Case Name: ORTENTIA SARAH FULLER and Myrtle Fuller Henderson, Copartners, as Fuller & Henderson, Respondents, v. ANTON FRIED and Fred O. Fried, Copartners, as Anton Fried & Son, and Individually, Appellants
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1928-08-06
Citations: 57 N.D. 824
Docket Number: 
Parties: ORTENTIA SARAH FULLER and Myrtle Fuller Henderson, Copartners, as Fuller & Henderson, Respondents, v. ANTON FRIED and Fred O. Fried, Copartners, as Anton Fried & Son, and Individually, Appellants.
Judges: Burke, Ch. J., and Birdzell, Nuessle, and Burr, JJ., concur.
Reporter: North Dakota Reports
Volume: 57
Pages: 824–843

Head Matter:
ORTENTIA SARAH FULLER and Myrtle Fuller Henderson, Copartners, as Fuller & Henderson, Respondents, v. ANTON FRIED and Fred O. Fried, Copartners, as Anton Fried & Son, and Individually, Appellants.
(224 N. W. 668.)
Opinion filed August 6, 1928.
Rehearing denied April 6, 1929.
Knauf & Kna-uf, for appellants.
Aylmer & Aylmer and Carr & Rittgers, for respondents.

Opinion:
Christianson, J.
This is an action brought by the buyer of a tractor outfit to recover the purchase price because of an alleged breach of warranty by the seller. The case was tried to a jury and resulted in a verdict in favor of the plaintiffs. Defendants moved for judgment notwithstanding the verdict or for a new trial. The motion was denied and the defendants have appealed from the judgment and from the order denying such motion.
The plaintiffs own and operate a large farm in Stutsman county in this state. The defendants are machinery dealers having, among others, a place of business at Spiritwood in Stutsman comity. The evidence shows that some discussion was had between J. F. Henderson, representative of the plaintiffs and manager of their farm, and Fred Fried, a member of the defendant firm, with respect to the purchase by the plaintiffs of a tractor and plows, with the result that on May 3, 1919 Henderson signed a written order wherein the plaintiffs ordered the following machinery:
"One Twin City 16 — 30 H. P. Oil Tractor, 4 Bottom Emerson Engine Gang Complete with Extra shears 3-14 inch breaking Bottoms and Extra shears, Steering Device, Extension Rims, and 4 Bottom Packer," and agreed to pay therefor $2,650 F. O. B. cars, the Minneapolis Steel & Machinery Company's plant at Minneapolis, Minnesota. The written order was upon a printed blank prepared by the Minneapolis Steel & Machinery Company and intended for use in ordering machinery from that company.
The first question presented on this appeal relates to such written order. It is undisputed that the order was signed by the authorized representative of the plaintiffs; but it is denied that such order constituted the contract .between the parties. Henderson, the representative of the plaintiffs; testified that when the order was presented to him he refused to sign it saying that he would not buy the machinery from the Minneapolis Steel & Machinery Company; that whatever purchase he made he would make from the defendants, Anton Fried & Son; that he was then informed by Fred Fried that the order was used merely as a memorandum giving a description of the machinery purchased and the price to be paid and was intended for no other purpose whatsoever; that Fried & Son did not haye an order blank of their own, and that consequently they used this blank as a memorandum of the machinery purchased and the price to be paid therefor. The defendant, Fred Fried, on the other hand, testified that no such conversation took place; that the order was taken without any such understanding and that it embodied the contract between the plaintiffs, as the buyers, and the Minneapolis Steel & Machinery Company, as the sellers, and that Anton Fried & Son acted merely as agents of the latter in obtaining and forwarding the order.
A large number of the assignments of error are directed at the rulings of the court in admitting the evidence offered by the plaintiffs tending to show that the written order was not in fact a contract of purchase; that the plaintiffs had never contracted with the Minneapolis Steel & Machinery Company; that they had contracted alone with Anton Fried & Son and that the signature of the plaintiffs had been affixed to the contract in the circumstances stated and with the understanding and belief on their part that it was not a contract at all and that it merely contained a description of the machinery and the price to be paid; that the plaintiffs had no intention, no desire and no willingness to enter into a contract with the Minneapolis Steel & Machinery Company and would not have so contracted. This evidence was objected to by the defendants on the ground that it tended to vary, change and contradict the written instrument, and error is assigned upon the rulings of the court, overruling such objections.
We are wholly agreed that no error was committed in such rulings. The evidence in question did not seek to contradict, vary or change the terms of a written contract. It went to the very existence of a contract between the plaintiffs and the defendants and was offered and received upon the question whether the alleged written contract between the plaintiffs and the Minneapolis Steel & Machinery Company did or did not exist as the only contract. The plaintiffs did not rely upon or seek to recover under the written contract. They denied that the alleged written contract had any legal existence whatsoever. The plaintiffs claimed, and the evidence adduced in their behalf tended to show, that they had no intention to enter into a contract with the Minneapolis Steel & Machinery Company and that they never did enter into any such contract. In short, that there was no meeting of the' minds of the parties to such alleged contract at all. The Minneapolis Steel & Machinery Company was not a party to the action and the defendant firm was not a party to the alleged written contract. In these circumstances the rule "excluding parol evidence tending to vary, modify or contradict the writing" does not apply. 3 Jones, Ev. 2d ed. § 1488. See also 2 Williston, Contr. § 641.
We are of the opinion, therefore, that the court was entirely correct in admitting the evidence adduced by the plaintiffs tending to show that the alleged written contract was not in fact a legal contract; that plaintiffs did not purchase the machinery from the Minneapolis Steel & Machinery Company under such contract but purchased the same from the defendants under another and oral contract; and, under the evidence, it was, we think, clearly a question of fact for the jury whether the plaintiffs purchased the machinery from the Minneapolis Steel & Machinery Company under the written contract, or whether they purchased it from the defendants under the oral contract.
The evidence adduced by the plaintiffs was further substantially to the effect that the plaintiffs purchased the machinery from the defendants under an oral contract; that the defendants had been informed and knew that plaintiffs purchased the machinery for use on their farm in Stutsman county; that the defendants had knowledge of the condition of the soil and the character of such farm and in general knew the kind of work the machine was intended to perform; that defendants represented and warranted that the tractor would pull a certain number of plows and a packer' on said land at a certain rate of speed; that the tractor and plows wholly failed to do the work which defendants had represented and warranted that they would do. We deem it unnecessary to enter into any detailed statement of the alleged warranty and the alleged breach thereof; but we are all agreed that the evidence on this phase of the case is such as to make it a question of fact for the jury to determine whether the warranty was made and whether there was a breach thereof.
It is contended by the defendants, however, that the plaintiffs did not offer to return the tractor within a reasonable time after knowledge of the breach of warranty, or at all; and that, consequently, no rescission was effected. The evidence shows that on October 23, 1919, the plaintiffs sent defendants a written notice to the effect that inasmuch as the outfit did not do the work defendants had represented it would do the plaintiffs "hereby offer to return . . . the whole outfit and demand from you the principal sum of $2,450." The evidence further shows that at the time this letter was written the tractor was in a machine shed on plaintiffs' farm and that it remained in such shed during the winter of 1919-1920. According to the evidence adduced by the plaintiffs they received no response to the notice of rescission and offer to return the outfit. Plaintiffs' manager testified that after writing the letter he saw Fred Fried and made settlement for certain machinery and supplies purchased from the defendant firm, but refused to pay the items in such bill for repairs furnished for the tractor. Plaintiffs' manager testified positively that the defendants at no time after the notice of rescission made any suggestion or offer of adjustment or compromise. The undisputed evidence further shows that in the spring of 1920 the plaintiffs again used the tractor in seeding, — seeding in all some one hundred seventy acres; they plowed some twenty or thirty acres with it; that they used it in the harvest of 1920 and later used it to haul some grain to market. As to the reasons why he attempted to use the tractor again in 1920, plaintiffs' manager testified:
Q. How did you come to try this tractor again in 1920 ?
A. Well, I was down to Fargo. I don't just remember whether it was in the fall or in the spring of 1919 or 1920. I would not say, and when I was there I went and had a talk with Mr. Austin, I think his name is, manager of the Minneapolis Steel & Machinery Company — * the Fargo branch manager. I had a talk with him and he said — . . .
I went to the Minneapolis Steel & Machinery Company and during the conversation — I took out a new carburetor, which was supposed to be a new make of carburetor for this engine that would burn gasoline instead of kerosene, which was made to improve this engine — . . .
Q. And did you get that as a result of somebody's suggestion or recommendation ? . . .
A. I got it as the result of the recommendation of the Manager of the Minneapolis Steel & Machinery Company. . . .
Q. Now we come to the spring of 1920 when you say you had secured a new carburetor at somebody's suggestion, that it might work on the tractor, and you took the tractor out and tried it again. Up to that date you had not secured any settlement or adjustment with Anton Fried & Son?
A. None, whatsoever. . . .
Plaintiffs' manager further testified that after the new carburetor had been put on, the tractor was used in drilling in some grain. According to his testimony it did not perform the work in a very satisfactory manner although he seeded in all some one hundred seventy acres with it. He further testified in response to questions propounded by plaintiffs' counsel:
Q. Did you make any effort to try it on any other kind of work after that?
A. Yes.
Q. What else and when and where ?
A. About twenty or thirty acres of plowing on section twenty-three northwest of town. I put another man on there and sent him up town to see if he could plow that out with it and he hooked on to the plow. We hooked one of the plows up aud just used three plows on there. There was an expert out there that time. I had one come myself that was out there.
Q. Why was this man out there?
A. A gear busted out. The main drive pinion busted. I sent for the main drive pinion to Fargo and told them to send out an expert to put it on. . . •
A. I got tired monkeying with Fried. If I would telephone him I would not know when the things were coming or anything about it.
It will be noted that the plaintiffs put the machinery to considerable use after the notice of rescission. Obviously such use was inconsistent with the declared purpose of such notice. If the contract was rescinded the machinery no longer belonged to the plaintiffs and they had no more right to use it than any other machinery belonging to someone else. There is nothing to indicate that the subsequent use was at the suggestion of the defendants. It will be recalled that on a trip to Fargo plaintiffs' manager conferred with the manager of the Minneapolis Steel & Machinery Company at that place, and it was at his suggestion and not at the suggestion of the defendants that plaintiffs' manager obtained a new carburetor. According to the contention of the plaintiffs, however, they bought the machinery from the defendants and not from the Minneapolis Steel & Machinery Company and there was not the slightest showing that the manager of that company had any authority to represent the defendants. Hence, under the evidence in this case we fail to find any .basis for a holding that plaintiffs' use of the machinery in 1920 was brought about by the inducement or request of the defendants. We are of the opinion, therefore, that the plaintiff has failed to show a rescission. "Rescission means the undoing of the contract, the making of it as if it had never been." 2 Black, Rescission & Cancelation, § 616. "Hence the first and prime essential of rescission is the 'restitutio in integrum,' that is, the restoration of each of the parties to the position, with reference to his property and his rights, which he occupied immediately before the making of the contract. . . . It is said : 'The rule that he who seeks to rescind a contract of sale must first offer to return the property received, and place the other party in the position he formerly occupied, so far as practicable, prevails equally at the civil and the common law. It is a rule founded in natural justice and requires that the offer shall be made by the purchaser to his vendor upon the discovery of the defects for which the rescission is asked.' " 2 Black, Rescission & Cancelation, § 616. The principle thus stated is recognized and prescribed by our statutes relating to contracts of sale.
Sec. 09, chapter 202, Laws 1917 (§ 6002a69; Supplement to the 1913 Compiled Laws) provides:
"Where there is a breach of warranty by the seller, the buyer may, at his election—
"'(a) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;
"(b) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty;
"'(c) Refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for the breach of warranty;
"(d) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.
"(2) When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy can thereafter be granted.
"(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, or if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were in at the time the property was transferred to the buyer. But if deterioration or injury of the goods is due to the breach of warranty, such deterioration or injury shall not prevent the buyer from returning or offering to return the goods to the seller and rescinding the sale. . . .
"(7) In the case of breach of warranty of quality, such loss in the absence of special circumstances showing the proximate damage of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty."
In this case there was no return or offer to return the property as required by the statute. The alleged notice of rescission served in October 1919 was waived by the subsequent conduct of the plaintiffs. The use of the property in 1920 was inconsistent with tbe declared intention to rescind, and nullified tbe effect of tbe attempted rescission. 2 Williston, Sales, 2d ed. § 611, p. 1533; Scriven v. Hecht (C. C. A. 2d) 287 Fed. 853; Maples v. Douglass, 205 Ala. 94, 87 So. 585; J. B. Alfree Mfg. Co. v. Grape, 59 Neb. 777, 82 N. W. 11; Gorman-Head Auto Co. y. Barrett, 78 Okla. 34, 188 Pac. 1083; Learned v. Hamburger, 245 Mass. 461, 139 N. E. 641; Pleak v. Marks, 171 Iowa, 551, 152 N. W. 63; Underwood v. Wolf, 131 Ill. 425, 19 Am. St. Rep. 40, 23 N. E. 598. See also J. L. Owens Co. v. Doughty, 16 N. D. 10, 110 N. W. 78; Allis-Chalmers Mfg. Co. v. Frank, ante, 295, 221 N. W. 75.
We are agreed that under tbe facts in this ease, tbe plaintiffs are not entitled to recover, and will not be entitled to recover upon another trial, as upon rescission of the contract unless tbe defendants are willing to acquiesce in a rescission; that under the complaint and tbe proof plaintiff's remedy is an action for damages for breach of warranty. While under tbe Sales Act tbe buyer has an election of remedy and where one remedy has been claimed and granted be may not after-wards have another, tbe evidence in this case shows that the remedy of rescission was unavailing when tbe action was instituted, unless tbe defendants acquiesced in tbe rescission. Tbe evidence also shows that tbe purchase price bad been fully paid either in cash or by negotiable note and that such note bad been negotiated before maturity to a purchaser for value. Consequently, at tbe time of tbe institution of tbe action the only remedy actually available to the plaintiffs was a suit against tbe sellers for damages for tbe breach of warranty. Hence, plaintiffs have not claimed "and been granted" a remedy; and Ave are of tbe opinion that tbe ends of justice require that tbe plaintiffs be permitted, if they so desire, upon such terms as may be just, to file an amended complaint asking relief by way of damages for breach of warranty. Gorman-Head Auto Co. v. Barrett, 78 Okla. 34, 188 B|,c. 1083. See also Allis-Cbalmers Mfg. Co. v. Frank, supra.
In event of such amendment, koAA^er, plaintiff should be restricted to damages measured by tbe difference between tbe actual value of tbe property and what would have been its value if it bad been as warranted.
Tbe judgment appealed from must be and tbe same is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.
Burke, Ch. J., and Birdzell, Nuessle, and Burr, JJ., concur.