Russo v. Hochschild, Kohn Co. , 184 Md. 462 ( 1945 )

Judge Henderson and I concur in the result for the following reasons:

1. This is an action against a dealer, not a manufacturer, for breach of an implied warranty, of fitness of goods sold, under Sec. 15(1) of the Uniform Sales Act [Code, 1939, Art. 83, § 33 (1)]. At common law such a warranty was not implied when the seller was not a manufacturer (or grower) of the thing sold.Luria Bros. Co. v. Klaff, 139 Md. 586, 592-595, 115 A. 849. Hitherto this new cause of action, created by the Sales Act, has been viewed somewhat strictly by this court. Child's Dining HallCo. v. Swingler, 173 Md. 490, 197 A. 105; Poplar v. Hochschild,Kohn Co., 180 Md. 389, 24 A.2d 783.

Under Sec. 69 (1) of the Act [Code, Art. 83, § 87(1)]; Acts of 1910, Ch. 346, the buyer, at his election, may obtain a remedy for breach of warranty in any one of four ways, viz., (a) recoupment, (b) action for damages after accepting the goods, (c) action for damages after refusing to accept, and (d) rescission. Sec. 69(2) [Sec. 87(2)] provides: "(2) When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy can thereafter be granted."

Section 87(1) (d) [Sec. 69(1) (d)], provides that the buyer may, at his election, "(d) [1] Rescind the contract to sell or the sale and [2a] refuse to receive the goods; or, [2b] if the goods have already been received, return them or offer to return them to the seller and recover the price, or any part thereof, which has been paid." [Bracketed numerals and letters inserted. In the published Acts of 1910 and in the Code there is a semicolon, instead of the comma after "goods." The Act as approved by the Governor does not contain the semicolon; nor does the Act as submitted by the Commissioners on Uniform State Laws.Williston on Sales, 2d Ed., Sec. 603. Whatever the punctuation, return of the goods is the alternative for refusal to receive, not for rescission. Rescission and return, not rescission or return, is required.]

Rescission of a contract, like making a contract, is a matter of intention, of both parties in case of rescission by mutual consent, of the buyer (with notice to the seller) in case of rescission for breach of warranty. In either case intention may be inferred from conduct. Vincent v. Palmer, 170 Md. 365,371-373, 19 A.2d 183. In most instances perhaps, return of the goods and the price may conclusively show an intention to rescind. Return of the goods and the price does not, however,ipso facto constitute rescission. Clyde Equipment Co. v.Fiorito, 9 Cir., 16 F.2d 106, 197; Black on Rescission andCancellation, 2d Ed., Secs. 534, 561, 569, 574; Teter v.Shultz, 110 Ind. App. 541, 548-550, 39 N.E.2d 802; Schutz v.Foster, 191 Minn. 116, 253 N.W. 372, 106 A.L.R. 701, and note, 106 A.L.R. 703-706.

When the goods are worthless, return of them in case of rescission is not necessary, even under the Sales Act. Willistonon Sales, 2d Ed., Sec. 610; Wright v. Bristol Patent LeatherCo., 257 Pa. 552, 557, 101 A. 844; John Service, Inc. v.Goodnow-Pearson Co., 242 Mass. 594, 597, 598, 136 N.E. 623,29 A.L.R. 1513. Conversely, return of worthless goods does not necessarily evidence intention to rescind.

In the instant case the pleadings show no intention to rescind; quite the contrary. The plaintiff (appellant) sues for $1,500 for personal injuries from the use of infected hair pads. At the request of the defendant (appellee) she returned the unused hair pads and "accepted credit" for the price, $1.10. In short, the goods were worthless, the price negligible. It was the defendant's duty and interest to get back the infected hair pads to prevent injury to anybody else. In the circumstances the request for return, and the return of the hair pads do not evidence an intention to rescind the contract of sale and thereby waive the plaintiff's right to damages. The plaintiff expressly denies any such intent; to infer such an intent on the defendant's part would be to ascribe to the defendant an intent to trap and cheat the plaintiff. In Henry v. Rudge GuenzelCo., 118 Neb. 260, 224 N.W. 294, relied on by the defendant, the buyer and the seller in close bargaining indicated that they did not regard the goods (a pair of shoes) as worthless or the price as negligible.

Consequently, a remedy by rescission has not been "claimed or granted" and is not a bar to this action for damages. On this ground, the judgment should be reversed.

It is, therefore, unnecessary to decide what is the relation (if any) of Sec. 70 [Sec. 88] of the Sales Act to Sec. 69(2) [Sec. 87(2)], or what implied exceptions there may be to Sec. 69(2) [Sec. 87(2)].

Section 69 [Sec. 87] of the Sales Act largely follows Section 53 of the English Sale of Goods Act, 1893, (56-57 Victoria, Ch. 71), with two marked changes, viz., the English Act (i) does not permit rescission for breach of warranty [53(1)], but (ii) permits both recoupment and a separate action for damages [53(4)] (cf. Mondel v. Steel, 8 M. W. 858) and contains no such provision as Sec. 69(2) [Sec. 87(2)] for election of an exclusive remedy. In both respects the English Act followed the common law, as previously established in England and in some (but not all) jurisdictions in the United States.

Section 69(6) and (7) [Sec. 87(6) and (7)] state the general measure of damages, substantially as stated in the English Act [53(2) and (3)]. Section 70 [Sec. 88], relating to special damages, follows Section 54 of the English Act. It provides: "88. Nothing in this sub-title shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed."

This section, instead of stating, adopts by reference, the common law rule as to special damages, as declared in Hadley v.Baxendale, 9 Ex. 341, and subsequent cases. Bostock and Co.,Ltd. v. Nicholson and Sons, Ltd., [1904] 1 K.B.D. 725, 735-737. It has no relation to Sec. 69(2) [Sec. 87(2)], which is not in the English Act.

The words of Sec. 70 [Sec. 88] and Sec. 69(2) [Sec. 87(2)] are no more related than their history. If by Sec. 70 [Sec. 88] the whole subject of special damages is excepted from the prohibition of Sec. 69(2) [Sec. 87(2)], then Sec. 69(2) [Sec. 87(2)] is practically nullified, and Sec. 70 opens a wider door to dual remedies than the English Act or the prior cases.

The draughtsman of the Act says: "Under the Sales Act it is clear that the buyer can have but a single remedy for breach of warranty." Williston on Sales, 2d Ed., Sec. 612, citing cases, including Impervious Products Co. v. Gray, 127 Md. 64,96 A. 1, 3. That case, a suit for special damages, was decided both on the ground of res adjudicata and also on the ground of election of remedy under Sec. 69(2) [then Sec. 90, Code of 1911] of the Sales Act. This court said "that if * * * there was any breach of * * * warranty, then the buyer had four distinct courses open to him, as set out in the act; but that after having resorted to and adopted one of these courses no other remedy could thereafter be granted to him." 127 Md. 69, 96 A. 3. To the same effect see Gerli Co. v. Mistletoe Silk Mills, 1910,80 N.J.L. 128, 76 A. 335; Joannes Brothers Co. v. Lamborn, 237 N.Y. 207, 142 N.E. 587; cf. Stanley Drug Co., etc., v. Smith,Kline French Laboratories, 313 Pa. 368, 370-373, 170 A. 274.

Section 69(2) [Sec. 87(2)] excludes only remedies for breach of warranty under the Act, not remedies for nondelivery (Lander v.Samuel Heller Leather Co., Inc., 314 Mass. 592, 597, 598,50 N.E.2d 962) or for torts (Friedman v. Swift Co., D.C.,18 F. Supp. 596, 597, 598). On such subjects and on the questions what expenditures are included in "the price" under Sec. 69 (1) (d) [Sec. 87(1) (d)] and what damages (if any) may be included in the judicial remedy of rescission, the authorities are in conflict. Such matters have been much discussed, without reaching a consensus of opinion, in law review articles and notes. See, e.g., 28 Michigan Law Review 26 (1929); 43 Harvard Law Review 328 (1929); 45 Yale Law Journal 1313 (1936); 21 Minnesota LawReview 111 (1936); 23 Virginia Law Review 840 (1937); 38Columbia Law Review 888 (1938). No such questions need be decided in the instant case.

3. The Uniform Sales Act has been adopted in thirty-four states, the District of Columbia, Alaska and Hawaii. It was adopted in Maryland in 1910 (Acts of 1910, Ch. 346). Section 74 [Sec. 92] provides that the act "shall be so interpreted and construed as to effectuate the general purpose to make uniform the laws of those states which enact it."

In the instant case it is not necessary to construe Sec. 69(2) [Sec. 87(2)] or Sec. 70 [Sec. 88], or to overrule ImperviousProducts Co. v. Gray, supra, and go from one extreme to another. The case can be decided on the basis of Sec. 69(1) (d) [Sec. 87(1) (d)] consistently with the history of the Act and with decisions in this and other states.