#### SWIFT & COMPANY et al. v. H. ETHERIDGE.

(Filed 30 September, 1925.)

1. Pleadings — Evidence—Contracts—Vendor and Purchaser — Warranty.

In the absence of proof as well as allegation in a suit upon a note given for fertilizers that the fertilizers were specially warranted for growing potatoes, a counterclaim based thereon cannot be recovered against the seller, the plaintiff in the action.

3. Same — Fertilizers—Statutes—Consideration—Caveat Emptor.

The requirements of our statute, C. S., 4697, with regard to fertilizers sold in North Carolina, requiring an analysis by the State Chemist and the branding accordingly of the bags or packages in which they are delivered to the purchaser, is to prevent the sale of worthless fertilizer, and where in an action upon a note given therefor it is established that the fertilizer given in consideration of the note is worthless, there is a failure of consideration, and the plaintiff, the seller thereof, may not recover upon the note notwithstanding there was no express warranty as to the quality of the goods in the contract of sale, and the common-law rule of *caveat emptor*has no application. C. S., 4690.

*163Appeal by plaintiff from *Cranmer, J.,*at March Term, 1925 of PasquotaNK. New trial.

Action upon note, dated at Harbinger, N. 0., 13 May, 1922, executed by defendant, payable to order* of plaintiff, for value received in fertilizers. Execution and delivery of the note is admitted in the answer.

As a defense to plaintiff’s cause of action upon said note, defendant, in his answer, says “that the note set out in the complaint is without consideration; that the fertilizers which defendant purchased of the plaintiff, Swift & Company, and its agent set out above, is worthless; that the defendant purchased it, had his lands well prepared for potatoes, had obtained good seed potatoes and placed the fertilizer on the lands in proper condition, and properly placed and cultivated the potatoes thereon; that the said fertilizer was absolutely worthless, and of no value or benefit to the crop; that the said fertilizer was sold to defendant for potato fertilizer, and such that would be suitable for the potatoes, and with the representation that it had the proper ingredients to produce good potatoes and to produce them for early market; that in truth and in fact, the fertilizer did not have these ingredients; that it did not produce the potatoes nor advance them for the early market, and that the consideration for the note as aforesaid was nothing except the said fertilizer, and that the defendant owes to the plaintiff nothing by reason thereof.”

As a counterclaim to plaintiff’s cause of action on said note, defendant avers that he purchased from plaintiff, during the spring of 1922, fertilizers; that he executed his note, payable to plaintiff, in the sum of $351, for the purchase price of said fertilizers, as set out in the complaint ; that plaintiffs represented to defendant that said fertilizers were good fertilizers and suitable for potatoes; that it had the proper ingredients and would produce potatoes at an early date; that said fertilizers were not as represented, and that by reason thereof defendant was damaged in the sum of $351.

Plaintiffs, in reply to the counterclaim, deny that they made representations with respect to the fertilizer sold to defendant, as alleged by defendant, and rely upon the contract as set out in the note.

The issues tendered by defendant, and submitted by the court to the jury, were as follows:

1. Was the fertilizer, the consideration of the note, worthless?

2. What amount, if any, are plaintiffs entitled to recover?

The jury answered the first issue “Yes,” and having so answered same, under the instructions of the court, did not answer the second issue. Plaintiffs moved that the verdict be set aside, for errors.. Motion denied and plaintiffs excepted. Plaintiffs then moved for judgment on the pleadings and *non obstante veridicto.*Motion denied and plaintiffs *164excepted. Judgment was thereupon rendered that plaintiffs take nothing by their action, and that defendant go without day and recover of plaintiffs his costs to be. taxed by the clerk. Plaintiffs having excepted to this judgment, appealed to the Supreme Court. Assignments of error appear in the opinion.

*Ehringhaus & Hall for plaintiffs.*

*Adylett & Simpson for defendant.*

CoNNOR, J.

Defendant did not insist upon the counterclaim, as set up in his answer, at the trial of this action. He tendered no issues involving the matters relied upon in support of his counterclaim. There was neither allegation nor proof that the fertilizers purchased by defendant of the plaintiffs had been subjected to a chemical analysis, showing a deficiency of ingredients, which is made, by statute, a prerequisite to a suit for damages, resulting from the use of the fertilizers; C. S., 4697. Defendant could not, therefore, have maintained an action to recover such damages; *Jones v. Guano Co.,*183 N. C., 338, 264 U. S., 171, 68 L. Ed., 623. Nor could he, without such allegation and proof, have maintained a counterclaim for such damages; *Fertilizing Co. v. Thomas,*181 N. C., 274; *Pearsall v. Eakins,*184 N. C., 291. There is no provision in the contract between the parties to this action abrogating the statutory requirement. Defendant was, therefore, well advised when he did not insist upon the counterclaim.

The only defense, relied upon by defendant, is failure of consideration for the note sued ujoon. He admitted the execution of the note, as set out in the complaint, but alleged that the fertilizers delivered to him, pursuant to the contract of sale, which were the consideration for the note, were worthless. This note contains a clause in words as follows:

> “The consideration of this note is commercial fertilizers sold to the undersigned without any warranty as to results from its use, or otherwise. Said fertilizers have been inspected, tagged and branded under and in accordance with the laws of this State.”

By these words, included in the note signed by him, defendant admits that there was no express warranty by plaintiffs as to results from the use of the fertilizers or otherwise. He is thereby precluded from alleging or contending that there was any express warranty, for the breach of which he is entitled to damages. Indeed, upon the trial, he made no such contention.

The rule of *caveat emptor,*as applied at common law in the sale of articles of personal property, is not applicable to the sale of commercial fertilizers in this State. “By the common law, the vendor is not bound to answer to the vendee for the quality or goodness of the *165articles sold, unless be expressly warrants tbem to be sound and good, or unless be knew tbem to be otherwise, or unless they turn out to be different from what be represents tbem to tbe buyer; in other words, there must be either an-0 express warranty or fraud, to make the vendor answerable for tbe quality or goodness of tbe articles sold.” 11 C. J., 43, note b. In this jurisdiction, however, tbe harshness of tbe rule of *caveat emptor,*when strictly applied, is modified and mitigated by the doctrine of implied warranties, which is based upon the presumption that men who receive something of value in commercial transactions intend to give, in return, something of value. “It is well settled,” says *Justice Brown,*in *Grocery Co. v. Vernoy,*167 N. C., 427, “that on a sale of goods by name, there is a condition implied that they shall be merchantable and salable under that name; and it is of no consequence whether the seller is the manufacturer or not, or whether the defect is hidden or might possibly be discoverable by inspection.” *Justice Allen,*in *Ashford v. Shrader,*167 N. C., 45, and *Justice Walker*in *Medicine Co. v. Davenport,*163 N. C., 297, approve the principle as stated in Benjamin on Sales, secs. 683 and 686, in the following words-: “If a man sell an article, he thereby warrants that it is merchantable; that is, fit for some purpose. If he sells it for a particular purpose, he thereby warrants it to be fit for that purpose.”

It is contended, however, that the words “or otherwise,” negative, not only an express warranty by contract between the parties, but also any warranty implied by law, in accordance with the principle above stated. This contention does not commend itself to us as consistent with the honesty of purpose with which plaintiffs are entitled to be credited in their dealings with their customers. The law presumes an honest purpose on the part of plaintiffs in the conduct of their business, in this State, as manufacturers and sellers of commercial fertilizers. It- will not presume a purpose to collect from customers the contract price for articles sold, regardless as to whether they are worthless or not. Plaintiffs sold and contracted to deliver to defendant commercial fertilizers; they seek in this action to recover the purchase price for the articles delivered pursuant to this contract. Plaintiffs did not guarantee the results from the use of the fertilizers, nor did they guarantee the quality or goodness of the articles sold. It was the duty of plaintiffs, however, to deliver to defendant, pursuant to the contract, commercial fertilizers. The law implies an undertaking by the plaintiffs to perform this duty. Plaintiffs will not be heard, when seeking to enforce rights under the contract, to say that they absolved themselves from the performance of the duty which the law imposed upon them when they made the contract with defendant.

*166In *Furniture Co. v. Mfg. Co.,*169 N. C., 41, this Court held that tbe implied warranty that tbe article sold .was at least merchantable or salable, and was fit for tbe purpose for wbicb it was sold, was not affected by express notice to tbe purchaser that tbe vendor would not guarantee tbe *condition*of tbe article sold. *Justice Allen,*writing tbe opinion for tbe Court, says: “Tbe refusal to guarantee condition means only a refusal to warrant as to quality, and although tbe law writes this into every contract for tbe sale of personal property — that in tbe absence of express agreement there shall be no warranty as to quality — it bolds tbe seller to tbe duty of furnishing an article merchantable or salable or that can be used. If so, why should tbe obligation of tbe seller be less because be writes in tbe contract what tbe law would place there? In other words, if tbe law writes into a contract of sale, that there is no warranty as to tbe quality of tbe goods sold, and still bolds tbe seller to tbe duty of furnishing an article that is merchantable or salable, or one that can be used, why does not tbe same duty rest upon tbe seller when be, instead of tbe law, writes into tbe contract that be will not warrant tbe quality”; *Register Co. v. Bradshaw,*174 N. C., 414. *Machine Co. v. McClamrock,*152 N. C., 406, cited in plaintiff’s brief, is not an authority to tbe contrary of this proposition. It is there said that “it cannot admit of doubt that personal property may be sold with or without warranty, and that from an express stipulation that tbe property is not warranted a warranty will not be implied.” Tbe property which was tbe subject-matter of tbe contract involved in that action was secondhand machinery,' wbicb was “not warranted.” Tbe property sold and delivered was second-hand machinery. Tbe controversy was as to tbe quality of this machinery, and it was held that in tbe absence of an express warranty, evidence of inferior quality was inadmissible. It was held that there was no implied warranty as to tbe quality of tbe article sold. Tbe use of tbe -words “or otherwise” in the note sued on in this action, did not absolve plaintiffs from tbe duty *to*deliver *to*defendant commercial fertilizer, with the warranty implied by law that tbe goods sold and delivered were merchantable, or salable, and fit for tbe purpose for wbicb they were bought.

In addition to tbe duty imposed by law upon plaintiffs, as manufacturers and sellers of articles of personal property, under tbe principle of implied warranty, there is tbe duty imposed by statute upon them as manufacturers and sellers of commercial fertilizers. C. S., 4690 makes it tbe duty of all persons, companies, manufacturers, dealers or agents, before selling or offering for sale in this State, any commercial fertilizer, *to*brand or attach to each bag, barrel or package, tbe brand name of tbe fertilizer, tbe weight of tbe package, tbe name and address of tbe *167manufacturer and the guaranteed, *analysis of the fertilizer,*giving the valuable constituents of the fertilizer in minimum percentages only, and also, the sources of nitrogen or ammonia and potash. The purpose of this statute is to protect the public from the sale of worthless fertilizers; *S. v. Oil Co.,*154 N. C., 635.

When plaintiffs as manufacturers, dealers or agents sold to defendant commercial fertilizers, they must be held to have warranted that they had complied with the statute, and that the articles delivered, as commercial fertilizers were truthfully branded as required by the' statute. Among other things the statute requires 'that the “guaranteed analysis of the fertilizer, giving the valuable constituents of the fertilizer in minimum percentages only,” shall appear on each bag or package. No commercial fertilizers may be sold in this State without a guarantee of the analysis claimed by the manufacturer. Plaintiffs, therefore, when they delivered to defendants the articles purchased by him as commercial fertilizer, in accordance with the statute, warranted that the contents of the bags or packages, were not only commercial fertilizers, but also were of the guaranteed analysis as appeard on the bag or package.

If the contents of the bags or packages delivered to defendant by plaintiffs were not, in fact, commercial fertilizers, of the analysis guaranteed on each bag or package, as required by statute, there was no consideration for the note, given for the purchase price of the articles bought by defendant, and plaintiffs are not entitled to recover on said note. Total failure of consideration is a defense in an action upon a note between the original parties thereto, C. S., 3008. *Jewelry Co. v. Stanfield,*183 N. C., 10; 3 R. C. L., 942, sec. 138 and authorities cited. The note sued on in this action is a negotiable instrument and is deemed prima facie to have been issued for a valuable consideration, C. S., 3004. The burden is on defendant, who admits the execution and alleges failure of consideration, to rebut the presumption arising from the character of the note; *Piner v. Brittain,*165 N. C., 401; *Hunt v. Eure,*188 N. C., 716. This burden may be sustained by parol evidence.

There was no error in the refusal to render judgment on the pleadings, or judgment *non obstante veridicto.*

Plaintiff excepted to the first issue' tendered by defendant, and submitted to the jury by the court. This issue was as follows:

> “Was the fertilizer, the consideration of the note, worthless?”

If a purchaser gets from his vendor the very krticle which was the subject-matter of the contract of sale, and there is no express warranty as to quality or no fraud or deceit, he cannot defend an action for the purchase price solely upon the allegations and proof that the article was worthless. *Fair v. Shelton,*128 N. C., 105. If, however, the article *168delivered to tbe purchaser by bis vendor is not tbe article, wbicb was tbe subject-matter of tbe contract, it' cannot be said that tbe purchaser received value for tbe purchase price, and an action may be successfully defended upon tbe ground of failure of consideration. Tbe fact, alone, that tbe article delivered is worthless, is not sufficient to support tbe defense of failure of consideration. Plaintiff’s right to recover upon tbe note in this action is not to be determined solely by whether or not tbe fertilizers, tbe purchase price of wbicb was tbe consideration of tbe note, were worthless, in that they did not produce good potatoes for tbe early market. There was no warranty as to tbe results of using tbe fertilizers sold, under defendant’s crops. There was a warranty implied by law, that tbe articles delivered to defendant were commercial fertilizers; there was also tbe warranty required by statute, that tbe commercial fertilizers sold were of tbe guaranteed analysis, as appeared upon tbe box or package. Tbe breach of tbe implied warranty and of tbe statutory warranty, although no demand is made for damages for such breach, is competent evidence upon tbe issue as to failure of consideration. It is not necessary in order to prove failure of consideration, that there should be a chemical analysis; *Carter v. McGill,*168 N. C., 507. Tbe issue, arising upon the pleadings, wbicb will be determinative of this action, is substantially, “Did plaintiffs fail to deliver to defendant commercial fertilizers, of tbe analysis guaranteed on tbe bags, in accordance with their contract?”

It may be noted that there are no provisions in tbe contract between tbe parties to this action wbicb differentiate their contract from other contracts for tbe sale of articles of personal property. Tbe fact that commercial fertilizers are tbe subject-matter of tbe contract does not affect tbe character of evidence competent to be beard by tbe jury upon tbe issue. There is no demand for compensation for deficiency of ingredients; nor are damages from results of using tbe fertilizers sought. Tbe controversy is as to tbe identity of tbe articles delivered with tbe articles sold. Defendant contends that plaintiffs did not deliver to him tbe articles wbicb be bought and wbicb plaintiffs contracted to sell and deliver to him. If this allegation is true, there was no consideration for tbe note sued on. Tbe issue submitted, to wbicb plaintiffs excepted, does not present this question. Tbe exception was well taken, and tbe assignment of error based thereon must be sustained.

We do not pass upon or discuss other assignments of error, wbicb are based upon exceptions to evidence upon tbe issue erroneously submitted. There must be a

New trial.