CHAPTER VII

REMEDIES OF THE BUYER ON THE CONTRACT

MONDEL v. STEEL,

(Court of Exchequer, 1841. 8 Mees. & W. 858.)

PARKE, B. In this case, the declaration is in special assumpsit on a contract to build a ship for the plaintiff, at a certain rate per ton and according to a certain specification: and the breach assigned is for the building a vessel with scantlings, fastenings, and planking, according to such specification; by reason whereof the ship, on a voyage from London to New South Wales and back, was so much strained that it became necessary to re-fasten and repair her.

To this declaration there was one plea, to which it is unnecessary to allude, as it was admitted to be bad on special demurrer, and it is to be amended; and a second plea, on which the question, which we have taken time to consider, arises.

This plea states in substance, that the defendant had sued the plaintiff for the balance of the agreed price of the vessel, after payment of £3500. and also for a sum of £134. odd for extra work, in the form of an action for work and labour, and for goods sold and delivered; that issue was joined, and, on the trial of the cause, the plaintiff gave evidence in his defence of the same breach of contract alleged in the declaration; and insisted, that if the amount of compensation to which he was entitled, exceeded or equalled the balance of the price and the value of the extra work, the now plaintiff was entitled to a verdict; if it was less, that he was entitled to a deduction from the amount of both, of such amount of compensation. The plea proceeds to state, (and, we must assume, correctly, for the purposes of this argument, though the statement has arisen from mistake,) that the learned judge before whom the cause was tried, my Brother Rolfe, so directed the jury; and that the jury found that the now defendant had committed a breach of contract, and was entitled to some compensation, which they deducted from the price of the .vessel and value of the extra work; and the now defendant had judgment for the amount, after such deduction had been made, since the commencement of this suit.

The plaintiff demurred to this plea, assigning several causes of special demurrer, which it is not necessary to notice, as we are all of opinion that it is bad in substance.

1 The statement of facts is omitted.

The ground on which it was endeavoured to support the plea, in a very ingenious argument, was this: that a defendant in an action for the stipulated price of a chattel, which the plaintiff had contracted to make for the defendant of a particular quality, or of a specific chattel sold with a warranty, and delivered, had the option of setting up a counter claim for breach of the contract in the one instance, or the warranty in the other, in the nature of a cross action; and that if he exercised that option, he was in the same situation as if he had brought such an action; and consequently, could not, after judgment in one action, bring another; and the case was likened to a set-off under the statutes. This argument was founded on no other authority than an expression of Lord Tenterden in giving the judgment of the Court in the case of Street v. Blay, 2 B. & Ald. 22 E. C. L. R. 462, his lordship having said that a breach of warranty might be given in evidence in an action for the price of a specific article sold, in mitigation of damages, "on the principle, it should seem, of avoiding circuity of action." But we are all of opinion that no such inference is to be drawn from that expression; what was meant was, that the sum to be recovered for the price of the article might be reduced by so much as the article was diminished in value, by reason of the non-compliance with the warranty; and that this abatement was allowed in order to save the necessity of a cross action.

Formerly, it was the practice, where an action was brought for an agreed price of a specific chattel, sold with a warranty, or of work which was to be performed according to contract, to allow the plaintiff to recover the stipulated sum, leaving the defendant to a cross action for breach of the warranty or contract; in which action, as well the difference between the price contracted for and the real value of the articles or of the work done, as any consequential damage, might have been recovered; and this course was simple and consistent. In the one case, the performance of the warranty not being a condition precedent to the payment of the price, the defendant, who received the chattel warranted, has thereby the property vested in him indefeasibly, and is incapable of returning it back; he has all that he stipulated for as the condition of paying the price, and therefore it was held that he ought to pay it, and seek his remedy on the plaintiff's contract of warranty. In the other case, the law appears to have construed the contract as not importing that the performance of every portion of the work should be a condition precedent to the payment of the stipulated price, otherwise the least deviation would have deprived the plaintiff of the whole price; and therefore the defendant was obliged to pay it, and recover for any breach of contract on the other side.

But after the case of Basten v. Butter, 7 East, 479, a different practice, which had been partially adopted before in the case of King v. Boston, 7 East, 481, note, began to prevail, and being attended with

much practical convenience, has been since generally followed; and the defendant is now permitted to show that the chattel by reason of the non-compliance with the warranty in the one case, and the work in consequence of the non-performance of the contract in the other, were diminished in value; Kist v. Atkinson, 2 Camp. 64; Thornton v. Place, 1 M. & Rob. 218, &c. The same practice has not, however, extended to all cases of work and labour, as for instance that of an attorney, Templer v. McLachlan, 2 T. R. 136, unless no benefit whatéver has been derived from it; nor in an action for freight; Shiels v. Davies, 4 Camp. 119.

It is not so easy to reconcile these deviations from the ancient practice with principle, in those particular cases above-mentioned, as it is in those where an executory contract, such as this, is made for a chattel, to be manufactured in a particular manner, or goods to be delivered according to a sample; Germaine v. Burton, 3 Stark. (14 E. C. L. R.) 32; where the party may refuse to receive, or may return in a reasonable time, if the article is not such as bargained for; for in these cases the acceptance or non-return affords evidence of a new contract on a quantum valebat; whereas, in a case of a delivery with a warranty of a specific chattel, there is no power of returning, and consequently no ground to imply a new contract: and in some cases of work performed, there is difficulty in finding a reason for such presumption.

It must however be considered, that in all these cases of goods sold and delivered with a warranty, and work and labour, as well as the case of goods agreed to be supplied according to a contract, the rule which has been found so convenient is established; and that it is competent for the defendant, in all of those, not to set off, by a proceeding in the nature of a cross action, the amount of damages which he has sustained by breach of the contract, but simply to defend himself by showing how much less the subject-matter of the action was worth, by reason of the breach of contract; and to the extent that he obtains, or is capable of obtaining, an abatement of price on that account, he must be considered as having received satisfaction for the breach of contract, and is precluded from recovering in another action to that extent; but no more.

The opinion, therefore, attributed on this record to the learned Judge is, we think, incorrect, and not warranted by law; and all the plaintiff could by law be allowed in diminution of damages, on the former trial, was a deduction from the agreed price, according to the difference, at the time of the delivery, between the ship as she was, and what she ought to have been according to the contract: but all claim for damages beyond that, on account of the subsequent necessity for more extensive repairs could not have been allowed in the former action, and may now be recovered.

We have already observed in the course of the argument, that the

defence made in the second plea cannot be supported on the ground that it discloses a mutual agreement by the plaintiff and defendant to leave the amount of the cross claim to the jury as arbitrators, and that they have made an award. The plea does not state any such agreement, or an equivalent thereto. Our judgment must therefore be for the plaintiff.

Judgment for the plaintiff."

BERMAN v. HENRY N. CLARK CO.

(Supreme Judicial Court of Massachusetts, 1907. 194 Mass. 248, 80 N. E. 480.) KNOWLTON, C. J. The defendant made a contract in writing to furnish and put in place specific apparatus for heating three houses. belonging to the plaintiff. The contract contained a guaranty as follows: "We guarantee this apparatus to be complete in every way and, when finished, to be capable of warming all rooms in which radiators are placed to 70 degrees in zero weather. We guarantee this apparatus against all imperfections in material and workmanship for one year." This action is brought to recover upon this guaranty.

An earlier action was brought by the defendant company against the plaintiff, to recover the price of this apparatus, and for extra work in connection with the contract. As a defense to this former action, the present plaintiff answered, denying that the plaintiff in that action had fulfilled its contract, and averring that it failed to provide apparatus which complied with the guaranty contained in the contract, in that the apparatus furnished has been and was unable to heat the apartments to 70 degrees in zero weather, etc., and claiming a recoupment of damages. After a trial upon these pleadings, the plaintiff in that action recovered from the present plaintiff the full amount claimed in its declaration. The only question now before us is whether the judgment in the former action is a bar to the present one.

We think it plain that it is. The principles applicable to the case were considered in Gilmore v. Williams, 162 Mass. 351, 38 N. E. 976, in Bradley v. Bradley, 160 Mass. 258, 35 N. E. 482, and in Watts v. Watts, 160 Mass. 464, 36 N. E. 479, 23 L. R. A. 187, 39 Am. St. Rep. 509. See, also, Morse v. Elms, 131 Mass. 151. In Gilmore v. Williams it was said of the plaintiff, seeking to recover on a breach of warranty, he having previously set up this breach as a defense to an action upon the note given in consideration of the warranty, "if he chose to plead the breach of warranty in answer to the claim on the note, and if a judgment was entered against him for the whole amount due on the note, or a part of it, on the issue thus raised, the judgment would be a bar to any further claim under the warranty. This would be so whether the judgment was entered by consent of parties, or

2 See Sale of Goods Act, § 53 (4).

3 The statement of facts is omitted.

upon a default after answer, or upon a verdict after trial on the facts. His election to claim his damages by way of recoupment in that suit would be conclusive on him."

This doctrine is conclusive against the right of the plaintiff to recover in the present case. There is a well recognized distinction, referred to in the cases above cited, between the effect of a judgment pleaded as an estoppel as to facts arising collaterally in another action, and its effect as a final determination of the matters declared on as the cause of action, or set up in the answer as a ground for an allowance in defense.

It is immaterial that there had been no zero weather before the trial of the first action. The capacity of the apparatus was put in issue, and could be shown otherwise than by actual experiment. Evidence was introduced on the subject, and it would have been in the power of the court, upon motion, to continue the case for trial until there was an opportunity for an experiment, if it had been thought advisable to do so.

Judgment on the verdict."

STREET v. BLAY.

(Court of King's Bench, 1831. 2 Barn. & Ad. 456.)

LORD TENTERDEN, C. J.

We have taken time to consider of this case, and are now of opinion that the rule ought to be made absolute for a new trial, unless the parties can agree to enter a verdict for the plaintiff for a sum less than the full amount.

The facts of the case were these: The plaintiff, on the 2d of February, sold the horse to the defendant for £43, with a warranty of soundness. The defendant took the horse, and on the same day sold it to Bailey for £45. Bailey, on the following day,. parted with it in exchange to Osborne; and Osborne, in two or three days afterwards, sold it to the defendant for £30. No warranty appeared to have been given on any of the three last sales. The horse was, in fact, unsound at the time of the first sale; and on the 9th of February the defendant offered to return it to the plaintiff, who refused to accept it. The question for consideration is, whether the defendant, under these circumstances, had a right to return the horse, and thereby exonerate himself from the payment of the whole price? It is not necessary to decide, whether in any case the purchaser of a specific chattel, who, having had an opportunity of exercising his judgment upon it, has bought it, with a warranty that it is of any particular quality or description, and actually accepted and received it into his possession, can afterwards, upon discovering that the warranty has not been complied with, of his own will only,

4 See Sales Act, § 69 (1), (2), and Impervious Products Co. v. Gray, 127 Md. 64, 96 Atl. 1 (1915).

5 The statement of facts is omitted.

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