Russo v. Hochschild Kohn & Co.

Grason, J., delivered the opinion of the Court. Appellant sued appellee in the Court of Common Pleas of Baltimore City, in assumpsit, for alleged special damages directly resulting to her from a breach of warranty of fitness of certain hair lacquer pads sold by appellee *464 to appellant. The second plea of appellee to the declaration is as follows: “That the Plaintiff, on or about September 30, 1943, with full knowledge of the alleged breach of warranty, and the resulting damage, returned the unused hair lacquer pads complained of to the Defendant and accepted credit on her account with the Defendant for $1.10, the full purchase price.” To which replication was made: “As to the second plea filed by defendant, plaintiff states that she returned the unused hair lacquer pads at the request of the defendant or the agents of defendant acting in the scope of their employment; that at the time plaintiff returned the aforementioned hair lacquer pads, she was still suffering from the infection caused by said hair lacquer pads, plaintiff did not intend to in any way waive her right to special damages as and for the injury caused plaintiff because of defendant’s breach of warranty in the premises.” To this replication appellee demurred and the court sustained the demurrer without leave to amend, and judgment was entered in favor of appellee for costs. From the judgment so entered, this appeal was taken. The appellant contends: “I. The lower Court erred in holding as a matter of law that plaintiff had rescinded the sale under the facts admitted by defendant’s demurrer,” and “II. Under the proper interpretation of the Uniform Sales Act as codified in Maryland in Article 83 of the Annotated Code, plaintiff can both rescind the sale and sue for special damages for breach of warranty.” The appellee claims: “1. The return of the merchandise and acceptance of credit for the purchase price was a rescission of the contract of sale. “2. Article 83, Section 87 (2) of the Maryland Code provides that no other remedy can thereafter be granted when the buyer has been granted one of the remedies under Section 87(1). “3. Article 83, Section 88 of the Maryland Code does not in any way affect the defense of election of remedy.” *465 Section 87 of the Article aforesaid, among other things, provides: “(1) Where there is a breach of warranty by the seller, the buyer may, at his election— “ (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.” Subsection (2) of said section provides when the buyer has claimed and been granted a remedy in any of the ways provided in subsection (1) no other remedy can thereafter be granted. Section 88 of the Article aforesaid provides: “Nothing in this sub-title shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed.” It is the position of appellee that when appellant, at its request, returned the unused hair lacquer pads and accepted a credit on her account for $1.10, which was the purchase price, she elected to rescind the contract and waived damages for the injuries alleged in the declaration. It is argued that the provision in Section 88, to wit, that: “Nothing in this sub-title shall affect the right of the buyer * * * to recover * * * special damages in any case where by law * * * special damages may be recoverable,” does not in any way affect the defense of election of remedy. Appellant contends that the provisions quoted from Article 87 apply only to cases where ordinary damages have been sustained, as distinguished from special damages, resulting from the breach of warranty. Aside from the intent of appellant to rescind, the provision (1) (d) of Section 87, viz.: “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,” standing alone is broad *466 enough to prevent recovery by appellant in this case. True she has only been paid the purchase price of the hair lacquer pads, which would be the damages in the ordinary case resulting from a breach of warranty. If this strict rule is to be applied she is not put in statu quo, because she has been paid only ordinary damages and has not been paid the special damages alleged in the declaration to have been caused directly by the breach of warranty. It is suggested by appellee that the facts in this case might support an action in deceit. This Court has decided: “Whatever may be the rule elsewhere, it is the established law of this state that, to support a charge of fraud based upon misrepresentation, ‘knowledge of the falsity by the party making the representation’ must be shown. Reynolds v. Evans, 123 Md. 372, 91 A. 564; Boulden v. Stilwell, 100 Md. 543, 60 A. 609, 1 L. R. A. N. S., 258. Or, as stated in the case last cited: ‘The foundation of the action is actual fraud, and nothing short of this will suffice. Consequently, a misrepresentation believed by the speaker to be true, though induced by his ignorance or negligence, will not sustain an action for deceit. There must be, either knowledge of the falsity of the representation, or such reckless indifference to truth in making it, as is held equivalent to actual knowledge.’ While the court in that case was discussing fraud in connection with an action of deceit, its language is equally applicable to the fraud charged in this case.” Keiner v. Commerce Trust Co., 154 Md. 366, 374, 141 A. 121, 124. Poe, Pleading & Practice, Tiffany’s Ed., Vol. 1, Sec. 201. If appellant is relegated to an action in tort for deceit, she could not sustain the burden of proof that the representation of the appellee or its agents was both false and fraudulent, and such effort would be futile. If the contention of appellee is correct, then the appellant cannot sue in assumpsit for special'damages because at the request of appellee she returned the unused hair lacquer pads and accepted a credit of $1.10, but she must resort to an action in deceit, which, under the circum *467 stances of this case, she could not possibly maintain. The action of appellee in requesting the return of the article and crediting appellant with $1.10, would be an inexpensive method of relieving itself from responsibility to answer for special damages sustained by appellant as a direct and proximate cause of the breach of its warranty of fitness. If this is law, appellant is not placed in statu quo. In the language of the books she is not made whole, but in the end, if appellee is correct, she is left without remedy for recovery of special damages. Both Section 87 and Section 88 of Article 88 of the Code come under the subsection entitled “Uniform Sales Act.” They are comprehended by that sub-title. In dealing with Section 87 we cannot close our eyes to Section 88. Certainly Section 88 was intended by the Legislature to have a purpose, and that purpose was that for every wrong within the purview of the Uniform Sales Act suffered by a citizen, there would be provided by the Act a just remedy. Manifestly the appellant goes without justice, if the contention of the appellee is correct. If Section 88 is construed to save the contract in cases where special damages have been sustained, notwithstanding the contract has been rescinded as to ordinary damages, appellant could sue under the contract. We think that is the intention of Section 88. This construction, in our opinion, is just, for it would prevent the ordinary person, unacquainted with the niceties of the law, from being the victim of sharp practice and, in some cases, entrapment. We hold that the contract in this case, even if rescinded as to ordinary damages, was not rescinded with reference to special damages, and that an action in assumpsit on the contract will lie to recover special damages directly resulting from the breach of warranty of fitness. We do not think that the case of Impervious Products Co. v. Gray, 127 Md. 64, 96 A. 1, is in point. Gray was sued. He could have pleaded recoupment or set off. He chose to plead recoupment and the verdict was for the defendant. He thereafter instituted suit for damages for *468 breach of warranty. The Court held he was bound by his election in the first case. Appellee’s demurrer to appellant’s replication to its second plea mounted up to the first error. As the plea set up that appellant had been credited with $1.10, which was ordinary damages, it was bad. The declaration claimed special damages, and the fact appellant had received ordinary damages was immaterial. The demurrer should have been sustained as to appellee’s second plea. Judgment reversed, with costs to appellant, and case remanded.