This is an appeal from a judgment rendered on a jury verdict in favor of defendant, 1 after trial of an action for the purchase price of a conveyor system manufactured and installеd by plaintiff, a Michigan corporation, in the plant of defendant, a Delaware corporation engaged in the city of Detroit in the manufacture of replacement automоbile glass. The facts are stipulated and are in substance as follows:
Plaintiff on May 31, 1950, submitted to defendant a proposal to design, manufacture and install conveyor systems suitable for carrying glаss of various sizes from one building to another in defendant’s plant and thence to a washing machine where the glass was washed. The *584 terms of payment specified in plaintiff’s proposal werе as follows:
“Terms
25% within thirty (30) days from date of order; 35% when materials . are shipped or when materials are . ready to ship; 35 % upon completion of installation; 15% within thirty . (30) days of completion of installation.”
After an amendment of the proposal immaterial here, defendant on August 3, 1950, sent a purchase order which stated, among other things:
“This equipment to be in accordance with your proposal No. U-9466 datеd May 31, 1950. Revised in . letter dated June 29, 1950.
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“All work to be performed in a good and workmanlike manner and ¿quipment is to perform satisfactor.ily in every way and be suitable for the purpose for which it is intendеd.
“All installations covered in this P. O. shall be subject to the approval of our Plant Engineer.”
This proposal was accepted in writing by plaintiff on- August 7, 1950. The conveyor system was designed, fabricated, аnd installed in defendant’s plant, the installation being begun in the early part of January, 1951. The system was placed in operation about the end of January, 1951.
' Four invoices for the aggregate amоunt of $6,654 were rendered to defendant, mailed January 12, 1951, January 31, 1951, March 29, 1951, and April 27, 1951, respectively, the last invoice in the agreed amount of $168 for overtime. No part of the. sums represented in thе invoices has been paid except the small amount for overtime.
Defendant claimed that the equipment did not perform satisfactorily, was not suitable for the purpose for which it wаs intended, and that the- conditions set forth in the purchase order therefor had not been complied with. At the trial plaintiff conceded that the plant engineer had not approved the installation. In a letter dated April -11, 1951, defendant stated that the system had failed to function in a satisfactory manner “on several points” and called upon plaintiff to obtain satisfactory рerformance of the installation at the earliest possible date. Efforts to remedy the claimed defects in performance were made by plaintiff but were not satisfactory to dеfendant. In a letter dated June 6, 1951, defendant stated that it had suffered a considerable loss of production efficiency due to breakdown of equipment, excessive breakage of glаss, and maintenance expense. The main source of the difficulty, defendant declared, was two horizontal turiis consisting, of two 90° curve sections, the inherent design of which defendant said prevеnted any practical, effective solution by alteration and required replacement with suitable equipment. In this letter defendant demanded that plaintiff immediately proceed to have the turns replaced with new ones of a design and workmanship to fully meet the requirements of the original agreement. Plaintiff replied that it would make no further effort to make the system operate until defendant had paid plaintiff’s invoices in accordance with the contract. Alterations were proposed, but plaintiff refused to make them until defendant paid the invoices. Such payment not being made, plaintiff instituted suit September 5, 1951. Defendant used the conveyor system as installed by plaintiff, without alteration, until December 5, 1951, when it replaced the two curve sectiоns in the conveyor system without plaintiff’s knowledge or consent and continued to use the altered conveyor system to the date of trial in September, 1953. During the trial plaintiff conceded that thе two curve sections did not operate to defendant’s satisfaction. The court submitted the case to the jury on the sole question as to. whether or not defendant had accepted the conveyor system. The jury returned a verdict for de *585 fendant and judgment of no cause of action was entered thereon.
The sole question presented, raised by motion for directed vеrdict, is whether defendant’s use of the conveyor system in its production from June 6, 1951, until the institution of suit in September, 1951, and its continued use thereafter to the date of trial in September, 1953, together with the replacement of the curve sections on December 5, 1951, without plaintiff’s knowledge or consent, as a matter of law constituted acceptance of the conveyor system.
Since the contract was executed and performed in Michigan the rights of the parties are governed by the Uniform Sales Act, which is part of the substantive law of Michigan. Erie R. Co. v. Tompkins,
“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 re-coupment 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.
“(c) Refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for breach of warranty.
“(d) Resсind the contract to sell or the sale, and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.”
Section 48 of the Uniform Sales Act, M.S.A. § 19.288, Comp.Laws 1948, § 440.48, relates to acceptance. It reads as follows:
“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 a lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected thеm.”
It is conceded that the plant was placed in operation January, 1951. While the conveyor system did not operate to defendant’s satisfaction, defendant did not refuse to acсept the goods nor rescind the contract nor the sale. It received the goods and did not return or offer to return them to the seller. If it accepted the goods the existence of a breach of warranty under Michigan law does not bar the action for the purchase price. Defendant’s remedy was recoupment for damages. Crescent Milling Co. v. H. N. Strait Mfg. Co., 8 Cir.,
In United States v. Lux Laundry Co.,
“The daily use of the stokers for a period of at least one year following installatiоn without any request for removal constituted in law an acceptance.”
Moreover, defendant also replaced the defective curve sections without the knowledge or сonsent of plaintiff. This action it took on December 5, 1951, some eleven months after the conveyor was installed. This was an act inconsistent with the ownership of the seller and as a matter оf law constituted acceptance. Cf. Scriven v. Hecht, 2 Cir.,
Defendant contends that these sections of the Uniform Sales Act do not apply because labor and materials were sоld instead of goods. This point is decided adversely to defendant in Cox-James Co. v. Haskelite Mfg. Corp., supra, which' involved the purchase price of a waste conveyor system. The court hеld that the case presented not merely the sale of a certain tank, motor or other specified articles. ‘“The thing sold,’” the court said, “ ‘was a conveyor system supposed to рerform a certain function.’ ” [
The judgment is reversed and the case is remanded for further proceedings in accordance with this opinion^
Notes
. The parties will be designated as in the court below.