North Alaska Salmon Co. v. Hobbs, Wall & Co.

This is an appeal from an order denying defendant’s motion for a new trial.

The action was brought to recover damages for the breach of an express warranty in the sale of goods. The plaintiff alleged that in November, 1903, plaintiff and defendant agreed in writing that the defendant should manufacture, sell, and deliver to plaintiff at the premises of the American Can Company - in San Francisco one hundred and twenty thousand salmon boxes, the defendant thereby expressly warranting that all said boxes should be of dry stock and free from dampness, and further agreeing to deliver the same between December, 1903, and April 10, 1904; that defendant at the time knew that plaintiff required for its business in salmon canning a large quantity of empty cans packed in dry boxes for shipment to the canneries of plaintiff on Bristol Bay, by vessels to leave San Francisco on April 15, 1904, so as to reach the canneries at the opening of the fishing season of that year, which would end about August 1st; that defendant delivered ninety-three thousand boxes under the contract, from January 5 to March 3, 1904, at the premises of the American Can Company, for which plaintiff paid the contract price on delivery. It is further averred that a large number of boxes were not of dry stock nor free from dampness, and because thereof the cans packed therein became rusty and unfitted for use, whereby the plaintiff was damag-ed in the sum of fifteen thousand dollars. The cause was tried by a jury, a verdict was rendered in favor of the plaintiff for thirty-five hundred dollars, and" judgment was given accordingly.

The evidence showed the making of the contract, as alleged, that the plaintiff about the same time had engaged the American Can Company to make a large number of cans to be packed in said boxes and directed the defendant to deliver the boxes to said can company for that purpose, that the defendant knew that the can company was to pack the boxes with the cans for the plaintiff’s use during the fishing season of 1904,

The defendant asked the court to instruct the jury that if the boxes delivered to plaintiff were damp at the time of delivery and that fact was visible and apparent upon inspection and that the plaintiff was aware of the said condition of the boxes, but nevertheless accepted them and appropriated them to its own use without notifying the defendant at the time of receiving them or within a reasonable time thereafter, that they were not accepted as fulfilling the contract, that the plaintiff thereby waived any such defects and could not recover damages on account of them. This instruction was refused and the court instructed the jury that acceptance by the plaintiff and payment of the purchase price did not relieve the defendant from liability under its guaranty, and that if they should find that the boxes were wet and damp at the time of delivery and were accepted and paid for by the plaintiff, they should render a verdict for such damages as the evidence should show were caused by the wet and damp condition of the boxes. The defendant contends that the court erred in refusing to give the instruction asked by it and in instructing the jury as above stated.

The main question in the ease, and the one which controls the decision upon the merits, involves the right of a buyer of

The defendant contends that the only remedy of the buyer in the case of an executory contract for the sale of goods with a warranty of quality, where he obtains knowledge of a defect in the quality at the time the goods are offered for delivery, is to reject such goods and insist upon the due performance of the contract, or, if the discovery of the defective quality is made after delivery, to immediately rescind the contract and return or offer to return the goods received and sue for the money paid therefor. The general rule applicable to all cases of sales of property is that the buyer has an election of remedies for a breach of a contract of warranty. If he knows of the defect at the time performance is offered he may refuse to accept the goods, insist on due performance, and sue for damages for non-performance if further performance is not duly offered, and if he has paid for the goods in advance he can recover the amount of money paid thereon as part of the damages. If part performance has been made, he may rescind the contract, restore what he has received and recover what he has paid. He need not rescind, or reject the goods, however, but may stand upon the contract, and, relying upon the warranty, may take the goods offered and sue for the damages caused by the breach.

In New York the rule is that an implied warranty does not survive acceptance, and that if the buyer accepts the goods with knowledge of the fault he thereby waives his right of action for a breach of the warranty (Reid v. Randall, 29 N. Y. 328 , [ 86 Am. Dec. 305 ]; Lestershire v. Ritter, 153 Fed. 573 , [ 82 C. C. A. 527 ], being a case arising in New York). A case from Georgia is cited by appellant, but as the statute there provides that even an express warranty does not cover patent defects, the decisions of that state are not authority here. In this state the prevailing rule has been followed. In Polhemus v. Heiman, 45 Cal. 573 , there was a warranty that wool sold to be delivered in sacks should be free from burs. Upon examination after delivery the wool was found to be very burry. The seller sued for the price and the buyer set up the breach of warranty in reduction of the price. The court said: “Having a warranty, the defendants were not required

The appellant insists that the decision in Jackson v. Porter, 151 Cal. 32 , [ 90 Pac. 122 ], is contrary to this doctrine and decisive of this case. In that action, however, the question of the right of the vendee, after accepting the goods with knowledge of the defects which constituted the breach of the warranty of quality, to sue for or recoup the damages caused by such breach, was not involved or discussed. That was a suit by the vendor for the price of a pump sold with a warranty as to its capacity, which the buyer was to test by trial. An examination of the record in the ease shows that the an

Upon a review of the authorities elsewhere we find that the rule adopted in this state is fully supported. In 30 Am. & Eng. Ency. of Law, after giving the rule with respect to executed contracts of sale, the author, on page 186, refers to executory contracts as follows: “The rule in this class of cases is the same as where the contract is an executed one; the buyer’s receipt and retention of the articles is not a waiver of his right of action for a breach of warranty. The fact that in such cases the buyer may rescind the contract and reject the article for the defendant’s failure to meet the warranty does not alter the rule; the buyer has an election whether he will rescind the contract or by accepting and retaining the

. , . The weight of authority supports the view here taken.” Discussing the subject further, that author continues: “The hypothesis is, therefore, that the goods which the seller tenders in his performance of the contract might have been refused by the buyer on account of the seller’s failure to fulfill his obligation. The obligation of the seller may have been stated either in adjective form as part of the description of the goods, or the broken promise may have been in the form of a collateral warranty, or it may have been a warranty implied by law. ... It is doubtful if the intention of the parties varies with the form in which the promise is put, whether as part of the description of the goods, or as a strictly collateral warranty. No doubt it is possible, however, for the buyer not

In section 489 the author refers to tlie difficulties that beset a buyer where the rule is that, if he accepts the goods knowing that they do not come up to the quality warranted, he thereby waives all right of action upon his warranty. Referring to executory contracts of sale, with warranty, he says: “If the property in the goods has not passed the buyer must not take the goods if they do not conform to the contract, for if he does so he will thereby extinguish all claims on account of such inferiority. It is frequently a very difficult question to determine whether the property had passed in a given case—a question of doubt even for lawyers and courts. To require a business man offhand to determine whether a contract is executory or whether the property in the goods has already passed and impose a severe penalty upon him if he guesses wrong, is certainly an unfortunate state of the law which should not be tolerated if, as in the matter under consideration, it is not necessary.”

The defendant contends that there is a well-recognized exception to this rule in cases where the defects in the articles are obvious, or where the buyer knows of them at the timé of the acceptance of the goods. In support thereof he quotes the following passage from 30 Am. & Eng. Ency. of Plead, and Prac. p. 187: “Where the defects in the article are obvious or where the purchaser has had full opportunity for examination and knows of them, he must either when he receives the goods or within what, under the circumstances, is a reasonable time thereafter, notify the seller that the goods are not accepted as

For these reasons we are of the opinion that the court correctly instructed the jury and that the evidence sufficiently sustains the verdict of the jury.

It is claimed that the court erred in sustaining objections to certain questions asked of che witnesses Wall and Hotchkiss. It was the theory of the defendant that the rusting of the cans after they were packed in the boxes furnishecl by the defendant was not caused by the wetness or dampness of the boxes, but by drops of moisture which were left upon the cans by the American Can Company in manufacturing them. These witnesses testified that they had examined a number of cans made by the can company for the plaintiff and found upon them beads of moisture, indicating that they were damp from some defect in the making of the cans. They then testified that they saw other crates filled with cans which it is conceded were not a part of the cans manufactured for the plaintiff. With regard to these they were asked: “What was the condition of these cans as to showing moisture?” Objection was made that the evidence was irrelevant and immaterial, since the cans referred to were not of those manufactured for the plaintiff. This objection was sustained and the ruling was

The order is affirmed. .

Angellotti, J., Sloss, J., Melvin, J., and Lorigan, J., concurred.

In denying a rehearing, the court in Bank rendered the following opinion on March 3,1911:—

In a petition for rehearing the defendant contends that the measure of damages stated by the court below in its instructions to the jury was incorrect and inapplicable. The rule laid down in the instruction complained of was that declared in section 3314 of the Civil Code with respect to the damages for breach of warranty of fitness of an article for a particular purpose, the rule including a fair compensation for the loss incurred by an effort in good faith to use it for such purpose. The defendant’s criticism is that the warranty shown was an express warranty of quality, only,—that is, that the boxes should be dry, and that this by operation of law excludes an express or implied warranty of fitness. It is sufficient to say on this point that the facts alleged and proven show that in order to make the boxes fit for the use intended it was necessary that they should be dry, and that, therefore, the express warranty made was a warranty both of quality and of fitness for the purpose intended, in which case the rule stated in section 3314 would he applicable. Furthermore, the facts alleged and proven would suffice to create an implied warranty of fitness, and we do not think it is true that the making of an express warranty of quality will exclude an implied warranty of fitness, where the warranty so implied is not only not inconsistent with the express warranty, but entirely in harmony therewith. There was no conflict in the evidence regarding these warranties.

The petition for a rehearing is denied.