Case ID: ohio-st_75/html/0153-01.html
Source: Caselaw Access Project
Author: {"author": "Shauck, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Cleveland Punch & Shear Works Company v. The Consumers Carbon Company.
    
      Action to recover damages — For failure of vendor to deliver machinery — Defense that plant was not ready for machinery— Question of injury for breach of contract — Measure of damages —Implied warranty in contract — Law of contracts.
    
    1. In an action to recover damages for failure of the vendor to deliver machinery according to the terms of his contract it is proper to allege that the machinery was intended to be used in a manufacturing plant in process of erection, and that the vendor was so informed, such facts making it appear that the loss of the use of the plant was, within the contemplation of the parties, an injury to result from a breach of the contract by the vendor, and, therefore, a proper element of recovery.
    2. When, in a contract for the sale of machinery, its power and capacity are expressly described,' there is no implied warranty that it will be adequate to the purpose for which it is to be itsed, though that purpose is known by the vendor at the time of making the contract.
    (No. 9817
    Decided October 16, 1906.)
    Error to the Circuit Court of Fairfield County.
    Plaintiff in error is a corporation engaged in the manufacturing of machinery at Cleveland, and the defendant is a corporation formed for the purpose of manufacturing at Lancaster carbons such as are used in arc electric lights. The contractural relations of the parties out of which the present controversy arose were founded upon the following proposition made by the plaintiff and accepted by the defendant:
    
      “Cleveland, Ohio, August 25, 1900.
    The Consumers Carbon Co., Lancaster, Ohio:
    
      Gentlemen — We propose to furnish you three of our Hydraulic Upright Mold Presses, as shown in our blue prints, which you now have, for $850.00 each, making the item of presses $2,-
    550.00, and one of our Six Plunger Horizontal Pumps, as shown on blue prints which you have, $975.00, and one Accumulator of capacity of power and dimensions to take care of this set of pumps, for $385.00, making a total of $3,-910.00.
    “We are to complete the entire above-mentioned machinery ready for shipment in three months. Two of three presses (together with the Pumps and Accumulators) we agree to have ready in seventy-five days; the Accumulator, Pump and one Press in sixty days.
    “We guarantee the above machinery to have capacity to make 336 impressions per hour on each press, and of ample strength to stand the pressure of 6,000 pounds per square inch. It is understood that the effective strokes of these presses is to be one inch.
    “Terms of payment to be one-half of the total amount upon receipt of the machinery, and the balance in 60 days thereafter. It is understood that this proposition is accepted, and thanking you for the same, we remain, etc.”
    The defendant had previously informed the plaintiff that it was engaged in the erection of a large plant for the prosecution of the business for which it was formed, and had solicited propositions to furnish the machinery which it required.
    
      After the acceptance of the plaintiff’s proposition, the machinery was sent to the defendant and received by it, and the sum of $2,000.00 was paid on the contract price before there was an opportunity to test the- machinery. A dispute having arisen as to the quality of the machinery and its compliance with the contract, the defendant refused payment of the balance of the purchase price, and suit was brought by the plaintiff. The first cause of action counted upon the accepted proposal, alleged generally and specifically compliance by the plaintiff and the failure of the defendant to pay the balance of $1,910.00. There was a second cause of action which needs not to be stated, as it gives rise to no question which is of present importance. Pleading to the first cause of action, the defendant admitted the making of the contract, the delivery of the machinery and the payment of $2,000.00 as alleged in the petition, but denied that the machinery was of the quality, power or capacity required by the contract, and further alleged that it was unfit for use and that the payment had been made before the defendant could test the machinery and before it was advised of its worthless character. By way of cross-petition, the defendant made the following allegations:
    “At the date of the agreement named in the petition and evidenced by Exhibit ‘A,’ the defendant was engaged in constructing and equipping a factory designed for the manufacture of carbons such as are used in arc electric lights, arid was investing a large amount of capital in grounds and buildings and the purchase of suitable machinery for said purpose, and had employed at large expense a sufficient number of expert operatives, and also a clerical force necessary to conducting said business of manufacturing and selling said carbons in large quantities, all of which was at the time well known to the plaintiff. And at said time the defendant further required certain presses and pumps and like machinery for the effective manufacture of said carbons, and without which said factory could not be operated, and the plaintiff professed to be able to manufacture and supply such machinery to defendant for said purpose, and said written agreement was thereupon made between said parties, the plaintiff at the time knowing that defendant’s said plant was dependent upon the furnishing of said machinery to be put in operation. And plaintiff, professing to comply with said agreement, sent certain items of machinery to defendant, which it represented to defendant would comply with’ said terms, viz.: three presses, one pump and one accumulator; and defendant, relying upon plaintiff’s representations, placed the same in position and undertook to operate the same arid expended large sums of money in such attempts, but in fact said machinery was wholly unfit for said purpose and worthless; said pump was wholly ineffective and was not made according to said blue print; said accumulator was likewise unfit for said purpose, and was of imperfect material and manufacture; said machinery did not have the capacity to make 336 impressions per hour on each press, nor half that number, and was not of ample strength to stand the -pressure of 6,000 pounds per square inch, and said accumulator was not of capacity of power and dimensions to take care of said pumps. And defendant was put to great expense of time and labor and money in setting up said machinery, and fully testing the same, and was induced by plaintiff’s representations aforesaid to pay and did pay the sum of $2,000.00 to plaintiff upon the price of the same before said machinery was thus tested, and by the failure of said machinery as aforesaid defendant’s said plant could not be fully operated, and defendant lost in large part the use and service thereof; all to the injury of this defendant in the sum of twenty thousand dollars, for which as damages the defendant now prays judgment against said plaintiff.”
    The plaintiff moved the court to strike from the cross-petition the following allegations:
    First: “The defendant was engaged in constructing and equipping a factory designed for the manufacture of carbons such as are used in arc electric lights, and was investing a large amount of capital in grounds and buildings and the purchase of suitable machinery for said purpose, and had employed at large expense a sufficient number of expert operatives, and also a clerical force necessary to conducting said business of manufacturing and selling said carbons in large quantities, all of which was at the time well known to the plaintiff.”
    Second: “And at said time the defendant further required certain presses, pumps and like machinery for the effective manufacture of said carbons and without which said factory could not be operated, and the plaintiff professed to be able to manufacture and supply such machinery to defendant for said purpose, and said written agreement was thereupon made between said parties, the plaintiff at the time knowing that defendant’s said plant was dependent upon the furnishing of said machinery to be put in operation.”
    Third: “And plaintiff professing to comply with said agreement sent certain items of machinery to defendant which it represented to defendant would comply with said terms, viz.: three presses, one pump and one accumulator, and defendant relying upon plaintiff’s representations, placed the same in position and undertook to operate the same and expended large sums of money in such attempt.”
    Fourth: “Accumulator was likewise unfit for said purpose.”
    Fifth: “And defendant was put to great expense of time, labor and money in setting up said machinery and fully testing the same.”
    Sixth: “And by the failure of said machinery as aforesaid, defendant’s said plant could not be fully operated and defendant lost in large part the use and service thereof.”
    This motion was overruled and the plaintiff excepted. Plaintiff thereupon by reply denied the new matter alleged in the cross-petition. On the trial evidence was offered to show that the machinery was defectively constructed and of defective material, and that it lacked the power and capacity required by the express terms of the contract. Against the objection of the plaintiff the defendant was permitted to show that it had informed the plaintiff of the nature and extent of the plant it was constructing, of the expense it was incurring therein and in the employment of workingmen and salesmen to operate it, and to the extent to which the plant was idle in consequence of the defects of the machinery, and the plaintiff’s failure to correct them. In the charge the jury was instructed to regard the loss of the use of the plant resulting from the plaintiff’s failure to comply with its contract as a proper subject for compensation.
    The plaintiff in writing requested several instructions to the jury, among them the following:
    “The first cause of action in the petition of the plaintiff is founded upon a written contract, a copy of which is attached to the petition. The execution of this agreement 'is admitted by the defendant, and there is no claim here asking to have the same set aside or reformed, and the said agreement is binding upon both parties to it. But it will be an implied term in the said contract that the said goods shall be' free from defect, either in material or workmanship.”
    This the court refused to give for the reason, as stated in the record, that said requests were handed to the court and made after two arguments had been made in the case. With reference to the defendant’s rights to recovery on its cross-petition the court charged: “If the machinery was defective and worthless, as the cross-petition states, and ineffective as a part of the equipment of this plant, and further if the plaintiff sold it to the defendant for the express and special pum. pose of equipping this carbon plant and understood it was for that purpose as alleged, and it was bought for that purpose, and it failed to do its work in manner and form as alleged in the cross-petition, then defendant is entitled to dam-
    
      The jury found for the defendant on its cross-petition in the sum of $4,000.00, and that there was due it a balance of $3,377.71. Judgment was rendered on the verdict and a motion for a new trial was overruled. On petition in error to the circuit court, the judgment was affirmed.
    
      Messrs. Carpenter, Young & Stocker;'Mr. J. S. Sites and Mr. C. W. McCleery, for plaintiff in error.
    The contract was not for the manufacture of machinery generally to satisfy a required purpose, but for the manufacture and delivery of specific articles- of machinery of specified sizes and dimensions, and this was the essential matter of the contract.
    The following authorities are relied upon: Leake on Contracts, 404; Hadley et al. v. Baxendale et al., 9 Exch., 341; Chanter v. Hopkins, 4 M. & W., 399; Ollivant v. Bayley, 5 Q. B., 288; Brown v. Edgington, 2 M. & G., 279; Jones et al. v. Just, L. R., 3 Q. B., 197; Jones v. Bright et al., 5 Bing., 533; Goulds et al. v. Brophy, 42 Minn., 109; McGraw et al. v. Fletcher, 35 Mich., 104; Shepard v. Gilroy, 46 Ia., 193; Case Plow Works v. Niles et al., 90 Wis., 590; Seitz v. Brewers Refrigerating Machine Co., 141 U. S., 510; Curran & Wolfe v. Hauser, Kramer & Co., 6 N. P., 281; 51 Ohio St., 587; Hauser, Kramer & Co. v. Curran, 61 Ohio St., 641; I Sedgwick on Damages, 8th edition, Sec. 159; Smeed v. Foord, 1 E. & E., 602; British Columbia, etc., Lumber & S. M. Co. v. Nettleship, L. R., 3 C. P., 499; Booth v. Spuyten-Duyvil R. M. Co., 60 N. Y., 487; Clark v. Moore et al., 3 Mich., 55-61; Champion 
      
      Ice Manufacturing & Cold Storage Co. v. Pennsylvania Iron Works Co., 68 Ohio St., 229.
    . We contend that the guaranties expressed in the contract are descriptive of the machinery, and have no other or more enlarged effect than dimensions or quality would have. Certain it is that the language of the contract does not extend the guaranties to the use of the machinery in defendant’s plant or in any particular place, or to any particular use, and inasmuch as the plaintiff did not sell, or agree to provide a mode or principle to effect the defendant’s purpose, and the guaranties are limited in their application exclusively to the operation of the machinery as an entirety, how could the plaintiff be held to have contemplated, or reasonably be supposed to have been able to foresee, the special damages claimed by defendant? In order to recover, defendant must establish such a fact. The contract being silent as to defendant’s purpose, it, therefore, must prove it by parole testimony, and inasmuch as the contract is for certain definitely described articles, the law will not allow this. The rule that parole testimony may not be introduced to vary or add to the terms, certainly obtains, and is applicable here. De Witt v. Berry, 134 U. S., 306; McCormick & Bro. v. Vanatta, 43 Ia., 389; Frohreich v. Gammon, 28 Minn., 481, 256; Wilson v. Reedy et al., 32 Minn., 256; Case Threshing-Machine Co. v. Haven, 65 Ia., 359; 2 Sedgwick, Section 767.
    We contend further that before parole testimony is admissible to show the purpose for which defendant purchased the machinery, there must be something in the terms of the contract which shows an intention on the plaintiff’s part to assume an enlarged engagement, and knowledge must be brought home to plaintiff to such an extent by the terms of the instrument as to show that the defendant’s purpose must have formed the basis of the contract. In support thereof, reference is made to the case of Clark v. Moore et al., 3 Mich., 55, cited with approval in 1 Sedgwick on Damages, 8th Edition, Section 159.
    
      Mr. W. K. Martin and Mr. M. A. Daugherty, for defendant in error.
    The plaintiff seeks to limit the defendant’s damages to the difference between the value of the machinery actually furnished and the value of the machinery contracted to be furnished or contract price.
    The defendant claims no such rule would afford it compensation and that the plaintiff’s contention on that question is manifestly and radically wrong. The whole argument of counsel for plaintiff falls because:
    First. It assumes that the contract provides only and solely for the manufacture and sale of certain well-known and definitely described articles, while in truth and in fact the contract is for the manufacture and sale by the plaintiff to defendant of certain stipulated machinery yet to be made by the plaintiff and not then in existence, machinery not well known, but almost wholly unknown, and which was to be made in accordance with blue prints and models designed by the plaintiff to answer the specific purpose for which the defendant, before and at the time the contract was entered into,- advised the plaintiff it required and intended to use the same.
    Second. The contract contains an express warranty so comprehensive in its terms that it clearly covers every item of damage asserted by defendant in its cross-petition and allowed by the court in its charge.
    Third. If there was no express warranty in the contract, still, in this state an implied undertaking would be inferred that the machinery was reasonably fitted for the intended purpose.
    The defendant contended for three items of damage and the charge of the court carefully limited its recovery to them and they are:
    1st. The recovery back of the $2,000 it paid for the worthless machinery before it was tested.
    2d. The expenses it incurred and wages it paid out while attempting to operate the worthless machinery.
    3d. The loss of the use of its factory occasioned by the same cause.
    No testimony was received that was not responsive to these three elements of damage, and therefore no incompetent testimony was admitted.
    All the cases cited by counsel for plaintiff in error relate to the purchase and sale of articles in the open market or so well known that they would be so classified. But no one can carefully read the contract and warranty involved in this' case and not see the difference. This was a contract for the manufacture and sale of certain machinery according to designs of the plaintiff with express warranty to do certain things.
    The plaintiff not only knew the purpose for which the machinery was purchased by the defendant, but it Undertook by its special contract to manufacture the machinery to answer that purpose. In other words, it undertook to equip the defendant’s factory with machinery of its (the plaintiff’s) design and construction. The plaintiff can not and does not attempt to avoid the legal effect of notice of the purposes for which the machinery was intended and purchased by the defendant. 1 Sutherland on Damages, Sections 79 and 90.
    I11 this case the plaintiff knew the special circumstances under which the contract was made, and the special purpose for which the machinery was purchased and intended, the same having been communicated to the plaintiff both verbally and in writing at and before the contract was made; and the plaintiff at the same time and in the same manner was advised in no uncertain language that the operation of the defendant’s plant was and would he wholly dependent upon the successful working of the machinery contracted for. This brings this case clearly within the rule laid down' in Hadley v. Baxendale, 9 Exch., 353, and the plaintiff must therefore be held answerable for the damages claimed in defendant’s cross-petition.
    The measure of damages for breach of warranty is the difference between the actual value of the defective articles, and their value had they been in accordance with the warranties — to which may be added compensation for the trouble and expense suffered, and any other special damages. Beach, Modern Law of Contracts, Volume I, Section-291; Am. & Eng. Ency. of Law (2d Ed.), Volume VIII, p. 637.
    
      Defendant alleges that at the date of the contract, it was building' and equipping a certain factory, and that it required certain machinery of the kind described in the written contract, in order to put and maintain the plant in operation; and that plaintiff, well knowing this, offered and engaged to furnish this described machinery for the agreed price and within a certain time; and that the warranty contained in the contract was made with special reference to this use and this situation; and that the failure of plaintiff to deliver the described machinery and thus make good its warranty, caused the enforced idleness of the factory for a considerable period, as plaintiff all the time -well knew that it must. The defendant’s claim is that the value to it, at this time, and the described machinery, must be computed with reference to its use as a part of this factory, as an essential factor in this integral establishment, and that defendant’s loss because it was deprived of the stipulated machinery, must be considered with reference to this relation. This “is to be considered in arriving at the rental value, though not constituting the measure of damages.”
    It will be observed that this claim does not seek to vary the terms of the written contract; nor does it add any implied warranty to the express one contained in the instrument; nor does it impose any obligation upon plaintiff other than those which the contract distinctly defines.
    In such a case as this it is proper to look into the situation of the parties with respect to which the contract was made, in só far as this was known to both parties at the time, and thus to learn the use and purpose for which the machines were purchased and to which they were to be applied. By this rule such damages will be ascertained as must have been within the contemplation of the parties when the contract was executed. No hardship is thereby inflicted upon either party; because both are held to such damages only as both could foresee as the natural result of a breach of the contract.
    The parties, therefore, left the subject of damages to legal construction and interpretation. In this view of the matter, the law becomes a part of the contract, and this, of course, applies quite as much to the law of special damages as to the law of general or of nominal damages.
    It can not be said that the allowance 'of damages for a breach of a written, contract changes the'contract because it is silent as to damages; that thereby the written instrument is altered or enlarged by parol. .And this can no more be said in case the damages are nominal or are general in character.
    In the great majority of cases the parties to a written contract make no mention in it of the damages to be allowed for a breach of it, and most of the leading cases upon special damages arise from such contract.
    As has been stated, the claim made by the cross-petition is founded upon the express warranties contained in the written contract. If, however, there were no express warranty in the written contract, yet there would be an implied warranty that the machinery would be fit for the purpose intended by the parties, and for which blue prints were designed by plaintiff. The machinery was not purchased in the open market and visible to the purchaser. It was yet to be manufactured and the contract was executory. In the absence therefore of an express warranty, the law would imply one as above indicated. Rogers & Co. v. Niles & Co., 11 Ohio St., 48; Byers et al. v. Chapin, 28 Ohio St., 300; Hooglund, v. Dayton, 39 Ohio St., 671; Curran & Wolf v. Hauser, Kramer & Co., 6 N. P., 284.
    Since the trial of this case in the common pleas court, this court has announced ah opinion which subsequently covers the present. The Champion Ice Manufacturing & Cold Storage Co. v. The Pennsylvania Iron Works Co., 68 Ohio St., 229:
    Where an article, desired for a specific purpose, known to the vendor, is sold with a warranty that it is of a certain necessary quality, which it is not, there may be a recovery not simply for the difference between the value of the article sold and its value as represented; but for any damage which naturally results from the contemplated use of the article sold.
    According to the principle stated, evidence of knowledge of special circumstances tending to enhance the damages in actions for damages for breach of contract is always deemed to be relevant: Am. & Eng. Ency. of Law, Volume VIII, p. 586 (2d Ed.) ; 1 Sedgwick on Damages, 128 (8th Ed.); 2 Sutherland on Damages, 403; Leonard et al. v. New York, etc., Telegraph Co., 41 N. Y., 544; Maryland Ice Co. v. Arctic Ice Machine Manufacturing Co., 29 Atl. Rep., 69; Actien-Gesellschafft v. Armstrong, L. R., 9 Q. B., 473; Kramer & Son v. Messner & Co., 101 Ia., 88; Goodloe et al. v. Rogers, 9 La. Ann., 273; 
      Richardson et al. v. Chynoweth, 26 Wis., 656; Hammer v. Schoenfelder, 47 Wis., 455; Hutchinson Manufacturing Co. v. Pinch, 91 Mich., 156; Liman v. Pennsylvania Railroad Co., 24 N. Y. Supp., 824; Poposkey v. Munkwitz, 32 N. W., 35; Logemann v. Pauly, 76 N. W., 604; Brown v. Edgington, 2 M. & G., 279; Bell v. Reynolds & Lee, 78 Ala., 511.
   Shauck, C. J.

It is urged that the motion to strike from the cross-petition the averments recited. in the statement of the case should have been sustained because the plaintiff was bound only as by the terms of the accepted proposal it had agreed to be bound. The view urged by counsel for plaintiff is that by the terms of the written contract the vendor was bound to furnish, and the purchaser to accept, machinery of the character and capacity which were definitely stated in the contract and that there can, therefore, be, no implied obligation on the former to furnish machinery which would meet the requirements of the defendant’s business. The admission that this view is correct would not justify the conclusion that the motion should have been sustained. The averments to which the motion was addressed, related not wholly to the ground, but chiefly to the measure, of recovery. They presented circumstances which would lead to substantial loss by the defendant if the machinery should not be furnished according to the contract, and the plaintiff’s knowledge of those circumstances. They, therefore, justified the introduction of evidence to show that the defendant had expended large sums of money in the construction of this plant and in the employment of workingmen and salesmen for the conduct of its business, and, these circumstances being known, the loss to be sustained by the defendant from inability to prosecute its business was within the contemplation of the parties as a result likely to follow a breach of the contract, and, therefore, a proper element of recovery. The Champion Ice Manufacturing & Cold Storage Co. v. The Pennsylvania Iron Works Co., 68 Ohio St., 228.

Although the motion was properly overruled because the averments had legal relation to the measure of recovery, they appear to have been regarded by the trial judge as suggesting a ground of recovery. The substance of the plaintiff’s first request for instruction to the jury was that the written agreement should be taken as the measure of the rights and obligations of both parties with no term implied except that the machinery should be free from defects in either material or workmanship. This request was refused for the reason, as the record informs us, that it was not made until two arguments had been addressed by counsel to the jury. As the literature of the case informs us of neither reason nor authority for refusing an instruction upon that ground,- we adhere to the view generally recognized that such a request is timely if made before the cause is submitted to the jury. Not only did the court refuse to give the instruction so requested, but in the instruction actually given there was expressed the view that if the plaintiff furnished the machinery with the understanding that it was to be used in operating the defendant’s plant there was an implied undertaking that it should be adequate for that purpose. The case affords no reason or opportunity for such implied term. The contract into which the parties entered expressly defined the capacity of the machinery, and the defendant bore the chance of its adequacy to meet the requirements of its business. The conclusive effect which the law gives to the written undertaking of parties would compel the conclusion that the obligations of the plaintiff were fully discharged if, within the time specified, it furnished the machinery of the .designated power and capacity and free from defects. Much evidence was adduced, important parts of it coming from witnesses called by the plaintiff, to show that it had in all of these respects failed to perform the terms of the contract into which it had entered, and that serious loss to the defendant had resulted therefrom. But we are not permitted to conjecture that no part of the damages awarded to the defendant was because of the instruction that the plaintiff must answer for the inadequacy of the machinery to perform the duties which the defendant’s business required of it, even though it might be of the character and capacity designated in the contract. ■ The case seems, therefore, to fall within the general rule that, there being substantial error in the refusal to instruct and the instructions given with respect to the ground of recovery, and it not appearing affirmatively in the record that the error did not operate prejudicially as to the amount of the defendant’s recovery, the judgment must be

Reversed.

Price, Crew, Summers and Spear, JJ., concur.