San Francisco Securities Corporation v. Phoenix Motor Company, Inc.

• Decision Date: 21 November 1923
• Docket Number: Civil 2085
• Parties: SAN FRANCISCO SECURITIES CORPORATION, a Corporation, Appellant, v. PHOENIX MOTOR COMPANY, INC., a Corporation, G. F. ROGERS and O. E. ROGERS, Appellees
• Court: Arizona Supreme Court

220 P. 229

25 Ariz. 531

SAN FRANCISCO SECURITIES CORPORATION, a Corporation, Appellant, v. PHOENIX MOTOR COMPANY, INC., a Corporation, G. F. ROGERS and O. E. ROGERS, Appellees

Civil No. 2085

Supreme Court of Arizona

November 21, 1923

APPEAL from a judgment of the Superior Court of the County of Maricopa. F. H. Lyman, Judge. Affirmed.

Mr James E. Nelson, for Appellant.

Messrs Dougherty & Dougherty, for Appellees.

OPINION

DARNELL, Superior Judge.

This is an action on contract between the San Francisco Securities Corporation, plaintiff, and Phoenix Motor Company, Inc., and G. F. Rogers and O. E. Rogers, defendants.

In its complaint the plaintiff alleged that on the twentieth day of June, 1918, the defendants Rogers entered into a written agreement with defendant motor company for the purchase by them from said company of a certain tractor for the price of $1,700, payable $850 upon the signing of said agreement and $850 on January 15, 1919, which agreement was on the same day duly assigned to plaintiff by said defendant motor company, a copy of the agreement and the assignment thereof being annexed to and made a part of the complaint; that the defendant motor company delivered the tractor to, and the same was accepted by, the defendants Rogers; but that the said defendants had not complied with the agreement regarding the payment of the balance due, and that the said sum, with interest at ten per cent per annum from January 15, 1919, was due, and plaintiff asked recovery in this amount, together with $50 attorney's fee, as provided in the agreement.

The cross-complaint of defendants Rogers consists of four counts, but only the second one will be considered in this opinion, as the verdict and judgment were based upon it. In this count they alleged that on the date of the purchase of the tractor they were engaged in general farming near Mesa, Arizona, and in the growing of grains and various crops necessitating the plowing and cultivation of tracts of land of considerable size, which facts were well known to plaintiff and defendant motor company at the time the agreement for the sale of the tractor was entered into; that the defendant motor company warranted the tractor to effectively and economically pull two bottom plows and three discs in the plowing of land; to likewise operate other machinery usually driven by such motive power; that said tractor and its appliances were further warranted to be well made of good material, free from defects, and capable of doing first-class work in plowing, disking, operating hay presses, and such other farm work as that in which the same might operate under conditions existing in general farming and dairying in the vicinity of Mesa; that the said motor company further warranted to keep on hand and replace all parts of said tractor that might prove defective within one year from delivery of tractor; to furnish the services of an expert gas engine and tractor mechanic to keep the tractor in first-class working condition, and to repair the tractor promptly when necessary; that said defendants believed and relied upon the representations and warranties of defendant motor company, and observing all instructions of defendant company in good faith attempted to operate the tractor and to secure from it the warranted service; that the tractor was not as represented, and was incapable of doing any satisfactory work, was not economical and effective, and required frequent expensive repairs; that said defendants notified the defendant company of the situation but that defendant motor company neglected and refused to repair the tractor, or to assist the said defendants in obtaining satisfactory service from it; that defendant motor company refused to accept the return of the tractor, and shortly thereafter discontinued business, and the said defendants ask damages for breach of warranty in the amount of $1,700.

Issue was joined by plaintiff's second amended reply which set up paragraph 12 of the sales contract as a bar to defendants Rogers' recovery. This paragraph was as follows:

"(12) As a part of this contract of conditional sale, it is further agreed that in the event of assignment of the seller's interest in said personal property, and of the moneys payable hereunder, then the purchaser upon such assignment shall be precluded from in any manner attacking the validity of this contract on the ground of fraud, duress, mistake, want of consideration, or upon any other ground, and all moneys, shall be paid to such assigns without recoupment, setoff, or counterclaim of any sort whatsoever."

At the trial it was stipulated by the parties that the defendants Rogers purchased the tractor from the defendant motor company; that the contract of purchase was thereafter assigned by said company to the plaintiff; and that the balance sued for was unpaid by defendants Rogers.

Plaintiff having rested, G. F. Rogers, one of the defendants, was called as a witness in his own behalf, and, upon offering testimony in support of his answer and cross-complaint setting up breach of warranty, plaintiff objected to the same, for the reason that the defendants Rogers had waived such defense, and were estopped from setting up the same by virtue of paragraph 12 of their contract, and which objection was by the court overruled; whereupon various witnesses were sworn and examined, evidence produced in support of the cross-complaint, and the cause having been submitted, a verdict was returned for G. F. Rogers and O. E. Rogers for damages in the amount of $1,381.50 against defendant motor company, from which the jury deducted the amount of $1,179 sued for by plaintiff, leaving a balance in said verdict in favor of the said Rogers of $202.50. Judgment on this verdict was filed December 22, 1921, in which the defendants Rogers recovered their costs and disbursements and the cancellation of all notes, contracts and agreements relating to the purchase of the tractor as against the plaintiff, and the damages in the amount set out in the verdict as against the defendant motor company; the plaintiff recovering $1,179 and its costs against defendant motor company.

Plaintiff thereupon filed its motion for a new trial, which was denied, whereupon it gave notice of appeal, and filed its bond as provided by law. The defendant motor company did not appeal.

Appellant assigns the following as errors of the lower court, because of which it contends that judgment should be reversed: (1) That the court erred in overruling the plaintiff's objection to the introduction of any evidence by the defendants G. F. Rogers and O. E. Rogers substantiating said defendants' answer and cross-complaint, for the reason that defendants had waived such defense, as shown by said paragraph 12 of the sales contract; (2) that the verdict returned by the jury is contrary to law; (3) that the judgment herein filed is contrary to law.

These assignments of error can be considered together; for, if the court was in error in overruling the objection to the introduction of any evidence by the defendants, under their answer and cross-complaint, it follows that the verdict of the jury and the judgment based thereon are contrary to law.

The question then to be answered in the appeal is: Had defendants Rogers by the terms of paragraph 12 of the sales contract waived their right to set up a claim for damages for breach of warranty against the Phoenix Motor Company, Inc., assignor of the...