J. A. Fay & Egan Co. v. Crowell

Civil action to recover balance due on ten promissory notes executed by the defendant and delivered to the plaintiff for a certain quantity of mill machinery.

Defendant admitted the execution of the notes and contract, but set up in his amended answer that by the false and fraudulent representations and promises, made by plaintiff's sales manager, he was induced to keep said machinery to his injury, beyond the 30-day period, allowed in the contract of purchase for its return in case of rejection, and that therefore said stipulation in regard to the return of said property has been waived.

Plaintiff demurred to the allegations set out in the defendant's amended answer, and from an order overruling said demurrer, plaintiff appealed. This case was before us at the Fall Term, 1921, and is reported in182 N.C. 532. We held there, upon the record as presented on the first appeal, that the plaintiff was entitled to a directed verdict for the balance due on the unpaid notes. When the cause went back and was again reached for trial, the defendant was allowed to amend his answer and to set up, by way of recoupment, set-off or counterclaim, an allegation to the effect that during the 30-day period within which said machinery was to be tested and returned, if not satisfactory and as represented, the plaintiff's sales manager falsely and fraudulently assured the defendant that said machinery would be made good, and any and all defects remedied by the plaintiff.

Defendant avers that he relied upon said verbal assurances, inducements and representations, believing them to be true, and for this reason did not return the machinery within the time required by the contract, and he now contends that on account of such fraud and deceit this provision of the contract has been waived by the plaintiff, and that he, the defendant, is no longer required to observe the stipulation in regard to the time limit for returning the machinery.

The clause in the contract here referred to is as follows: "And that a retention of the property forwarded, after 30 days from its arrival at destination, shall constitute a trial and acceptance, be a conclusive admission of the truth of all representations made by or for the consignor, and a fulfillment of all its contracts of warranty, express or implied."

We will not review the action of the trial court in allowing the defendant to amend his answer in the manner as indicated, for this was a matter resting in his sound discretion. C. S., 547. There is no suggestion of any abuse of discretion. Brewer v. Ring and Valk, 177 N.C. 485.

In the case of Randall v. J. A. Fay Egan Co., 158 Mich. 630, it was held that the identical clause in the contract now before us, with respect to a retention of the property for a period of 30 days, being made, as it was, for the benefit of the seller, could be waived by a duly authorized agent of Fay Egan Company (defendant there, plaintiff here), agreeing, as he did in that case, within the 30-day period, to remedy all defects and to make the machinery in question satisfactory to the purchaser, which was not done. The agent there in question was a state agent, or, as described by the company, a "Michigan agent."

In the case at bar we have the additional allegation that such promises were fraudulently made, and that the defendant relied upon them to his hurt, etc. We are not now interested in whether the defendant can make good his allegations with proof. At present they stand on demurrer. And it would seem that a "sales manager" would presumably have sufficient authority to waive the stipulation in question; but, as to the authority of the agent, the defendant must assume the burden of proof. This may not be shown by declarations of the agent himself, but it must be established by evidencealiunde. Piano Co. v. Strickland, 163 N.C. 250; N.C. 250; Medicine Co.v. Mizell, 148 N.C. 384; Machine Co. v. Hill, 136 N.C. 128.

This general rule in regard to the waiver of such stipulations has been recognized by us in a number of cases. Bland v. Harvester Co.,169 N.C. 420; Fairbanks v. Supply Co., 170 N.C. 315. This last case contains an elaborate discussion of the whole subject, with full citation of authorities by Associate Justice Walker. See, also, 24 R.C.L., 252; 35 Cyc., 440; note 50, L.R.A. (N.S.), 796.

Construing the allegations of the answer in a favorable light for the pleader (C. S., 535), we think the demurrer was properly overruled.

Affirmed.