Loe v. McHargue, 5-3615

• Decision Date: 11 October 1965
• Docket Number: No. 5-3615,5-3615
• Citation: Loe v. McHargue, 394 S.W.2d 475, 239 Ark. 793 (Ark. 1965)
• Parties: Bert LOE and Glen Loe, d/b/a Loe Pipe Yard, Appellants, v. Jim McHARGUE and J. C. Wolfe, d/b/a Falcon Drilling Company, Appellees.
• Court: Arkansas Supreme Court

Page 475

394 S.W.2d 475

239 Ark. 793

Bert LOE and Glen Loe, d/b/a Loe Pipe Yard, Appellants, v.Jim McHARGUE and J. C. Wolfe, d/b/a Falcon Drilling CompanyAppellees.

No. 5-3615.

Supreme Court of Arkansas.

Oct. 11, 1965.

Coleman, Gantt, Ramsay & Cox, Pine Bluff, for appellants.

Mahony & Yocum, El Dorado, for appellees.

WARD, Justice.

This litigation began when suit was filed to collect a note given as part payment for used drilling equipment.The signers of the note--the purchasers--defended on the ground that the equipment was defective, and was therefore not as warranted by the seller.

Facts.The facts here set out are not in dispute.Appellees(Jim McHargue and J. C. Wolfe, d/b/a Falcon Drilling Company) purchased from appellants(Glen D. Loe and Bert Loe, d/b/a Loe Pipe Yard) certain drilling equipment for the price of $19,500.Of this amount appellees paid $15,000 in cash and gave their note in the amount of $4,500.When the note became past due and unpaid appellants filed suit.Appellees' defense was 'that the plaintiffs warranted the drilling rig to be in sound mechanical condition and fit and suitable for the purposes for which it was designed and intended'.(The principal contention regards the condition of the 'caterpillar diesel' engine.)The trial court found that appellants did warrant the engine to be in A-1 condition; that it was defective; that appellees paid out (as a result of the defects) the sum of $2,770.86; that appellants have judgment for the difference--$1,729.14.From said judgment comes this appeal.Appellees claim they should have been allowed greater deductions and so have taken a cross-appeal.

Appellants here contend (a) that the weight of the evidence does not show they warranted the equipment to be in A-1 condition and further (b) that, even if the evidence does show a warranty, it was error to permit testimony to show such warranty.

(a) Sufficiency of the evidence.We have no hesitancy in affirming this portion of the trial court's finding.It is true that the testimony in this respect was not undisputed, but we think the preponderance lies with the finding of the Chancellor.There was definite testimony that Mr. Loe said the diesel was in A-1 condition.For example one of the appellees testified:

'Q.What, if any representation did Mr. Loe make to you concerning the engine?

'A.He said that that engine was in A No. 1 shape.

'Q.At that time?

'A.And guaranteed it was expressly to be so, yes.'

* * *

* * *

'Q.Mr. McHargue, you stated that Mr. Loe on more than one occasion represented this equipment to be in A-1 condition, is that correct?

'A.Yes, sir.

'Q.Did you rely upon that express warranty when you purchased the equipment?

(Objected to by Mr. Lile, attorney for Appellants.)

'Q.Did you purchase it on the representations, regardless of what we want to call it, that Mr. Loe made of it being in A-1 condition?

'A.Yes, sir, I wouldn't have otherwise given him $15,000.00.'

In the case of Gentry v. Little Rock Road Machinery Co., 232 Ark. 580, p. 582, 339 S.W.2d 101, p. 103, we said:

'A representation that a used truck was in A-1 condition has been held to be a statement of fact and hence a warranty rather than a mere expression of opinion.'

There was also other testimony that the diesel engine was in A-1 condition, and there was no definite denial.

(b) Oral Testimony.The next contention made by appellants--that it was error to admit oral testimony to vary a written contract--presents an interesting question.It is well recognized, of course, that usually a written instrument cannot be changed or altered by oral testimony.Appellants further point out and rely on a statement contained in Lower v. Hickman, 80 Ark. 505, 97 S.W. 681, which reads:

'A warranty is so clearly a part of a sale that where the sale is evidence by a written instrument it is incompentent to engraft upon it a warranty proved by parol.'

To the same effect appellants rely on other decisions of this Court, including Old City Iron Works v. Belmont, 177 Ark. 223, 7 S.W.2d 772.This argument of appellants is based on the premise that there was such a written contract of sale in this case.

It is true there appears in the record a written instrument in connection with the sale here, but we do not think it constitutes a 'sales contract' and especially not such a contract as would preclude the introduction of testimony with reference to a warranty.The instrument in question is captioned a 'Security Agreement' and it appears to be just that--it refers almost exclusively to the matter of a lien on the equipment, the safeguarding of the property and the method of enforcing collection of the note.It is silent as regards a warranty of any kind.Also it is shown by the record that there was an oral sale of the equipment several days before the 'Security Agreement' was signed.In the Hickmancase, supra, the court said 'The contract signed by Lower and Gann shows it is a complete contract between the parties, embracing the subject-matter of their negotiations * * *.'That is not the situation in this case.The Belmontcase, supra, was decided on an issue and on facts different from those present here.In that case the chancellor held there was an 'implied' warranty.

In the case under considerationwe have these factors; the warranty was made before the written instrument was signed; the written instrument made no mention of a warranty having been made; and, neither did it contain the entire agreement between the parties.In Equitable Discount Corp. v. Trotter, 233 Ark. 270, 344 S.W.2d 334, this Court said:

'We have held that where a contract of sale is in writing and recites that it constitutes the entire agreement between the parties, parol evidence is not admissible to vary the terms of the agreement.'(Italics ours.)

The Court further stated that:

'It is true that there are exceptions to this rule, and we have several times held that even though the contract provided that the written instrument constituted the entire agreement between the parties, oral testimony was admissible to contravene this recitation.'

In Louisiana, where most of the sale transactions took place, the court in the case of Stewart v. Clay, 10 La.App. 727, 123 So. 158 made these relevant statements:

'We cannot agree that the testimony with reference to the warranties as to the capabilities of the heater would tend to vary or contradict the provisions...