Hyman v. Broughton, 197 N.C. 1 (1929)

April 3, 1929 · Supreme Court of North Carolina

197 N.C. 1

T. G. HYMAN v. N. L. BROUGHTON.

(Filed 3 April, 1929.)

1. Sales A a — Evidence of total worthlessness of article sold admissible to show failure of consideration — Warranties.

Where a seller contracts for the sale of a cotton gin and delivers to the purchaser an article that is worthless except for junk, there is a failure of consideration, and evidence that the gin was worthless except for junk is admissible in the'seller’s action for the purchase price.

2. Sales H d — Vendee may not set up counterclaim for 'breach of warranty when contract contains no express warranty and excludes parol.

The vendee may not recover damages for the delivery of a cotton gin on the ground that it was inferior in quality to the one purchased in the face of a stipulation in the written contract of sale that any agreement, verbal or otherwise, not in the writing would not be considered.

3. Sales H e — When the article sold is worthless vendee is not bound by stipulation that notice of defect be given vendor — Fraud.

Where the article sold is worthless there is a failure of consideration and the vendee may resist the vendor’s action for the purchase price without alleging or proving fraud in the procurement of the contract or compliance with a stipulation of the contract requiring notice of defects and an opportunity to remedy same, be given the vendor.

Civil action, before Nunn, J., at November Term, 1928, of Chaven.

Tbe plaintiff instituted an action against tbe defendant to recover tbe sum of $2,000 evidenced by four promissory notes in tbe sum of $500 eacb. Tbe notes were given in payment of tbe purchase price of a certain gin sold by tbe plaintiff to tbe defendant. Tbe contract of sale was in writing, containing tbe usual stipulation tbat “no agreement, oral or otherwise, other than is set forth herein, forms any part of this contract.” Tbe defendant admitted tbe execution of tbe notes, but denied tbat be was indebted to tbe plaintiff by reason of tbe fact that the plaintiff “represented, warranted and guaranteed ... a certain gin equipment; . . . tbat same was practically new and in number one condition, . . . when in truth and in fact said gin and equipment was in bad condition; . . . tbat said engine is still unsatisfactory and cannot be operated but a very short time without overheating and is not only unsatisfactory, but worthless and of no value.”

Tbe defendant further alleged “tbat by reason of tbe wrongful misrepresentation by tbe plaintiff and breach of said warranties, all of which were relied on by tbe defendant, tbe defendant has sustained a loss of $700, money expended on repairs and transportation, and $2,000 loss of earnings on account of not being as represented and warranted,” etc.

There was a written warranty on tbe back of tbe sales contract providing in substance tbat if tbe machinery did not give satisfaction notice should be given in a reasonable time to enable tbe vendor to remedy any defect. Tbe defendant offered evidence tending to show tbat tbe vendor was informed of tbe purpose for which this machinery was to be used, and tbat it could not be used during the season at all; tbat tbe motor could not be put in condition to run; tbat tbe motor could not be started.” All of this testimony was excluded by tbe court.

One witness for defendant testified tbat be '“did' not consider tbe engine worth anything — only junk.” Another witness testified: “Engine worth only junk price at time I started to work on it. 'Worthless as a running engine.”

At tbe conclusion of tbe testimony tbe trial judge directed tbe jury to answer tbe issue in favor of plaintiff in tbe sum of $2,000 with interest.

From judgment rendered tbe defendant appealed.

Whitehurst £ Barden for plaintiff.

T. A. Banks, Ward £ Ward and Smith £ Joyner for defendant.

Brogden, J.

The contract of sale was in writing and contained the usual stipulation that no oral agreement formed any part of the contract. The allegations in the counterclaim or cross-action of defendant are not sufficient to raise the issue of fraud in the inducement of the contract. Colt v. Kimball, 190 N. C., 169, 129 S. E., 406; Colt v. Conner, 194 N. C., 344, 139 S. E., 694. However, the defendant contends tbat in all sales of personal property without inspection there is an implied warranty tbat the property can be used for the purpose for which it was purchased. It is to be observed tbat there was an express warranty contained in the contract. Tbe law is tbat “an express warranty of quality will exclude an implied warranty of fitness for the purpose intended; but an express warranty on one subject does not exclude an implied warranty on an entirely different subject, an illustration of the latter being, tbat an express warranty of title will not exclude an implied warranty of soundness or merchantability. ¥e have recognized the principle tbat there can be no implied warranty of quality in the sale of personal property where there is an express warranty, and tbat where a party sets up and relies upon a written warranty be is bound by its terms and must comply with them (Main v. Griffin, 141 N. C., 43), and the further principle, applied by us in tbat case, that a failure by the purchaser to comply with the conditions of the warranty is fatal to a recovery for breach of the warranty in an action on it, or where, as in this case, damages for the breach are pleaded as a counterclaim in an action by the seller for the purchase money.” Guano Co. v. Livestock Co., 168 N. C., 442, 84 S. E., 774.

The defendant in bis counterclaim or cross-action does not allege or offer evidence tending to show that notice was given to the vendor as required by the written warranty, but the defendant says that this principle does not apply because the property was utterly worthless and that be attempted to offer competent evidence to that effect, which was erroneously excluded by the court. This aspect of the case is governed by the principle declared in Swift v. Aydlett, 192 N. C., 330, 135 S. E., 141. “It ought not and cannot be held as law that a vendor who has sold a well-known article which has value only for a definite, specific purpose, by implication of law, warrants that the article delivered is the article sold, and may in the contract of sale stipulate that be shall be relieved of bis obligation to deliver the very article which be has agreed to deliver in performance of bis contractual obligation.” In other words, if a vendor contracts to sell a gin, be cannot receive the purchase money for a gin and deliver junk. Such transaction would result in a total failure of consideration for the note evidencing the purchase price. Of course, in the absence of fraud, the defendant cannot recover upon bis counterclaim in the light of the facts presented in the record, merely because the gin was of poorer quality of workmanship than be anticipated. His right to recover upon the record as now presented depends entirely upon the application of the principles of law announced in the Aydlett case, supra, and the case of Furniture Co. v. Mfg. Co., 169 N. C., 41, 85 S. E., 35.

The evidence of the worthlessness of the property or total failure of consideration of the note sued on should have been submitted to the jury with proper instructions from the court. Failure to do so constituted error, and a new trial is awarded.

New trial.