Austin Co. v. Tillman Co.

McCOURT, J. This is an action by the plaintiff to recover a balance alleged to be due on the purchase price of an asphalt mixing plant delivered by plaintiff to defendant and used by it. -Defendant by its answer denied that plaintiff performed the terms and conditions of the contract of sale necessary to be kept and performed by plaintiff before it was entitled to recover the purchase price named in the contract of sale. Defendant alleged affirmatively that the plant delivered was incomplete, defective and old, and was not the one described in the contract and did not correspond to the description or specifications of the plant which plaintiff agreed to furnish defendant and was of insufficient strength and capacity in many of its parts to do the work which plaintiff had represented and warranted it would do; that when the machine was assembled, it protested and objected that the machine did not conform to the contract; that it was worthless as then constructed, and that the failure of plaintiff to supply the plant contracted for was causing defendant large damages; that thereupon the plaintiff admitted that the plant was not as ordered, and undertook to alter, enlarge, strengthen and equip the plant so that it would produce the quantity of material daily which the plant plaintiff had contracted to furnish was warranted to produce, in which undertaking plaintiff failed after efforts exerted by it for a period of more than forty days; that although defendant had used upon its road contracts the material produced by the machine while — 544 — plaintiff was endeavoring to make it conform to the contract and had used the machine to complete its contracts after plaintiff had abandoned all attempts to rebuild the machine and make it operate, it did so through necessity and in order to keep down its damages, and alleged further that it did not accept the machine as corresponding to the requirements or description in the contract, but under protest that it did not correspond or conform to the contract, and with express reservation of its right to claim such damages as defendant might suffer as a consequence of the failure of the machine to correspond with the contract. Defendant also alleged that it had suffered both general and special damages by reason of such failure, and prayed that it have judgment therefor. A trial resulted in a verdict and judgment in favor of the defendant in the sum of.$10,145.47. Plaintiff appeals. Numerous errors are assigned, which are grouped and presented by plaintiff under two propositions: (1) That the contract of sale provided a remedy in case of breach, to wit: A return of the machine and cancellation of the order, which was imperative and not permissive in form, and the remedy thus provided was exclusive, and it was not optional with the defendant to pursue other remedies. (2) That plaintiff was entitled to show in rebuttal, contrary to the ruling of the trial court, that the asphalt mixer was substantially as warranted. A summary of the evidence will assist in the determination of the questions thus presented. Defendant had entered into three or more contracts with the county of Clatsop, whereby it had undertaken to construct about four miles of paved roads, which im — 545 — provement included the laying of approximately 36,685 square yards of asphalt top pavement, one and one-half inches in thickness, upon a concrete base; in order to lay such pavement with profit, the same must be mixed by an asphalt mixer, of which there are several kinds manufactured; that plaintiff is a manufacturer of road machinery, including mixing plants for various kinds of pavement; a representative of plaintiff, knowing that defendant had the contracts mentioned, solicited defendant to purchase from plaintiff an asphalt mixing plant with which to complete its contracts, representing that plaintiff manufactured a plant entirely suitable to defendant’s needs, one of which it had on hand at its factory in Chicago, Illinois, ready for delivery, pursuant to which solicitation, defendant on February 1, 1919, gave to plaintiff an order in writing for an asphalt mixing plant as follows: “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 in 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 2" asphalt top in ten hours; you further agree to send a man at your expense to put — 546 — 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 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. “Tours truly, “The J. H. Tillman Company, “By J. H. Tillman, Mgr. “Hammond, Oregon, or “931 C. of C., Portland, Ore. “(Sd.) D. I. Cooper, Sec. “Witness: W. F. Looker. “Accepted: u_>> Concurrently with the execution of this order and as part thereof, the following writing was addressed to the plaintiff by its representative and forwarded with the order above set forth: • “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 pump and pipe so that pump agitates or delivers to mixer controlled by three way valve on operating platform piping to be steam jacketed. . — 547 — “Substitute revolving screen % and % mesh. Make bin capacity not less than 4y2 yards, 5 yards preferable, two compartments. “Howard Cooper Corp. “By (Signed) D. I. Cooper. “Expense of these changes are included in selling price. ’ ’ On April 26, 1919, plaintiff accepted defendant’s order and undertook to fill the same, and on that date shipped from Chicago to defendant at Hammond, Oregon, the unassembled parts of a machine, which reached defendant about May 15, 1919. Upon its arrival defendant paid the freight thereon, amounting to $1,466.75, and proceeded to assemble and put together the several parts, many of which did not fit and appeared to be rusty and to have been used. Plaintiff sent an expert, with directions to assist defendant in assembling the machine and to put it in operation. On assembling the parts, it was discovered that the machine did not conform to the description and specifications of the contract in many important particulars, among which were the following: (1) The machine was not new, but appeared to be old and to have been used. (2) Oil-heating burners were not placed on the side, but had been at one time, and were changed to rear corners of machine. (3) Screw conveyor under pug mill not furnished. (4) Tailing chute would not fit and had never been in place. (5) Chute from hot elevator to screen would not clear chain driving screen. (6) Agitation pipes were not left in kettles. (7) Kinney asphalt pumps did not fit to machine. — 548 — (8) Pipe with three way valve omitted, and piping not steam jacketed. (9) Bin capacity only one and one-half yards, instead of four or five yards. The defects mentioned and the absolute departures enumerated rendered the machine incapable of producing the quality and quantity of material that plaintiff had . agreed the machine furnished by it would produce; plaintiff was unable to furnish another machine to replace the one sent; it was impossible for the defendant to secure an asphalt mixer elsewhere, and its contracts imposed a penalty of $25 per day for delay beyond September 1, 1919. Upon the complaint of the defendánt, made when the machine had been assembled with the assistance of plaintiff’s expert, that plaintiff had placed defendant in a position that prevented it from carrying out its construction contracts without incurring heavy losses, plaintiff undertook to alter, add to, rebuild and equip the machine so that it would operate in such, a manner as to produce the quantity and quality of material which the machine contracted to be sold was guaranteed to produce, and in order that defendant might be enabled to complete its contracts with the least delay. To this end, experts representing the plaintiff exerted themselves continuously from about June 5, 1919, to July 17, 1919, in which they were actively and energetically assisted by defendant, the latter having expended in that behalf, by the authority of plaintiff, more than $3,000. In spite of the efforts of both the defendant and plaintiff, the machine continually broke down and did not, except upon three or four days, produce the minimum quantity of máterial called for by the contract. The efforts of plaintiff to conform the machine to that — 549 — ordered disclosed that numerous parts thereof were of insufficient strength or insufficient size, and that yet others were faulty in construction or equipment: for instance, to determine the weight of material placed in the bins, it was necessary to multiply the weight which the scales indicated by 3.74. Such material as plaintiff and defendant were together able to make the machine produce was utilized by defendant in carrying out its road contracts. On July 17, 1919, plaintiff abandoned its efforts to convert the machine shipped into the one ordered, or into a machine that would do the work required by the contract of sale, and demanded that defendant either accept or reject the machine. Defendant declined to do either, whereupon plaintiff, as a coercive measure, ordered the machine shut down, and placed a watchman in charge thereof. Defendant, however, made some alterations and additions to the machine while plaintiff’s watchman was in charge, and about July 29, 1919, undertook to operate it again, and finally on August 5, 1919, plaintiff took its watchman off the machine and left it in charge of defendant, and on August 9, 1919, commenced this action. Defendant then continued to use the machine under difficulties similar to those mentioned until September 17, 1919, upon which date it completed its road contracts. During the time that plaintiff’s experts were endeavoring to make the machine operate, the defendant procured, at their direction, numerous parts therefor and made many alterations, changes and additions thereto, all of which were necessary in order to make the machine operate at all. Defendant throughout protested that the machine did not conform to the machine ordered, either struc — 550 — tnrally or in producing capacity, and at no time expressed an intention of accepting it as in conformity to the contract, and protested that such use as it made of the machine or of the material produced by it, was occasioned by the necessity which it was under to complete its contracts and keep down its damages, and with reservation of its right to call upon the plaintiff to compensate defendant for such damages as it might suffer from the failure of the plaintiff to supply the machine it had contracted to furnish. Witnesses for the plaintiff testified that defendant on August 5, 1919, when pressed by representatives of plaintiff to declare whether he would accept or reject the machine, stated: “I have accepted the plant. The plant is mine.” This was denied by defendant. Defendant gave evidence that the machine had no value except ás junk, for which it was probably worth $400 or $500; that he had expended, with the authority of plaintiff, $3,203.51 upon the machine in materials and labor furnished for replacing defective parts and repairing and altering the machine; that he had paid upon the purchase price, in the form of freight charges, $1,466.75; that if plaintiff had supplied the machine it agreed to furnish, defendant could have performed his contracts in 36.68 days at a cost of $8,867.39; that it required defendant 85 days to lay the pavement called for by his contracts, which actually and reasonably cost defendant $23,-947.11. Plaintiff did not offer any evidence to contradict defendant’s evidence of damages. Noticing first the observation with which plaintiff introduces the argument in its brief, to the effect that the verdict of the jury exhibits a startling result to plaintiff, it may be said, aside from the actual cash — 551 — outlay expended by tbe defendant on the purchase price of the machine, and repairs and additions thereto, less the value of the plant as shown by the evidence, the jury allowed approximately $6,000 for the excess cost of laying the pavement, or between 16 and 17 cents per square yard, which does not appear excessive, in view of the evidence of the difficulties incident to preparing the paving mixture with the machine furnished by plaintiff. A contract for the sale of personal property between the plaintiff and defendant was created by the order which defendant gave, and its acceptance by the plaintiff. By that contract the plaintiff engaged and undertook to furnish and deliver to defendant at Astoria, Oregon, one Austin Portable Asphalt Mixing Plant, as described on pages 32 and 33 of plaintiff’s catalogue, with the following changes and substitutions: “Omit air compressor but leave agitation pipes in kettle so that they may be connected to boiler if so desired and substitute Kinney or other good asphalt pumps and pipe so that pump agitates or delivers to mixer controlled by three way valves on 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.” The pages of the catalogue, which were made a part of the contract, contained two large drawings or views of the plant, and set forth the dimensions and specifications of the machine, the character of material of which it was made and the manner of its operation and its capacity, together with other descriptive details. The description of the machine to be furnished was followed in the contract by the express warran — 552 — ties set forth, therein and the provision for the return of the machine, upon which plaintiff relied to defeat defendant’s right to recover damages. Plaintiff was under obligation to deliver to defendant a machine that complied with the description in the contract; performance of that obligation was a condition precedent, having the force of a warranty after acceptance, with which plaintiff was bound to comply before it was entitled to urge that defendant was precluded from asserting the ordinary remedies available to it for breach of such contract: Case T. M. Co. v. Smith, 16 Or. 381 (18 Pac. 641); Morse v. Union Stock Yard Co., 21 Or. 289, 293 (28 Pac. 2, 14 L. R. A. 157); Wadhams v. Balfour, 32 Or. 313, 326 (51 Pac. 642); Puritan Mfg. Co. v. Westermire, 47 Or. 557 (84 Pac. 797); Mine Supply Co. v. Columbia Mining Co., 48 Or. 391 (86 Pac. 798). The condition precedent or warranty in the contract for the sale of personal property, which imposes upon the seller the duty to deliver to the buyer an article corresponding to the -description in the contract is not waived by failure of the buyer to reject the article when the contract is partly executed by the buyer, and he has been placed by the nonperformance of the seller in a situation where repudiation will not afford him a complete remedy: Morse v. Union Stock Yard Co., 21 Or. 289, 293 (28 Pac. 2, 14 L. R. A. 157), and cases cited therein; Northwestern Cordage Co. v. Rice, 5 N. D. 432 (67 N. W. 298, 57 Am. St. Rep. 563); Mechem on Sales, § 1393. The parties to a contract for the sale of personal property may, by express stipulation in the contract, provide the remedy that shall be pursued by the buyer in case of breach of condition or war — 553 — ranty, and make such remedy the only one available to the buyer. Where the remedy agreed upon is the return of the property and recovery of the purchase price, the buyer will not be permitted to maintain a counterclaim for damages in an action brought against him by the seller to recover the purchase price, but the buyer in such case will be confined to the exclusive remedy agreed upon, unless he has tendered a return of the property, and the same has been refused by the seller: Feeney & Bremer Co. v. Stone, 89 Or. 360, 366 (171 Pac. 569, 174 Pac. 152); 24 R. C. L. 250; Nave v. Powell, 52 Ind. App. 496 (96 N. E. 395); Consolidated Wagon & Machine Co. v. Barben, 46 Utah, 377 (150 Pac. 949); J. A. Fay & Egan Co. v. Crowell, 182 N. C. 532 (109 S. E. 562); Wilson v. Nichol & Shepherd Co., 139 Ky. 506 (29 Ky. Law Rep. 1128, 97 S. W. 18). In the case of Feeney & Bremer Co. v. Stone, 89 Or. 360 (171 Pac. 569, 174 Pac. 152), Mr. Justice Harris said: “Generally speaking, the parties to a contract for the sale of personal property have a right to agree that a defined remedy shall be exclusive; but in the absence of language evidencing an intention to make a given remedy, like the one in question here; exclusive of all others, it is treated as cumulative and permissive rather than exclusive and mandatory; and hence the buyer is usually permitted to avail himself of the special remedy; or, if he chooses, he may accept the property and recover damages for a breach of the warranty.” In the contract under consideration this language was used: “ * * 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 — 554 — this order canceled,” indicating an intention of the parties to create an exclusive remedy in favor of the defendant, in the event of a breach to which the language quoted referred. Where, however, the special remedy in favor of the buyer refers to particular breaches only, the buyer still has his remedy in damages for breaches as to which no special remedy is agreed upon: 24 R. C. L. 251. Plaintiff contends that the provision for a return of the property referred expressly to all the warranties contained in the contract of sale, and cannot therefore be deemed to except from its operation any one of the vendor’s warranties. • That provision obviously was intended to protect plaintiff against liability for defects and imperfections that might develop when the machine was placed in operation, and which were not discovered previously, in spite of the exercise of reasonable care in the selection of materials and in the manufacture and construction of the machine. The language of the stipulation does not refer to defects or failure of warranty that may arise subsequent to a test, for which provision is made in the contract, nor to failure of the obligation of plaintiff to furnish a machine corresponding to the description in the contract, and does not restrict defendant’s remedies or define the same in case of breách in those particulars. Substantial performance by plaintiff of the undertaking of the latter to furnish a machine that corresponded to the description in the contract was contemplated and required before the obligation of defendant to return the machine became active as a limitation upon defendant’s ordinary legal reme — 555 — dies accruing upon account of plaintiff’s failure to deliver the machine described in the contract. Defendant agreed that if plaintiff delivered to it a machine as specified and described in the contract and which required a test to disclose that it was not what it appeared to be, defendant would, when the required test developed incurable defects, return the machine and terminate the contract. The conditions upon which the obligation of defendant under that agreement were to become active were not present until the plaintiff delivered to defendant a machine corresponding to the description in the contract, and until that time the obligation of the defendant did not arise or accrue. For defects that developed in a machine that. answered the description in the contract, while the same was being tested and which plaintiff was unable to remedy, and make the machine produce the quantity of material warranted, the return of the machine was the only remedy available to defendant; but for failure of plaintiff to perform its contract in other respects, there was open to defendant the ordinary remedies afforded by law in like cases for the breach of contracts for the sale of personal property. The provision limiting the remedy of defendant to a return of the machine was for the benefit of the plaintiff in respect to the sale of a machine manufactured by it, and should not be extended to embrace situations not clearly comprehended by its language. It was established by the evidence that the machine delivered failed in substantial - and vital particulars to correspond with the description in the contract; that it was apparent, without any testing, that it did not have the warranted capacity and was insufficient, mechanically and structurally, all of which was ad — 556 — mitted by plaintiff before attempting to test or operate the machine; that plaintiff altered and strengthened the machine, and tested and operated it, not for the purpose of developing possible hidden defects, but for the purpose of rendering a machine confessedly different from, and inferior to, the one ordered, capable of producing the character and quantity of material the one ordered was designed to produce. The evidence also strongly tended to show that the attempts to strengthen the machine and enlarge its capacity resulted in failure, and at the same time imposed expense upon defendant and involved it in losses that would have been largely increased by repudiation of the contract and return of the machine. Plaintiff was not entitled to insist that defendant was limited in respect to its remedy by the terms of the contract, unless it first performed the conditions precedent upon its part, and which were essential to impart force and operation to the limitation upon defendant’s ordinary remedies: Mine Supply Co. v. Columbia Mining Co., 48 Or. 391 (86 Pac. 798); Puritan Mfg. Co. v. Westermire, 47 Or. 557 (84 Pac. 797); Case T. M. Co. v. Smith, 16 Or. 381 (18 Pac. 641). “Conditions precedent on the part of the seller to the duty of the buyer to make a return must of course be performed; otherwise no duty is imposed on the buyer to make the return.” 24 R. C. L. 252. Plaintiff urges that use of the machine by defendant and the resulting acceptance, constituted a waiver of performance by plaintiff. In actions to recover the purchase price, under the circumstances disclosed by the evidence, the result contended for only arises where delivery is made of an article that does not meet the description in the contract, but is — 557 — accepted as complete performance of the seller’s obligation under the contract, and does not arise when such delivery is accepted under protest and objection, as in this case, that it does not fulfill the contract. The buyer may, when the seller as performance of the contract, tenders an article which does not correspond to the description called for by the contract, refuse to accept it, or after delivery, if within a reasonable time, he may return the article and thereby rescind the contract, but if he retains possession of the property, or uses the same in a manner inconsistent with ownership in the seller, without rescinding or offering to rescind, the latter is entitled to recover the contract price, less any damages the buyer may have sustained by reason of a breach of the contract by the seller: Steiger v. Fronhofer, 43 Or. 178, 183 (72 Pac. 693); Mine Supply Co. v. Columbia Mining Co., 48 Or. 391 (86 Pac. 798). Defendant’s right to claim damages was not taken away by the provision for return of the machine; the conditions precedent to the application and operation of that provision were not performed by plaintiff: Mine Supply Co. v. Columbia Mining Co., 48 Or. 391 (86 Pac. 798). In the case last cited Mr. Chief Justice Bean said: “There is also a provisions in the contract that the plaintiff should not be responsible for repairs or alterations unless made with its written consent, nor liable for damages on account of delays caused by such repairs or alterations. This stipulation can only apply in case plaintiff complied with its contract. If it did not furnish a mill of the kind and description specified in the contract, and defendant was damaged by reason thereof, it cannot shield itself from liability behind a stipulation in a contract with which it did not comply.” — 558 — Plaintiff in its case in chief gave evidence that the failure of the machine to produce the minimum quantity of material named in the contract was due to the inexperience and lack of skill of defendant’s employees, and to an excess of moisture in the material used by defendant, and attributed the frequency with which the machine broke down to the. same want of experience and lack of skill of defendant’s employees, together with the passage through the machine of oversized particles of stone. This evidence was contradicted by defendant. On rebuttal plaintiff called the witness, who in its direct case had given the evidence that large stone was permitted to go through the machine, who produced ’several pieces of stone, which the witness claimed he had seen pass through the machine while defendant was operating the same. The pieces of stone were offered in evidence, but the court refused to allow their introduction, upon the objection of the defendant -that it was not proper rebuttal evidence. Counsel for plaintiff stated that the evidence was offered to show that the machine was substantially as warranted. Without determining the competency or materiality of the evidence for the purpose for which it was offered, it is clear that its rejection had no perceptible influence upon the result of the case. Plaintiff called in rebuttal one John L. Hill as a witness, and asked him the following question: “Q. Are you able to state what effect, if any, wet material * * containing more than 2 per cent moisture would have on an asphalt mixing plant?” The court sustained an objection to the question interposed by the defendant on the ground that the evidence sought to be elicited by the question was not — 559 — proper rebuttal evidence. The witness later, however, testified that if the material ■ was wet, water going into the tahk where the asphalt was being heated, would cause all the asphalt to boil out of the kettle and would cut down the capacity considerably. (Tr., pp. 517, 518.) Another witness called by defendant testified upon the same subject in effect. Rain or water or condensed steam getting into asphalt will have the effect of making the asphalt bubble and foam and become spongy and will not adhere to the stone. (Tr., p. 539.) Plaintiff having succeeded in getting before the jury the evidence which he sought to elicit by the question to which an objection was sustained, cannot now complain of the previous ruling of the court. This disposes of the contentions made by plaintiff upon this appeal, and it follows that the judgment of the Circuit Court is affirmed. Affirmed. Brown, Harris and Rand, JJ., concur. McBride, J., concurs in the result.