Reliance Varnish Co. v. Mullins Lumber Co.

• Decision Date: 08 June 1948
• Docket Number: 16086.
• Parties: RELIANCE VARNISH CO. v. MULLINS LUMBER CO.
• Court: South Carolina Supreme Court

48 S.E.2d 653

213 S.C. 84

RELIANCE VARNISH CO. v. MULLINS LUMBER CO.

No. 16086.

Supreme Court of South Carolina

June 8, 1948

[Copyrighted Material Omitted]

Woods & Woods, of Marion, for appellant.

C W. Muldrow and John M. Scott, both of Florence, for respondent.

OXNER, Justice.

This action was commenced in April, 1943 for the recovery of the sum of $1235.05 which respondent, Reliance Varnish Company alleged was the balance due for varnish and finishing materials furnished to appellant, Mullins Lumber Company between April 22, 1941 and January 8, 1942, and for the recovery of the further sum of $455.00, representing the value of certain drums used in shipping material to appellant which respondent alleged were never returned or accounted for. Appellant admitted in its answer the purchase of the materials and payments thereon as set forth in the complaint, but alleged that other payments had been made in an amount sufficient to discharge the balance alleged to be due. It denied being under any obligation to return the drums. As a further defense, appellant alleged that after using a portion of this material, it was found to be wholly unsuitable and worthless for the purpose for which it was sold and that thereafter it sent to respondent a check covering the portion actually used and returned the remainder, which resulted in the extinguishment of respondent's claim. As a further defense, it was alleged that respondent warranted the material to be sound and suitable for the purpose for which it was bought and that this warranty was breached. Appellant also set up a counterclaim in which it alleged that some of this material was applied to furniture manufactured and sold to its customers and on account of the defective quality to the material, appellant had to make large refunds to its customers or allow deductions from the agreed price of furniture sold to them. It was further alleged that the reputation and good will of appellant in the furniture trade had been damaged. Judgment was sought on the counterclaim in the sum of $3000.00.

The case was tried in April, 1947. At the conclusion of all the testimony, respondent made a motion for a directed verdict for the full amount of its claim and also moved for a directed verdict in its favor on appellant's counterclaim. Appellant moved for a directed verdict in its favor as to respondent's account upon the ground that it had tendered full settlement of the controversy by sending to respondent a check for $392.35, covering the cost of the material actually used, and returning the balance, and that respondent accepted the check but refused to receive the returned merchandise. The Court denied appellant's motion and granted that of respondent for the amount of the account, but refused respondent's motion as to appellant's counterclaim. The case was thereupon submitted to the jury solely on appellant's counterclaim and resulted in a verdict in favor of the respondent for the sum of $1690.05, representing the amount of the account and the value of the drums. The verdict of the jury necessarily included a finding against appellant on its counterclaim.

We shall first determine whether the Court erred in granting respondent's motion for a directed verdict for the full amount of its claim and refusing appellant's motion.

Respondent has been engaged in business at Louisville, Kentucky, for a number of years, selling its products almost exclusively to furniture manufacturers. The formula and color of the varnish or stain are made to meet the particular needs of the customer. The type of material selected depends to some extent on the kind of wood used and the pattern of furniture to be manufactured. It frequently happens that the furniture maker, after observing the result produced by a certain material, desires to change the formula or color in some particular so as to produce a slightly different color or result. It is then necessary to change the formula to meet the wishes of the customer. Respondent keeps in the field service managers for the purpose of making such changes, demonstrating its materials, and observing the mechanical layout of the customer's finishing room. It constantly receives suggestions and criticisms from the customers, which are called 'production complaints' and are attended to by the service manager. Even though the material is of the proper type, unless correctly applied the result is not satisfactory. It is necessary that its application be skilfully supervised by the furniture manufacturer.

Appellant was formerly engaged in the lumber business. About 1932 it commenced manufacturing furniture. For seven or eight years appellant had been buying varnish and other finishing material from respondent and during this period also made purchases from other companies, although it claims that during 1941 the major portion of its supply came from respondent. Complaints were registered from time to time which appellant says were usually temporarily remedied by respondent's service manager. Frequently the service manager changed the formula in order to obtain a better result. Appellant's testimony was to the effect that the service manager assured it on each occasion that there would be no more trouble, but during 1941 the matter became serious; that during the summer of that year it was necessary on some occasions for the service manager to visit its plant as much as twice a week; and that finally during the fall of 1941 the trouble reached such proportions that appellant was forced to discontinue the use of respondent's products and secure its materials elsewhere.

Appellant's finishing room foreman who was experienced in this line of work, testified that at first the trouble was of a minor nature but during the latter part of 1941 it went 'beyond the control' of respondent service manager; 'that the varnish wouldn't dry' and when put 'in operation in the rubbing room, the varnish would soften up'; that respondent's representatives used various ingredients to remedy the situation and assured them that there would be no more trouble, but after making repeated efforts to solve the difficulty, the service manager said during the fall of 1941, 'The d--material wasn't any good, it wouldn't work'; that appellant then discontinued its use, commenced purchasing from another company, and later shipped to respondent all material which had not been used (The record shows that this material was not shipped until October, 1942). This witness admitted on cross-examination that appellant also had some difficulty with material furnished by other companies and that at least on one occasion the varnish of another company was turned over to respondent to be 'reworked.' His explanation of the delay in returning the unused materials to respondent was that respondent's sales manager stated that he could get some ingredients from respondent's laboratory which would cause the materials 'to work out but it didn't come', and that the product was left at appellant's plant pending an adjustment.

Respondent's service manager and sales manager did not testify. However a former employee of appellant, who was superintendent of its furnishing room in 1939 and during a part of 1940 and 1941, testified for respondent in reply that its materials were satisfactory and caused no more trouble that those furnished by the other companies.

Appellant has paid for all material bought from respondent prior to April, 1941. The total purchases between that month and January, 1942 amounted to $3877.27. Respondent wrote appellant in November, 1941, calling attention to the fact that it had not paid for the May shipments and the following month again wrote appellant stating that it was imperative that the account be straightened out. A few days later appellant inquired of respondent whether it would be satisfactory to send 'check for $1000.00 and 45 and 90-day notes for the balance'. It appears that four payments of $500.00 each were made between March 6 and September 8, 1942. On October 9, 1942, respondent wrote appellant insisting that further payments be made so as to clear up the account before the end of the year. The president of appellant replied on October 13th, stating that his son, who had handled this transaction as vice-president and treasurer of the company, had been in the Service since February of that year but that he did not personally feel that the company owed respondent anything because of losses sustained on account of the defective materials. He further stated that the company had on hand 'some nine to a dozen drums' of respondent's material which it had been unable to use for any purpose, and made the proposal that if respondent would permit the company to return these drums as a credit on the account, it 'would be glad' to send check for the balance. On October 16th, the president of respondent replied that appellant's letter of October 13th was the first intimation he had of any claim that the materials were defective and made the following proposition: 'If you have any of our material on hand that is unopened, and uncontaminated, you may be sure that we would be more than glad to receive it for credit, if it is returned to us by prepaid freight.' On October 26th appellant wrote respondent as follows:

'We are enclosing herewith our check for $392.35, together with an invoice for $1235.05, which pays in full our indebtedness to you, as per your statement of October 1.

'Your action in this matter is greatly appreciated and goes a long way towards settling satisfactorily the difference between us.'

Respondent accepted and deposited the check and on October 29, 1942, replied as follows:

'We have for acknowledgment your letter dated October 26th.

'I wish to call your...