Abdallah, Inc. v. Martin

• Decision Date: 25 June 1954
• Docket Number: No. 36406,36406
• Citation: 242 Minn. 416,65 N.W.2d 641
• Parties: ABDALLAH, Inc., v. MARTIN et al.
• Court: Minnesota Supreme Court

Page 641

65 N.W.2d 641

242 Minn. 416

ABDALLAH, Inc., v. MARTIN et al.

No. 36406.

Supreme Court of Minnesota.

June 25, 1954.

Rehearing Denied July 29, 1954.

Syllabus by the Court

In cases involving summary judgment, the evidence must be viewed in the light most favorable to the one against whom the motion for summary judgment was granted. In order to permit summary judgment under Rule 56.03 of the Rules of Civil Procedure, the pleadings, depositions, and admissions on file, together with the affidavits, must show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Held that the question whether there was a rescission under the record here was a fact issue, and summary judgment should not have been granted against plaintiff.

Eugene A. O'Brien and John J. Doherty, Minneapolis, for appellant.

Van Valkenburg, Blaisdell & Moss, Minneapolis, for respondent.

FRANK T. GALLAGHER, Justice.

Appeal from a judgment of the district court entered pursuant to an order granting a motion for summary judgment.

The complaint in this action alleges in substance that plaintiff, Abdallah, Inc., on or about September 24, 1952, purchased 1,140 pounds of pecans from defendant William B. Martin, Jr., doing business as Sunshine Pecan Company; that the purchase was made through Martin's agent, defendant Smith-Flemming, Inc., not involved in this appeal; that the pecans were represented to be in first-class condition and suitable for use in plaintiff's candy manufacturing and retailing business; that upon delivery of the pecans plaintiff accepted them and paid the agreed price of $798; that thereafter plaintiff used 570 pounds of the pecans in the manufacture of candy, some of which was sold to his customers; that sometime after that the customers returned the candy as being of poor quality and inedible; that thereupon plaintiff examined the remaining pecans, including those already used in the manufacture of candies, and discovered that they did not correspond to samples but were rancid, inedible, unmarketable, and of no value; that plaintiff promptly notified defendants of the character and condition of the nuts and offered to return and did return to Smith-Flemming, Inc., the 570 pounds of pecans which had not been used in the manufacture of candy; and that by reason of the foregoing plaintiff was damaged in the sum of $1,274 for the loss of the pecans, caramel, chocolate, and labor in the manufacture of the candies and $5,000 in the loss of sales, profits, and good will.

Defendant Martin interposed a separate answer. Insofar as it is pertinent to this appeal it was in substance that plaintiff offered to rescind the contract of purchase and to return the 570 pounds of pecans that Martin accepted this offer of rescission and accepted the return of the pecans; that Martin thereupon paid plaintiff $399, being the selling price and cost of the pecans returned and balanced plaintiff's account in full; and that this action by plaintiff constituted an election of remedies by it and that the acceptance of the rescission and payment by Martin accomplished a full and complete accord and satisfaction of any and all claims between plaintiff and Martin arising out of the transaction.

On June 15, 1953, Martin and Smith-Flemming, Inc., moved the court for summary judgment, which was subsequently denied. On September 17, 1953, Martin alone moved for summary judgment. This motion was made pursuant to Rule 56.02 of the Rules of Civil Procedure and was based on all the files, records, and proceedings therein. Two affidavits were submitted in these proceedings, one by Martin in support of his motion, and the other by plaintiff in opposition to the motion. The affidavit in support of Martin's motion, made by his attorney, was to the effect that on September 2, 1953, discovery depositions of plaintiff's bookkeeper and vice president were taken. Included in this affidavit were excerpts of testimony given by plaintiff's bookkeeper. It appears from this testimony that plaintiff received invoice No. C--6780, dated September 24, 1952, from Martin covering the 1,140 pounds of pecans originally purchased; that certain entries were then made in plaintiff's books indicating that plaintiff owed Martin $798 and that said amount had been paid by check; and that thereafter plaintiff received an invoice dated October 28, 1952, showing the purchase of 540 pounds of fancy large pecans for $432. It further appears that entries were made on plaintiff's books on November 1, 1952, indicating that plaintiff owed Martin $432 and that entries were also made indicating that $399 was debited the accounts payable of Martin on the basis of a credit memo received by plaintiff from Martin, thus leaving a balance of $33 apparently owed by plaintiff to Martin. On the credit memo it was stated: 'Mdse. covered by Invoice No. C. 6780 Ret'd to Merchants Cold Stg.'

The affidavit of plaintiff, resisting defendant Martin's motion for summary judgment, was made by its vice president, Glenn Oletzke. As far as pertinent to this appeal it stated that, after plaintiff discovered that the candies in which the pecans were mixed were unsalable, affiant contacted an employee of defendant Smith-Flemming, Inc. (agent for Martin), who agreed to accept a return of the unused pecans and suggested that affiant contact Martin concerning the pecans already used in the manufactured candy, and that thereupon affiant wrote Martin in an effort to negotiate a settlement of plaintiff's claim in respect to the pecans used in the manufacture of the candies. Affiant further stated that, at the time defendant Smith-Flemming, Inc., through its employee, offered to accept a return of the 570 pounds of pecans, plaintiff discussed with that employee the need for procuring more pecans for plaintiff's holiday business; that said employee advised plaintiff that it could procure a quantity of the pecans of a different grade and at a different price; and that affiant (plaintiff) then ordered said pecans to replace those returned. Affiant vice president also stated that at no time until it was asserted in Martin's answer in this litigation did Martin or his agent assert or claim that the return of the 570 pounds of pecans would be or constitute a cancellation or rescission of the original contract or be an accord and satisfaction, nor did plaintiff ever agree that any of their actions or discussions constituted a complete settlement or an accord and satisfaction.

On October 7, 1953, the trial court issued its order granting Martin's motion for summary judgment.

Rule 56.03 of the Rules of Civil Procedure states in part:

'* * * The judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'

M.S.A. § 512.69, remedies for breach of warranty, states:

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

'(b) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty;

'(d) Rescind 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.

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

It is Martin's position with respect to this action that the undisputed facts show that he is entitled to judgment as a matter of law, in that plaintiff in this action is seeking relief under § 512.69(1)(b) for breach of warranty but that plaintiff has already elected and has exercised the remedy afforded by § 512.69(1)(d), which is to rescind the contract. Martin therefore claims that plaintiff's action is barred by § 512.69(2), inasmuch as it has claimed and has been granted a remedy as provided above and that, therefore, no other remedy can thereafter be granted.

Plaintiff takes the position that it cannot be stated conclusively by its pleadings, together with the affidavit for Martin, that it (plaintiff) has conclusively elected to rescind and is now pursuing an action inconsistent with this election. Rather, it is plaintiff's position that the record thus far shows, if it shows anything, that it has elected to affirm the contract, in that the record reflects that some of the pecans were returned and others delivered to replace them, all in pursuance of the original plan and intention to purchase the pecans.

The determinative issue on this appeal is whether on the record before us a rescission has been effected as a matter of law. Rescission has been defined as the unmaking of a contract. Butler Mfg. Co. v. Elliott & Cox, 211 Iowa 1068, 233 N.W. 669; Kunde v. O'Brian, 214 Iowa 921, 243 N.W. 594; Fuller v. Fried, 57 N.D. 824, 224 N.W. 668. It has also been stated that to rescind a contract is not merely to terminate it but to abrogate it and undo it from the beginning. 1 Black, Rescission and Cancellation (2 Ed.) § 1. There are three general methods of effecting a rescission, namely (a) by mutual agreement of the parties; (b) by one of the parties declaring a rescission of the contract without the consent of the other if a legally sufficient ground therefor exists; and (c) by applying to the courts for a decree of rescission. 1 Black, Rescission and Cancellation (2 Ed.) § 1. ¹

We are not concerned here with the problem of rescission by bringing an action, since plaintiff in this case is seeking damages by affirming the contract. In order to sustain the claim of Martin, there must have been either a notice by plaintiff of his election to rescind or mutual agreement to rescind. There is nothing in the record to indicate either...