the time when the defendant set sail for the United States.
A few of the articles, however, seem to have been selected from the June and
July shipments which were in stock at that time.

The defendant testified that on her arrival in San Francisco she advised the
plaintiff that in addition to the goods she had brought with her there would be
another shipment of returns later on for which she desired credit, and that
plaintiff at that time made no objections on that account. Plaintiff denies
positively that he received any such information, and testified that the first
intimation he received in regard to the return of these goods was on January 24,
1912, the day following the departure of the defendant on her return to
Manila.

Of course if defendant’s claim that she had advised the plaintiff when in San
Francisco as to the fact that she had directed the return of these goods, and
that plaintiff at that time made no objection to her action in this regard, were
satisfactorily established, there would be nothing left of the case, and there
could be no question of her right to be credited with the amount of the goods
thus returned. We are strongly inclined, however, to doubt the claim of the
defendant that she informed the plaintiff that she had arranged for the return
of these goods. It appears that they were shipped to her agent in San Francisco
for delivery to the plaintiff, and that they arrived some little time before her
departure on her return trip to Manila. She admits that although she knew that
they had arrived she said nothing to the plaintiff in regard to their arrival in
the interviews she had with him not long before she left San Francisco ; and
from all the evidence it is clear that when the goods were delivered to the
plaintiff a few days after her departure, he was taken by surprise and had no
idea that the defendant had in fact directed the return of so large and
substantial a part of the August shipment. It may be true that the defendant
told the plaintiff in San Francisco that she had directed her agent in Manila to
return some of the articles received after her departure, but it is very clear
that she did not intimate to the plaintiff that she expected, to return a
substantial part of the August shipment, or that the value of the goods thus
returned would be much greater in proportion to the shipment made than the value
of the goods which she had brought to be returned in person. From her conduct
while in San Francisco, and having in mind the unexplained delay in the delivery
of the goods thus returned to the plaintiff after their arrival in the hands of
her agent in San Francisco, we are strongly inclined to believe that she was not
wholly frank with the plaintiff in any references she may have made to these
goods, and that she Was anxious to close up her business with the plaintiff and
to get out of San Francisco on her way back to Manila before he learned the full
extent and nature of this return shipment. Under all the circumstances as
developed by the record we accept as true the plaintiff’s denial of all
knowledge that such a shipment had been made by the defendant until the goods
were actually delivered after her departure for Manila, and we are satisfied
that he did not expressly agree to receive them and to credit them on account at
the time when defendant claims that she advised him of the fact that they were
en route, during her interview with him in San Francisco.

These goods, however, had actually been shipped from Manila prior to the date
of the interview between plaintiff and defendant in San Francisco. In
determining the right of defendant to make the returns and to have them credited
on her account we must look, in the absence of an express agreement, to the
conduct of the parties and the nature of their business relations prior to and
at the date of their return. From what has been said we think that there can be
no doubt that defendant had a right, acquiesced in and assented to by the
plaintiff, to make returns of merchandise shipped her by the plaintiff which she
believed to be unsuited for the business which she conducted in Manila.
Doubtless this right to make returns was not an absolute unqualified right to
return any or all goods received, and there being no express agreement in regard
thereto, defendant could only exercise the right in a reasonable manner; but
there is nothing in the record which would justify us in holding that in making
the particular return in question she or her agents acted arbitrarily or
unreasonably. It is true that prior to that date the returns made by her had
never amounted to anything like as much in value as did the return in question,
but it does definitely appear that on one occasion she returned twenty-one out
of a lot of thirty dresses shipped her. The question as to whether a return of
goods included in any particular shipment from the plaintiff was reasonable and
in accordance with the implied agreement arising out of the mercantile relations
of the parties, necessarily depends upon the amount of the particular shipment
which was suited to defendant’s retail trade in Manila. In regard to the
shipment in question we have no evidence of record, other than the fact that
defendant’s manager in her absence rejected these goods, upon which to base a
conclusion as to the reasonableness of her conduct in this regard. It may be
that a part or all of these goods were improperly returned, and that under a
fair construction of the implied agreement between the parties they should not
have been returned, but there is nothing in the record upon which to base a
finding to that effect. The lack of an express agreement as to the circumstances
and conditions under which such returns were to be made, practically left the
plaintiff in the hands of the defendant, and if he has any just cause for
complaint, it would seem that his inability to establish the loss or damage
suffered by him must be attributed to the manifestly unbusinesslike arrangement
under which he entered into and carried on mercantile relations with the
defendant.

Plaintiff undertook to rebut defendant’s claim of a right to make returns of
unsuitable goods by showing that defendant’s mother, who resides in or near San
Francisco, acted as her agent in passing upon and approving all shipments made
by him. We are of opinion that the evidence does not sustain a finding that
defendant’s mother was her agent for that purpose, with authority to impose upon
defendant an obligation to accept all goods approved by her. We think that the
evidence sufficiently establishes that while plaintiff consulted with
defendant’s mother as to the goods forwarded in some shipments, he was not bound
to do so. Indeed, it was only when it suited the convenience of the parties that
she conferred with the plaintiff, and there was no agreement between the parties
binding the plaintiff to ship only such goods as met with defendant’s mother’s
approval. Moreover, we think the correspondence and the conduct of the parties
sufficiently establishes the right of defendant to make returns of unsuitable
goods, whether her mother had or had not approved the selection made by
plaintiff.

It is contended that judgment should be rendered in favor of the plaintiff
for the amount claimed in the complaint as a balance due on an “account stated.”
It appears that an account on which no credit was made for the return of the
goods in question and which showed a balance due in the amount as claimed in the
complaint, was mailed by plaintiff in San Francisco to defendant in Manila, and
that she did not forthwith reply thereto, returning and repudiating the account
and denying her indebtedness. It is urged that her silence should be held to be
an implied admission of the correctness of the account, and an acquiescence in
the statement of the balance due.

We cannot agree with these contentions. An account stated is an agreement
between persons who have had previous transactions, fixing the amount due in
respect of such transactions. The essential element of such an account is the
acknowledgement by the parties of the balance shown to be due on the account, or
of the truth and accuracy and completeness of the items therein set forth.
Before an account can be given the binding effect of an account stated it must
affirmatively appear that the parties did in fact reach an agreement as to its
correctness. Assent as to the correctness of an account rendered may fairly be
presumed and is presumed, especially between merchants, from the conduct of the
party to whom the account is rendered. His silence after receipt of the account
without raising any objections thereto within a reasonable time raises a fair
presumption of his acquiescence, in the absence of proof of circumstances from
which counter-inferences may be drawn. But there is no arbitrary rule of law
which renders an omission to object in a given time equivalent to an actual
agreement or consent to the correctness of the account, and the presumption of
acquiescence may always be rebutted by evidence of facts and circumstances in a
particular case from which a counter-inference must be drawn.

In the case at bar defendant had returned to plaintiff goods to the value of
P1,865.50, for which she claimed the right to a credit on her account.
Plaintiff, although he acknowledged the return of these goods, positively denied
the right of defendant to have them credited on her account. The matter was in
dispute between them. Plaintiff well knew that defendant insisted on her right
to have these goods credited on her account. Defendant had done nothing to lead
him to believe that she had waived her claim to a credit. On the contrary both
parties were fully advised that defendant claimed and plaintiff denied the right
to a credit of the value of the goods. No settlement of this difference had been
reached by the parties when the account was rendered. The goods rejected and
returned by the defendant must be presumed to have had some value, and plaintiff
well knew that he could not retain them and at the same time decline to give
credit for at least their actual market value in the condition in which they
were received by him. No reference whatever was made to these goods in the
account actually rendered. It is clear therefore that the failure of defendant
to make an express repudiation of the account rendered under these conditions
cannot fairly be held to be an acquiescence in the account as a correct
statement of the status of the mercantile relations between herself and the
plaintiff, nor an implied admission of its correctness and a waiver or
abandonment of her claim on account of the goods to the value of P1,865.50 which
she had returned to the plaintiff.

The judgment entered in the court below should be affirmed, with the costs of
this instance against the appellant. So ordered.

Arellano, C. J., Torres, Moreland, and Araullo, JJ.,
concur.