Opinion
1-25-1960
COLLINS RADIO COMPANY, Plaintiff, Respondent and Cross-Appellant, v. GOTHARD MANUFACTURING COMPANY et al., Defendants, Appellants and Cross-Respondents. Civ. 6259.
Arthur M. Bradley, Santa Ana, and Harwood, Heffernan & Soden, Newport Beach, for appellants. Newell, Chester & Gibson and Robert M. Newell, Los Angeles, for respondent.
COLLINS RADIO COMPANY, Plaintiff, Respondent and Cross-Appellant,
v.
GOTHARD MANUFACTURING COMPANY et al., Defendants, Appellants and Cross-Respondents.
Jan. 25, 1960.
Rehearing Granted Feb. 23, 1960.
For Opinion on Rehearing see 3 Cal.Rptr. 388.
Opinion vacated 3 Cal.Rptr. 388.
Arthur M. Bradley, Santa Ana, and Harwood, Heffernan & Soden, Newport Beach, for appellants.
Newell, Chester & Gibson and Robert M. Newell, Los Angeles, for respondent.
MONROE, Justice pro tem.
In 1951 the Gothard Manufacturing Company was a corporation owned by Mr. Ralph Gothard and his son William Gothard. Under date of February 16, 1951, there was issued by the plaintiff Collins Radio Company a purchase order whereby they agreed to purchase from the Gothard Company 1,015 dynamotors. Thereafter the number was reduced to 1,012. There were several modifications of the order which are not significant. The dynamotor is an electrical instrument which operates at high speed and which converts low voltage direct electrical current to high voltage. It is used as a component part of radio receiving and sending apparatus for airplanes. These dynamotors were ordered to be used as part of radio telephones manufactured for the United States government and were to be manufactured in accordance with a sample furnished and in accordance with the government specifications therefor. In September, 1951, the Gothard Company furnished two dynamotors which were tested by plaintiff and found insufficient. In February, 1952, another one was delivered which passed the tests given to it. The plaintiff then ordered ten of the machines and after their delivery and after testing them they directed the Gothard Company to go ahead with filling the order. This direction was given in August, 1952.
Mr. Ralph Gothard and Mr. William Gothard, as partners, took over the business of the corporation and succeeded to all its rights and obligations and became responsible for fulfilling the contract with the plaintiff. Between November, 1952, and the 6th of May, 1953, the balance of the machines were manufactured and delivered to the plaintiff and the purchase price thereof was paid. The total purchase price was $65,422.70.
A number of the machines which were tested by the plaintiff failed to meet the requirements, although some of them did. Ultimately the plaintiff started to use the Gothard dynamotors on their production line as parts of radio telephone sets and it developed that their rejections rose from an average of approximately 2% to about 18%, at which time they stopped the installation. There was a period of a number of months of dispute between plaintiff and defendants with regard to whether the dynamotors were sufficient and whether they met specifications. The matter culminated in the return of 604 dynamotors to the defendants and, after considerable negotiation, in an agreement defendants would re-work the dynamotor for a charge of $10 each, to be paid by plaintiff, and that in case they found defects in workmanship which were the fault of defendants, same would be repaired or replaced at defendants' expense. In May, 1954, the defendants sent to plaintiff six dynamotors which had been re-worked. Of these, four were subjected to what was referred to as a 'life test' whereby the machine was operated at high speed for a period of five hundred hours. Three of them failed to pass and one passed. The remaining two were subjected to other tests and both passed. Thereafter defendants wrote to plaintiff requesting the issuance of a work order to continue the re-working the remainder of the dynamotors. Plaintiff did not answer the letter. The matter remained in this condition and in the fall of 1954 the defendants sold the business to the Sangamo Electric Company. The dynamotors were not included in this sale for the reason, as stated by Mr. William Gothard, that they were owned by the plaintiff. Thereafter the plaintiff employed the Sangamo Electric Company to tear down sixty of the dynamotors and send them the parts for use as spare parts, and this was done.
Nothing further occurred until the commencement of this action in October, 1956. In the meantime the Gothards had moved to California. Mr. Ralph Gothard had died and William Gothard was sued as the representative of his estate. The action was filed as an action for breach of contract and breach of warranty and plaintiff sought the sum of $28,617.63. This amount was the amount paid for the remaining dynamotors which remained in Springfield, Illinois, where they had been left by the defendants.
A judgment was rendered in favor of the plaintiff and against the defendants as prayed for and from this judgment the defendants appeal.
The defendants urge, as ground for appeal, that the court erroneously found that there was a breach of warranty in that 604 of the dynamotors did not meet the specifications and that the court erroneously found that plaintiff was damaged in the sum of the total purchase price and, further, that the plaintiff failed to sustain its burden of proving any damage by reason of a breach of warranty.
A large volume of testimony was introduced regarding the details of the transactions, the disputes between the parties and concerning the tests made of various of the machines. There was no evidence as to damage. It was and is the contention of the plaintiff and respondent that the tests sufficiently established that the dynamotors manufactured by defendants did not meet the specifications; that the dynamotors had been returned and that therefore plaintiff was entitled to recover the purchase price. The appellants contend that plaintiff could not recover the purchase price unless the contract was rescinded and that there was no proof of rescission.
The confusion and difficulty which existed throughout the trial of the case arose from the manner in which plaintiff set up its cause of action in its complaint. It alleged, in substance, that 604 of the dynamotors were not in accordance with specifications; that they were returned to defendants and accepted for reconditioning and that defendants had failed to do so and that therefore there was due plaintiff the sum of $28,617.63. By a second cause of action plaintiff sought to recover the same amount, 'being the purchase price of said defective dynamotors' upon the theory of breach of warranty.
It is the general rule that in case of a breach of warranty the buyer has his election of remedies. '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 nonperformance, 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.' North Alaska Salmon Co. v. Hobbs, Wall & Co., 159 Cal. 380, 113 P. 870, 871, 120 P. 27, 35 L.R.A.N.S., 501.
This rule is embodied in section 1789 of the Civil Code as a part of the Uniform Sales Act. After stating the various remedies which the buyer may enforce at his election, it is provided that 'When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy can thereafter be granted.'
Depending upon the facts involved, a buyer may have ample opportunity to determine which remedy he will pursue, but in any event, at some time before judgment the election must be made. Lenard v. Edmonds, 151 Cal.App.2d 764, 312 P.2d 308. The buyer must select one remedy or the other. He cannot have both. Holt Manufacturing Co. v. Ewing, 109 Cal. 353, 42 P. 435. If he determines to rescind, there must be an effectual rescission. Karapetian v. Carolan, 83 Cal.App.2d 344, 188 P.2d 809, 1 A.L.R.2d 1075.
In the original purchase order it was provided, 'Articles not in conformity herewith may, at Collin's option, be returned to seller for repair, replacement, credit, or refund as Collins may direct or Collins may retain same at a proper adjustment of price.'
By the provisions of Civil Code, section 1789, several different options are afforded to the buyer. Where a portion of the goods sold fail to comply with the warranty, the buyer may rescind the entire contract or may reject the portion of the goods that is defective. Morrell v. San Tomas Drying & Packing Co., 30 Cal.App. 194, 157 P. 818.
The plaintiff and respondent, however, failed to establish its case within any of these rules. There was proof, as has been noted, that some of the dynamotors were defective, or failed to meet the specifications. The entire contract could have been rescinded upon proof of this fact. However, plaintiff returned 604 machines out of the total of 1,012. Although there was some general testimony as to defective workmanship, there was evidence that some of the machines did pass the tests and specifications. There was no proof of any effectual acts of rescission of the contract. The machines were returned to defendants pursuant to an arrangement for re-working them. Plaintiff thereafter took and used sixty of them by having them torn down and used for surplus parts. If plaintiff chose to proceed upon the theory of rescission, it would be required to prove that the steps necessary for rescission had been taken and the goods returned in accordance therewith. If plaintiff intended to proceed upon the theory that part of the goods were defective it would be necessary to furnish proof that the machines which were rejected were defective. If plaintiff intended to proceed upon the theory of breach of warranty, if was incumbent on plaintiff to furnish proof of its damages. Neither in the complaint nor in the findings of the court was the case reduced to any definite theory. Plaintiff could not escape the requirement of making its election in this fashion, nor could the court thus escape its obligation to require plaintiff to elect before entering judgment.
Judgment reversed. Defendant-appellant to recover costs.
GRIFFIN, P. J., and SHEPARD, J., concur.