J. L. White Furnace Co. v. C. W. Miller Transfer Co.

Majority

p. 559

J. L. White Furnace Company, Respondent, v. C. W. Miller Transfer Company, Appellant.

Fourth Department,

March 10, 1909.

Headnote

Corporations—when foreign corporation not doing business here — sale — exclusive remedy set by contract — intention of parties controlling — waiver.

A foreign business corporation having no office in this State, and doing no business here other than selling and installing furnaces under contracts proposed in writing. from the foreign State, and confirmed in that State after acceptance here, can recover on such contract although it has not been authorized to do business here as required by section 15 of the General Corporation Law.

Parties to a contract of sale may agree that the exclusive remedy of the buyer in case of breach of warranty is to remove the goods and hold them subject to the buyer's order without payment of the purchase price. But such remedy is not exclusive unless it be apparent that such was the intention of the parties.

A contract for the sale of furnaces expressly guaranteed that they would fulfill certain requirements, required the buyer to build the foundations and gave him a right to remove the furnaces and hold the same subject to the seller’s order without payment if at the expiration of thirty days’ test the guaranty was not fulfilled. At the seller’s request the buyer paid part of the purchase price before the furnaces were in operation and thereafter when it was found that they did not meet the guaranty made a further test at the express request of the seller.

Held, that, in view of the positive guaranty of the seller and the expense imposed upon the buyer, it was not the intention of the parties to make the removal of the furnaces and the cancellation of the contract the buyer’s exclusive remedy;

That, in any event, the seller by receiving part of the purchase price before the furnaces were tested, an<^ by asking a further test when they were .found to be deficient, waived its right to restrict the remedy to that named in the contract.

Appeal by the defendant, the C. W. Miller Transfer Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 8th day of April, 1908, upon the decision of the court, rendered after a trial at the Erie Special Term, directing the foreclosure and sale of the premises described in the complaint.

The plaintiff is a foreign corporation having its principal place of business at Milwaukee, Wis; The defendant is a domestic corporation having its place of business in the eity of Buffalo.

The action is brought to foreclose a mechanics’ lien for the bal

p. 560

anee due upon a contract for furnishing and installing two furnaces in the defendant’s stables, for firing the boilers upon the premises. The furnaces were constructed by the plaintiff under a written, contract made between the parties. The contract provided that the defendant should furnish proper foundations for the furnaces,, and that the plaintiff should furnish the furnaces, construct the ovens therefor, and install the same as set forth in the contract. The furnaces are described in the- testimony as a “ Dutch -Oven,” and located in front of the boilers.

The defendant made the foundations and the plaintiff installed the furnaces, as the contract required, but -the furnaces did not meet the requirements of the contract and the defendant seeks to recover by way of a counterclaim the damages it has sustained.

■ The contract contains the following provision :

“We (referring to the plaintiff) guarantee that these f iirriaeeS' will generate steam to the full capacity of your boilers, using a mixture of your stable manure and coal as fuel, and that no offensive odors will escape from the stack during operation; and comply with the health ordinance.

. “ If at the expiration of thirty days after the furnaces have been installed it is found that the above guarantees are not complied with, you will remove material holding same subject to our order and no payment shall be made.”

The trial court held that the only remedy the defendant has for the breach of warranty' in the failure of the furnaces to. meet the requirements of the contract is to remove the material and hold it subject to the order of the plaintiff, and directed a judgment in favor of the plaintiff for the balance of the purchase price. From the judgment entered upon that decision this appeal is taken.

The opinion of the lower court is reported in White Furnace Co. v. Miller Transfer Co. (59. Misc. Rep. 66).

James McCormick Mitchell, for the appellant.

Thomas R. Stone, for the respondent.

The defendant challenges the right of the plaintiff to prosecute this action, because the plaintiff is a foreign stock Corporation other

p. 561

than a moneyed corporation, and had no certificate, as provided by section 15 of the General Corporation Law,^[1] authorizing it to do business in this State, but we think the plaintiff was not doing business in this State within the meaning of that section.

The contract was in the form of a written proposition submitted by the president of the plaintiff at Buffalo, in this State, to the president of the defendant, and accepted by the latter in writing and approved by the secretary of the plaintiff in the city of Milwaukee, in the State of Wisconsin, as was usual, by the plaintiff. So far as the evidence discloses, the plaintiff had no office and did no business in this State other than that of furnishing and installing the furnaces and doing the work under the contract. We think the plaintiff was not doing business in this State within the contemplation of the section referred to. (Ozark Cooperage Co. v. Quaker City Cooperage Co. 112 App. Div. 62 ; Union Trust Co. v. Sickels, 125 id. 105 ; Penn Collieries Co. v. McKeever, 183 N. Y. 98 .)

The other question raised by the defendant is more serious. If the defendant’s only remedy for the breach of warranty is to remove the material and hold it subject to the order of the plaintiff, manifestly the defendant cannot recover upon its counterclaim, since it has not availed itself of the provision-by removing the material as is therein provided. It is undoubtedly true, as contended by the plaintiff and held by the trial court, that it was entirely competent for the parties to contract for the specific remedy of removing the furnaces and material for a failure of the furnaces to meet the requirements of the contract, and éven make the remedy exclusive. But such a special remedy is not exclusive unless it is apparent that such was the intention of the contracting parties.

In order to determine the intention of the parties in that regard, it may be well now to refer to another provision of the contract and the surrounding circumstances. The contract required the defendant to build the foundations for the furnaces. This and the other changes which the defendant would have to make to use the furnaces in connection with the boilers would require the expenditure

* See Laws of 1892, chap. 687, § 15, as amd. by Laws of 1904, chap. 490.— [Rep.

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of a ■ considerable amount; and taking out and removing the fur-maces in case they were not successful and up to the requirements of the contract would require a further expenditure.

The contract was made in October, 1906. The work was done in November and December, 1906, being completed on or about December twenty-first. The contract price was $1,500. Five hundred dollars was paid thereon at the plaintiff’s request on that day, which was before the furnaces had been operated. On January 28, 1907, the defendant made a further payment of $100 at the plaintiff’s request. On J anuary 30,1907, the board, of health of the city warned the defendant of the offensive odors being emitted by the burning of the manure. Various interviews occurred between the presidents of the respective companies, a demand being made on behalf of the plaintiff for the balance of the contract price, and a refusal upon the part of the defendant to pay the same, upon the ground that the furnaces were not up to the requirements of the contract. There is a dispute in the evidence as to just what was said about taking out the furnaces. It is, however, a conceded fact that the furnacds were not taken out. »

It appears that even before the $100 was paid, the furnaces had been operated and that odor from the burning manure was detected, but, as the defendant’s president testified, he was assured by the plaintiff’s representative that it would be better, and he was assured that the furnaces would meet the requirements of the contract, and requested that the furnaces be left there for a while. . .

On March 21, 1907, notice of lien was filed. The action, was commenced April 18, 1907. After the action had been commenced and between June 7 and July 14, 1907, an agreement was made between the parties that the furnaces should be further tested, the claim being made on behalf of the plaintiff that the defendant’s Workmen engaged in firing the furnaces did not properly do that work. Thereupon a further test was made by a person who was satisfactory to the defendant, with the same result as before — offensive odors were still emitted from the stack, caused by the burning of the manure. In short, the trial judge finds that at no time did' these furnaces burn all the manure, or burn it without emitting offensive odors from the stack.

We deem it unnecessary to enter into an extended argument

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upon the facts, or an analysis of the various’ cases cited by counsel for the respective parties. In view of the positive guaranty of the plaintiff,,the large expenditure to be made by the defendant before the test could be made to determine the efficiency of the furnaces, the loss to the defendant in taking them out and the conduct of the parties after making the contract, we think it. should not be held that it was the intention of the parties that the only remedy which the defendant should have for the- failure of the furnaces to meet the requirements of the contract, was to take them out and hold them subject to the order of the plaintiff. But even if such was the intention when the contract was entered into, the payment of a part of the purchase price by the defendant upon the assurance that the furnaces would do the work as required by the contract, and the request by the plaintiff to ’ leave the furnaces after they had been tested and found wanting, and the other circumstances in the case, to which I have alluded, modified the contract in that regard, and the plaintiff waived the right to require the defendant to remove the furnaces, and rely solely upon that remedy for the non-fulfillment of the contract upon the part of the plaintiff. In either view the conclusion follows that the defendant is not limited in its remedy, as is contended by the plaintiff, but may recover such damages as it has sustained from the failure of the plaintiff to furnish and install furnaces to meet the requirements of the contract.

The judgment should be reversed and a new trial granted, with costs to the appellant to abide the event.

All concurred.

Judgment reversed and new trial ordered, with costs to appellant to abide event, upon questions of law and fact.

Cases cited

Ozark Cooperage Co. v. Quaker City Cooperage Co. 112 App. Div. 62 N.Y. App. Div. 1906-03-21 p. 561
Penn Collieries Co. v. McKeever 183 N. Y. 98 N.Y. 1905-11-21 p. 561