Overton v. Bemis-Hooper-Hays Co.

Eschweiler, J. The trial court in reviewing the findings of the referee agreed with the latter’s conclusion that under the facts in this ease there was no valid rescission by defendant, whether based upon the letter of August 5th quoted above or upon the formal offer of December 28,. 1920, because of failure on defendant’s part to notify the plaintiffs within a reasonable time of such intended election [320] to rescind. Sub. 3, sec. 1684f — 69, Stats. We agree with such disposition of this case upon that point. The referee, having reached the conclusion upon the evidence that there was no express warranty, came to the conclusion that there could be no recovery by defendant upon its counterclaim for any claimed breach of warranty. The trial court, however, construed the evidence as requiring a determination that there was an express warranty by the plaintiffs that the cheese to be furnished under this contract was to be firmer, that is, of less moisture content, than that theretofore manufactured by plaintiffs and sold to the defendant, and that because of what was deemed by the trial court a substantial failure on the part of the plaintiffs to meet with the conditions of such warranty the defendant was entitled to damages. We deem it unnecessary to determine whether the view taken by the referee or that of the trial court on this question of warranty should be upheld. For conceding that there was an 'express warranty as to the moisture content of the cheese, yet we think the defendant is barred from any right to recover upon its counterclaim because of delay for an unreasonable time by the defendant to give plaintiffs notice after it' knew and ought to have known of any breach by the plaintiffs of the conditions of the sale. Sec. 1684f — 49, Stats. It is conceded and appears from the testimony on behalf of defendant that at all times from August, 1919, to June, 1920, while the American cheese was being received by defendant, there was no one in connection with its business who knew much about cheese so far as being able to determine by inspection or any form of simple tests whether or not such cheese was or. was not in compliance with the statutory standard or the contract between the parties. It also appears from the same source that no test was made in any way of this cheese as it was received, or at and prior [321] to the sales that were made from time to time by defendant, although its former custom of many years as to caring for and storing such cheese was followed. Defendant did have complaints early in 1920 from customers as to the quality of this cheese and of a nature that necessarily brought home to it knowledge of the possibility at least of the existence of the defect, if any such existed, upon which defendant now relies in its claim for damages. It took no steps to have such test made in any satisfactory form until December 20th and after the commencement of this suit in August, 1920. Then a simple test by one engaged in the wholesale cheese business disclosed the fact.that'certain samples of cheese taken from defendant’s warehouse December 17, 1920, and some of which had been received by defendant in August and December, 1919, and in the months of January to May, 1920, had an excess of moisture at the time of the test, and undoubtedly, from other evidence in the case, still more of an excess at the time of its sale by plaintiffs. We have no way of telling from the record how much was of the brick or of the American cheese of the May and June deliveries for which plaintiffs brought this action and’ for the agreed purchase price of which it was conceded and found by the referee and trial court it was entitled to recover, the counterclaim as to the brick cheese having been abandoned-on the trial. The tests relied upon by defendant and by the trial court as reported to, defendant on December 21, 1920, showed that two deliveries in May, 1920, each tested .394, that is, within the statutory maximum of moisture content of .40, and no test appears to have been made of any cheese delivered in June. So far, therefore, as the deliveries of cheese are concerned for which plaintiffs seek to recover, there is no evidence in the record that such particular shipments were a breach of the contract or contrary to the statute. [322] - During all the times of the contract between the parties, under the law of this state by sub. (9), sec. 4601 — 4a, Stats. 1919, such American cheese was not to have more than forty per cent, of moisture. , And at this time sec 4601 — 7, Stats. (created by ch. 301, Laws 1919), provided a penalty for any firm or corporation or individual who, by servants or agents, should manufacture for sale, sell, or offer for sale, or have in possession with intent to sell, any cheese which contains more than the amount of moisture permitted under the section above quoted. That the defendant did not know at the time it was offering sjuch cheese for sale that it was in violation of the statutory condition, would have been no defense to defendant in any prosecution under such statutes. Scott v. State, 171 Wis. 487, 177 N. W. 615. Therefore it became the imperative duty of the defendant to ascertain, at its peril, whether or. not the cheese it was so holding with intent to sell the same was in compliance with the statute. That duty was pressing and present all the time that the defendant was receiving the cheese from the plaintiffs and while holding it in its warehouse subject to sale. Defendant did not ascertain the fact of any possible excess of moisture content in this cheese until, as to some of it, more than a year had elapsed since it had been received.and long after it had been paid for and long after it had disposed of some of it to its customers in violation of the statute, if it was made contrary to statute. Whether the plaintiffs could have recovered the agreed purchase price of cheese sold by them to defendant in violation of such penal statute, or whether the law would have left the parties to such a transaction as it found them, is not now material here, for in the instant case there is no showing made that the particular deliveries of cheese for which recovery is sought by plaintiffs were in violation of the statute. It does appear, however, that the defendant is seeking to recover damages on its counterclaim because of its sales made or rendered impossible to be made to its own [323] customers of cheese claimed or shown to have been in violation of the statute. For, if violated by the plaintiffs in the making for sale, it was also necessarily violated by defendant itself in its sales made or frustrated. It is an undisputed fact that it did not comply with its duty and ascertain the fact as to its moisture content until long after the receipt of the cheese and for a period that must be deemed, as a matter of law, an unreasonable time after it knew and ought to have known that there was such defect, and for that reason the counterclaim of defendant must be dismissed. By the Court. — Judgment reversed, and cause remanded with directions to grant judgment in favor of the plaintiffs for. the amount claimed and for a dismissal of defendant’s counterclaims.