Bullock Tractor Co. v. Knapp

HUNT, Circuit Judge (after stating the facts as above). [1] Keeping in mind that by the terms of the written contract of agency the agents were authorized to make sales pursuant to the provisions of the contract, it is clear that the agents had authority to give a purchaser the warranty printed on the back of the contract of agency. This warranty was that the tractors sold would be made of good material and durable if used with, proper care, and that in the event any trouble with the tractors was due to defective material or workmanship, and an expert could not make the tractors work well, then the purchaser should immediately return the tractor to the agents and the price should be refunded which should constitute a settlement in full of the transaction. But as between the principal and the agents there was no warranty stipulation other than such as the law implied. The implication of law, however, made it the duty of the Tractor Company, the maker of the tractors, to furnish to the agents tractors reasonably fit for the general purposes for which the manufacturing company authorized the agents to sell the tractors (Williston on Sales, § 232; Bucy v. Pitts Agricultural Works, 89 Iowa, 464, 56 N. W. 541); and considering the nature of the subject-matter, it is obvious that the general purpose of a creeping gasoline tractor for farm work is to do such work as has been usually done by horses and mules. [2] Do the findings show that this implied warranty was broken? The specific findings are that certain of the tractors furnished to the agents Nwere defective in both materials and workmanship; that the vital parts subjected to heavy wear, and which should be made of the best materials obtainable and highly tempered, were made of soft and inferior metals and wore out within three or four days; that the tracks would not remain in their proper positions; that the pistons would wear out in less than a month’s use and that the engine heated to such an extent in so short a length of time as to make the tractors wholly unfit for practical use on farms and in orchards in California, and that the engines- would not. develop enough power to draw the load the tractor was designed to draw; that they were not durable and were wholly unfit to do the work for which they were designed, notwithstanding the fact that skilled and experienced mechanics were employ [383] ed to operate and adjust them. In plain words, the tractors were not reasonably fit for the purposes intended and were not salable. For breach of the implied warranty we believe the agents can sustain this action. Little v. G. E. Van Syckle & Co., 115 Mich. 480, 73 N. W. 554. While in many respects the warranties given to the purchaser and the implied warranty are similar in effect, the express warranty given to the purchaser went beyond the conditions of the implied; for instance, as to notice of defects being given by the purchaser within a certain time. The agents are therefore confined to the implied warranty for upon that they made their contract with the manufacturer. In Wood Mower & Reaping Co. v. Thayer, 50 Hun, 516, 3 N. Y. Supp. 465, there was a contract between the Mower Company and one Thayer, by which the company gave to Thayer exclusive right to the sale of machines within certain territory. The complaint pleaded performance by the company and delivery of machines. Defendant admitted the agreement, but denied performance, and pleaded that the company had delivered imperfectly constructed and unmerchantable machines and machines unsuitable for the purposes for which they were manufactured. The Supreme Court of New York held that the contract construed with reference to the nature of the business implied a warranty on the part of the company that the machines should be reasonably fit for the purposes for which they were intended, and should be salable. The court said: ‘■Otherwise, how could the defendant sell them? Or, how could he realize anything from them either for the plaintiff or himself? The evidence shows that the machines, if made in a good and workmanlike manner, and of proper materials, were reasonably fit for the purpose for which they were made, and were salable. Unless these machines should be of this character, the whole business would be wrecked at the outset. Instead of * * * salable machines the defendant would have a mass of rubbish. * * * Herr the defendant was the factor of the plaintiff for the express purpose of making sales of plaintiff’s machines, and it was of the essence of the contract that the machines should be salable.” We approve this reasoning and sustain the right of the plaintiffs below to a judgment. Let us now turn to the question of damages. Plaintiffs below sold nine tractors during the fifteen months lor which they were employed, and collected from purchasers for the nine tractors and repairs therefor the gross sum of $13,061.38. Of this amount they paid to the Tractor Company $6,283.03, which left $6,778.35 retained by plaintiffs to be applied on the payment of $14,330.99, made up of time expended, $2,600, commissions, $1,959.20, plus $9,771.79, expenses which the court found had been necessarily incurred by them in rent, freight, advertising, telegrams, and other incidental items connected with the handling of tractors and parts. From this there should be deducted 15 per cent, of $13,061.38 commissions, which is $1,959.20. This left $12,371.79, from which there should be deducted $6,778.35, the amount retained, which leaves (after deducting $60 on account of the harrow) $5,533.44, which plaintiffs below claim they are entitled to recover. [3] But'the court found that, nine tractors having been sold as salable, the portions of the expense heretofore referred to incurred by [384] plaintiffs, which related to the nine tractors could not be separated from the expenses in connection with the efforts to sell the tractors which could not be sold. Nor could the court make apportionment with respect to the award for time spent in connection with tractors sold and those not sold. But as the court found that the Tractor Company was guilty of a breach and that the agents lived up to their obligations under the contract, the damages to the plaintiffs would be the amount which would compensate them for all the detriment proximately caused by breach of the contract or which in the ordinary course of things would be likely to result therefrom. United States v. Behan, 110 U. S. 338, 4 Sup. Ct. 81, 28 L. Ed. 168; Grosse v. Peterson, 30 Cal. App. 482, 158 Pac. 511; Blair v. Brownstone Oil & Refining Co., 35 Cal. App. 394, 170 Pac. 160. It would therefore follow that the agents should recover the actual expense to which they were put in living .up to their contract. There can be no recovery for profits that the agents would have realized by performing the contract because there is no specific finding that plaintiffs lost profits. The actual loss by way of necessary expenditures for which they are entitled to recover is $9,771.79. They are entitled, however,, to recover for value of time and services, because under the findings Knapp diligently and honestly gave his entire time to the business from April 1, 1915, to June 30, 1916, and his services were worth $2,000, while Blade gave his entire time between February 1, 1916, and June 30, 1916, and his services were worth $600. United States v. Behan, supra. We conclude, therefore, that as against $9,771.79, found to have been actual and necessary outlay, there are no credits other than $6,-778.35, allowed by the court as an offset. This leaves $2,993.44 and the value of the services. Sixty dollars for the harrow unaccounted for should be deducted. Knotts v. Clark Construction Co., 249 Fed. 181, 161 C. C. A. 217. The judgment rendered was erroneous, and is set aside, and the cause is remanded, with directions to the District Court to render judgment in favor of plaintiffs below in accordance with the views herein expressed, together with interest and costs. Modified and reversed.