M. F. Marx Manufacturing Co. v. Beha Laundry Co.

Opinion of the Court by Commissioner Sandidge Reversing. By a writing dated April 24, 1924, which, the parties signed, appellant, M. F. Marx Manufacturing Company, agreed “to sell and deliver and install” a Ray rotary fuel oil burner, with tank and certain other machinery and fixtures with which to fire the boiler, which was owned by, and was a part of, the plant of appellee, Beha Laundry Company. The oil burner and other machinery and equipment were installed by appellant in August, 1924, and, appellee having failed to pay the agreed purchase price, this action was instituted to recover it. Appellee pleaded the defenses hereinafter indicated. The action was in equity because appellant sought to enforce a lien on the equipment sold and a mechanic’s and materialman’s lien on the property improved by its installation. The trial below resulted in a judgment dismissing appellant’s petition and in favor of appellee for $450 on its counterclaim. Hence the appeal. A great deal of the discussion of this case as presented by briefs of opposing counsel centers around the question whether this was an executory or executed contract of sale. Much of the brief for appellee is devoted to the proposition that it was an executory contract, the conditions of which were such that the title would not pass, and appellee would not become obligated for the purchase price until by trial it had been ascertained that the oil burner and equipment was satisfactory for the purpose for which it was installed. On the other hand, it is contended for appellant that the sale was executed, and that the oil burner has been shown to have complied with the terms of the warranty. It would seem to make but little difference whether the contract be regarded asexecutory or executed. If executory, and it was contemplated by the parties that the oil burner be tried and proved to be satisfactory before the title should pass, or appellee should become obligated for the purchase price, and if, when tried, it proved unsatisfactory, and was not received, it cannot be said that there was a breach of *265 warranty. A warranty is always collateral to an executed contract of sale. It would be in that case rather a breach of the terms of the contract of sale. If the seller does not tender the article contemplated by the contract of sale, the buyer may decline to receive the article tendered, and, of course, is not bound for the contract price. Whether this be an instance in which the article tendered was not such as was contemplated by the contract of sale, or whether it be an instance in which the article was sold and delivered, and there has been a breach of the warranty, is immaterial under the facts of this case. If appellee’s contentions with reference to the oil burner and other equipment—the subject of the sale herein— are correct, it is relieved of the obligation to pay for same whether the sale be executed or executory, because within two weeks after the installation thereof it offered to rescind the contract by notifying appellant of the particulars in which it claimed the oil burner failed to comply with the contract of sale or with the warranty and tendered it back to appellant. If the sale was executory, what was done in this particular amounted to declining to receive the article tendered, which was not as contemplated by the contract of sale. If it was executed, then it amounted to a rescission of the contract of sale for breach of warranty. As said in Paducah Hosiery Mills v. Proctor & Schwartz, 210 Ky. 806, 276 S. W. 803: “If machinery is sold under a warranty and does not come up to the warranty, the vendee may, if he acts promptly, rescind the contract; but to exercise this right he must act in a reasonable time after learning of the defects in the machinery.” Numerous opinions of this'court are cited to sustain the principles there declared. The contract of sale which the parties signed contains this provision: “We further guarantee that the oil burning equipment herein referred to will operate in a satisfactory manner for the purpose for which it is installed and deliver the maximum amount of heat obtainable with this particular type of installation, with.the minimum amount of fuel and power.” The “guaranty,” it is to be observed, is twof®ld. The guaranty that the oil burner would deliver the maximum .amount of heat obtainable with the minimum amount of *266 fuel and power, when compared with other oil-burning equipment, must have been fulfilled by the oil burner installed, because there is no attempt to show a failure in this particular. Appellee’s right to reject the article tendered or to rescind the sale and to be relieved of paying for the oil burner is predicated wholly upon the contention that, when tried, it did not “operate in a satisfactory manner,” for the purpose for which it was installed. It is insisted that the evidence discloses two particulars in which the oil burner proved materially unsatisfactory; that is, that the heat generated by its use was so intense that it burned and destroyed the boiler, and that the cost of operation was excessive. The evidence establishes that, after approximately two weeks of use, fire cracks appeared in the first girth seam of the boiler, which were large enough to cause the boiler to leak, so that it became necessary to close down the plant for repairs. The testimony of the engineers and experts'who testified for appellee herein attributed the appearance of the fire cracks, not to the use of the oil burner, but to the fact that, when it was installed, a protecting arch of brickwork, which previously, and while coal was being used as fuel, had protected the first girth seam, was removed. Their explanation of the appearance of the fire cracks was that the boiler plates of this boiler were one-half inch thick. Where they were lapped at the girth seam and riveted, there was a thickness of one inch of boiler plate, to which was added the thickness of the heads of the rivets. The outer surface of the boiler shell was thus so far removed from the water within the boiler that it overheated, and, because of the difference in the temperature of the outer and inner surfaces, and the consequent terrific strain thereon, the cracks were caused. They testified that with boilers of this thickness, to prevent fire cracks appearing, it is necessary to protect the first girth seam with brickwork. They testified that the same thing would have happened if this boiler had been fired with coal, unless the first girth seam was so protected. It is agreed by all the witnesses that restoring the brickwork to protect the first girth seam as indicated was a simple task, involving insignificant cost. The evidence herein establishes without contradiction that the three fire cracks which appeared while the oil burner was being used were repaired at a cost of $52.76',’ and that the boiler now is as sound and as safe for use as before they appeared. The boiler being used *267 by appellee bad been purchased from the United States after being used at Camp Taylor. While the evidence does not so disclose, we feel that we may assume that it was a new boiler when installed at Camp Taylor. That fire cracks sometimes occur, regardless of the type of fuel being used, and regardless of whether the girth seam is protected by brickwork, may reasonably be inferred from the undisputed fact appearing herein that the same thing had occurred with this boiler before appellee purchased it. Fire cracks had appeared while it was used at Camp Taylor; and repairs had been made by the welding process. It would seem unreasonable to condemn the oil burner because fire cracks appeared while it was being used when the same thing happened to the same boiler when it had had much less use while being fired with coal. That is especially true in this ease where the witnesses for appellee attribute the trouble, not to the use of the oil burner, but to lack of protecting brickwork at the first girth seam, which could be supplied at insignificant cost. The only other particular in which appellee found fault with the oil burner which was installed was in the cost of its operation. The complaint in this particular is founded upon a comparison of the cost of operating with oil as fuel and with coal as fuel, to the disadvantage of the former, according to the evidence for appellee. The difference in the cost of the two fuels is the foundation upon which appellee’s complaint is builded. It is admitted that coal is the more expensive as a fuel from the standpoint of cost of labor incident to its use, compared with cost of labor incident to use of oil. The contract appears to be conclusive on this question. Whether part of the contract of sale or part of the warranty of the thing sold, when the parties agreed that the oil burner would be what appellee agreed to receive and pay for or fulfilled the terms of the warranty when it delivered “the maximum amount of heat obtainable with this particular type of installation with the minimum amount of fuel,” they circumscribed the field of inquiry and comparison. What type of installation was the subject of this contract ? It was the oil-burning type. The contract clearly was that the oil burner being installed would produce more heat from the amount of fuel used than any oil burner on the market. Those are the terms of the contract or warranty as to economy of operation. Having expressly contracted with reference thereto, the parties *268 are bound by the terms of the contract. As said in Paducah Hosiery Mills v. Proctor & Schwartz, 210 Ky. 806, 276 S. W. 803: “It clearly appears that the vendor sold the machines well knowing the specific purpose for which they were intended, and it is earnestly insisted that this being so there is an implied warranty that the machines were reasonably adapted to that purpose. This is ordinarily the rule. Cumberland Grocery Co. v. Hardwood-Barley Mfg. Co., 184 Ky. 70 (211 S. W. 409). But in this case there was an express warranty as to what the machine would do. It was guaranteed to at least double the production of an operator over the quantity turned out by the same operator when boarding by the method of using wooden boards. The quantity of work that the machine would do being expressly guaranteed in writing, there wa.s no implied warranty that it would do more and the vendor cannot maintain that it satisfied the contract if it did less. It was also expressly guaranteed that all the machinery, materials and supplies should be of good and suitable quality and that all work should be performed in a good and workmanlike manner. The parties having put their contract in writing the writing supersedes all the previous oral negotiations. The court should have excluded all evidence of oral representations to the effect that the machines would produce more than specified in the written contract. And neither of the parties can maintain that the machines were not reasonably suited for the purpose intended if they produced as specified in the written contract, for by the written contract the parties fixed the standard by which it should be determined whether the machines were reasonably adapted to the purpose intended.” Appellant pleaded that the contract was that the oil burner would cost 1-ess to operate than coal-burning equipment, and that this was left out of the contract by fraud or mistake. There was no prayer for reformation of the contract, and no showing authorizing it from the evidence introduced. Hence the evidence tending to establish that oil as fuel was more expensive than coal as fuel was beside the point. For the reasons indicated, this court is constrained to the view that the chancellor erred in concluding that *269 appellant failed to manifest the right to the relief sought in the petition, and the judgment herein is reversed, and cause remanded for judgment in conformity herewith.