Columbia Motors Co. v. Williams ( 1923 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Count 1 of the original complaint and count 4 of the complaint as amended are assailed on the ground that they each allege two distinct and inconsistent causes of action: they seek damages for the breach of the contract alleged, thereby affirming its continued existence, and at the same time repudiate the contract by seeking to recover the purchase money paid thereunder. As we read the complaint, both counts proceed as for a breach of the covenants of a contract which the pleader undertakes to set forth according to its legal effect. The purpose of the contract, as it is alleged in both these counts, in substance, was to establish plaintiff as exclusive agent for defendant in the Gadsden territory and to effect an agreement for the sale by defendant to plaintiff of automobiles for resale by plaintiff at Gadsden and other places in that territory. The further averment of count 1 is that the automobiles to be delivered under the contract "were to be new cars and in first-class merchantable condition," and the breach alleged is that the cars shipped "were inferior in material, parts, and workmanship, unsalable, and totally worthless to this plaintiff." These allegations of count 1 sufficiently set forth the contract and a breach thereof. It may be conceded that on the case thus shown by this count the only recoverable item of damages alleged is that plaintiff "paid for the draft against the bill of lading covering said shipment of cars"; but this would not determine the count to be one for rescission. The allegation is of a breach, and in the circumstances stated plaintiff was entitled to recover the damage alleged. And if nonrecoverable items of damage were claimed, that fact could not be urged against the complaint by demurrer. In such case the defendant may protect himself against harmful results, by objections to the evidence, by exceptions to the oral charge authorizing recovery, and by special charges. Vandiver v. Waller, 143 Ala. 411, 39 So. 136; Southern Ry. v. Coleman,153 Ala. 266, 44 So. 837. Like considerations obtain in the case stated in the fourth count, added by amendment, where the stipulation is alleged to have been that the cars "were to be in good merchantable condition and salable for use and service as automobiles," and the breach that the cars were defective in respects, which are named, and "were unsalable and worthless." At least, the counts stated enough to warrant the recovery of nominal damages and that made them good as against demurrer. Cassells' Mill v. Strater Bros., 166 Ala. 282, 51 So. 969.

Quite a number of assignments of error raise the question whether under the complaint plaintiff was entitled to prove that he expended money in equipping a place for the storage and display of Columbia cars; in the payment of rent for such building; in employing salesmen in the effort to sell the cars he got from defendant under the contract; in paying for the services of mechanics who repaired the cars; and the value of his own services rendered to the same end; and the expenses of trips to Anniston and Ft. Payne to establish sub-agencies. The actual proximate injury sustained from the breach of warranty is the general rule of damages. For breach of warranty in the sale of goods such damages are prima facie, in other words, in the absence of special circumstances, the difference between the value of the goods at the time of delivery and the value they would have had if they had answered to the warranty. 2 Williston on Contracts, 1878; Snow v. Schomacker Mfg. Co.,69 Ala. 119, 44 Am. Rep. 509. This may be shown by proof of the reasonable cost of putting the article sold in the condition called for by the warranty. 69 Ala. supra; Hodge v. Tufts,115 Ala. 379, 22 So. 422.

Counts 2 and 3 were the common counts for money due and for money received by defendant to the use of plaintiff. Such counts being wholly inadequate as bases of recovery for the damages in dispute, we may assume that the judgment rendered by the court, trying the case without a jury, was based on neither of them. The question then is whether the judgment may be sustained as upon counts 1 and 4.

On the authorities cited above, the cost of putting the cars in the condition warranted by defendant — reasonable cost, of course — was, on the face of the pleadings as they appear in the right record in this cause, provable as tending to show the amount of recoverable damages.

As for the item of $75 expended by plaintiff in making trips to Anniston and Ft. Payne to establish agencies at those points, it is, of course, in the absence of allegation bringing them within the contemplation of the parties when entering into the contract, too remote; nor is this item of special damage claimed in the complaint. It was improperly allowed.

The other items in dispute, as enumerated above, were not recoverable prima facie — cannot ordinarily be considered as the natural and reasonable consequences of the injury described in the complaint. They are claimed as special damages; but there is no allegation in the body of the complaint going to show that the parties contracted with reference to the special circumstances out of which these damages arose. In the circumstances of this case — there being no ostensible connection between these items of damage and the sale of automobiles, or even between them and a contract for the establishment of an agency for the sale of automobiles — an allegation of special circumstances to bring those elements of damage within the contemplation of the parties was necessary. Baxley v. Tallassee Montgomery R. Co., 128 Ala. 183,29 So. 451; Bixby-Theirson Lumber Co. v. Evans, 167 Ala. 431,52 So. 843, 29 L.R.A. (N.S.) 194, 140 Am. St. Rep. 47; Morgan v. Whatley, 205 Ala. 170, 87 So. 846; 8 Rawle C. L. p. 459, §§ 27, 28, where many cases are cited.

However, count 1 purports to exhibit the contract between the parties, which by reference is made a part of the count. As matter of fact the exhibit was not appended to the pleading. This defect was not pointed out by demurrer, nor was it the proper subject of demurrer, since the count without the exhibit sufficiently stated a cause of action; the remedy was by motion to take the count from the file. No motion having been made, the absence of the exhibit was waived, and when it appeared in evidence, as it did, our judgment is that the court was justified in looking to it for a further statement and definition of the damages claimed in the complaint. This contract by its terms disclosed the fact that the elements of special damages here in question were within the contemplation of the parties; it showed that it was contemplated that plaintiff should provide — and that meant rent and equip, if necessary — a place for the storage and display of the automobiles bought from defendant for resale, and that plaintiffs should employ agents, in reasonable number and at reasonable price, of course, and so brought the losses incurred by plaintiff in making such provisions within the category of recoverable damages according to the rule of the authorities to which we have referred. The evidence aliunde was to the same effect. Plaintiff was entitled to recover actual losses of the sort described in the complaint as thus interpreted. Bixby-Theirsen Co. v. Evans, 174 Ala. 579, 57 So. 39.

Defendant (appellant) refers to section 15 of the contract, which provided that either party might terminate the contract on five days' notice without assigning cause therefor, and contends thereupon that it could not be made the basis of an action for damages for a breach; in other words, that there was in fact no executory contract between the parties. Christian v. Stith Coal Co., 189 Ala. 500, 66 So. 641, Lambie v. Sloss Co., 118 Ala. 427, 24 So. 108, and some federal cases in which there were contracts for the sale of automobiles similar in that respect to the contract under consideration, but lacking other material provisions, are cited in support of this proposition. The specific contention is that under the contract in evidence plaintiff was improperly allowed to recover damages on account of renting and equipping a place of business and paying the salaries of salesmen. This theory of the case proceeds upon the assumption that the contract was only for the sale of automobiles; but the provisions for the contract make it something more. The automobiles were sold to plaintiff as furnishing the stock in trade of a business he was to build up and carry on, his own business, in and over which, however, defendant reserved to itself a certain benefit and a large measure of control. Still there remained mutual obligations to be fulfilled — an executory contract. This contract provided that plaintiff should faithfully and diligently promote defendant's interest in the territory granted him; he was to employ local dealers, but they were not to be the agents of defendant; he was to keep in stock sufficient cars for display and demonstration purposes; to provide at all times facilities for handling, repairing, and adjusting cars in his territory; to keep at least one competent automobile mechanic; he was to advertise defendant's cars; to furnish detailed statements of sales made by him — those among other stipulations. These stipulations demonstrate, we think, that the contract amounted to more than the ordinary sale of automobiles; that defendant had an interest in the business; that in making the outlays for which he now seeks to recover plaintiff was furnishing a part of the consideration upon which defendant agreed to sell him automobiles; and that a breach involved defendant in liabilities beyond those which attend a sale without more. So far as concerns the right summarily to terminate the contract, it remained in full force and effect for several months; and, as we understand the record, plaintiff was allowed to recover only such actual damages as were incurred by reason of losses suffered during the life of the contract in the reasonable effort to perform its conditions. The cases referred to merely decide, and correctly, we think, that damages may not be recovered under a contract terminable at the will of either party for what might have been done or left undone, in the event and after its termination, or that a contract without mutual obligations cannot be enforced — is no contract. Such is not the case here in respect of the damages awarded or the nature of the contract.

The court overruled defendant's motion to exclude plaintiff's testimony that on one of the cars he paid out for freight and insurance the sum of $548.74. Plaintiff had to pay the freight in order to get the cars and no doubt common prudence suggested insurance. This damage must therefore be taken as within the contemplation of the parties.

Plaintiff was allowed to answer the question, "What would they [the cars bought and paid for by plaintiff] have been worth if they had been in first-class merchantable condition?" The objection was general, that the question called for illegal and immaterial testimony. The argument is that by implication the question required too much of defendant — required cars in first-class merchantable condition, whereas the law, in the circumstances, required only that they should be in merchantable condition, citing Baer v. Mobile Cooperage Co.,159 Ala. 491, 49 So. 92. Conceding for the argument a difference between "merchantable" condition and "first-class merchantable" condition — though we do not think the cited case intends to establish any such distinction — the objection did not fairly call the court's attention to the point now taken against the ruling. The evidence was neither illegal nor immaterial. This and other like questions tended to establish, each in part, the measure of plaintiff's recoverable damages.

It is further insisted that the contract limited the liability of defendant to the furnishing or replacing of defective parts. This refers to section 24 of the contract which incorporates the "manufacturer's standard warranty," by which the manufacturer warrants each new vehicle "to be free from defects in material and workmanship under normal use and service, our obligation under this warranty being limited to make good at our factory any part or parts thereof which shall, within 90 days after delivery of such vehicle to the original purchaser, to be returned to us," etc. A witness testified that "original purchaser" meant the person who buys the new car from the dealer. Such evidence has been received by the courts in a great variety of cases, not as contradicting, but as explaining, the terms of written contracts which are of a technical character, or have a limited meaning as used in some locality or, as here, in some branch of business. Many such cases are cited in the note to Jones on Ev. § 455, including our case of M C. R. R. v. Graham, 94 Ala. 554, 10 So. 283. And in this case the "manufacturer's standard warranty" sufficiently shows the terms to have been employed with the meaning to which the witness testified. Considering the purpose of the contract, the purpose, not to sell cars to plaintiff for his use, but to sell cars to him as one step in the establishment and maintenance of an agency — however qualified — for the sale of automobiles to "original purchasers," we think it cannot be held that there was the intent to provide a substitute for the legally implied warranty of merchantability, if indeed that is something different from a guaranty of freedom from defects in material and workmanship under normal use and service.

There was no error in admitting evidence of the fact that plaintiff paid the sum of $9,125.66 when he got the first consignment of five cars. This was the agreed purchase price, it is true, and plaintiff could not retain the cars and recover the price. But proof of this payment was proper, not as meaning necessarily that plaintiff was entitled to recover the whole amount, but as fixing one term of the equation by which his recoverable damage, the difference between price and value, Was to be ascertained.

The court allowed plaintiff to testify to the value of work done on two cars of a later shipment afterwards sold to Mrs. Farrar and T. B. Gwin. Plaintiff had refused to accept these cars; the evidence tending to show that he got possession of them by means of false representations to the warehouseman at Gadsden, who had them in charge. He was not entitled to compensation for repairs done on them, but the record shows that the court charged plaintiff with the price at which he sold them after being repaired. No complaint is made that the price obtained did not represent the full value of these cars in their condition at the time of the sale to Farrar and Gwin. We do not see that defendant was prejudiced by the rulings just here in question.

Our conclusion is that the charge of $75, the expense of visiting Anniston and Ft. Payne, should be deducted, and judgment rendered here for the balance of the amount for which plaintiff had judgment in the trial court.

Corrected and affirmed, at appellee's cost.

ANDERSON, C. J., and GARDNER and MILLER, JJ., concur.

On Rehearing.