186 Ky. 526 | Ky. Ct. App. | 1919
Opinion of the Court by
Affirming on appeal of Rubber Trading Company and reversing on appeal of Ten Broeck Tyre Company.
Tbis suit was brought by tbe Rubber Trading Company against tbe Ten Broeck Tyre Company to recover the difference between tbe contract prices of tbe rubber and the prices obtained on tbe resales and the reasonable and necessary expenses incurred in making the resales. On a trial before a -jury tbe court peremptorily instructed tbe jury to find for plaintiff tbe amount of damages and expenses incurred on tbe second contract. Tbe liability of tbe defendant under tbe first contract was submitted to tbe jury, which returned a verdict in favor of tbe defendant. Both tbe plaintiff and defendant appeal.
On the appeal of tbe defendant it is first insisted that as tbe proper measure of damages was tbe difference between tbe contract price and tbe market price of tbe rubber at tbe place of delivery, tbe court erred in not permitting tbe defendant to prove that after notifying plaintiff that it would receive no more shipments under tbe contracts because of the defective condition of tbe rubber, it immediately offered to buy all tbe rubber covered by both contracts at tbe prices named in tbe contracts, if permitted to inspect tbe rubber before payment. Since no damages were allowed plaintiff under tbe first contract, tbe offered evidence concerns only tbe extent of defendant’s liability under tbe second contract. Before passing on tbe admissibility of tbe offered evidence, it becomes necessary to determine who breached the second contract. It is argued on behalf of the defendant that as tbe two contracts were for tbe successive deliveries of tbe same article, and covered approximately tbe same periods of time, it was not necessary for defendant to go through tbe form of receiving and paying for shipments under tbe second contract when plaintiff’s failure to comply with tbe first contract bad made it certain that it was engaged in shipping rubber that did not meet the requirements of tbe contract. Such, however, is not the prevailing rule. On the contrary, the authorities are agreed that where the contracts are separate and distinct, the breach of one by the seller will not justify the buyer’s failure to perform the other. Elliott on Contracts, sec. 5053; Williston on Sales, sec. 467; Lestershire Lumber, etc., Co. v. W. M.
Another error relied on by the defendant was the action of the court in sustaining a demurrer to its plea that it was the established custom of the rubber trade to permit the buyer to inspect the rubber, and that plaintiff had breached the contracts by denying the defendant this right. Ordinarily, of course, a buyer has a reasonable opportunity to inspect the goods, but this rule does not apply where the contract provides otherwise. Here, each of the contracts provided for payment by a sight draft against bill of lading. Such contracts have been uniformly construed to deny the right of inspection before payment, the reason for the rule 'being that the buyer is not entitled to the bill of lading or the possession of the goods until the draft has been paid. 5 Elliott on Contracts, sec. 5058, p. 1204; Williston on Sales, sec. 479, p. 839; Thick v. Detroit, etc., 101 N. W. 64 at 66; Sawyer v. Dean, 114 N. Y. 469, 21 N. E. 1012; Trenton Rubber Co. v. Small, 3 Pa. Supt. Ct. 8 at 13; Cochran v. Chetopa, etc., Co., 114 S. W. 711; Lawder v. Mackie Grocery Co., 54 Atl. 634, 97 Md. 1; Eason Drug Co. v. Montgomery, etc., Co., 65 So. 345; Hazel Hill Canning Co. v. Roberts Bros., 99 Atl. 424; Whitney v. McLean, 4 App. Div. 449, 48 N. Y. S. 793; Plum v. Hallauer, etc., 130 N. Y. 147. While this rule has generally been applied to cases where the merchandise remained in the hands of a carrier, we perceive no reason why it should not apply where by agreement of the parties the goods were placed in the hands of a bailee to be held until the buyer made payment in accordance with the contract. The cases of Charles v. Thomas, 96 Tenn. 507, 36 S. W. 396, and Thick v, Detroit, Utica & Romeo Ry., 137 Mich. 708,
Another contention of the defendant is that the court erred in sustaining a demurrer to the fourth paragraph of its amended and reformed answer. The paragraph is as follows:
“For further answer to paragraph 2 of the petition herein, defendant says that by error of the draftsman of its original answer and answer as amended, it was stated therein that it made the contract dated April 29, 1916, set out in paragraph 2 of the petition, when in truth and in fact, what was intended to be said was that it signed the paper dated April 29, 1916, set out in paragraph of the petition, and any statement in the answer or answer as amended to the effect that it entered into the contract set out in paragraph 2 of the petition dated April 29, 1916, was a mistake and is hereby expressly withdrawn. Defendant says that said paper was signed by it under a mistake of fact induced by the false and fraudulent representations of the plaintiff herein, which representations were relied upon by defendant and unknown by defendant at said time to be false or untrue, and which were known by the plaintiff to be false and untrue, and of knowing the truth,of which facts this defendant did not have equal means of knowledge with the plaintiff.
Construed as a whole, the paragraph does not allege facts sufficient to authorize a rescission of the contract of April 29, 1916. "While it alleges in a general way that the entire contract was obtained by fraud, yet when it comes to specify the fraud, it admits the purchase of the rubber but alleges that it was agreed between the plaintiff and defendant that the purchase price should be the same as the New York market price on May 1st, if less than seventy-eight and one half cents a pound. It further alleges in substance that plaintiff fraudulently inserted seventy-eight and one-half cents as the purchase price in the contract, when, as a matter of fact, the price for May was not seventy-eight and one-half cents a pound but seventy-five cents a pound, and for June and July rubber seventy-three cents a pound, and that defendant, relying upon the representation of plaintiff, executed the contract under a mistake of fact. It is also alleged that defendant immediately notified plaintiff of the incorrectness of the purchase price and asked that the agreement be corrected accordingly. It will thus be seen that the case is one where the contract of purchase was made and the price agreed upon, but by the alleged fraud of plaintiff and the mistake of the defendant the purchase price was not correctly stated in the contract. If these facts be true, then by reason of the fraud of plaintiff and the mistake of defendant the written contract does not express the true agreement between the parties, and the defendant, against whom the contract is sought to be enforced, was entitled to have the contract reformed. Since the facts alleged make out a case entitling the defendant to a reformation of the contract, it follows that the demurrer should have been overruled. Inasmuch, however, as the reformation of the contract, if
On the appeal of plaintiff it is insisted that the court erred in not sustaining its motion for a peremptory instruction as to the first contract. In support of this proposition it is -argued that the retention and use of the defective installment, with knowledge of the defects, precluded the defendant from refusing ¡subsequent installments not in themselves defective, and that this is doubly true where an allowance has been made for the defective installment. By the contract of February 24th, plaintiff sold to the defendant twelve tons of rubber for delivery in certain quantities at certain times. That being true, the contract was entire and each installment was not a separate contract. As before seen, the defendant was not entitled to inspect before payment. After it had paid for the defective installment it accepted damages for the defects, but immediately notified plaintiff that it would accept no further installments. Under the rule in force in this state, a seller’s breach in any delivery made under an entire contract for successive deliveries will relieve the buyer from liability for subsequent deliveries if notice of his refusal to perform is promptly given, and this right is not waived by the retention of the defective shipment where the buyer complained thereof and was allowed a deduction therefor from the contract price. Newton v. Bayless Fruit Company, 155 Ky. 440, 159 S. W. 968; and there is additional reason why this rule should apply to a case where the buyer is denied the right of inspection until he has paid for and received the goods.
On the appeal of the Rubber Trading Company the judgment is affirmed, and on the appeal of the Ten Broeck Tyre Company the judgment is reversed and cause remanded for proceedings consistent with this opinion.
The costs in this court will be equally divided.