Distributors Inv. Co. v. Patton

• Decision Date: 27 April 1935
• Docket Number: No. 11619.,11619.
• Citation: 83 S.W.2d 782
• Parties: DISTRIBUTORS INV. CO. et al. v. PATTON.
• Court: Texas Court of Appeals

83 S.W.2d 782

DISTRIBUTORS INV. CO. et al. v. PATTON.

No. 11619.

Court of Civil Appeals of Texas. Dallas.

April 27, 1935.

Rehearing Denied June 1, 1935.

Appeal from District Court, Dallas County; Towne Young, Judge.

Suit by the Distributors Investment Company against H. L. Patton, who impleaded the R. B. George Machinery Company by way of cross-action. From a judgment for the original defendant, plaintiff and the impleaded defendant appeal.

Affirmed.

Burgess, Chrestman & Brundidge and L. E. Elliott, all of Dallas, for appellants.

Robert Lee Guthrie, of Dallas, for appellee.

JONES, Chief Justice.

This suit was instituted by the Distributors Investment Company, hereinafter called investment company, against H. L. Patton, hereinafter called appellee, in a district court of Dallas county, to recover the principal, interest, and attorney fee on a series of eight notes, each of which is in the principal sum of $250, except one for the principal sum of $300. Appellee impleaded the R. B. George Machinery Company, hereinafter called machinery company, and sought judgment over against it. From an adverse judgment, the investment company and the machinery company have duly perfected this appeal. The following are the necessary facts:

The notes in question were duly executed by appellee to the machinery company, in part payment of a caterpillar tractor and wagon, and transferred by the machinery company to the investment company. The tractor was secondhand, and was sold "as is." The contract of sale was executed on or about December 30, 1931, and a chattel mortgage on the machinery sold was executed by said Patton to the machinery company. The machinery was sequestrated and duly sold for the sum of $2,400, which sum is allowed by the petition, as a credit on the indebtedness represented by the notes, and a small open account. The written contract of sale contains, among other things, the following covenant: "There are no representations, warranties or conditions, express or implied, statutory or otherwise, except those herein contained, and no agreement collateral hereto shall be binding upon either party unless in writing hereupon or attached hereto, signed by Purchaser and accepted by Company at its head office."

At the time the contract of sale was executed, appellee was engaged in the moving of oil rigs from one location to another in the East Texas oil field, and he desired equipment in the way of a tractor, by means of which he could do the work of moving the heavy oil well equipment, economically and expeditiously, and purchased the caterpillar tractor from the machinery company to do such work. In making the purchase, his dealings and negotiations were with one McClure, the authorized agent of the machinery company. Appellee fully informed appellant as to the purpose for which he purchased the tractor, and said agent informed appellee that he was fully acquainted with the portion of the East Texas oil field in which appellee was operating, and that the one offered for sale and purchased was reasonably suited for such work; that, in order to meet appellee's demands as to the character of a tractor he wanted, McClure made a number of representations to appellee in reference to the particular caterpillar that was purchased, which are: (a) That the caterpillar could be operated with little expense, and that an inexperienced man could handle it, and that he would save the expense of an extra team and hand, and that it would not be necessary to have had prior experience, or an experienced man to attend to it; (b) that he was well acquainted with the territory in and around Overton, where defendant contemplated using such tractor, and that on account of its tracks the caterpillar could be used in such soil and dirt, and that the said caterpillar would not sink down in muddy ground; (c) that the operation of said caterpillar would be inexpensive, and that the consumption of oil and gas would be slight; (d) that the sprocket wheels, as well as all of the parts of the caterpillar that were apt to give trouble, were new, and there was no possible chance for the same to cause trouble; (e) that any person would be able to handle the caterpillar, because of its being so simple in its operation.

After appellee had purchased such tractor, he was induced to purchase the wagon, on the representation that the caterpillar would not work with an ordinary wagon, but would work with the special wagon which went with it. Appellee believed these representations in reference to the caterpillar and the wagon to be true, relied upon them, and would not have purchased same, unless he believed the caterpillar would perform as represented by the agent.

Appellee tried the tractor for approximately sixty days, and it never performed in a satisfactory manner, though on his frequent reports to the machinery company, expert mechanics were sent, in unsuccessful attempts by the machinery company, to adjust the tractor so that it would do the required work. Each time the tractor was worked upon, appellee was assured that it would perform the work for which he purchased it, but in this it continued to fail. If it had not been for these frequent efforts of the machinery company to adjust the caterpillar and the wagon, and the promise each time that it would then do the work, appellee would have repudiated the contract earlier, and demanded a rescission.

The suit for rescission is based entirely on the alleged false and fraudulent representations made to appellee for the purpose of inducing him to enter into the contract. The investment company's suit is based upon the notes and contract, and the petition filed contains well-pleaded allegations that present a cause of action for recovery for the amount of the notes; also the small items on an open account. There is no question of innocent purchaser involved.

Appellee answered the suit by a plea of failure or a partial failure of consideration, on the ground that the machinery company had full knowledge of the special use to be made of the caterpillar, and that it had utterly failed to perform the work for which the machinery company knew it was purchased. The allegations in the answer in this respect are well pleaded, and, on their face, show a failure of consideration.

By way of cross-action, appellee seeks a rescission of the contract and a return to him of the money he had paid on the purchase price. The basis of this cross-action is that appellee was induced to execute the contract and the notes by false and fraudulent representations made by the machinery company's agent on material matters which appellee believed to be true, and which caused him to execute the contract. These alleged false representations were set out in the petition and are those above given. The allegations of the cross-action are full and complete, and on their face show a right of rescission.

The machinery company and the investment company denied that such representations were made, and specially pleaded the paragraph in the contract, above quoted, to the effect that any representations that may have been made prior to the agreement are not binding on either party, that all antecedent negotiations were merged into the contract, and that appellee purchased the secondhand tractor "as is," i. e., with whatever defects it might have.

The case was tried to a jury, submitted on special issues, a verdict returned on such issues favorable to appellee, both as to plea of failure of consideration and as to his suit for rescission, and a judgment was entered, rescinding the contract of sale, canceling the notes in the possession of the investment company, and directing that such notes be surrendered to appellee, and judgment against the machinery company for $275 with interest, at the rate of 6 per cent. per annum from February 13, 1933.

On the issues of a rescission of the contract, and failure of consideration, the jury's findings are that McClure represented to appellee that (a) the caterpillar involved in this lawsuit could be operated with little expense; (b) an inexperienced man could operate the caterpillar; (c) the caterpillar could be operated in muddy ground; (d) the caterpillar was reasonably fit for the purpose for which it was purchased; (e) all of the parts of the caterpillar that were apt to give any trouble were new. In answer to other special issues, submitted in connection with the above issues, the jury found that each of the said representations was untrue, and that appellee was induced to execute the contract and notes because he believed as true each of said false representations.

In respect to a rescission of the contract for the sale of the...