Case Name: Kelly Asphalt Block Company, Appellant, v. The Barber Asphalt Paving Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-12-30
Citations: 136 A.D. 22
Docket Number: 
Parties: Kelly Asphalt Block Company, Appellant, v. The Barber Asphalt Paving Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 136
Pages: 22–28

Head Matter:
Kelly Asphalt Block Company, Appellant, v. The Barber Asphalt Paving Company, Respondent.
Second Department,
December 30, 1909.
Principal and agent — evidence — proof of undisclosed agency — sale — suit by undisclosed principal for breach of implied warranty — effect of execution of contract — when implied warranty survives acceptance — latent defects — pleading — contract made through agent.
An undisclosed principal suing on a contract made by his agent may give evidence of conversations between them to establish the agent’s authority to make the contract in the absence of a written contract of employment.
One who has executed a contract of sale made with the agent of an undisclosed principal by delivering the goods to the principal, cannot escape liability for a breach of an implied warranty as to the quality of the goods on the theory that he would not have contracted with the principal, if he has not been prejudiced by having dealt with the agent as a principal.
One who deals with the agent of an undisclosed principal occupies a contract relation with the principal, so that he may be held upon an implied warranty when the contract has been executed.
One who manufactures goods to be used for a certain purpose impliedly warrants that they are free from latent defects and suitable for the purpose intended.
Hence, where the buyer sues for a breach of such implied warranty it is error for the court to limit the proof to a comparison of the goods with other goods manufactured by the seller.
An implied warranty arising upon the sale of goods to be manufactured does not survive acceptance where the defects are discoverable upon inspection, but by inspection is meant the customary and ordinary inspection. Hence,- where asphalt blocks manufactured for paving a certain street were not properly compressed so that they crumbled when put into use, the implied warranty survives the acceptance of the goods if the defect was not discoverable upon inspection, and it was not customary to test the specific gravity of the blocks, the only means by which the defect could have been discovered.
An undisclosed principal suing for the breach of an implied warranty as to the quality of goods sold need not allege the agency through which the sale was effected.
Appeal by the plaintiff, the Kelly Asphalt Block Company, from a judgment of the Supreme. Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 17th day of April, 1909, upon the dismissal of the complaint by direction of the court at the close of the plaintiff’s case on a trial at the Kings County Trial Term, in an action brought to recover damages for breach of an implied warranty on the sale of a quantity of asphalt paving blocks to be manufactured by the defendant.
The parties to this action were competitive bidders for a contract to repave with asphalt blocks the roadway of Broadway from Havemeyer street to Lafayette avenue, in the borough of Brooklyn-. The contract was awarded the plaintiff by resolution of the board of estimate on the 19tli of July, 1905, and was executed by the parties on the 21st of August, 1905. The plaintiff, wishing to purchase the necessary blocks of the defendant and fearing that the latter would not sell directly to it, procured one Booth to purchase them, and he entered into correspondence with the defendant for that purpose. Before accepting his order the defendant requested him to indicate the streets upon which'the blocks were to be used, and in reply he wrote that they were to be used on Broadway, Williamsburg, saying, “The Interstate Co. was low, but the work was awarded to us.” Reports of the awarding of contracts for which it bid were received in the usual course by the defendant at its Philadelphia office within two or three days thereafter. After being informed where the blocks were to be used, the defendant accepted the order and later delivered the blocks pursuant to it. As soon as laid, the blocks began to crumble and it became necessary' for the plaintiff to remove them and resurface the street with sheet asphalt. The plaintiff’s evidence tended to show that the blocks conformed to the specifications prescribed by the city in so far as their composition was concerned, but that their compression was below that of other blocks sold by the defendant at about the same time, and was insufficient to insure durability, which was due to some defect in the process of manufacture and was discoverable by- testing the blocks for specific gravity. ' The warranty alleged in the complaint was that the. blocks should be fit and proper foi* the purpose intended, and the same in size, character, composition and durability as the blocks commonly manufactured and sold by the defendant, and known to the trade as the “ Barber Asphalt Blocks.”
Edward M. Grout [ James F. McKinney and Paul Grout with him on the brief], for the appellant.
L. Laflin Kellogg [Franldin Kevius with him on the brief], for the respondent.

Opinion:
Miller, J.:
The following questions were presented by the motion to dismiss: (1) Did the evidence tend to show that Booth was -the plaintiff's agent ? (2) Though the agency of Booth were established, could the plaintiff recover.for breach of warranty collateral to a contract made in his name?. (3) Was there evidence tending to show a breach of warranty which survived acceptance of the blocks? (4) Was it necessary to plead the agency of Booth ?
(1) The court excluded evidence to show the conversation between the president of the plaintiff and Booth resulting in the employment of the latter to purchase the blocks; The contract of employment was the fact to be proven-, and, in the absence of a waiting, could be shown only by proving, the verbal arrangement. More over, there was evidence in the record tending to show that Booth acted as agent, but it is unnecessary to consider that evidence for the reason that the improper exclusion of evidence to show the agency requires a reversal of the judgment, unless the defendant was entitled to a dismissal, although the fact of agency be deemed established.
(2) The defendant does not question the general rule that an undisclosed principal may sue or be sued on a contract made in the name of his agent (see Henderson, Hull & Co. v. McNally, 48 App. Div. 134; affd. on opinion below, 168 N. Y. 646, and cases cited in the opinion of Mr. Justice McLaughlin), but contends that this case falls within the exception for the reason that the element of personal confidence and trust is involved; that the defendant sold upon the personal responsibility of Booth and, as a matter of fact, would not have contracted with the plaintiff. The circumstances referred to in the above statement of facts would justify the inference that the defendant knew when it accepted the order that the plaintiff was the contractor to whom the blocks were to be furnished, and that Booth was acting as its agent. No doubt, the plaintiff desired to conceal from the defendant the fact that it was the principal in the transaction, but that does not prove that it succeeded in so doing. There is nothing to show that the defendant had ever refused to sell blocks to the plaintiff, and it could not be decided as a matter of law on the record before us that it was not willing to do so. Moreover, I think, that the plaintiff may maintain the action, though Booth's agency was unknown to the defendant. If the defendant sold the blocks on Booth's credit, it could, if it chose, look to him for payment, and no .doubt the plaintiff's action would be subject to any equities in favor of the defendant arising from the fact that it had dealt with Booth as the principal. The fact that the defendant would not have made the contract if it had known who the principal was, if that be the fact, would have justified it in refusing to perform upon learning the truth; but, having executed the contract, the defendant should not be permitted to escape liability thereon in the absence of evidence to show that it has been prejudiced by having dealt with an agent as principal. Of course, the plaintiff cannot maintain the action unless there was a contract relation between it and the defendant. But the case above cited is sufficient authority for the proposition that there is a contract relation between an undisclosed principal and one who contracts with his agent. The respondent relies upon the case of Moore v. Vul canite Portland Cement Co. (121 App. Div. 667), but that was a suit by an undisclosed principal for breach of an executory contract. The reason for that decision cannot apply to the case of an executed contract. The case of Boston Ice Company v. Potter (123 Mass. 28) does support the respondent's contention.- It seems to me that it is plainly opposed to the doctrine of. the decisions of the Court of Appeals of this State hereinbefore referred to. If the undisclosed principal cannot sue a vendor on an executed contract, the latter might escape liability for the grossest fraud by asserting that it would not have sold to the former, unless in such case the' action could be maintained by the agent, and the undisclosed principal could in turn compel the agent to account for- the result of such suit. But, even if such circuity of action were permissible, a single, direct action by the real party in interest would seem to be the one contemplated by our system of procedure.
(3) The court restricted the plaintiff to proof that the blocks furnished were not equal to the standard Barber blocks manufactured and sold by the defendant'. It must not be overlooked that the contract was for the sale of blocks to' be manufactured by, the defendant, and that the evidence justified a finding that the defendant knew the purpose for which they were to be used. It is unnecessary to cite authority on the .proposition that under such circumstances there is an implied warranty by the manufacturer that the article is free from latent defects and suitable for the purpose intended. The respondent contends that it was required to furnish Only blocks which complied with the city specifications. But the specifications were silent on the subject of the compression required. I think that the complaint is broad enough .to present the question and that the court erred in limiting proof to comparisons with other blocks manufactured by the defendant. However, as thus limited, there was evidence to show that, owing to.some defect in the- process of manufacture, the blocks were not sufficiently compressed as compared-with other blocks sold by the defendant, and that, owing to that fact, they commenced to crumble immediately upon use. However, it is asserted that the warranty did not survive acceptance. The blocks were composed of the proper materials, mixed in the proper proportion. Ho defect could be discovered by handling or by visual inspection. Indeed, a chemical analysis would not have disclosed the defect. The compression of the- blocks was indicated, however, by their specific gravity, and the test for specific gravity is simple. The respondent asserts in its brief that it was customary to make such a test, but the evidence on that head refers to the test made by the city engineer of sample blocks furnished by bidders. The evidence is that the specific gravity of these blocks varied, and there is no evidence that it is customary for contractors to subject blocks to the test for specific, gravity before laying them. It appears that, during the progress of the work, city inspectors from time to time took blocks to the city expert who discovered that they were low in specific gravity and communicated that fact to the city engineer, but there is no evidence that that was brought to the knowledge of the plaintiff. A purchaser cannot shut his eyes to defects and, after acceptance, hold the seller to an implied warranty. But every party to a contract has a right to rely to some extent upon performance by the other party. There is some evidence in this case tending to show that the low compression of the blocks was due to some trouble with the machinery with which they were manufactured. The defendant, the manufacturer, may have had reason to test the blocks for specific gravity, but the plaintiff was not called .upon to do so unless that was customary. As the blocks appeared to be all right on examination, the plaintiff was not required to, subject them to every known test but, after the usual examination, could- accept them, relying upon the manufacturer having performed its contract. It is elementary that the implied warranty arising upon the sale of articles to be manufactured does not survive acceptance in the case of a defect discoverable upon inspection; but by inspection is meant the customary and ordinary inspection. (Carleton v. Lombard, Ayres & Co., 149 N. Y. 137; Bierman v. City Mills Co., 151 id. 482; Waeber v. Talbot, 167 id. 48.) If it had appeared that it was customary for contractors to test blocks for specific gravity before laying them, a different question would be presented.
(4) It was not necessary to allege the agency of Booth, as only ultimate facts should be pleaded. The case of Buffalo Catholic Institute v. Bitter (87 N. Y. 250), cited by the respondent, does .not decide to the contrary. In that case the complaint set out in Imc verba an agreement under seal, made by the agent in his own name, and the other averments of the complaint were held to be averments of the legal effect of that instrument.
' The judgment should be reversed and a new trial granted, costs to abide the event.
Hirschberg, P. J., Woodward, Jenks and Burr, JJ., concurred.-
Judgment reversed and new trial granted, costs to abide the event.