Williamson Daily News v. Linograph Co.
| Decision Date | 12 February 1931 |
| Docket Number | No. 3040.,3040. |
| Citation | 47 F.2d 523 |
| Parties | WILLIAMSON DAILY NEWS v. LINOGRAPH CO. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Ben Moore and T. C. Townsend, both of Charleston, W. Va. (Harry Scherr, of Huntington, W. Va., on the brief), for appellant.
George S. Wallace, of Huntington, W. Va. (James W. Bollinger, of Davenport, Iowa, on the brief), for appellee.
Before PARKER, Circuit Judge, and SOPER and COLEMAN, District Judges.
This is an appeal from a decree in equity in favor of the appellee, the Linograph Company, a corporation engaged in the manufacture of typesetting machinery, with its principal place of business in Davenport, Iowa, which was the plaintiff below and will hereinafter be called the seller, against the appellant, the Williamson Daily News, a corporation engaged in the newspaper publishing business in Williamson, W. Va., which was the defendant below and is hereinafter called the purchaser. The suit was brought by the seller to recover the balance due on the sale of two typesetting machines and their equipment, and to foreclose on two chattel mortgages covering the property sold. Only one of the machines, that known as linograph model 12, is now in controversy. The decree of the lower court awarded the seller $7,044.53, which represented the total unpaid balances together with accrued interest. The purchaser admitted having bought the machines and equipment as alleged by the seller, but sought to avoid payment by a counterclaim alleging breach of warranty with respect to the model 12 machine. The contract price of this machine was $5,600, and of its equipment $1,367, a total of $6,967. The purchaser paid on account $3,835, including an allowance of $2,000 for an old machine. The balance, $3,132 with interest, making a total of $4,197.92, is the amount which the lower court decreed to the seller, in addition to $2,846.61 found to be due on the purchase price of the other machine, plus interest. With this latter amount, we are not here concerned except as it is involved in the purchaser's counterclaim, because the purchaser has accepted the second machine as satisfactory. It claims, however, that because the model 12 machine was defective, it should not have been required to pay anything more under the contract, but that a decree should have been entered in its favor for $460.92, representing the amount paid on account, namely, $3,835, less the contract price of the equipment and of the other machine, with interest, the model 12 machine to be returned to the seller.
There are nine assignments of error, but they all bear upon the same question, namely, the validity of defendant's counterclaim, which in turn, depends upon the answers to the three following questions: (1) What was the nature and extent of the warranty that went with the model 12 machine? (2) Was this warranty breached by defects in that machine, thereby entitling the purchaser to rescind the contract? and (3) Was the right, if any, to rescind waived, either expressly or impliedly, by the purchaser?
The agreement of sale covering the model 12 machine is contained in a written contract consisting of an order from the purchaser, signed by three of its officers, its president, its editor and manager, and also by a salesman, and accepted on behalf of the seller by its sales manager, the contract providing that it should become binding when so signed. This acceptance is dated May 26, 1924, at Davenport, Iowa. Thus, the contract having been consummated in Iowa, its provisions are to be interpreted according to the law of that state. Scudder v. Union National Bank, 91 U. S. 406, 23 L. Ed. 245; Gaston v. Warner, 260 U. S. 201, 43 S. Ct. 18, 67 L. Ed. 210. The contract provided for certain cash payments, the balance by a series of monthly notes, secured by a chattel mortgage on the property sold, and also contained the three following provisions which are pertinent to the present suit: "The Linograph Company guarantees the Linograph to be of good mechanical construction and agrees to replace any parts which prove defective, provided the broken parts are returned to the factory for inspection with transportation charges prepaid." "The Linograph Company does not bind itself to any verbal agreements or `understandings' not specified in contract." "The Linograph Company agrees to send a man to install the Linograph and to allow him to stay with the purchaser for five days, for the purpose of giving instruction in the operation and care of the Linograph."
In July, 1924, the seller's employee Ziegler installed the machine, tested it out in operation, and then turned it over to the purchaser and received the latter's so-called "installation O. K." in writing, signed by its editor, on July 31, 1924. Thereupon the purchaser's operator Blackburn ran the machine and appears to have had trouble from the very beginning, which Ziegler, in September, was called in to remedy and did remedy, operating the machine himself for ten days. During that time the president of the company told him that the trouble was not due to any fault in the machine, but to the operator's fault. The machine was a linograph as distinguished from a linotype machine, designed primarily for so-called display composition, which permits of a smaller average of line-setting per day than does ordinary straight composition, due to the fact that there is a greater variety in size of type and length of line. The trouble found by Ziegler was that the machine did not produce the proper quantity of work, due primarily to two alleged defects: First, the letters on the left-hand side of the keyboard fell into the assembly elevator faster than the letters on the right, resulting in transposition of letters and the consequent necessity of discarding whole lines in which these transpositions occurred; second, certain parts of the machine failed to maintain a constant clearance, with the result that the mechanism sometimes became blocked. Blackburn stated the trouble was due to a tendency "to squirt," which in the printing trade is understood to be the throwing of molten metal over the front and back of the machine, thus requiring frequent cleaning of the type, with consequent loss of time in operation. The seller's engineer and factory inspector testified that he refused to O. K. the machine when it left the factory, because its magazine was too wide and its construction too light to perform what was expected of it; that it was not capable of reasonably efficient operation as a typesetting machine. He stated that he did so over the protest of the manager and secretary of the company, but he never saw the machine after it was installed, and was discharged by the company in October, 1925. It appears that several other machines of the same type, sold to other customers, also produced unsatisfactory results. The seller's sales manager testified that only twelve of this type were manufactured, and four were still in successful operation, the company having stopped making this type because of patent litigation.
In October, 1924, Ziegler left the seller's employment and became superintendent of the purchaser's plant where he became operator of the machine in the place of Blackburn. In November, 1924, purchaser had bought the other so-called intertype machine from the seller, and had given to the seller the following letter commendatory of the Model 12 machine:
During the month of January, 1925, the purchaser's company was sold to new interests and a reorganization in the management took place, but Ziegler was retained as operator of the model 12 machine until the latter part of February, 1925, when he was again employed by the seller, up to which time, that is, for some seven months, the machine worked satisfactorily, except for minor troubles. During nearly all of this period the purchaser paid its monthly notes with interest as they became due under the contract of sale, and made no complaints about the machine. Mr. Adams, the new business manager, on January 27, 1925, wrote the seller the following letter:
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