Palaniuk v. Allis-Chalmers Mfg. Co.

• Decision Date: 06 August 1928
• Docket Number: No. 5450.,5450.
• Citation: 220 N.W. 638,57 N.D. 199
• Parties: PALANIUK et al. v. ALLIS-CHALMERS MFG. CO.
• Court: North Dakota Supreme Court

57 N.D. 199

220 N.W. 638

PALANIUK et al.

v.ALLIS-CHALMERS MFG. CO.

No. 5450.

Supreme Court of North Dakota.

July 3, 1928.

On Rehearing, Aug. 6, 1928.

Syllabus by the Court.

Chapter 238, S. L. 1919 (sections 5991a and 5993a, 1925 Supplement), insures to the buyers of machinery of the character therein specified, a warranty that the same is reasonably fit for the purposes for which it is purchased.

A buyer of machinery such as is specified in chapter 238, S. L. 1919 (Comp. Laws Supp. 1925, §§ 5991a, 5993a), may by his contract with the seller stipulate that, in case the machinery bought is not reasonably fit for the purposes for which it was purchased, he shall have no remedy except by way of rescission, and where he does so other remedies are not open to him.

Additional Syllabus by Editorial Staff.

Where contract for sale of gasoline tractor provided that, in case tractor was not reasonably fit for purposes for which it was purchased, the only remedy of the purchaser was by way of rescission, such remedy was exclusive notwithstanding Comp. Laws Supp. 1925, § 6002a69, authorizing election to rescind or keep goods and for action for damages in case of breach of warranty.

Appeal from District Court, Billings County; Thomas H. Pugh, Judge.

Action by Elko Palaniuk and another against the Allis-Chalmers Manufacturing Company. From a judgment for plaintiffs and an order denying new trial, or judgment non obstante, defendant appeals. Reversed, and a new trial ordered.Pierce, Tenneson, Cupler & Stambaugh, of Fargo, for appellant.

C. H. Starke and H. A. Mackoff, both of Dickinson, for respondents.

NUESSLE, C. J.

In August, 1923, the plaintiffs purchased a gasoline tractor from the defendant. The plaintiffs were farmers and contemplated using this tractor for plowing and threshing. The fact that they so intended to use it was known to the agent of the defendant who sold them the tractor. A written contract covering the sale was entered into by the parties. This contract was prepared by the defendant. The tractor was delivered. After using it for a few days the plaintiffs claimed that it was unsatisfactory, and in the early part of September, 1923, advised the defendant to that effect. Thereafter the defendant sent one of its representatives to remedy the defects complained of, and the plaintiffs continued to use the tractor. The plaintiffs' evidence tends to show that it never satisfactorily fulfilled the purposes for which it was purchased; that on their complaints the defendant at intervals through the period up to July, 1926, sent its servants and representatives to remedy the defects which the plaintiffs claimed existed; that the tractor was never satisfactory. In July, 1926, the plaintiffs served a formal written notice of rescission and advised the defendant that the tractor was at Belfield subject to the defendant's order. At the time that the tractor was purchased, the plaintiffs gave their notes for the purchase price thereof, some of which were paid.

The contract under which the purchase was made contained, among other provisions, the following:

“This contract is made in conformity with House Bill No. 113 of the 16th Legislative Assembly of the State of North Dakota, approved February 26, 1919, reserving, however, unto vendor all state and federal lawful and constitutional rights, and it is mutually agreed between the parties hereto that ten days from the time when purchaser shall first put said tractor in operation for plowing (if purchased for plowing), or for threshing (if purchased for threshing) or as to said separator, ten days from the time when purchaser shall first put it in operation, shall be a reasonable time after delivery of said machine for the inspection and testing of the same or either of them, and if purchaser shall claim such machine is not reasonably fit for the purpose for which it is purchased and sold as aforesaid, he shall give vendor written notice by registered letter addressed to vendor at Fargo, North Dakota, mailed within twelve days from the date such machine is first used for the purpose for which it is purchased and sold, specifying the machine and in what particular it is unfit for such purpose, and the vendor shall have six days from the receipt of such notice within which to get a competent man to the machine and reasonable time, not exceeding six days, thereafter in which to make the same comply with the terms of this contract, or at its election to furnish a new machine which will be delivered and tested under the terms and conditions of this contract, and upon failure the purchaser shall deliver the machine so failing in as good condition as when received to the place where he received it, this contract shall be considered rescinded and vendor shall return to him the amount of cash it received and all notes and securities given by him in settlement of the purchase price, and this remedy shall be exclusive and shall be in full of all claims of every nature by purchaser against vendor.

Failure to give the aforesaid notice or so to return the goods within the time specified shall be taken as conclusive evidence that all of said machinery is reasonably fit for the purpose for which it was purchased and sold.

Vendor warrants that the machinery sold hereunder is well made and of good material. This warranty is exclusive of all representations and of all implied, statutory or other warranties, and there are no terms or conditions except those herein contained. Parts proving defective in workmanship or material will be replaced free of charge, f. o. b. Fargo, North Dakota, for the period of six months after delivery of the machine, upon the defective parts being returned to vendor at Fargo, and vendor shall be the judge of whether or not such part is defective. In event the purchaser shall pay for any such defective parts he shall be credited with the moneys paid by him therefor upon any note owing by him to vendor or vendor shall return the same to him in cash, and this shall be the full and sole measure of damages for failure of this warranty.”

In 1926 the plaintiffs began the instant action. In their complaint they alleged the fact of the purchase; that the tractor was not reasonably fit for the purposes for which it was purchased; that there was an implied warranty of fitness; that on account of its unfitness the contract was rescinded and the tractor tendered back to the defendant; that in using it and determining its fitness they had incurred expense; that on account of its unfitness they had suffered damages; wherefore, plaintiffs prayed judgment for the recovery of that portion of the purchase price paid, for the cancellation of the notes remaining unpaid, for the expenses incurred in trying to use the tractor, and for damages suffered on account of its failure to comply with the warranty of fitness. The cause came to trial before a jury. The trial court ruled that there had been no proper rescission, and the case was tried and submitted to the jury on the theory that there had been an affirmance of the contract and that a recovery might be had for damages. The plaintiffs had a verdict. Thereafter the defendant moved for a new trial or for judgment notwithstanding the verdict. The motion was denied. Judgment was entered on the verdict, and the defendant perfected the instant appeal from the judgment and from the order denying its motion for a new trial or for judgment non obstante.

The defendant has assigned many errors in support of its appeal. Its chief contention, however, is centered on the proposition that under the terms of the contract there could be no implied warranty of fitness; that the only warranty contained in the contract was the warranty that the tractor was well made and of good material; that there was no breach of this warranty; that the contract excluded any and all other warranties, and therefore there could be no recovery of damages by the plaintiffs; that though the tractor was unfit for the purposes for which it was purchased and the plaintiffs were entitled to relief on that account, the contract provided an exclusive remedy therefor by way of rescission. On the other hand, plaintiffs contend that notwithstanding the provisions of the written contract, there was an implied warranty of fitness for the purposes for which the tractor was purchased, that it was not reasonably fit for such purposes, and therefore plaintiffs were entitled to recover damages on account of the breach of such warranty.

[1] The Uniform Sales Act was enacted as chapter 202, S. L. 1917. Under the terms of that act, section 15, subd. 1 (section 6002a15 of the Supplement), an implied warranty of fitness for the...