Houser & Haines Manufacturing Co. v. McKay ( 1909 )

Gose, J.

This action was instituted for the purpose of recovering a judgment against the defendant for the sum of $1,600 and interest, upon a contract for the sale and delivery of a combined harvester. The case was tried to a jury, and resulted in a verdict and judgment against the plaintiff for the sum of $520. The plaintiff has appealed from this judgment.

The complaint set forth the sale and delivery of the harvester and the failure of the defendant to pay the purchase price. The defendant pleaded affirmatively that, in October, 1906, he gave the plaintiff a written order directing it to manufacture at Stockton, California, and ship to him at Wilbur, Washington, a certain described combined, harvester, for which he agreed to pay it $1,600 at fixed dates; that the defendant ordered such harvester manufactured for the purpose of harvesting his crop, as the plaintiff well knew; that the plaintiff sold the same to him for harvesting purposes; that there was an implied warranty upon the part of the plaintiff that the harvester was made of good material; that it was fit and proper for such purpose; that it would successfully harvest his crop; that it was not properly constructed; that it was not made of good material; that it was not fit or suitable for harvesting purposes; that after reasonable trial, it was found inadequate and useless for the purpose it was intended to accomplish, and of no value; that he gave the machine a fair trial, and as a result of its failure to do the work which it is warranted to do, and the delays incident to its trial, his grain became overripe; that he lost a large part of his crop, and the remainder was greatly impairéd in value by reason of such delay. The injury and loss to his crop was alleged to be $1,750, which he specially pleaded. He further claimed the sum of $125, which he alleged he had paid as freight on the harvester from the factory to Wilbur. The reply joined issue on the affirmative matter pleaded in the answer. The court instructed the jury in substance that, if it found by a preponderance of the evidence that these affirmative facts pleaded in the answer were true, they should determine the amount of damage that might fairly and reasonably be considered as arising from such breach of contract, and such as it would be reasonable to conclude had been in the contemplation of both the parties at the time they made the contract, as the probable result of its breach, and return a verdict for the respondent for such sum. This instruction is assigned as error.

The appellant urges that, when the respondent became aware of the fact that the harvester was not such as the appellant had warranted it to be, he had the right to elect as to one of two courses; (1) he could refuse to accept the machine, rescind the sale, and recover any sum that he had paid on account of the purchase price; (2) that he could retain • the machine and offset against the purchase price such damages as naturally and proximately resulted from the breach of the warranty. We think these propositions are well established. At any rate, we have not been able to find any diversity of authority on this question. The governing rule in such cases is very aptly and tersely stated in Osborne $ Co. v. Poindexter (Tex. Civ. App.), 34 .S. W. 299. At page 301 it is said:

“The plaintiffs might have tendered back the machine, and demanded their notes and money, or, at their option, might elect to keep the machine, and pay the price, and sue for damages in the difference in value of the machine as represented and warranted, and as it really was, and for the special damages occasioned by the breach of the warranty.”

See, also, Mechem, Sales, par. 816; 30 Am. & Eng. Ency. Law (2d ed.), pp. 190-7.

“The bringing of an action on the warranty for damages implies an affirmation of the contract of sale and a prima facie liability for the contract price, less the damages sustained in consequence of the breach of warranty.” 30 Am. & Eng. Ency. Law (2d. ed.), 197, par. d.

“The buyer may not pursue two inconsistent remedies; if he chooses to exercise the special remedy by returning the article to the seller, he is then confined to a recovery of the purchase money paid, and cannot maintain an action to recover damages for a breach of the warranty.” See authority last cited, p. 199, par. g.

The same rule is very clearly stated in Abraham Bros. v. Browder, 114 Ala. 287, 21 South. 818. From page 290 wé excerpt the following:

“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.”

In Park v. Richardson Boynton Co., 81 Wis. 399, 51 N. W. 572, the court had under consideration an instruction which permitted the purchaser to recover as damages both what he had theretofore paid and any damage which he sustained by reason of the failure of the article purchased to meet the requirements of the warranty. The court said:

“This was certainly error, because it blends two distinct rules of damages, one of which is applicable to the action for rescission, and the other to the action for breach of warranty. If the action be one to rescind the sale and recover back the purchase money under the provisions of the contract of sale, then the latter part of the instruction should not have been given.”

The respondent, after the breach of the contract was established, properly claimed the right to have the money refunded which he had paid as freight on the harvester from the factory to the point of destination. This was a part of the purchase price. If the machine would not harvest his crop as it was warranted to do, he had a right to a return of this amount. This he had properly pleaded. The fact that he also pleaded items of damages which were not recoverable upon an election to rescind the contract does not preclude the recovery of this item. Whilst it is true that the respondent in his answer did not formally tender a return of the harvester, yet he pleaded that it had no value, and that there was an entire failure of consideration.

The case, however, as we view it, was tried on the theory that there had been a rescission of the contract by the respondent. The appellant introduced in evidence a letter which had been written to it by the respondent, bearing date September 3, 1907, in which it is stated: “Your combined harvester has not proven satisfactory. I have given it up.” The respondent when on the witness stand in his own behalf upon cross-examination, testified that he made no claim to the machine. This view is strengthened by one of the court’s instructions wherein, in directing the jury as to the different kinds of verdicts which it could return, the court said:

“The Court: I am furnishing you, gentlemen, three' forms of verdict. One is a verdict in favor of the Houser & Haines Manufacturing Company and assesses the plaintiff’s damages at the sum of $1,600 with interest at ten per cent per annum from August 1st, 1907. If you should find for the plaintiff, that will be' your verdict. The other is, ‘We, the jury, find for the defendant in the sum of......., dollars.’ If you should find in favor of the defendant, James McKay, and further find he is entitled to damages from the plaintiff, you will insert in there the amount of damages he is damaged. And the other form is in favor of the defendant, James McKay. If you should find in favor of the defendant, James McKay, and should not find for him any damages, then you will sign that form of verdict.”

The $1,600 and interest was the purchase price according to the contract. Admittedly this instruction could only be correct on the assumption that the case had been tried on the theory that the respondent had rescinded the contract. If he were seeking to assert a counterclaim for his damages, that course would necessarily imply that he had elected to accept the machine, and the appellant could then recover the difference between the contract price and the value of the machine as it was delivered to the respondent, less such damages, if any, as resulted directly and proximately from the failure of the appellant to comply with its contract and furnish a machine that would do the work which it was warranted to do. This was not submitted to the jury.

Moreover, the respondent has set forth his affidavit in his brief in .which he states that the appellant has accepted the machine since the cause was tried. There is an admission of this statement in the reply brief. Upon the issues as joined in the pleadings, and under the evidence which was admitted without objection, the jury should have been instructed as to the measure of damages in case they found that the machine was not what it Avas warranted to be, and there had been a rescission of the contract by the respondent. The measure of damages in such case would be the amount of freight which the respondent had paid on the machine. As we have said, this freight was in effect a payment upon the purchase price. It was contemplated between the parties that the appellant should manufacture the machine at its factory in the city of Stockton, in the state of California, and that it should ship it to the respondent at Wilbur, Washington, where it was to be used for harvesting purposes. The purchase price was $1,600, plus the freight between such points. It follows, therefore, that the court committed error in giving the instruction complained of.

Reversed and renianded for a new trial. The appellant will recover its costs on this appeal.

Rudkin, C. J., Crow, Mount, Morris, and Parker, JJ., concur.

Fullerton, J., dissents.