Court Opinion

ID: 3515195
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:26:22.701129+00
Date Added: 2024-06-11T13:38:46.992156
License: Public Domain

ON SUGGESTION OF ERROR.
In the Louisiana court, in the original proceeding there, the Sales Corporation averred that its debt, for the recovery of which that suit was instituted, amounted to approximately $16,000, the debt being evidenced by a series of notes, secured by a chattel mortgage. The Dredging Company there appeared and presented as its defense against the debt, a counterclaim for damages and adduced substantially the same evidence which has been presented in the present case, under which, if its claim for damages for what it then called a breach of warranty had been sustained, it would have owed the Sales Corporation nothing; and no decree could have issued against the Dredging Company, for, as we pointed out in our original opinion, it was necessary for the Louisiana court to find and adjudge that the debt demanded by the Sales Corporation was due and owing by the Dredging Company, else it could not have ordered the sale of the encumbered property. The ultimate issue whether the debt existed and was due was a necessary and vital issue, without the determination of which in the *Page 99 
affirmative favor of the Sales Corporation no further adjudication could be made, save to dismiss the entire proceeding. The debt issue was not one which that court could have laid to one side, and still have proceeded with other features of the case.
But whether the debt existed, and was due in the full amount demanded, depended upon whether the counterclaim interposed by the Dredging Company was sustained under the facts, and that issue was there fully heard. The Louisiana court held that the counterclaim was without sustainable merit either in part or as a whole, and furnished, therefore, no obstacle to the enforcement of the debt.
The argument by the Dredging Company now further pressed is that inasmuch as the counterclaim interposed in the Louisiana court against the demand there made for the purchase price of the machinery and for its enforcement by sale of the mortgaged chattel was one for a breach of warranty — that is to say, a defense which recognized the sale contract as valid, but sought to defeat the balance of the purchase price because of damages incurred in the use of the machinery founded upon the alleged fact that the machinery would not do in that use what it was warranted to do — the proceedings there involved only contractual relations. That here the procedure under the amended pleadings sounds in tort; that here the demand is that the contract of purchase be declared null because of the fraud and deceit of the seller in procuring it; and that, therefore, the counterclaim there tried was on one cause of defense in point of substantive right, while here it is upon a different cause having a different substantive foundation.
But fraud and deceit in the sale of property operates only to give the buyer the right to elect to rescind or annul the sale, and this right of election must be exercised with reasonable promptness after discovery that the property is not what it was represented to be. When the buyer does not promptly so elect and make his election *Page 100 
effective but continues to use the property, as was the case here, the law of all the states will interpose, by implication, an obligation to pay for the property so retained and used; and when in such case the buyer seeks to meet a demand for the price of the property by way of counterclaim for the damages caused to him in the use, the rule as to whether the counterclaim is sustained, and if so the measure of the damages, will be the same whether the counterclaim is tried on the theory of fraud and deceit by the seller as to what machine will do in its use or whether on the theory of breach of warranty.
The issue which was tried in the Louisiana court was the counterclaim of damages interposed by the buyer, and it was there called a counterclaim for damages for breach of warranty, and there it was held that the counterclaim was not sustained on the facts. Here the same counterclaim of damages is interposed by the buyer on substantially the same evidence of the facts; and it is insisted that we should reverse the findings of the Louisiana court on the same facts on the same counterclaim, because here the name given the counterclaim is different from that given it in the Louisiana court.
Let us suppose that, on the counterclaim, the issue had been decided by the Louisiana court in favor of the Dredging Company and in consequence had adjudged that no debt was due by it to the Sales Corporation, would the latter have been permitted to come thereafter to this State and relitigate here its alleged, but dead, debt?
After a prolonged and laborious examination of the Louisiana cases, including the recent opinion in Hope v. Madison,194 La. 337, 193 So. 666, we believe none has gone so far as to sanction what is attempted to be done here when the cases in that jurisdiction are examined on their exact facts. And since no case from the Louisiana courts precisely similar to the present case upon the facts has been shown us, we have concluded, as we did before, that such cases as Exchange, etc., Bank v. Holoman, *Page 101 177 La. 537, 148 So. 702, come nearest and furnish us the best guide to follow.
Suggestion of error overruled.