J.I. Case Threshing Mach. Co. v. McKay

• Citation: 77 S.E. 848,161 N.C. 584
• Parties: J. I. CASE THRESHING MACH. CO. v. McKAY.
• Decision Date: 02 April 1913
• Court: United States State Supreme Court of North Carolina

77 S.E. 848

161 N.C. 584

J. I. CASE THRESHING MACH. CO. v. McKAY.

Supreme Court of North Carolina

April 2, 1913

Appeal from Superior Court, Robeson County; Webb, Judge.

Action by the J. I. Case Threshing Machine Company against J. W McKay. Judgment for defendant, and plaintiff appeals. Affirmed.

A party relying upon a written warranty of quality in a sale of personal property is bound by the terms of the warranty, and must comply therewith in order to recover.

The following were the issues:

"(1) Did the defendant execute the contract, notes, and mortgages alleged in the complaint? Answer: Yes.

"(2) Did the defendant accept the engine and fixtures after demonstration and inspection of same by him, as alleged in the complaint? Answer: No.

"(3) Were the said notes, contract, and mortgage procured from defendant by false and fraudulent representations of the plaintiff's agent, as alleged in the answer? Answer: Yes.

"(4) Is the defendant indebted to the plaintiff, and, if so, in what amount? Answer: Nothing.

"(5) In what amount, if anything, is the plaintiff indebted to the defendant on account of money paid on the machinery to the plaintiff by the defendant? Answer: $500, with interest.

"(6) In what amount, if anything, is plaintiff indebted to the defendant for expenses incurred in the endeavor to operate the machinery and other expenses incurred in connection with said machinery as alleged in the counterclaim of defendant as set forth in the answer? Answer: $231."

From the judgment rendered the plaintiff appealed.

W. D. Turner and Dorman Thompson, both of Statesville, for appellant.

McLean Varser & McLean and McIntyre, Lawrence & Proctor, all of Lumberton, for appellee.

BROWN J.

This action is brought to recover on notes of defendant aggregating $1,774 given for the purchase of a traction engine sold to defendant by plaintiff's agent, one Crutchfield. The defendant for answer sets up two defenses: First, that the plaintiff warranted the quality and suitableness of the engine for the purposes intended, and avers a breach of said warranty; second, that defendant was induced to enter into said contract by reason of the false and fraudulent representations of Crutchfield, the selling agent of plaintiff. The defendant appears to have relied solely upon the last-named defense, and, as no issue was submitted upon the question of false warranty, we will not consider that aspect of the case.

There is this difference: A party relying upon a written warranty of quality in the sale of personal property is bound by the terms of the warranty, and must comply with them in order to recover. Piano Company v. Kennedy, 152 N.C. 196, 67 S.E. 488.

Whereas the defense of fraudulent representations, whereby one is induced to enter into a contract, is not founded on the contract, but, when established, vitiates and destroys it, and the restrictive stipulations contained in the contract fall with it. For this reason the contention of the plaintiff that much of the evidence tends to vary the written contract cannot be sustained. The case of Etheridge v. Palin, 72 N.C. 216, has no application. In that case the attempt was to vary the contract of warranty.

The defense of fraud does not change the contract, but nullifies it, and is competent for that purpose as held in Tyson v. Jones, 150 N.C. 181, 63 S.E. 734; Whitehurst v. Insurance Co., 149 N.C. 273, 62 S.E. 1067. In Tyson v. Jones it was held that false and fraudulent representations sufficient to avoid a written contract may be shown by parol as a defense in an action for damages alleged to have been sustained by its breach, as such does not tend to vary or contradict the writing, but to render the entire instrument void. To same effect: Bank v. Chase, 151 N.C. 108, 65 S.E. 745; Basnight v. Jobbing Co., 148 N.C. 350, 62 S.E. 420; Gwaltney v. Ins. Co., 132 N.C. 928, 44 S.E. 659; Insurance Co. v. Knight, 76 S.E. 623.

It is contended that the contract contains a clause limiting the authority of the selling agent, and that McKay, being able to read, is fixed with knowledge of such clause. This position might be well taken if the defense was based upon the contract. but it is well settled that a clause in a sale contract exempting the seller from liability for its agent's representations at variance with the contract does not protect the seller where the contract was void by reason of the agent's fraud. Machine Co. v. Bullock, 76 S.E. 634, last term. In Unitype Co. v. Ashcraft, 155 N.C. 63, 71 S.E. 61, it was said: "The declarations made by the agent were made by him dum fervet opus, and his principal must be considered as bound by them as much so as if it had made them itself." As said in Peebles v. Guano Company, 77 N.C. 233, 24 Am. Rep. 447: "A corporation can only act through its agents, and must be responsible for their acts. If a manufacturing corporation is not responsible for the false and fraudulent representations of its agents, those who deal with it will be practically without redress and the corporation can commit fraud with impunity." Mfg. Co. v. Davis, 147 N.C. 267, 61 S.E. 54, 17 L. R. A. (N. S.) 193; Food Co. v. Elliott, 151 N.C. 393, 66 S.E. 451, 31 L. R. A. (N. S.) 910; Mfg. Co. v. Feezer, 152 N.C. 516, 67 S.E. 1004. Several prayers for instruction bring up for review the sufficiency of the evidence of fraud.

To justify a finding for the defendant upon the third issue, relating to the fraudulent representations of Crutchfield, the agent of plaintiff, the evidence must tend to prove (1) that the representations were made; (2) that the agent knew they were untrue and made them with intent to deceive; (3) that the defendant acted in reliance thereon in purchasing the engine.

We think there is sufficient evidence to be submitted to the jury upon each of these three elements of fraud. The representations are established, not only by the evidence of the defendant, but by that of Crutchfield himself, who testified as follows: "I was salesman and expert for company; went around selling machines. It was usual to demonstrate their qualities. McKay told me he wanted an engine to haul lumber, and showed me road, and said he wanted to haul from 4,000 to 5,000 feet at a load and make two trips a day; If he could get an engine that would do that, he wanted it. He said it cost him $1.50 to haul with wagons and wanted engine to reduce cost. I told McKay I thought that engine could haul 5,000 feet, and make two trips per day. I told him this more than once. I told him that it would haul from 4,000 to 5,000 feet and make two trips per day under ordinary conditions of weather and roads, if he would make improvements on road. I thought engine would do what he wanted it to do. I told him so. The only thing he told me he wanted to do was to reduce hauling expenses. After it would not work we talked about it and I told him I thought it would do it."

The defendant testified: "I told him I would buy an engine if it would reduce the cost of hauling sufficient to justify it; told him it was costing me $1.50 per thousand; showed him the road. He told me, if I bought this engine, I could reduce cost considerably; that it would not cost more than $4 per day to operate it and could make two trips a day, and easily carry 5,000 feet at a trip. *** I would not have bought the engine but for those representations. I told Crutchfield repeatedly that I would have to rely upon what he said about it. I had had no experience in operating traction engines. *** He said he guaranteed that it would haul 10,000 feet a day, and make two trips per day, and would improve the roads in running over it."

B. F Faircloth testified: "Crutchfield said to McKay he could haul two trips, and...