Arctic Engineering Corp. v. Harrison

Full title: ARCTIC ENGINEERING CORPORATION, Respondent, vs. HARRISON, Appellant

Court: Supreme Court of Wisconsin

Date published: Feb 7, 1956

74 N.W.2d 627 (Wis. 1956)

74 N.W.2d 627

Opinion

January 12, 1956 —

February 7, 1956.

APPEAL from a judgment of the circuit court for La Crosse county: LINCOLN NEPRUD, Circuit Judge. Reversed.

For the appellant there was a brief by Otto M. Schlabach, and oral argument by William J. Sauer and R. M. Schlabach, all of La Crosse.

For the respondent there was a brief by Johns, Roraff, Pappas Flaherty of La Crosse, and oral argument by Peter G. Pappas.

Plaintiff Arctic Engineering Corporation is an Illinois corporation engaged in the business of selling refrigeration equipment. On June 6, 1953, it sold to defendant Louis Harrison, d/b/a River Fisheries, engaged in the business of selling fish at retail and wholesale, a Col-Flake ice maker. A judgment note for a part of the purchase price of the ice maker and other equipment, payable in instalments, was given to plaintiff. To secure payment thereof a conditional sales contract was given, which contains the recital:

"This ice maker is guaranteed to make three tons of ice per twenty-four hours based on a water temperature not higher than 60° F. and when operating at a suction pressure of not over 18#."

It is undisputed that despite plaintiff's efforts to make it so, the machine has never been made capable of producing to comply with the warranty. The defendant refused to make the payments required by the terms of the note and on June 9, 1954, plaintiff obtained judgment by confession for the sum of $3,003.60.

On July 23, 1954, defendant obtained an order vacating the judgment and for leave to answer. He answered and alleged that the machine was purchased by him in reliance upon the warranty; that plaintiff knew the purpose for which it was to be used and that he relied on plaintiff's skill in purchasing it; that the ice machine was unsuitable and worthless and at no time produced three tons of ice per twenty-four hours; that the failure of the machine to produce was apparent to plaintiff's agents when they installed it, and that after various attempts by them to remedy the failure they abandoned their efforts; that on July 28, 1953, defendant notified plaintiff by registered mail that the ice maker "continued to fail in its performance;" that on many occasions between the date of installation and May 20, 1954, plaintiff sent its technicians to defendant's place of business in an attempt to remedy the failure, all of which efforts were without success; that any ice produced by the machine was mushy and therefore difficult to remove from the bin and of poor quality; that between the date of the installation and May 20, 1954, plaintiff assured defendant numerous times that it would remedy all difficulties with the machine and place it in proper operating order; that defendant's first notice of plaintiff's apparent intention to abandon such efforts came when he became aware that judgment had been entered against him; that on June 22, 1954, he rescinded the agreement by sending to plaintiff notice to that effect by registered mail, and by removing and shipping the ice maker to plaintiff by prepaid freight; that the purchase price of the ice maker had been fixed by the parties at $4,175; judgment demanding dismissal of the complaint is prayed for.

He joins with his answer a counterclaim in which he realleges by reference, all of the allegations of his answer and alleges that by reason of the failure of the machine to comply with the warranty he has suffered damages "in that he was forced to purchase ice from other sources, that he suffered fish-spoilage losses, and that he suffered the expense of dismantling and shipping such ice maker to plaintiff, all to his damage in the amount of $700;" he demands judgment on his counterclaim for $700.

The reply of the plaintiff contains denials of practically all of the allegations of the answer and counterclaim, and alleges that defendant failed to notify plaintiff within a reasonable time of his election to rescind the contract; that the equipment sold by the plaintiff to the defendant, the subject of the conditional sales contract, is not in substantially as good condition as it was when it was transferred to the defendant, and that the deterioration and damage to said equipment results from the negligent and careless operation and maintenance by the defendant; plaintiff puts defendant to his proof as to the extent of damages, if any, suffered by him.

At the close of the testimony plaintiff moved to dismiss the counterclaim and for judgment as demanded in its complaint. The motions were granted and the jury discharged. The trial judge in so acting, and after quoting sec. 121.69, Stats., spoke as follows:

"The record in this immediate case, and I believe it has been so conceded by counsel, makes it unnecessary for the court to make reference to subsection (c) or (d) of sec. 121.69 but the court must of necessity consider subsections (a) and (b) of sec. 121.69(1).

"The court has already granted the motion of the plaintiff herein, dismissing the counterclaim of the defendant. The court's interpretation and ruling is that the buyer, to wit the defendant, has claimed, through his counterclaim, certain damages, and the court, after consideration of the testimony and the lack, in the mind of the court, of sufficient notice to sustain the counterclaim or the claim for damages, is of the opinion that the defendant not only has claimed, but has been granted consideration and remedy to the extent that the court cannot grant any other remedy. There has been a satisfaction or final determination of the issues submitted by the counterclaim. The court granted the motion of the plaintiff dismissing the counterclaim. . . .

"The plaintiff's motion for dismissal of the counterclaim having been premised upon the lack of proper notice, and the plaintiff's motion for judgment on the complaint as amended being premised upon the testimony and lack of notice, it is the court's ruling that the plaintiff be granted judgment upon his amended complaint."

The subsections of the statute referred to by the judge are as follows:

"(1) Where there is a breach of warranty by the seller, the buyer may, at his election:

"(a) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;

"(b) Accept or keep the goods and maintain an action against the seller, for damages for the breach of warranty."

Judgment dismissing the counterclaim and granting plaintiff judgment as demanded by it was entered February 14, 1955. Defendant appeals.

GEHL, J.

Sec. 121.69(2), Stats., lays down the remedies available to a buyer in case of breach of warranty, and then provides that:

"When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy can thereafter be granted."

Apparently the trial judge considered that, since defendant's counterclaim had been dismissed, he had been granted a remedy and was entitled to no more. Manifestly, defendant was not granted a remedy by the dismissal of his counterclaim.

Plaintiff urges that we consider the case as though the defendant had at the trial abandoned his claim for rescission and elected to proceed exclusively upon his counterclaim. It would require strong evidence to convince us that, under the circumstances, defendant had forsaken his claim for a credit of more than $3,000, based upon what now appears to be an established fact — the failure of the machine, for a judgment of $700, the amount claimed on account of his counterclaim. On the contrary, defendant's counsel made it quite clear near the close of the testimony that he "was seeking recoupment against the plaintiff as well as special damages arising from the breach of warranty."

While counsel for defendant in the quoted statement referred to his defense as one for recoupment, it is clear that both counsel and the court, near the close of the case, used the expressions "recoupment" and "rescission" interchangeably. This appears clearly from a statement made by counsel for plaintiff when the court and counsel were considering plaintiff's motion made near the close of testimony for a dismissal of the answer and counterclaim; counsel said:

"May it please the court, we have a breach of warranty, you either rescind the contract or you seek damages. If you do not rescind the contract it is elementary that the contract stands, that you are affirming the contract and that if you have any damages you have to set them up in a counterclaim. Now Mr. Sauer, by his election to proceed on the breach of warranty, has affirmed the contract and is entitled to a counterclaim or offset."

It is not disputed that defendant's answer contains allegations sufficient to support a claim for rescission for breach of warranty. Plaintiff contends, however, that defendant is not entitled to recover because he failed to give the notice required by sec. 121.49, Stats., which provides:

"In the absence of express or implied agreement of the parties, acceptance of the goods by the buyer shall not discharge the seller from liability in damages or other legal remedy for breach of any promise or warranty in the contract to sell or the sale. But, if, after acceptance of the goods, the buyer fails to give notice to the seller of the breach of any promise or warranty within a reasonable time after the buyer knows, or ought to know, of such breach, the seller shall not be liable therefor."

What constitutes an acceptance is defined in sec. 121.48, Stats.:

"The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."

The provisions of these statutes require that to entitle defendant to relief under the allegations of his answer to the complaint, it must appear that he did or did not accept the ice machine, and, if he did, that he gave the timely notice required by sec. 121.49, Stats. These are questions of fact for the jury, Buck v. Racine Boat Co. (1923), 180 Wis. 245, 192 N.W. 998; Wood v. Heyer (1923), 179 Wis. 628, 191 N.W. 971, the right to a determination of which the defendant was denied. In view of the fact that there must be a determination of these questions we consider it unnecessary, if not inadvisable, to discuss the testimony which would support the finding favorable to the defendant. We say no more in that regard than to point out that it appears clearly to us that the testimony would support such findings.

Plaintiff cites Marsh Wood Products Co. v. Babcock Wilcox Co. (1932), 207 Wis. 209, 240 N.W. 392, as authority for its contention that defendant fails because he did not give the required notice. No notice was given in that case, but it must be observed that there the plaintiff who sued for breach of warranty kept and used the goods from September 28, 1926, when the breach was discovered, and made no complaint against the sellers until June 14, 1928, when it commenced its action. There had been acceptance. It has not yet been determined in the instant case that defendant accepted the ice machine.

Plaintiff contends that the notice given by defendant of his election to rescind is defective. The notice upon which defendant relies is contained in a letter addressed by him on July 28, 1953, eight days after the work of installation had been completed, which reads in part as follows:

"The ice maker is not working we are having the same kind of trouble when your men were here. Meanwhile we have to buy ice every day which we are charging to your account, because it is up to you to do something, and do it fast. "

We consider that this letter must be construed to have reasonably informed the plaintiff of defendant's intention to claim damages for the breach. It is as clear a statement of defendant's intention as was the notice given by the buyer who defended in Ace Engineering Co. v. West Bend Malting Co. (1943), 244 Wis. 91, 93, 11 N.W.2d 627, for breach of warranty in an action brought by the plaintiff for the recovery of the balance of the purchase price of some machinery, which notice was held to be sufficient and read as follows:

"`We will proceed getting this job in first-class order, and whatever the cost, will be deducted from the balance due you."

It is clear that the answer of defendant sets up a claim for rescission and that by his counterclaim he seeks to recover damages for breach of warranty. He has both these remedies but they cannot both be prosecuted at once. Park v. Richardson Boynton Co. (1892), 81 Wis. 399, 51 N.W. 572; Advance-Rumely Thresher Co. v. Born (1926), 189 Wis. 309, 206 N.W. 904. He should have been required or at least been given the opportunity to elect between the remedies. Advance-Rumely Thresher Co. v. Born, supra.

Defendant complains because when his motion for a new trial was being considered, he was denied the right to amend his pleadings. Since there must be a new trial and the motion may again be made and since, if it is, it will, of course, be addressed to the discretion of the court, we refrain from discussing the contention.

Defendant contends that the court erred in including in the judgment for plaintiff an item of $430 due upon "open account." Plaintiff responds to this contention with the statement that defendant did not in his answer set up a defense to this claim. The answer to the response is that plaintiff made no claim for the item in its complaint.

Since the judgment is to be reversed it is unnecessary that we consider defendant's objection to one of the items of cost allowed the plaintiff.

It is obvious that there must be a new trial.

By the Court. — Judgment reversed. Cause remanded for a new trial.