Court Opinion

ID: 3406049
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:20:59.548852+00
Date Added: 2024-06-11T13:46:54.967981
License: Public Domain

Execution of notes with knowledge of breach of contract by the plaintiff was a waiver by the defendants of right to set off damages alleged to have resulted from the breach. Direction of verdict was proper.
         DECIDED MARCH 7, 1940. REHEARING DENIED MARCH 22, 1940.
General Chemical Company brought suit against Treat Orchard Company and D.C. Porter on five promissory notes, dated September 1, 1937, aggregating $9903.38, besides interest and 10 per cent. attorney's fees. The defendants filed an answer admitting the execution and delivery of the notes but denied liability thereon, setting up in a cross-bill that by reason of a breach by the plaintiff of an alleged contract they had been damaged because of its failure to ship them certain materials purchased, and judgment was prayed for $24,643.42 as the difference between the amount of such damage and the amount of the notes sued on. To the answer and cross-bill of the defendants as amended there was attached as an exhibit a copy of the instrument relied on by the defendants as evidencing a contract between them and the plaintiff as to the furnishing of certain insecticides for their peach and apple crop for the year 1937. This instrument constituted a mortgage on "a certain crop of peaches and apples grown during the year 1937 on land located in Cleburne County, Alabama, adjacent to and just west of the line dividing the States of Alabama and Georgia, said land known as the Brown and Coley farms, and having located thereon approximately 10,000 bearing peach trees and 1000 bearing apple trees, and being all of the orchard lands owned by Treat Orchard Company [party of the first part] in Cleburne County, Alabama," and was executed and delivered to General Chemical Company (party of the second part) "in order to secure the payment of the sum of $2618.88 evidenced by promissory note of the *Page 306 
first party, payable to the second party, of even date and herewith, bearing interest at the rate of six per cent. per annum from date, and payable on or before September 1st, 1937, as well as to secure payment of all of the insecticide requirements of the first party, which are to be furnished and supplied by the second party for use by the first party on all of its orchards, both peach and apple, during the 1937 season." The instrument also recited: "The second party agrees to furnish to the first party on call all of its insecticide requirements for the 1937 season, as above specified, and the purchase-price on each shipment of such insecticide materials is to be evidenced by note of the first party, payable to the second party, bearing six per cent. interest from date, and due on or before September 1st, 1937, and the total indebtedness secured by this crop mortgage is the aggregate sum of the notes for insecticide materials furnished as above provided, plus the note for $2618.88 above referred to." It was set up by the defendants, in substance, that General Chemical Company was under contract to furnish insecticides to them for the 1937 season and that it failed to do so when requested in July of 1937, resulting in a breach of the contract; that because of the breach they were unable to get insecticides to use in 1937 and consequently the 1938 crop was off 25 per cent., causing a damage or loss to them of $25,000; that the plaintiff's failure to furnish insecticides in 1937 caused defendants to have to use the balance of their crop to buy part of their requirements, resulting in an impairment of their credit so that they could not spray in 1938, in consequence of which the trees themselves were damaged to an extent of $10,000 because of scabs and scales; that defendants were overcharged on an item included in the notes sued on and were entitled to a credit of $20; that the mortgage on the crop and the indorsement of D.C. Porter on the notes were given to General Chemical Company because it was familiar with the financial condition of Treat Orchard Company, and knew that the defendants relied on plaintiff furnishing the materials contracted for, and that General Chemical Company further knew what would result if it failed to furnish defendants with the material; that they did not know until 1938 that the damages hereinbefore set out would result from the breach of the contract by the plaintiff, and that they should recover of the General Chemical Company the sum of $24,643.42, the amount of the damage set out *Page 307 
over and above the amount sued for by the plaintiff. By amendment it was set up, in substance, that the failure of the plaintiff to furnish materials after July, 1937, caused the 1937 crop to decay, which decay, however, was not apparent until the crop was graded some time after September 1, of that year, at which time it was discovered that the 1937 crop had been damaged in the amount of $15,000; that the consideration for the contract by General Chemical Company was the execution of the mortgage to secure a previous, unsecured open account of $2618.88 which was reduced to note form and also the indorsement by D.C. Porter of a $500 note of Treat Orchard Company which was held by the plaintiff and which was subsequently paid; that the term "insecticide requirements" referred to in the contract had a definite meaning, well known to the parties to the contract, and that the plaintiff knew that the "insecticide requirements" for the 1937 season would amount to a minimum of $10,000 to $12,000 worth of insecticides.
The plaintiff demurred generally and specially to the answer and cross-bill of the defendants, which demurrers were sustained by the court except as to one item of the defendants' answer and cross-bill which set up an overcharge of $20 on certain material shipped to the orchard company. The defendants filed exceptions pendente lite. When the case came on for trial the plaintiff elected to write off from the amount of its suit the aforesaid amount of $20 which defendants claimed to be due them as a credit because of the overcharge mentioned, and, the answer and cross-bill of the defendants having been stricken in all other respects, the court directed a verdict for the plaintiff for the full amount sued for, less the $20 mentioned, and verdict and judgment were rendered accordingly. Error is assigned on the exceptions pendente lite, on the judgment striking the defendants' answer and cross-bill, and on the final verdict and judgment.
Suit was brought on a number of promissory notes, and the makers sought to set off against the liability on the notes damages alleged to have resulted from the plaintiff's breach of a contract in which it is contended plaintiff promised to furnish *Page 308 
defendants with certain insecticides for peach and apple orchards in 1937. The answer alleged that the plaintiff breached its contract in July, 1937. The notes sued on were dated September 1, 1937, and were given for insecticides furnished to the defendants under the contract. While the answer alleged that the defendants did not know what damages they would suffer by reason of the plaintiff's breach of the contract until 1938, it shows that defendants knew in July, 1937, of the breach of the contract. The execution by the defendants of the notes sued on, after they were fully aware of the breach, was a waiver of the breach which they can not now plead in defense to a suit on the notes. It was not error for the court to sustain the general demurrer to the defendants' plea and answer. Consequently the court properly directed a verdict for the plaintiff, and entered judgment accordingly, after the amount of an alleged overcharge had been written off by the plaintiff. Judgment affirmed. Stephens, P.J., and Felton, J., concur.