Hodge v. International Derrick & Equipment Co.

• Decision Date: 19 May 1948
• Docket Number: No. 12189.,12189.
• Citation: 167 F.2d 896
• Parties: HODGE et al. v. INTERNATIONAL DERRICK & EQUIPMENT CO.
• Court: U.S. Court of Appeals — Fifth Circuit

167 F.2d 896 (1948)

HODGE et al. v. INTERNATIONAL DERRICK & EQUIPMENT CO.

No. 12189.

Circuit Court of Appeals, Fifth Circuit.

May 19, 1948.

M. M. McGowan, of Jackson, Miss., for appellants.

E. R. Holmes, Jr., of Jackson, Miss., for appellee.

Before SIBLEY, McCORD, and LEE, Circuit Judges.

McCORD, Circuit Judge.

Plaintiff, International Derrick and Equipment Company, brought this suit against T. F. Hodge, and four other named defendants, to collect a balance of $3,851.44, plus interest, alleged to be due from them on an open account.

Defendants, in answer, admitted the correctness of the account as to both itemization and price, with the later exception of four items valued at $703.24, but averred by way of defense that the equipment bought from plaintiff, and for which the amount claimed was due, was unsuited for the purpose for which it was manufactured, held out and sold; that it was wholly defective therein, and failed to perform the work for which it was intended and bought. Defendants counterclaimed in the amount of $1,178.82 for an alleged overpayment, and for the further sum of $8,000, which latter expense was alleged to have been incurred for breakage and repairs in attempting to utilize the equipment sold to them by plaintiff.

The case was tried by the court without a jury, whereupon judgment was rendered for plaintiff against four of the five defendants, in the full amount sued for, and defendants' cross-complaint was dismissed. From the adverse judgment, defendants bring this appeal.

Appellants contend (1) the court erred in awarding plaintiff judgment when the proof showed the equipment bought was wholly unsuited for the purpose for which it was manufactured, held out and sold; (2) that because of misrepresentations which induced their purchase they were entitled to rescind their contract to buy the defective equipment; (3) that, regardless of whether plaintiff warranted the equipment as serviceable for the purpose intended, they were entitled to rescind their purchase because of an implied warranty; (4) that, in any event, the extent of plaintiff's recovery could only be the difference between the sales price and the actual value of the pumps; and (5) the court erred in granting judgment for plaintiff when the proof showed there was no actual acceptance of the equipment.

It was shown that plaintiff, an Ohio Corporation, is a supply house supplying and delivering materials and equipment to oil field operators in the various oil fields throughout the country. Lamtex Equipment Corporation is a manufacturer of certain types of oil pumps and other oil field equipment, and sells its equipment to oil operators through plaintiff, and similar supply houses.

The defendants, in 1943, were partners engaged in drilling a certain oil lease in the Tinsley area of Yazoo County, Mississippi. During the process of its development, defendants had drilled a certain piece of property on the east of the field, known as Sorrel's Lease. When the wells were brought in they at first yielded large quantities of oil, but after being in production a year or two, they began making a considerable amount of salt water. It later became necessary to put the wells on a pump, as they would not flow of their own pressure. During the summer of 1943, the four wells on the defendants' lease were producing about ninety percent water and ten percent oil with the aid of the ordinary and conventional type pump then being used by defendants. About this time a representative of the Lamtex Equipment Corporation convinced one of defendants' authorized representatives that Lamtex manufactured a new type pump which would enable defendants to produce more oil from their wells. It was agreed between them that Lamtex Corporation would install one of these new pumps on defendants' lease to determine whether it would produce more oil or not. Accordingly, the Lamtex representatives and employees installed the test pump and operated it for about a month, with the knowledge of defendants, during which time it is without dispute that the pump failed to give satisfactory service, or perform the job for which it was installed. While this test pump was in operation, one Mr. Gholson, an agent of defendants, was approached by a Mr. Ackman, a representative of plaintiff, and asked if he intended purchasing some of the pumps for further use of the defendants. When Gholson replied in the affirmative, Ackman suggested that defendants purchase them through plaintiff, since the pumps could not be sold direct from the Lamtex Corporation, the manufacturer. Gholson agreed to purchase...