Interstate Grocer Co. v. Colorado Milling & Elevator Co.

This suit was brought by appellee against appellant to recover liquidated damages in the sum of $612.69 for failure to order a second car of Snowbird flour of 210 barrels capacity under and by virtue of a contract entered into by and between appellant and appellee on August 5, 1937. It was alleged that on said date appellant entered into a contract with appellee to purchase 420 barrels of Snowbird flour in a two-car shipment, each car to contain 210 barrels of flour; that appellant gave shipping instructions on one car and that same was shipped and delivered and paid for in accordance with the terms of the contract; that appellant did not give shipping instructions on the second car and in July, 1938, eight months after the expiration of the original time of performance, advised appellee that it would not accept the second installment of 210 barrels, whereupon appellee brought suit against appellant for damages based upon the liquidated damage clause in the contract.

The written contract made the basis of this suit contained the following warranty:

"Seller expressly warrants that any flour contracted herein will be representative of the brand or grade specified herein to be sold and that any feed contracted herein to be sold will be equal to the minimum requirements of the law of the state named herein as destination. Buyer hereby waives any claim or defense based on the quality of the commodities specified herein, unless (1) within said twenty (20) days after receipt of said commodities Buyer sends Seller at Seller's main office a letter by registered mail specifying the nature of the complaint; (2) within said twenty (20) days sends by express prepaid to Seller's said office a five (5) pound sample of the goods alleged to be defective or inferior; and (3) within thirty (30) days after the arrival of said goods Buyer sends Seller at his said office an itemized verified statement of all loss and damage claimed by Buyer as a result of said alleged defective or inferior goods, provided that compliance by Buyer with the three last above enumerated steps shall not constitute an admission by Seller of the merits or amount of Buyer's claim."

It also contained a provision relative to liquidated damages in case appellant should breach the contract by failing to order out the flour purchased and for future delivery specifying the items that might be considered in arriving at the amount of damages.

The contract also contained the following clause: "If there is more than one installment of goods shipped or stipulated herein to be shipped, this contract shall be construed to be severable as to each installment . . . and breach or default of either buyer or seller as to any installment or installments shall not give the other party a right to cancel this contract except as herein otherwise expressly provided."

Appellant filed an answer denying liability for failure to order the second shipment of flour for the reason that the first shipment of flour was not of the grade specified in the contract and that the agent of appellee made misrepresentations as to the grade and quality of the flour and by way of cross-complaint prayed for the damages it sustained by reason of the inferior quality of the flour contained in the first shipment.

The cause was heard to a jury and at the conclusion of the testimony the trial court directed a verdict against appellant for $612.09 and denied appellant any rights of recovery under its cross-complaint.

A verdict and consequent judgment was rendered in accordance with the direction of the court over appellant's objection and exception and it has duly prosecuted an appeal to this court from the judgment rendered by the trial court.

It is conceded that if appellee is entitled to recover in any amount, the amount adjudged to it is correct, so it is unnecessary to refer to the testimony as to the amount of damages appellee sustained, if any.

It is undisputed that appellant sold appellee 420 barrels of Snowbird flour which was a brand of flour that had been sold for a number of years in that part of the state: that no misrepresentations were made by appellee or the broker who negotiated the sale as to the quality and grade of flour intended to be sold and purchased; that the quality and grade were so well known that no representations were necessary relative to the quality or grade in order to induce the sale and purchase of the flour.

Since there was no evidence of fraudulent representations which induced the contract, that issue went out of the case; but appellant contends that, since the evidence tends to show that the first shipment of flour did not meet the requirements of the written warranty in the contract, it was privileged to refuse to order out the second shipment of flour and that it had a right to rescind the whole contract. There is much evidence to the effect that the flour contained in the first shipment was inferior in grade and did not meet the requirements of the warranty contained in the written contract, and, for this reason, it is urged that the court should have submitted that issue of fact to the jury. In making this contention it overlooked the fact that the contract contained a provision that it was the duty of appellant within twenty days after receiving the flour to send a registered letter to appellee's main office specifying wherein the grade of flour was defective and by sending within twenty days by prepaid express a five pound sample of the goods alleged to be defective to the main office of appellee and also within thirty days to send a verified, itemized statement of the loss claimed by reason of the defective flour, else appellant would waive any claim or defense based on the quality of the flour. The undisputed evidence reflects that none of these conditions precedent were performed within the time specified, hence it follows that appellant cannot recover damages from or hold appellee upon the written warranty as to the quality or fitness of the flour delivered in the first car.

It was said in the case of Yerxa, Andrews Thurston v. Randazzo Macaroni Mfg. Co., 315 Mo. 927,228 S.W. 20, concerning a warranty provision containing similar conditions when shown that the conditions had not been complied with that:

"It has been repeatedly ruled that similar contractual obligations are conditions precedent to be observed and performed by the buyer and he must show a compliance therewith on his part or a waiver thereof by the seller before he can recover damages from the seller or hold the seller upon a warranty express or implied as to the quality or fitness of the goods delivered by the seller." Our own court is in accord with the rule announced in the case referred to. It was said by this court in the case of Southern Engine Boiler Works v. Globe Cooperage Lumber Company, 98 Ark. 482,136 S.W. 928 that: "It has been well settled that when a purchaser of machinery has agreed that if it proves defective he will give notice in a specified time, he will not be entitled to resist payment of purchase money on account of imperfection of which he did not give notice."

It was also said by this court in the case of Carle v. Avery Power Machinery Company, 185 Ark. 799, 49 S.W.2d 599 that: "Thus it will be seen that the warranty was conditioned upon giving the notice of defect within a specified time. The agreement of warranty being in writing is controlled by the language used. It has been held by this court that contracts of this sort are lawful and must be enforced as they have been made by the parties and the test must be made within the time specified and the notice given according to the terms of the agreement. The condition that notice of defects must be given within a specified time is imperative and if the buyer does not show a compliance therewith, the buyer cannot enforce it against the seller."

Further, appellant in making the contention that it might refuse to order out the second car of flour because the flour contained in the first car was inferior in quality and grade to the flour contracted for, overlooked the following clause in the written contract, to-wit: "If there is more than one installment of goods shipped or stipulated herein to be shipped, this contract shall be construed to be severable as to each installment . . . and breach or default of either buyer or seller as to any installment or installments shall not give the other party a right to cancel this contract except as herein otherwise provided."

This clause in the contract is not ambiguous and clearly evinces the intention of the parties to treat each shipment of flour ordered out as severable and separable from other installments of flour ordered out and specifically provides that a breach or default of either buyer or seller as to any installment shall not give the other party a right to cancel the contract. Clauses of this character in contracts are legitimate and enforceable as will be seen by reference to the following adjudicated cases: Yerxa, Andrews Thurston v. Randazzo Macaroni Mfg. Co., 315 Mo. 927,288 S.W. 20; Habicht, Braun Co. v. Gallagher Co.,172 Mich. 328, 137 N.W. 685; Ellison, Son Co., v. Grocery Company, 69 W. Va. 380, 71 S.E. 391, 38 L.R.A., N.S. 539; Cahen v. Platt, 69 N.Y. 348, 25 Am. Rep. 203; Krebs Hop Company v. Livesley, 59 Or. 574, 114 P. 944, P. 118, P. 165, Ann. Cas. 1913C, 758.

No error appearing, the judgment is affirmed.

SMITH and HOLT, JJ., dissent.