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Voorhees v. Earl & Kellogg

2 Hill & Den. 288 Court N.Y. Sup. Ct. English

Delivered by *291 Cowen, J.

Contents

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p. 288
Voorhees and others vs. Earl & Kellogg.

Headnote

In general, the measure of damages for a breach of warranty as to the quality ol goods sold, is the difference between the value of the goods as they really were, and what their value would have been had they answered the warranty.
Where there is a warranty as to quality on the sale of goods, but no fraud, and no stipulation that the goods may be returned, though the warranty be broken, the vendee cannot rescind the contract without the consent of the vendor.
Otherwise, if there be fraud in the sale on the part of the vendor; in which case the vendee may rescind, and recover back the consideration paid, in an action for money had and received.
A vendee'of goods, however, in order to rescind a contract of sale on the ground of fraud, must restore or offer to restore all he has received under it, and cannot rescind in part and affirm as to the residue, even where the sale is of several articles at distinct prices for each. Per Curiam ; Cowen, J. dissenting.
. Assumpsit, tried before Willard, C. Judge, at the Montgomery circuit, November 30th, 1838. The action was on a warranty, that 220 barrels of flour, purchased by the plaintiffs of the defendants, were superfine flour, of good quality. The declaration set forth the warranty, averring a breach, and- also contained" the money counts, including a count for money had and received.
At the trial, the plaintiff proved the sale and warranty, which took place January 1st, 1838. The sale was at
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Skaneateles, (Onondaga county,) where the defendants manufactured it; the plaintiffs being retailers of flour at Fulton-ville (Montgomery county) and purchasing it for the purposes of retail. The price paid was $9,50 per barrel. The flour was kept on hand by the plaintiffs till the 18th of August, succeeding the sale, they in the meantime retailing a part of it. Most of it answered the warranty; but 60 barrels did not, being defective in quality. The latter were marked “A. Stamp.” The rest, “Earl &. Kellogg.” Of the barrels marked “ A. Stamp,” several were sold by the plaintiffs in April, 1838; but this parcel proving bad, the plaintiffs had paid damages on account of it, to the amount of $16,25. On the 25th of May, 1838, the plaintiffs wrote to the defendants stating the facts in relation to the 60 barrels, and offering to return 55 barrels of it. They repeated this offer by letter of the 5th of June, 1838; and the defendants answered on the 7th of the same month, proposing to make a reasonable deduction for all that might fall short in quality; but, from the length of time elapsed, and the fall in price, declining to receive the 55 barrels back. The plaintiffs waited till the 1st of August following, when they sold the 55 barrels at auction. By this time some of it had become sour and musty. They claimed to recover the whole purchase money paid for the 60 barrels.
The defendant’s head miller, A. Stamp, was introduced as a witness by them, and testified that he had had an experience of 20 years as a miller; that flour ground as early as the flour in question, would usually begin to grow sour and musty in April—flour used in May, June and later, being ground in the spring or summer. This view was slightly confirmed by the testimony of P. Gould, another of the defendants’ witnesses.
The witness, A. Stamp, further testified, that he ground the flour in question for the defendants; that the entire lot was manufactured from the same quality of wheat taken from the same bin; that the wheat was of good fair quality. He said: “ The flour of the first run through was marked
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(D. Earl & Co.’ (the defendants.) Then the coarse flour of the first run was run through one pair of stones, and the wheat through another pair; and the flour of both conducted into the same bolt together. This flour was marked 1 A. Stamp;’ and all was marked ‘ superfine.’ That such is the universal custom of millers. That about four fifths of this flour thus ground and marked ‘A. Stamp,’ bears inspection in New-York as superfine, and about one fifth is scratched and marked fine. This lot had the usual proportions of the first and second grindings. That there was a third sort called middlings, made from a third grinding, none of which was sold to the plaintiffs.”
The defendants’ counsel, offered to prove that the difference in the market price of superfine and fine flour ranged generally from 25 to 50 cents per barrel,- depending on the relative supply. That in the spring of 1838, the difference was only 25 cents. The plaintiffs objected to the evidence and it was excluded.
The defendants’ counsel offered to show that since the sale to the plaintiffs, flour had fallen $2,50 per barrel. This being objected to was also excluded.
It was insisted by the defendants’ counsel that the offer to return was too late: that the plaintiffs’ could not affirm the contract in part, and disaffirm it in part; and that the measure of damages was the difference in value between the 60 barrels when sold, and of superfine flour. But the judge decided that the plaintiffs were entitled to recover back the balance of the whole purchase monéy paid for the 60 barrels with interest, crediting the amount realized by them from the sale thereof at auction. Verdict accordingly.
The above decisions were severally excepted to by the defendants, who now moved for a new trial on a bill of exceptions.
J. A. Spencer, for the defendants.
M. T. Reynolds, for the plaintiffs.

Regarding this case as one of simple warranty, without fraud, the measure of damages adopted at the trial was wrong. It should have been the difference between the value of the sixty barrels, at the time of the sale considered as good superfine fine flour, and the value of the inferior article sold. The purchaser is entitled to have the article made equal in quality to what the warranty assumed it to be. Such at least is the general rule in all actions upon a warranty of quality, though circumstances may exist which call for more. (Clare v. Maynard, 7 Carr, & Payne, 741; 6 Adol. & Ellis, 519, S. C. Ellis v. Chinnock, 7 Carr, & Payne, 169. Chesterman v. Lamb, 2 Adol. & Ellis, 129. McKenzie v. Hancock, Ry. & Mood. N. P. Rep. 436. West v. Anderson, 9 Conn. Rep. 107 , 111.)

The circuit judge probably went upon the ground of rescission. Where, however, there is a warranty on a sale of goods without fraud, arid no stipulation in the contract that the goods may be returned, the vendee has no right to annul the contract without the consent of the vendor. The only remedy is by an action on the warranty. Such, after some fluctuation, appears to be the doctrine of Westminster Hall. {Street v. Blay, 2 Barn, dp Adol. 456.) In this case Lord Tenterden examined the question both on the nature of the contract, and the weight of authority; and on going through with his argument, it is difficult, and I think impossible to resist the conclusion to which he came. Of course he distinguishes between a sale, and an executory contract, in which latter case the goods may generally be returned as soon as they are found not to satisfy the contract, if the purchaser have done nothing in the meantime beyond what- is necessary to give them a fair trial. That case was followed by the court of exchequer in Gompertz v. Dent, (2 Crompt. dp Mees. 207 ;) and substantially by the K. B., in Patteshall v. Tranter, (3 Adol. dp Ellis, 103; 4 Nev. dp Mann. 649, S. C. See also Freeman v. Baker, 5 Carr. Payne, 475.) The question was also very ably examined by Washington, J. in Thornton v.

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Wynn, ( 12 Wheat. 183 , 189 to 193,) who came to the same result, in which he was sustained by the supreme court of the United States. This decision was acted on by the court of appeals in Kentucky, in Lightburn v. Cooper, ( 1 Dana, 273 .) I am not aware of any case in this court which conflicts with those I have referred to. Had there been such an one, I presume it would have been cited on the argument; but none was cited. So far as I have observed, even where a" contraiy principle has been acted on, it seems to have been done rather out of deference to local custom operating an exception to the common law of England, than as impugning the correctness of the general rule. In Maryland, it is said to be the received doctrine of the state that the article may be returned and the contract rescinded, in case either of simple warranty broken, or fraud in the sale. The right of -rescission in the case of mere breach of warranty, is at the same time admitted not to exist elsewhere. (Franklin v. Long, 7 Gill & John. 407. 419.)

On a former argument of this cause before the Chief Justice and myself, in the absence of Mr. Justice Bronson, I supposed, and so expressed myself,-that the circuit judge had a right to assume, on the whole evidence, that a fraud had been established; and that nothing had transpired on the part of the plaintiffs, by way of delay or otherwise, which impaired their right to disavow the contract. The Chief Justice differed with me in" these two respects, which led to a re-argument before a full bench. He held, first, th«t the question of fraud, not explicitly appearing to have been raised at the trial, the cause should go down upon that point; and secondly, he doubted whether, even if the point had been made, and fraud found by the jury, the plaintiffs could legally rescind the sale in part—and he mentioned the following books to the latter point: 5 Bast, 449; 2 Younge & Jerv. 284 ; Long on Sales, 359.[1]

(a) (a) See also per Morton, J. in Perley v. Balch, ( 23 Pick. 283 , 286;) Conner v. Henderson, ( 15 Mass. R. 319 ;) and Coolidge v. Brigham, (1 Metcalf, 547 550 ;) Junkins v. Simpson, (2 Shepl. R. 364.)

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I have since examined them; and they certainly prove the general rule very clearly, that where one party is desirous of rescinding a contract by reason of the other’s default, he must do so in toto ; and ca'nnot hold on to any part. He must put the other in statu quo, by an entire surrender of possession, and of every thing he has obtained under the contract, or he cannot recover the consideration in an action for money had and received. But neither of the books cited relate to a fraudulent, and therefore a voidable sale. They take the common case of a fair sale, or an executory contract to sell either an entire thing, and a continuance in possession by the vendee, or several things at an entire price, the vendee retaining possession of part. Even in the case of a fair sale, the rule .is not universal. If it be of several articles at distinct prices for each, though entire in other respects, the action lies for the consideration paid for one article, the vendee retaining possession of the others. Such in principle was the case of Johnson v. Johnson, (3 B. & P. 162.) And on the authority of that, Morton, J. said, in Miner v. Bradley, ( 22 Pick. 460 ,) that if a man bid off at auction and pay for a cow and a quantity of hay, specifying distinct prices for each, and receive the cow, but the hay is used by the vendor, the vendee may rescind, and recover, in an action for money had and received, the price paid for the hay, still retaining the cow. But he and the court held otherwise in respect to an entire price bid and paid for both. In the case at bar, there was no difficulty in that particular; for the flour was sold at so much for each barrel—and when the fact of fraud is superadded, it makes a stronger case for these plaintiffs than the one supposed by Morton, J.

With deference, therefore, I still think that, in this view of the case, the plaintiffs were entitled to recover the consideration money paid for the several barrels which proved defective, with the interest, as allowed at the trial. I concede that if the plaintiffs shall appear, on a future trial, to have dealt in the flour with their eyes entirely open to the

p. 294
fraud, the case may be varied. (Campbell v. Fleming, 1 Adol. & Ellis, 40.)

On the other point, upon farther examination, I agree with the Chief Justice that the question of fraud should, at least, have been mentioned at the circuit; and if left in any sort of doubt, as perhaps it was, on the evidence, should have been submitted to the jury. Fraud was essential to warrant the plaintiff in resorting to the count for money had and received ; and non con-stat but the measure of damages may have been adopted by the judge in respect to a breach of warranty only. In such a case, the title actually vesting in the vendee, and the property being delivered, I am not prepared to say, especially after the delay which here intervened, that the warrantor is at all events not entitled to a greater deduction from the purchase money paid, than the price of the deteriorated article at auction.

Nelson, Ch. J. was of the same opinion expressed by him on the former argument, viz. that though fraud in the sale should be shewn, the plaintiffs could not'rescind in part, and not having attempted to rescind in toto, were confined to their remedy upon the warranty; and of the like opinion was also Mr. Justice Bbonson. In other respects, they concurred in the views expressed by Mr. Justice Cowen.

New trial granted.

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