Lehigh, Inc. v. Stevens

• Decision Date: 11 April 1970
• Docket Number: No. 45588,45588
• Citation: 205 Kan. 103,468 P.2d 177
• Parties: LEHIGH, INC., a Corporation, Appellee, v. Nick S. STEVENS and Arthur S. Stenvens, d/b/a Cigarette Service Company, Appellants. LEHIGH, INC., a Corporation, Appellee, v. Nick S. STEVENS, Appellant.
• Court: Kansas Supreme Court

Page 177

468 P.2d 177

205 Kan. 103

LEHIGH, INC., a Corporation, Appellee, v. Nick S. STEVENS and Arthur S. Stenvens, d/b/a Cigarette

Service Company, Appellants.

LEHIGH, INC., a Corporation, Appellee, v. Nick S. STEVENS, Appellant.

No. 45588.

Supreme Court of Kansas.

April 11, 1970.

Syllabus by the Court

1. In general, the doctrine of election of remedies precludes a party who has elected to pursue a particular remedy with full knowledge of the facts, or with means of ascertaining them, from at a later time seeking to pursue a different and inconsistent remedy.

2. A litigant may not rescind a contract because of a breach of warranty and in a later action seek to recover damages for the same breach.

3. Where a party alleges two inconsistent causes of action or remedies in the same petition there is no election as to either, but the plaintiff may be required to make an election between them, either while the case is pending or at time of trial.

4. Under the provisions of K.S.A. 60-208(c) the defense of waiver is an affirmative defense which must be pleaded.

5. A litigant impliedly consents to the introduction of issues not raised in the pleadings by failing to object to the admission of evidence relating thereto.

6. Where a purchaser of property bought under a warranty voluntarily continues to make payments after discovery of defects violating the warranty, he may not thereafter maintain an action for breach of warranty.

7. Waiver of a breach of warranty may not be imputed to a vendee because of payments made on defective merchandise after having notice of the defect, when the payments are induced by continuous promises of the vendor to remedy the defects and assurances the machinery will be made to operate properly.

8. Whether continued payments made by a vendee, after becoming aware that a warranty of fitness has been breached, were induced by promises of the vendor to repair the defects and make the property operable is a question to be determined by the trier of the facts.

9. In general, where an action is brought to recover damages resulting from a breach of warranty, the measure of damages, in the absence of evidence showing a greater damage, is the difference between the value of the property at time of its delivery and the value it would have possessed had it conformed in fact to the warranty.

10. The record is examined in an action to recover the balance due on promissory notes, in defense of which action the defendants alleged a breach of warranty, and for reasons appearing in the opinion is it held: (1) No election as to remedies is shown to have been made by or required of the defendants, and (2) the trial court did not err in finding (a) that breach of warranty had been waived by the defendants, and (b) that no effective rescission had been made by the defendants.

Larry A. Withers, of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause and was on the brief for appellants.

Grrit H. Wormhoudt, of Fleeson, Gooing, Coulson & Kitch, Wichita, argued the cause and was on the brief for appellee.

FONTRON, Justice.

This appeal encompasses two lawsuits which were tried together and have been consolidated for hearing in this court.

Both actions were filed by Lehigh, Inc. to recover balances due on five promissory notes payable in installments, two notes being executed by Nick S. Stevens and Arthur S. Stevens, doing business as Cigarette Service Company, and the other three by Nick C. Stevens, individually. The trial court entered judgment in favor of plaintiff in both cases and the defendants have appealed. Throughout this opinion the appellants will be referred to collectively as defendants, or Stevens, and the appellee as plaintiff, or Lehigh.

Lehigh, Inc. is a Pennsylvania corporation engaging in the production of vending machines. In 1956, the company began to fabricate automatic coffee vending machines bearing the trade name Take-A-Break.

On March 6, 1958, Nick Stevens purchased a number of the vending devices from Lehigh and in connection therewith executed a promissory note to Lehigh in the amount of $4,709.88, payable in twenty-four monthly installments. Four subsequent purchases of Take-A-Break machines were made later during the same year, all being evidenced by similar installment notes executed by defendants and dated respectively, August 1, August 1, August 14, and August 29. The four latter notes were in the amounts of $5039.28, $1292.04, $4163.04 and $3654.12. At the time each note was executed a conditional sale contract was drawn up covering the machines involved in the specific transaction. Default in payment of the first note, which was dated March 6, 1958, occurred February 21, 1959, and defaults in payment of the remaining four notes took place throughout July and August of 1959.

On March 24, 1962, suits were filed against the defendants. In answer to the petitions filed by Lehigh the defendants admitted execution of all five notes and conceded that balances were due thereon, as set out in the petitions. However, the defendants alleged that the vending machines had been misrepresented; that they were defective; and that they would not function or operate for their intended purposes. Alleging breach of both express and implied warranties, the defendants asserted they were not liable on their notes and prayed plaintiff be denied recovery thereon.

By way of cross petition in each case the defendants alleged they had rescinded the sale contracts as of September 1, 1959, and were holding the vending machines for the benefit of Lehigh. Accordingly they prayed for the return of all payments which had been made on their several notes.

Both cases were tried to the court which, after an extended hearing, made extensive findings of fact which included the following: That defendants purchased approximately ninety Take-A-Break machines, all being covered by conditional sales contracts and evidenced by promissory notes; the first note was executed on or about March 6, 1958; that fifty-six of the machines were defective; that defendants were aware of the defects by at least April or May, 1958, but continued to buy additional machines until August, 1958, and continued to pay installments due on some of the notes until August, 1959; that no effective notice of breach of warranty was given to plaintiff until after suit was filed; and that the first attempt to rescind the contracts and tender back the machines was made after suit was filed.

Conclusions of law were entered by the court to the following effect: That as to fifty-six of the vending machines there was a material breach of an implied warranty of fitness for the ordinary purposes for which they were to be used; that such breach was waived when defendants purchased additional machines after knowledge of the defects and continued making payments for more than a year after knowing of the defects; that rescission must be made with reasonable promptness and accompanied by an effective tender of the consideration involved; that no effective attempt to rescind the contracts was made by Stevens; and that any damages sustained by Stevens were remote, speculative and no supported by competent evidence.

Pursuant to the findings and conclusions the trial court entered judgment in favor of Lehigh for the balances due on the five notes, plus interest. The defendants thereupon appealed.

The points raised by defendants in this appeal are principally directed toward the trial court's findings that no rescission had been effected and that Stevens had waived Lehigh's breach of warranty. Before discussing these points we first note Lehigh's position that the appeal is moot, a viewpoint not shared, we may add, by Stevens.

The rationale of Lehigh's argument is two-pronged. First it is contended that the defendants, both in their pleadings and at the trial, elected to rely on rescission, thereby precluding themselves from claiming damages for breach of warranty. Hence, Lehigh says that waiver was not in the case, despite findings of waiver made by the court. Second, Lehigh says the defendants are not now challenging the court's conclusion that rescission had never been effected, since they have not briefed this point but have switched to the question of waiver. Accordingly, the plaintiff maintains that the trial court's conclusion that an effective attempt to rescind was not made by Stevens, presently stands unassailed.

We do not entirely agree with either diagnosis. As to the doctrine of election of remedies, it may be said in general that it precludes a party who has elected to pursue a particular remedy with full knowledge of the facts, or with means of knowing them, from later seeking to pursue a different and inconsistent remedy. (Taylor v. Robertson Petroleum Co., 156 Kan. 822, 137 P.2d 150.)

In the present case, however, the defendants, as we evaluate their pleadings, first asserted a claim for damages resulting from Lehigh's breach of warranty in an amount offsetting their indebtedness on the notes and second, by cross petition, asked for rescission. Granting that a litigant may not rescind a contract for breach of warranty and in a later action seek recovery of damages for the same breach, (Christy v. Gaylord, 158 Kan. 753, 150 P.2d 164), these defendants have pleaded both remedies in the same lawsuit.

In Lindsay v. Keiming, 185 Kan. 89, 334 P.2d 326, this court was faced with a similar situation, in which the plaintiff had included two causes of action in the same petition, one being for rescission of a contract of sale, the second seeking to recover damages sustained by reason of alleged fraud in the transaction. In reversing the trial court's order sustaining the defendant's motion for judgment on the pleadings, this court stated:

'* * * (W)here a party alleges two inconsistent causes of action or remedies in the same petition there is no election as to either, but while the case is pending or at the...