Taylor v. P. B. Yates Machine Co. , 208 Ala. 528 ( 1922 )

In the case of an executed contract of sale, the rule is settled in this state that, upon a rescission of the contract and return of the property by the purchaser, on the ground of breach of warranty, the purchaser has no right of action remaining for damages as for a breach of the warranty.

"There must be a subsisting contract to support an action for a breach of warranty. If the facts justify it, a buyer may rescind a contract and sue for the purchase money paid; or he may sue and recover damages for a fraud practiced upon him; or he may affirm the contract and maintain an action for breach of warranty. He cannot insist that a contract has been rescinded, and yet recover on the contract." Abraham Bros. v. Browder,114 Ala. 287, 21 So. 818; Eason Drug Co. v. Montgomery, etc., Co., 186 Ala. 454, 65 So. 345.

In accord with this rule are numerous other authorities. Mundt v. Simpkins, 81 Neb. 1, 115 N.W. 325, 129 Am. St. Rep. 670; McCarthy v. Ellers, 107 A.D. 219, 94 N.Y. Supp. 1109; Enterprise Soap Works v. Sayers, 51 Mo. App. 310; Smeesters v. Schroeder, 123 Wis. 116, 101 N.W. 363; Houser v. McKay,53 Wash. 337, 101 P. 894, 27 L.R.A. (N.S.) 925, note.

But —

"Where a purchaser refuses to receive property tendered to him under an executory contract of purchase, on the ground that such property does not comply with the warranty or with the contract in general, if the seller fails to tender property that does comply with the contract, the purchaser may recover whatever he has paid upon the purchase price, and also damages for the breach by the seller of his contract to furnish property of a certain description." 27 L.R.A. (N.S.) 929, editorial note, citing the authorities.

As there observed:

This "involves an entirely different principle * * * than that involved where the purchaser has rescinded or repudiated the contract of purchase for breach of warranty, as in such a case he terminates the contract, and, having terminated the contract, he could not assume the inconsistent position of also seeking damages for its breach, such damages being entirely different from damages which, under special circumstances, may be incident to the rescission of the contract. Where, however, as in the last cited cases, the purchaser does not rescind the contract, but merely refuses to receive the property tendered by the seller as complying therewith, he does not * * * terminate the contract, and may maintain an action to recover whatever he has paid thereon, as well as for damages growing out of the breach."

Some of the leading authorities which explain and exemplify this distinction are Kimball, etc., Co. v. Vroman, 35 Mich. 310, 24 Am. Rep. 558; Philadelphia, etc., Co. v. Detroit W. L. Wks., 58 Mich. 29, 24 N.W. 881; Punteney, etc., Co. v. Northwall Co., 66 Neb. 5, 91 N.W. 863; North Al. Salmon Co. v. Hobbs, etc., Co., 159 Cal. 380, 113 P. 870, 120 P. 27,35 L.R.A. (N.S.) 501; Tompkins v. Lamb, 121 A.D. 366,106 N.Y. Supp. 6, affirmed in 195 N.Y. 518, 88 N.E. 1133.

"This cause of action, however, is not based on a breach of the warranty, but on the seller's failure to perform his contract." 24 Rawle C. L. § 510, p. 236; Punteney, etc., Co. v. Northwall, 66 Neb. 5, 91 N.W. 863.

Without noticing the distinction which we have pointed out just above, some courts, even in the case of a rescission of an executed contract, have allowed special damages to cover the purchaser's expenses reasonably incurred on account of the contract, particularly in attempting to use the property, and in caring for it while in his custody. Harvey v. Kendall, 2 La. Ann. 748; Berkey v. Lefebure, 125 Iowa, 76, 99 N.W. 710; Kester Bros. v. Miller, 119 N.C. 475, 26 S.E. 115; Optenberg v. Skelton, 109 Wis. 241, 85 N.W. 356; Phares v. Jaynes Lumber Co., 118 Mo. App. 546, 94 S.W. 585.

The action in the instant case is for a breach of warranty, and not for a failure to deliver to plaintiff a machine of the quality and condition stipulated for.

Defendant's plea 6 shows that the contract of sale was executory only, and required the prompt return of the machine if rejected by the purchaser for any cause, and that its retention by the purchaser after 30 days from the date of its shipment would be a conclusive admission of the truth of all representations made by the seller, and would annul all warranties express or implied. In other words, all warranties of quality, fitness, and condition were limited in their operation to the trial of the machine, and were serviceable only as a basis and justification for its rejection if the warranties were not satisfied on such trial.

This construction was given by this court to contracts substantially like the one now before us in the cases of Berlin Machine Wks. v. Marbury Lumber Co., 146 Ala. 542, 40 So. 951, and Berlin Machine Works v. Ewart Lumber Co., 184 Ala. 272,63 So. 567.

The plea alleges a return of the machine by plaintiff and its acceptance by defendant, "wherefore said cause of action did not arise in regard thereto for or in behalf of said plaintiff."

We think it is entirely clear that, so far as any breach of warranty is concerned, the contract itself provided the exclusive remedy therefor, namely, the return of the machine to the seller; whereupon all warranties became functus officio. It results that the plea in question is a complete answer to the complaint in this action, and the demurrer thereto was properly overruled.

We do not decide (the question not being before us) that, under a complaint in general assumpsit, or for breach of a contract to deliver a machine of a certain descriptions — the machine being rejected and returned to the seller because of noncompliance with contractual requirements, and in accordance with the terms of the contract — there could be no recovery of damages for expenses or losses which resulted proximately from the breach of the seller's executory undertaking and obligation. That question may arise hereafter, but it is not presented in this action for breach of warranty.

The judgment will be affirmed.

Affirmed.

ANDERSON, C. J., and McCLELLAN and THOMAS, JJ., concur.