Laundry Service Co. v. Fidelity L. M. E. Co. Inc. , 187 Minn. 180 ( 1932 )

¹ Reported in 245 N.W. 36. Plaintiff is engaged in the general laundry and dry-cleaning business. Defendant is a corporation engaged in the manufacture of equipment for use in such business. Both parties are located in Minneapolis.

Prior to January, 1929, plaintiff had purchased certain equipment from defendant and was operating the same in January, 1929. In that month plaintiff purchased from defendant a Unipress machine. It was for use in pressing the bosom, body, and neck band of shirts. This machine was shortly thereafter installed in plaintiff's place of business. The sale was on open account; no payments were made thereon prior to May 2, 1929, when a conditional sales contract was entered into covering that machine, by the terms of which $225 was credited plaintiff for old equipment taken back by defendant as part payment, and plaintiff promised to pay the balance of the purchase price in eleven $50 monthly payments and one $25 payment, with six per cent interest on deferred payments. The purchase price of the machine was $800. Six consecutive payments were made.

On May 29, 1929, plaintiff placed an order with defendant for the purchase of three similar press machines and other equipment. These new machines were installed in plaintiff's plant about June 29, 1929. The purchase price thereof was $1,683.

The complaint in general alleged the making of the purchases; breaches of warranty; failure of the machines to work satisfactorily, and that on or about December 17, 1929, a tender and offer to return the machines and equipment and a demand for the return of the money paid was made by plaintiff; that defendant refused to accept delivery and refused to return to the plaintiff the amount paid; that it was holding said machines and equipment for the benefit of the defendant and asked for judgment for $525 and interest. Defendant by proper answer controverted the salient paragraphs of the complaint and as a counterclaim asked for judgment for $2,133 and interest, being the claimed unpaid balance of the purchase price for the four machines. A general denial was made by reply. The case was tried to a jury and evidence introduced by both parties. At the close of the trial, upon motion, the court directed the jury to return a verdict in favor of defendant for $1,683 and interest, the purchase price for the three machines which were installed in June, 1929. From an order denying the motion for a new trial, predicated on the ground that the directed verdict was not justified by the evidence and that it was contrary to law, this appeal was taken.

The court in granting the motion for a directed verdict among other things stated:

"There can be no question in the court's mind, so far as the first machine is concerned, that there was a ratification on the part of the plaintiff."

This statement was amply justified by the evidence. The trial court then expressed the opinion that the first machine was entirely out of the case and found in defendant's favor for the purchase price of the last three machines, thus preserving to defendant all its rights under the conditional sales contract. The court correctly stated that the testimony was unsatisfactory in regard to an express agreement and that there was nothing more than the usual implied warranty that a machine which is sold is such that it will do the work that is claimed for it or that it is manufactured to do.

G. S. 1923 (2 Mason, 1927) §§ 8423 and 8443(3), provides:

"8423. In the absence of express or implied agreement of the parties, acceptance of the goods by the buyer shall not discharge the seller from liability in damages or other legal remedy for breach of any promise or warranty in the contract to sell or the sale. But, if, after acceptance of the goods, the buyer fail to give notice to the seller of the breach of any promise or warranty within a reasonable time after the buyer knows, or ought to know of such breach, the seller shall not be liable therefor."

"8443(3). Where the goods have been delivered to the buyer, he cannot rescind the sale if he knew of the breach of warranty when he accepted the goods, or if he fails to notify the seller within a reasonable time of the election to rescind, * * *."

The rule of law relative to rescission is not in dispute. A rescission must be made within a reasonable time when all the facts and circumstances are taken into consideration. The right to rescind must be exercised promptly upon discovery of the facts justifying it or it is waived. 5 Dunnell, Minn. Dig. (2 ed. Supp.) §§ 8606, 8607, and cases cited; Stewart v. B. R. Menzel Co. 181 Minn. 347, 232 N.W. 522; Holcomb Hoke Mfg. Co. v. Osterberg, 181 Minn. 547, 233 N.W. 302,72 A.L.R. 722; Butler Mfg. Co. v. Elliott Cox, 211 Iowa, 1068,233 N.W. 669; Advance-Rumely Th. Co. v. Wharton, 211 Iowa, 264,233 N.W. 673, 77 A.L.R. 1153; 2 Black, Rescission Cancellation (2 ed.) §§ 536, 542.

The evidence discloses that the first machine was purchased in January, 1929, and used continually from that time on, with a few alterations, until December, 1929; that notwithstanding plaintiff's claim that the machine was unsatisfactory and that it made complaints soon after purchasing it, nevertheless in May, 1929, plaintiff executed a conditional sales contract for the machine and in that month entered into another contract for the purchase of three other machines of the same general character as the first one, which were installed in June, 1929. There were some complaints made relative to all of the machines, but they appear not to have been of a very serious nature. In October, 1929, plaintiff wrote defendant stating that the machines were not perfect articles, specifying some particulars. Defendant was not at that time asked to take the machines back then; but on the contrary it was stated in the letter that the machines could remain for a further time. They so remained and were used.

The first real attempt at rescission was in the middle of November, more than four and one-half months after the machines were installed, although plaintiff testified that it observed the nature of the work and character of the machines shortly after they were installed. In addition, it is to be noted that even after the attempted rescission they were in use up to about the time they were dismantled and tendered to defendant (about December 17, 1929). As to the effect of this use see Butler Mfg. Co. v. Elliott Cox, 211 Iowa, 1068,233 N.W. 669.

Upon the facts the court concluded, and we think correctly, that a rescission was not made within a reasonable time; that there was a waiver of plaintiff's rights; that it had slept upon its rights. Whether the purchaser exercises his right to rescind within a reasonable time is usually a question of fact for the jury. Laganas Shoe Mfg. Co. v. Sharood, 173 Minn. 535,217 N.W. 941. But conditions may exist that make the question one of law. Stewart v. B. R. Menzel Co. 181 Minn. 347,232 N.W. 522; 5 Dunnell, Minn. Dig. (2 ed. Supp.) § 8607. We think it was one of law in this case. Had the case gone to the jury and a verdict been returned for plaintiff, it would have been the duty of the trial court to set it aside. 6 Dunnell, Minn. Dig. (2 ed. Supp.) § 9764, and cases cited; Manos v. St. Paul City Ry. Co. 173 Minn. 402, 217 N.W. 377.

This is not a case where plaintiff was led by promises or other inducements to delay the exercise of the right. A careful examination of the evidence convinces us that the acts of defendant in servicing the machines from time to time were only such as would ordinarily occur and be required, and were not such as to extend plaintiff's time in which to rescind.

The order denying the motion for a new trial was proper.

Order affirmed.