Northwestern Equipment v. Tentis, 7550

• Decision Date: 03 February 1956
• Docket Number: No. 7550,7550
• Parties: NORTHWESTERN EQUIPMENT, Inc., Plaintiff and Appellant, v. Leo J. TENTIS, Defendant and Respondent.
• Court: North Dakota Supreme Court

Page 832

74 N.W.2d 832

NORTHWESTERN EQUIPMENT, Inc., Plaintiff and Appellant, v. Leo J. TENTIS, Defendant and Respondent.

No. 7550.

Supreme Court of North Dakota.

Feb. 3, 1956.

Syllabus by the Court

1. Section 51-0707, NDRC 1943 does not provide for or contemplate an implied warranty of fitness against defects of material or performance of which the purchaser of the property covered by this section was aware at the time the contract for purchase was made nor does it give the purchaser a right to rescind the contract because of such defects.

2. One who has a right to rescind a contract of purchase under the provisions of Section 51-0707, NDRC 1943 on the ground that the property purchased is not reasonably fit for the purposes for which it was intended may delay the exercise of his right of rescission on condition that the property be made fit and if the condition is not complied with may thereafter rescind within a reasonable time after the seller has failed to comply with the condition. But a purchaser must in the first instance have a right to rescind before it can be saved to him by a subsequent promise on the part of the seller to make fit.

3. The statutory rules that the execution of a contract in writing supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the contract, Section 9-0607, NDRC 1943, and that a contract in writing may only be altered by a contract in writing or an executed oral agreement, Section 9-0906, NDRC 1943, are not rules of evidence but of substantive law.

4. Where a party challenges the trial court's ruling in denying a motion for a directed verdict by a motion for judgment notwithstanding the verdict made after judgment and also appeals from the judgment and specifies as error the denial of the motion for directed verdict and because of procedural defects the trial court did not have jurisdiction to hear and determine the motion for judgment notwithstanding the verdict, the supreme court may review the action of the trial court in denying the motion for a directed verdict on appeal from the judgment.

5. For reasons stated in the opinion it is held that the motion for a directed verdict is sufficient in form and scope to warrant a review of the sufficiency of evidence by this court.

Nilles, Oehlert & Nilles, Fargo, for plaintiff and appellant.

J. K. Murray, Bismarck, for defendant and respondent.

MORRIS, Judge.

This is an action upon two conditional sales contracts for the replevin of two tractors and some equipment connected therewith. The defendant answered denying plaintiff's right to possession of the property- ; alleged a rescission of the contracts of sale; and counterclaimed for repairs in the sum of $6,000 on the item known as the International Harvester tractor and for repairs and labor in the sum of $5,000 on the item known as the Allis-Chalmers tractor. He also alleged that he is entitled to all the purchase price paid, together with all moneys paid out in attempting to make the tractors and equipment work, and that in addition he lost $6,500 by reason of lost time and money paid out for a stand-by crew by reason of the tractors not being fit to operate and work, making an overall total of $32,468.75, upon which he would allow the plaintiff $3,000 for net benefits to the defendant, thereby leaving a net balance due from the plaintiff to the defendant of $29,468.75, for which the counterclaiming defendant prays judgment. To this counterclaim the plaintiff filed a reply.

The jury found in favor of the plaintiff with respect to the Allis-Chalmers tractor. It is thereby eliminated from consideration on this appeal.

On September 26, 1952, the plaintiff, as lessor, entered into a rental agreement with the defendant, as lessee, whereby the lessor rented to the lessee for a minimum term of four months

'One Used reconditioned International TD-24 Crawler Tractor. Tractor Serial Number #876. Engine Serial Number #910.

'One New Bucyrus Erie 24 G Bullgrader for rear mounted Winch less A Frame and Blade. Bullgrader Serial Number #98807.

'One new Bucyrus Erie P-29 Winch double drum rear mounted. Winch Serial Number #92889.'

The lessee agreed to pay an aggregate rental of $7,958.48. The agreement also provided that at any time within the four month period and while the lessee was not in default he should have

'the option to purchase said equipment for the sum of $19,896.23 less any and all rentals that have been paid by Lessee, plus an interest charge of 6% simple interest on deferred payments on the unpaid balances of the purchase price from date of delivery.'

On the date of this agreement the property therein described was delivered to the defendant at Fargo. He transported it to Mandan and used it on various jobs in that vicinity until it was repossessed, except for about a month when it was in a shop for repairs.

According to defendant's evidence defects in the tractor became apparent shortly after delivery. On October 5, 1952, he complained to the plaintiff's sales representative, Miller, about the clutch and clutch housing. Emil Tentis, brother of the defendant, operated the tractor in October 1952. He testified that the final drive and rollers were leaking, the clutch was sticking, and it was hard to shift. After the motor had been warmed up it had a loud knock. The seals on the rollers were worn out and would not hold grease. The steering apparatus leaked and the clutch was dragging. He knew of these defects after he had operated the machine for one eight hour shift and told the defendant about it.

Despite defendant's knowledge of the defects in the tractor he exercised his option and bought it on December 29, 1952. He entered into a conditional sale contract whereby he agreed to pay $22,817.05, upon which he was credited with the sum of $7,958.48 as an initial payment. This was the amount of rental provided in the rental agreement. The balance of $14,858.57 he agreed to pay in twelve monthly installments of approximately $1,235 on the fifteenth of each month from June to November inclusive of 1953 and from June to November inclusive of 1954. Title was retained by the plaintiff. Above the defendant's signature at the end of the contract appears this statement in black type:

'No oral agreement, guaranty, representation, or warranty, past, present or future, respecting said equipment or our obligations hereunder, shall bind you or your assigns.'

The defendant paid to the plaintiff various sums from time to time, the last payment being a major portion of the monthly installment due August 15, 1953. It was stipulated that the total amount that the defendant paid the plaintiff was $12,214.83. The defendant also contends that he paid substantial amounts for repairs and labor on this tractor. The evidence shows that the repairs that he made were extensive. However, the exact cost is difficult to determine because of the failure of the record to show which of the parts furnished and repairs made apply to the International tractor and which apply to the Allis-Chalmers tractor.

After purchasing the property under the conditional sale contract the defendant continued to complain that the operation of the tractor was unsatisfactory. However, he continued to use it until in August 1953, at which time he was in default. On August 12, 1953, the parties entered into a further agreement in writing wherein the plaintiff, in consideration of certain specified assignments totaling $4,610.20, stated:

'We agree to make the following necessary repairs on one (1) International TD-24 tractor now in your possession.

'1--Replace old radiator

2--Replace three (3) fan pulleys

3--Agree to absorb labor cost on clutch installation already performed

4--Agree to absorb labor and parts cost on repairs previously made on the right final drive

5--Agree to make necessary repairs on left final drive

6--Agree to absorb cost on complete set of pins and bushings which are now in your possession

7--Agree to absorb labor and parts cost on hydraulic steering system already performed.'

Pursuant to this agreement the tractor was taken to the Schultz machine shop in Bismarck where the repairs were made at the expense of the plaintiff. When the tractor left the machine shop it was in good working order. It was released to the defendant about September 28, 1953. The defendant started to use the tractor on a job at the Delzer Cement Plant where it was seized in this action by the sheriff of Morton County on October 6, 1953. At the time of seizure the September 15th installment was in default and also a slight additional amount, making in all $1,350.57 as of October 1, 1953.

The case was tried and the jury was instructed upon the theory that the defendant claimed to have rescinded the contract of sale and to be entitled to a return of the payments that he had made, plus the cost of repairs and labor expended by the defendant in attempting to make the tractor work. The court read Section 51-0707, NDRC 1943 to the jury. It found for the defendant

'for a rescission of the contract in favor of the defendant and assess his damages and the amount he is entitled to recover in the sum of Seven Thousand Nine Hundred & Fifty Eight 48/100 ($7958.48) Dollars, on the International TD-24 tractor and equipment.'

The amount found by the jury was the exact amount shown by the conditional sale contract as the initial payment. This in turn was the exact amount of the aggregate rental for four months provided in the rental agreement.

Defendant bases is claim to the right to rescind on Section 51-0707 which provides that any person purchasing a gas or oil burning tractor for his own use shall have a reasonable time after delivery for the inspection and testing of the same, and if it does not prove to be reasonably fit for the purpose for which it was purchased may rescind the sale by giving notice within a reasonable time after delivery to the seller or...