Interstate Grocer Co. v. Colorado Milling & Elevator Co. ( 1940 )

The first car of flour was paid for when the purchaser took up at the bank the draft to which the bill-of-lading was attached. Payment for and delivery of the flour were simultaneous acts, and no opportunity was afforded the purchaser to ascertain whether the flour conformed to the warranty until after it had been paid for and delivered. The majority opinion reflects the fact that there was testimony that this car of flour did not conform to the warranty under which it had been sold. The testimony upon that question was sufficient to have required the submission of that issue to the jury as to both cars of flour but for the fact that the purchaser did not comply with the provisions of the contract relating to a breach of the warranty as to the quality of the flour. These were that he should make written complaint within twenty days after delivery, and should return to the shipper a 5-pound package of the flour with an itemized statement of loss sustained. The contract provided that unless the purchaser made complaint and returned the sample and the statement of the loss as required, he waived the right to complain of the breach of the warranty.

The purchaser was, therefore, not entitled to damages on account of the defective quality of the flour delivered, and the cases cited in the majority opinion sustain the ruling of the trial court to that effect.

The recent case of N. Sauer Milling Co. v. Stueart, ante, p. 210, 133 S.W.2d 639, was a suit upon a contract identical with the one here sued on calling for the shipment of flour in installments. That suit, like this, was one for the liquidated damages, for which the contract provided, for failure to order out flour as required by the contract. In that case, as in this, there was testimony to the effect that the first car of flour shipped was not up to the grade for which the contract called. When the shipper in the Sauer case, supra, was sued for the damages, he denied liability, and filed a counterclaim for loss sustained on the first car.

It was decided in that case that the purchaser could not recover damages because he had not given notice and had not sent sample of the flour as the contract required. The purchaser was also held liable for the liquidated damages provided in the contract resulting from the failure to complete the order for flour. But a second contract had been made in that case after the purchaser was aware of the faulty quality of the flour, and it was there said: "It certainly appears that the misrepresentations relied upon by appellees (the purchaser) as to the grade and quality of the flour purchased did not induce them to enter into the second contract which is made the basis of this suit." In other words, the purchaser in that case made a new contract covering the balance of the flour originally purchased, and when the flour was sold and delivered it was subject to the same warranty applicable to the first shipment. Here, there was only one contract, although it recited that its provisions for two shipments of the flour should be treated as severable contracts, but the warranty applied alike to both shipments.

Appellee here received and paid for the first shipment of flour; but the contract of warranty precluded him from recovering any damages on account of its inferiority because he did not comply with the provisions of the contract in regard to giving notice. The cases cited in the majority opinion, as well as the Sauer case, so hold. But the shipper seeks and was allowed to recover the liquidated damages for failure to order out the balance of the flour covered by the contract.

The case of Yerxa, etc., Inc., v. Randazzo Macaroni Mfg. Co., 215 Mo. 927, 288 S.W. 20, cited by the majority, holds that the seller's breach or default as to one installment of a severable contract does not entitle the buyer to rescind the contract or refuse subsequent shipments on the ground that prior shipments or installments were inferior in quality or unfit for the use intended. This is true, where the shipper tenders and proposes to ship flour of the grade contracted for.

Here, the shipper insisted that the flour shipped was of the grade contracted for, and he proposed to fulfill the contract by shipping additional flour of the same grade as that first shipped. As has been said, there was much testimony to the effect that the first carload of flour was inferior in grade, certainly there was enough testimony to support a finding of the jury to that effect.

Now, the first car of flour passes out of the case regardless of its inferiority, because the terms of the warranty were not complied with; but the purchaser was under no obligation to receive additional flour which did not meet the quality warranted. The question in the case — and, under the testimony, it was one for the jury — was, whether the shipper had shipped the flour warranted, as he proposed to ship more of the same kind. Justice Holt and I think the question should have been submitted to the jury under instructions telling the jury that, if the first car shipped conformed to the warranty, the purchaser should have ordered out the balance of the flour and was liable for the liquidated damages; but that the purchaser would not be required to order out and pay for the second car of flour if the first car was inferior and did not comply with the warranty, inasmuch as the shipper insisted that the purchaser receive more flour of the same kind.

The majority cite the case of Enterprise Mfg. Co. v. Oppenheim, 114 Md. 368, 79 A. 1007, 38 L.R.A., N.S. 548, the first headnote in which case reads as follows: "One who purchases a quantity of cotton goods of a quality known as `firsts,' to be delivered in installments, may rescind the contract in case the first few installments are seconds, which cannot be put to the use for which the first were intended."

The annotator's note to this case cites the case of Ellison Son Co. v. Flat Top Grocery Co., immediately preceding, 69 W. Va. 370, 71 S.E. 391, 38 L.R.A., N.S. 539 — for a discussion of the question as to the right of the purchaser to rescind a contract for the purchase of articles in installments for breach as to the quality in any installment. In the annotator's note to this case, there cited, it was said: "Where the seller is required by an entire contract to make successive deliveries of the article sold, and the first deliveries fail substantially to comply with the terms of the agreement as to the quality of the goods, the purchaser, by prompt notice of his refusal further to perform, upon the discovery of the failure, may relieve himself from liability for subsequent deliveries. McDonald v. Kansas City Bolt Nut Co., 79 C.C.A. 298, 149 F. 360, 8 L.R.A., N.S. 1110; Harding, W. Co. v. York Knitting Mills, 142 F. 228; Enterprise Mfg. Co. v. Oppenheim, 114 Md. 368,79 A. 1007, 38 L.R.A., N.S. 548." It will be remembered that the second car of flour was never shipped.

It is familiar law that the party who commits the first material breach of a contract may not require the other party to perform the contract, and if the first car of flour did not conform to the contract the seller had no right to insist that the purchaser order out additional flour of the same inferior grade.

In the case of Jerome Hardwood Lbr. Co. v. Beaumont Lbr. Co., 157 Ark. 220, 247 S.W. 1059, Chief Justice McCulloch, speaking for the court, said: "We recognize the well-established rule that one who first breaks a contract cannot maintain suit to recover upon it, and that the failure of one party to comply with a contract releases the other party from performance. Missouri Pacific Ry. Co. v. Yarnell, 65 Ark. 320, 46 S.W. 943; Spencer Medicine Co. v. Hall, 78 Ark. 336, 93 S.W. 985; John A. Gauger Co. v. Sawyer Austin Lbr. Co., 88 Ark. 422,115 S.W. 157; Ford Hardwood Lbr. Co. v. Clement, 97 Ark. 522,135 S.W. 343; Keopple v. Delight Lbr. Co., 105 Ark. 233,151 S.W. 259; Ensign Co. v. Coffelt, 119 Ark. 1,177 S.W. 735."

Justice Holt and I are of the opinion that, while a verdict was properly directed as to the first car of flour, for the reasons herein stated it was error not to submit to the jury the question of liability for the second car.