Old City Iron Works v. Belmont , 177 Ark. 223 ( 1928 )

STATEMENT BY THE COURT.

Appellant brought this suit to recover the balance of the purchase price alleged to be due from appellee for a second-hand or used drilling rig sold to him and for an amount due on open account for machinery.

Appellee denied indebtedness to appellant in any sum; alleged that the drilling rig purchased was a secondhand rig not worth more than $3,000, that the sale price, $9,000, was greatly excessive, and by cross complaint alleged that appellant expressly warranted the title to the property, and both expressly and impliedly warranted that it was in first-class condition and fit for the purpose for which it was purchased; that, at the time of the transaction, the property was impounded or held under attachments, and could not be delivered; that it was not in first-class condition as warranted, a part of same being wholly unfit for use; and that appellee was damaged in the sum of $2,156 by breach of the warranties, for which judgment was prayed.

The reply denied the allegations of the cross-complaint, and specifically that there was any express or implied warranty of the condition of the property, which it was alleged was sold "as is;" that appellee, after examination and inspection of the property, executed the note and agreement for the purchase price sued on, reciting the terms of the contract of sale and description of the property purchased.

The testimony shows that appellee approached appellant company at its offices in Shreveport, Louisiana, for the purchase of a drilling rig, and was informed by Mr. Price, its manager of oil field equipment, that it had two second-hand rigs, a light and a heavy one, in the Arkansas oil fields, which were for sale in existing condition, second-hand machinery not being guaranteed. Appellee was interested only in the purchase of the heavy rig located near Stephens, Arkansas, which he said he would like to see, and after ascertaining that satisfactory arrangements could probably be made for payment, he had Mr. Franklin, an employee of appellant company, to call the Shreveport office and tell them he was ready to buy. Price went to El Dorado, met appellee, and, after getting a favorable opinion from its attorney about the proposed assignment by appellee of a part of a judgment appealed from to the Supreme Court as security for some of the purchase money, he and Franklin took Belmont to the location of the property for its inspection, having already told him that there would be no guaranty of second-hand equipment, and he would have to come and examine it himself. Price said, "We took Belmont to the location, Franklin and myself, and showed him the rig, and told him that was what he was getting, and he said all right." Appellee held off a while, and after an agreement for exchange of some of the old machinery for new, accepted the rig, and moved it off the lease. Franklin testified he assisted in showing Belmont the rig, went with Price and Belmont to where the rig was set up, and showed it to him. "We just told him that that was the derrick, and he could look it over and examine it; it was a second-hand rig, but that it had just finished a well, and for him to look it over, so he looked it over. At that time he was satisfied with the rig, he said it was all right. After he came to El Dorado he decided he wanted new draw-works, one we had in stock which he had seen, and he offered to trade us the old draw-works and the boiler for our new draw-works, and we accepted the trade, and it was closed that way."

The contract was written and signed by appellee after this trade, and appears to be a full recital of the agreement of the parties, with a description of the property, and does not contain any expression of a warranty of the property sold.

Appellee admitted making an inspection of the rig before purchasing it, but testified, over objection, that he could not tell about all the machinery in such cursory examination, and that Price expressly represented and guaranteed the rig to be in first-class condition, and that if anything was wrong they would make it good. He also admitted signing the note and contract after making the inspection of the rig, and it was stipulated that the amount claimed to be due in the open account was correct.

The chancellor held there was an implied warranty and a breach of it; that appellant was entitled to recover the amount sued for, $1,331.28; that appellee was entitled to recover on his cross-complaint a like sum for breach of the implied warranty as a set-off against appellant's claim, with costs, dismissed both complaints for want of equity, awarding costs to appellee, and from the decree appellant prosecutes this appeal. (after stating the facts). Appellant contends that there was no express or implied warranty of the condition of the second-hand drilling rig sold to appellee, and that the court erred in holding otherwise and awarding appellee damages for breach of an implied warranty, and offsetting the award against the amount which appellant was entitled to and allowed to recover upon its claim.

The note sued on recites that it is given for the purchase price of the following described property, this day delivered to H. B. Belmont, itemizing it, a reservation of title in the property till paid for, permitting it to be moved to a described location, but not elsewhere without written consent of appellant; also that, as additional security for the obligation, the maker is assigning to the appellant company an interest of $9,000 in a judgment and decree recovered in the Ouachita Chancery Court in the case of Belmont v. Johnson, 172 Ark. 851,291 S.W. 77, on appeal to the Supreme Court; and "it is further stipulated that said assignment of all interest in said judgment as additional security for the above obligation shall be executed as a separate instrument;" purports to contain the entire contract or agreement of sale, and was signed and acknowledged by appellee, and contains no mention of a warranty of the condition of the property sold. There is no allegation of the pleadings or claim made by appellee that the warranty was omitted by mistake, nor of misrepresentations made or fraud practiced inducing appellee to sign the contract, and the warranty could not be incorporated in the contract by parol evidence. Schneider v. Fairmon, 128 Ark. 425, 194 S.W. 251.

It is undisputed that the property, the drilling rig, was second-hand, known to be such by the parties; that it was examined and inspected by appellee before his purchase thereof, and, under the circumstances, there was no implied warranty as to the condition or quality of the property purchased. Yellow Jacket Mining Co. v. Tegarden, 104 Ark. 573, 149 S.W. 518; Case Threshing Machine Co. v. Bailey, 89 Ark. 108, 115 S.W. 949; Hartin Com. Co. v. Pelt, 76 Ark. 177, 88 S.W. 929; Colchord Machinery Co. v. Loy-Wilson Foundry Machinery Co.,131 Mo. App. 540, 116 S.W. 630; note 29 A.L.R. 1231; 24 R.C.L. 1705; 35 Cyc. 468.

It follows that the court erred in holding otherwise and in adjudging damages to appellee for a breach of an implied warranty and setting-off the amount of such recovery against appellant's judgment for the balance of the purchase money due on the drilling rig and open account for machinery and supplies furnished the appellee.

The judgment on the cross-complaint is accordingly reversed, and the cause dismissed, and a judgment in appellant's favor for the said amount found to be due is affirmed, and judgment will be entered here accordingly. It is so ordered.