Court Opinion

ID: 6907688
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:03:17.491895+00
Date Added: 2024-06-11T09:08:04.664307
License: Public Domain

BURNETT, C. J.,
Dissenting. — This is an action by the plaintiff to recover a balance alleged to be due on the purchase price of an asphalt mixing plant. The transaction was begun by the defendant’s addressing to the plaintiff the following order:
“F. C. Austin Company, Inc.,
“Chicago, Illinois.
“Gentlemen:
“Please enter order and ship to our address Astoria, Oregon, one Austin Portable Asphalt Mixing Plant as described on pages No. 32 and 33 of your catalogue and for which we agree to pay eighty-seven hundred dollars f. o. b. Astoria, Oregon. Payment to be made in cash within ten days after plant is in operation. And, on accepting this order it is with the understanding that you guarantee the outfit to be well made, of good material and free from defects and should any defective part or parts develop in six months after arrival at destination you are to furnish the new part or parts free, f. o. b. your factory and you are to guarantee the machine when properly operated, capable of laying 750 to 1200 square yards of two inch asphalt top in ten hours. You further agree to send a man at your expense to put the machine in operation and teach us to operate it and stay with the outfit not less than two weeks and we agree to notify you when we are ready to have the machine put in operation, said notice not to be longer than fifteen days after machine arrives at destination; we to furnish all the necessary help to operate the outfit and all material including fuel.
“If for any cause, when testing the machine defects should develop, you are to have a reasonable length of time to remedy defect, but limited to ninety days and if you are not able to remedy the defect *586and make machine deliver the amount of material as herein provided, we are to return the machine to you and the amount we have paid for freight from your factory to Astoria, Oregon, is to he refunded and this order canceled.
“The J. H. Tillman Company.
“By J. H. Tillman, Mgr.
“Hammond, Oregon, or
“931 Chamber of Commerce, “Portland, Oregon.
“Witness: W. F. Looker.”
It appears that concurrently with the execution of this order the following writing was addressed to the plaintiff by the Howard Cooper Corporation and forwarded with the writing already mentioned:
“F. C. Austin Company, Inc.,
‘ ‘ Chicago, 111.
“Gentlemen:
“On order for asphalt mixing plant from the J. H. Tillman Co. make the following changes:
“Omit air compressor but leave agitator pipes in kettle so that they may be connected to boiler if so desired and substitute Kinney or any other good asphalt pumps and pipe so that pump agitators or delivers to mixer controlled by three way valve or operating platform piping to be. steam jacketed.
“Substitute revolving screen % and % mesh. Make bin capacity not less than 4% yards, 5 yards preferable, two compartments.
“Howard Cooper Corp.
“By (Signed) D. I. Cooper.
“Expense of these changes are included in selling price.”
The complaint alleges that pursuant to the receipt of the order the plaintiff sold and shipped to the defendant one Austin portable asphalt mixing plant as described in said order, and that the defendant received and accepted it, with certain minor changes, operated it for more than forty days, and has not *587paid the purchase price, with the exception of $1,466.75 paid as freight. The plaintiff demands judgment for the balance.
The defendant challenges the complaint in material particulars but admits giving the order as stated, and the execution and forwarding of the writing signed by Howard Cooper Corporation. It is stated in the answer substantially that the plaintiff delivered to the defendant about May 15, 1919, certain appliances and machinery as and for an asphalt mixing plant, representing the same to be the Austin portable mixing plant designated in said written contract, the same being knocked down and not assembled. It is stated in the answer with considerable detail that the plant when assembled did not correspond with the catalogue mentioned in the order, in certain particulars, but that the defendant finally, at considerable expense, set up the machine and operated it up to the time the action was brought. It is also stated that the mixer was ordered for the purpose of carrying on some road paving contracts for Clatsop County, all of which was known to the plaintiff, and that owing to the defects in the machine the defendant was delayed and put to extra expense in completing the paving, to its special damage in a sum mentioned. It is neither alleged nor pretended that the defendant ever returned or offered to return the machine to the plaintiff. On the contrary, it is without dispute in the evidence that after efforts had been made to get the machine to work satisfactorily to the defendant, the plaintiff demanded that the mixer be returned or paid for according to the offer.
The reply traversed the answer in material particulars and made averments to the effect that the *588machine was of the kind ordered and would have performed the task specified for it but for want of competent management on the part of the defendant.
A jury, trial resulted in a verdict of damages in favor of the defendant and against the plaintiff in the sum of $10,145.47.
There are various assignments of error, which we deem it unnecessary to consider, for the case must turn upon a proper construction of the order.
There is no evidence of any written acceptance of the order made by the defendant, so that the contract depends upon the written offer of the defendant, the acts of the plaintiff in response thereto, and the conduct of the defendant in pursuance thereof. It is unquestioned that the plaintiff forwarded the machine in response to the order of the defendant. This order was an offer to buy certain machinery. The plaintiff was under no obligation to undertake to fill the. order. It was within its rights when it tendered the machine which was actually sent in response to the offer to buy. Upon receiving the .machine and having an opportunity to inspect it, which is unquestioned, the alternative was presented to the defendant of rejecting the machine and returning it to the plaintiff or of keeping it and paying the price; it was then incumbent upon the defendant to do one of two things: take the machine and pay for it, or return it and get back its payments. No obligation attached to either party until the defendant took the machine and operated it for its own purposes. Until then there was no contract to break.
The order specified that the plaintiff is to guarantee the outfit to be well made, of good material and free from defects, with the privilege on the part of the plaintiff of replacing defective parts discov*589ered within six months after the arrival of the machine at its destination. The further guaranty is that the machine when properly operated would be capable of laying 750 or 1,200 square yards of two-inch asphalt top in ten hours. The controlling condition of the warranty is found in the last clause of the order:
“If, for any cause, when testing the machine, defects should develop, you are to have a reasonable length of time to remedy defects, hut limited to ninety days and if yon are not able to remedy the defect and make machine deliver the amount of material as herein provided, we are to return the machine to you and the amount we have paid for freight from your factory to Astoria, Oregon, is to be refunded and this order canceled.”
If in fact the outfit was not well made or was not of good material, it was defective within the meaning of the contract. It was also faulty, if it could not deliver the material at the rate mentioned in the order. The concluding clause of the order covers and applies to both these features, defective construction and lack of capacity, which constitutes the burden of the defendant’s plaint against the machine. The procedure stipulated in the order for the solution of those considerations controls both features of the defendant’s objections to the machine.
The defendant admits that it took possession of the machine and used it to complete its contract, albeit with considerable delay. The normal consequence of such action by the defendant is that it must pay the contract price unless that result can be avoided under the terms of the agreement of the parties. It is well settled beyond the necessity of citations to support the doctrine, that ordinarily where no special stipulations are made, the buyer has *590the option of refusing to, take the machine tendered by the seller in performance of the contract, if the same does not conform to the agreement, or of keeping it and recouping his damages against an action by the seller to recover the price. It is competent, however, for the parties to provide in advance an exclusive formula by which may be avoided or prevented the ordinary result of having to pay the purchase price of an article sold and delivered to the buyer. In Nave v. Powell, 52 Ind. App. 496, (96 N. E. 395), cited by the defendant here, it is said:
“It must not be forgotten that in contracts of warranty, the same as in all other contracts, the contracting parties have a perfect right to put into such contract all its terms and conditions, and provide all and entire the remedies contemplated and agreed upon by the parties. Upon this subject the supreme court of this state said in the case of Brown v. Russell & Co., 105 Ind. 46, „at page 52 (4 N. R. 428, at page 431): ‘Of course, it was competent for the parties to contract with each other in relation to the extent, terms,- and conditions of the warranty, and to impose such limitations and restrictions thereon as they might mutually agree upon.’ * * When the parties do agree upon such remedies and their contract by its terms expresses a clear intent and purpose in that respect, they are bound thereby and limited to the remedies, or remedy, so provided. # *
“It is only where there is ambiguity or uncertainty that this rule of construction is called into operation. The rules for the interpretation of express warranties do not essentially differ from those applied to other contracts. In construing such contracts, the object to be ascertained is the intent of the parties; but this intent must be ascertained, if possible, by the language which the parties themselves have adopted and used in such contract, and *591not by reading into the same words that import and intent and an understanding wholly unintended and unexpressed when the contract was written, but suggested by some apparant hardship in the enforcement thereof”: Citing authorities.
The terms of the contract evidenced by the admitted written offer restrict the solution of difficulties respecting the quality and efficiency of the machine to the return thereof by the defendant and the repayment to it of the money already paid. The stipulation covers all defects of the machine, either structural or operative or in capacity of manufacture. The order made by the defendant contemplated that just such a dispute might arise as has arisen according to the pleadings, and that the defendant might be unable to accomplish the desired result either through defects or want of capacity of the machine. The order details how only those difficulties must be adjusted and finally solved. It is not a question of breach of the contract by the plaintiff. When it tendered the machine in response to the defendant’s offer to buy, there was not as yet any agreement between the parties. None arose until afterward, when the defendant did not return the machine but kept it and used it in completing the paving. The plaintiff is in court substantially saying to the defendant: “We furnished you a machine upon your offer to pay us $8,700 or return the machine. You have not returned the machine but have kept it and used it in carrying out your contracts, and we therefore demand that you perform the alternative you offered, namely, to pay us the price.” This is a legitimate demand under the contract the parties themselves have formed. The plaintiff’s conduct is not in derogation or breach of the contract but affirms the same in the precise exi*592gency contemplated by the defendant when it made the order. The defendant’s refusal to 'perform the alternative of returning the machine entails the performance of the other alternative, that of paying the contract price. The defendant cannot go on using the machine ad libitum, increasing the amount of consequential damages, and expect the plaintiff to pay them. To allow a counterclaim for damages of any kind is to let the defendant into a remedy from which it excluded itself by its covenant „ to return the machine and get back its money already paid. In its concluding paragraph the offer covers precisely the result described in the pleadings and provides the only means by which in any event the defendant could recover anything from the plaintiff. We cannot make a new contract for the parties; we can only enforce the one they have made for themselves.
Some decisions inculcating this doctrine are here noted. Consolidated Wagon & Machine Co. v. Barben, 46 Utah, 377 (150 Pac. 949), was a case brought to recover the purchase price of certain machinery sold to the defendant. In the contract of sale it was warranted “that the machinery and goods hereby sold are made of good material and durable with good care to do as good work under the same conditions as any made in the United States of equal size and rated capacity.” The terms of the warranty were much like the one in hand and contained this language:
“If, then, the machinery cannot be made to fill the warranty, the part that fails is to be returned by the second parties free of charge to the place where received and the company notified thereof.”
The court said:
*593“The parties in the case at bar, in specific terms, have provided what course shall be pursued by the defendants in case the machinery shall fail to fulfill the terms of the warranty. One of the things required to be done was the service of written notice both on the local agent and also upon the company within a specified time, in which the particular defects claimed to exist in the machinery shall be stated. Another condition was that if the machinery was defective and plaintiff failed to comply with the terms of the warranty, in order to entitle the defendants to rescind and be relieved from their obligation they must return the machinery if the whole is defective, or the defective parts, to the plaintiff. The defendants wholly failed to comply with the condition of serving notice so far as the company is concerned. They did not even attempt to comply with that provision. This, under the cases before cited, is alone sufficient to prevent them from sustaining a defense to an action for the purchase price of the machinery.”
After discussing in similar strain the stipulation about returning the machinery, the court concluded the matter in this language:
“Without pausing to discuss any of the other numerous errors assigned, we, for the reasons stated, are forced to the conclusion that under the undisputed evidence as it now stands, there is but one course open to the trial court, and that was to direct the jury to return the verdict for the plaintiff in the full amount sued for, with interest and costs, as stipulated in the contract.” .
Another case is J. A. Fay & Eagan Co. v. Crowell, 182 N. C. 532 (109 S. E. 562), decided November 30, 1921. The stipulation of the contract there involved was as follows;
“That in case of rejection the undersigned will promptly deliver it [the machinery] to consignor, *594f. o. b. Cincinnati, Ohio; that this contract is not modified or added to by any agreement not expressly stated herein, and that a retention of the property forwarded, after thirty days from its arrival at destination, shall constitute a trial and acceptance, be a conclusive admission of the truth of all representations made by or for the consignor, and a fulfillment of all its contracts of warranty, express or implied.”
The court, commenting on this stipulation, said:
“It has been the settled holding with ns, in a long line of decisions, that where there is an express warranty in the sale of personal property, and it is stipulated as a condition of the contract of sale that the property is to be returned within a specified time, if not as represented, the complaining party is entitled to no redress by reason of a breach of the warranty, in the absence of fraud or a waiver of the condition, without first offering to return the property within the time fixed by the contract: Robinson v. Huffstetler, 165 N. C. 459 (81 S. E. 753), and cases there cited. See, also, 35 Cyc. 437. In the absence of fraud, this rule applies equally to a case where the goods delivered are different from, and inferior to, those sold, as where the property, though corresponding in description with the article purchased, is defective or wanting in quality. If the vendor tender goods of less value than those purchased, the vendee is not bound to accept them. But if he does accept them, under the terms of his agreement, he is deemed to assent to a fulfilment of the contract on the part of the vendor: Pierson v. Crooks, 115 N. Y. 539 (22 N. E. 349, 12 Am. St. Rep. 831). And in the instant case such acceptance and retention afford a ‘conclusive admission of the truth of all representations made by or for the consignor, and a fulfilment of all its contracts of warranty, express or implied.’ * * In the light of the foregoing authorities, and upon the record, we think his honor should have directed a verdict in favor of the plaintiff for the balance due on the unpaid notes.”
*595It is said in Wilson v. Nichols & Shepherd Co., 139 Ky. 506 (29 Ky. Law Rep. 1128, 97 S. W. 18), speaking of suck stipulations:
“Contracts similar to tkis kave been before tkis court in a number of cases, and it kas uniformly been ruled tkat, wken tke parties to tke contract kave agreed upon tke warranties and tke remedies tkat accrue upon a breaek of tkem, tkose remedies constitute tke only relief in tkis particular tkat tke purckaser kas, and ke must look to kis contract, and be governed by its stipulations. Tke contract kere affords to tke purckaser a remedy, if tke warranty is broken, tkat will at once- relieve kim from all liability. He cannot retain tke mackine, and demand kis purckase notes, tkereby canceling tke contract; but if ke elects to retain tke property, in its defective condition, ke must pay tke purckase price.”
Tke precedents cited by tke defendant are instances wkere tke return of tke mackine is merely optional in favor of tke purckaser, or wkere tke same kas been waived by tke seller, or else tke warranty upon tke breaek of wkick damages were assigned kad no relation to tke return of tke mackine. It is very plain, however,’ in tke instant case tkat tke return of tke mackine kas been made applicable as a remedy for all tke defects and lack of capacity specified in tke pleadings kere. It is manifest tkat tke mackinery actually delivered to tke defendant was tke basis upon whick tke parties kave operated under tke contract. In otker words, it is tke subject matter of tke contract as actually performed pro tanto. It was tke written order of tke defendant tkat induced tke skipment of tkat particular mackine and its delivery into tke possession of tke defendant. Manifestly tke mackine was tendered in performance of tkat order, and tkat tender constituted tke plain*596tiff’s acceptance of the defendant’s offer to buy as embodied in the order. The exclusive dilemma was then presented to the defendant, either to return the machine and recover its payments, or to keep it and pay the purchase price. By the terms of its own offer, it excludes itself from the ordinary option of returning the machine or keeping it and abating the purchase price by a counterclaim for damages suffered on account of its defects. Having itself thus marked out the course of procedure, the defendant must be bound thereby. It cannot take the machine and operate it as if no such covenant had been inserted in its order.
Something has been said about not allowing the plaintiff the benefit of the contract which it has not itself performed, yet the stipulation in the final paragraph of the defendant’s order covers and was intended to cover just such a contingency. It provides an exclusive remedy for the very breach which the defendant avers. If the machine had been all that the defendant claims it ought to have been, the clause of the order referred to would have been utterly useless. There is presented the very situation which the parties contemplated might be possible, and they provided in advance for its adjustment. To allow them to do otherwise than as they have stipulated respecting the alleged failure of the machine, is for the court to construct for them a new contract. Generally it has been decided that this cannot rightly be done.
The fallacy of the' opposing view is found in the theory that the order constitutes the sole and exclusive evidence of the contract between the parties. The truth is that at the outset it was only an offer to buy and had no binding effect upon the plaintiff. *597The latter had the right to tender the machine as it did, in acceptance of the offer to hny, or at the very least as a counter-offer. In either ease, knowing this as it did, the defendant should have rejected the machine or paid for it, whether it came as a tender or as a counter-offer. The whole transaction is one of offer and acceptance. That the defendant accepted the machine and used it to complete its contract, is written large throughout the record. That it cannot now pay for it in damages and reap a profit on that score besides, is apparent because its own offer limited the defendant to rejection or payment and excluded the recovery of damages.
The following authorities may be consulted with benefit: Charter Gas & Engine Co. v. Barton (Ala., not reported), 39 South. 985; Purcell v. International Harvester Co., 37 S. D. 517 (159 N. W. 47); J. L. White Furnace Co. v. C. W. Miller Transp. Co., 59 Misc. Rep. 66 (109 N. Y. Supp. 796); Case Threshing Machine Co. v. Cook, 7 Ga. App. 631 (67 S. E. 890); Sturtevant Mill Co. v. Kingsland Brick Co., 74 N. J. L. 492 (70 Atl. 732); Fay & Egan Co. v. Dudley, 129 Ga. 314 (58 S. E. 826); Nichols-Shepherd Co. v. Rhoadman, 112 Mo. App. 299 (87 S. W. 62); King v. Towsley, 64 Iowa, 75 (19 N. W. 859); Crouch v. Leake, 108 Ark. 322 (157 S. W. 340, 50 L. R. A. (N. S.) 774); Rowell v. Oleson, 32 Minn 288 (20 N. W. 227); Gaar, Scott & Co. v. Hodges, 28 Ky. Law Rep. 889 (90 S. W. 580). These considerations are controlling in the disposition of this case.
Feeney & Bremer Co. v. Stone, 89 Or. 360 (171 Pac. 569, 174 Pac. 162), is neither controlling nor applicable here. In that case the buyer assumed.no obligation except to pay the purchase price of the *598machine on compliance by the seller with the terms of the .contract of sale. The buyer there did not agree to forego his ordinary optional right to keep the goods tendered by the seller and recoup his damages in an action against the latter to recover the purchase price. Here, as an express condition of the defendant’s order, it stipulates in plain terms that if in testing the machine defects are developed, “we are to return the machine to you and the amount we have paid for freight from your factory to Astoria, Oregon, is to be refunded and this order canceled.” These terms are positive and exclusive, leaving no option to the defendant to pursue any other remedy for breach of the contract.
As in ordinary cases where the buyer elects to keep the goods, both parties here treated the machine in question as the subject matter of the contract, and both plead that contract as the standard governing their relations to each other. In construing that instrument it is not by the mark to apply the last clause only to latent defects not ascertainable except by a test of the machine. But even so, it may be granted for the sake of argument that there were several patent features in which the machine delivered to and kept by the defendant differed from the pictures and description in the plaintiff’s catalogue and for the disclosure of which no test was required; yet the record tells us of defects that could not be revealed except by a test. The principal one of these, about which the most complaint is made, is the lack of capacity to turn out the minimum amount of material. Others are the breakage of parts and the like. Hence there are ample data coming within the purview of the *599last clause of the contract under its strictest construction.
"What, then, is the result? Did the plaintiff deliver a machine to the defendant in response to the latter’s order? It did. Did both parties treat it as the subject matter of the contract? They did. Especially did the defendant do so by using it to complete its paving contract, refusing to surrender it on the plaintiff’s demand, taking charge of it from the latter’s watchman and repairing it on its own account. Did the parties test the machine? Assuredly they did. Did that test develop defects not otherwise ascertainable? The record proclaims an affirmative answer. The consequence is that it was the duty of the defendant to return the machine, cancel the order and take back the advance payment. Such a process, required as it is by the contract, would have restored the parties to their former situation. Cancellation of the contract as the result of its own terms extinguishes all right to sue for damages, for no one can recover damages ex contractu without a living contract as a basis. Neither can one recover damages for a breach of contract who has broken it himself. In this instance the defendant has not kept the covenant in that it did not return the machine when the test developed its defects and hence it is in no position to claim damages. The conclusion is, that the defendant should be made to pay the contract price, subject of course to deductions of such sums of money paid .out by it on the plaintiff’s request as may be made to appear by proper pleading and proof. But no damages eo nomine are recoverable under the contract involved.
*600Manifestly, the defendant made a bargain that proved to be a hard one when viewed in connection with the penalties of its paving contract with Clatsop County. Yet the contract in suit is a lawful one. It is not impeached for fraud. It is the rule prescribed by the parties themselves to govern their relations to each other and we cannot relieve them from it in this action at law. To sustain the defendant’s contention is to allow it to carry into effect the part of the contract favorable to itself and to reject the remainder, or else for the court to make and enforce a new and different covenant, a result condemned by all precedents. A different construction of the writing in question would require of the plaintiff strict and complete performance of the contract on its part before it can claim the benefit of the concluding paragraph, whereas that part of the covenant was designed by the parties as an exclusive remedy for just such a breach as the defendant assigns.
The judgment should be reversed.