American Sugar Refining Co. v. Martin-Nelly Grocery Co.

111 S.E. 759, 90 W. Va. 730, 1922 W. Va. LEXIS 282
CourtWest Virginia Supreme Court
DecidedApril 11, 1922
StatusPublished
Cited by4 cases

This text of 111 S.E. 759 (American Sugar Refining Co. v. Martin-Nelly Grocery Co.) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Sugar Refining Co. v. Martin-Nelly Grocery Co., 111 S.E. 759, 90 W. Va. 730, 1922 W. Va. LEXIS 282 (W. Va. 1922).

Opinion

Lively, Judge :

The ruling of the circuit court in refusing to strike special pleas numbered 3 and 4 and permitting them to be filed over the objection of plaintiff is certified for review.

Plaintiff, a manufacturer and wholesale dealer in sugar, sold to defendant, a wholesale grocery company, several shipments of sugar. The declaration contained the common counts in assumpsit and three special counts. Special counts Nos. 1 and 2 are upon trade acceptances, the first for $3,-012.61, drawn by plaintiff on defendant, dated September 30, 1920 and accepted by the latter, payable on November 30, 1920; and the other for a. like sum payable December 30, 1920. The third count is for 80,400 lbs. of extra fine granulated sugar at 22 1-2 cents per lb. f. o. b. New York, delivered to and accepted by defendant, including $354.56 freight.

Special plea No. 3 relates to the consideration for the trade acceptances and alleges that prior to September 14, 1920 plaintiff agreed to sell and deliver to defendant 402 bags of sugar warranted to be extra fine granulated, which meant “white in color, regular in granulation, free from caking and not powdered”, for 22.941 cents per pound, or $9,222.28, which sugar was received by defendant on September 21, 1920, and, relying upon the warranty, it paid for the same on September 30 by accepting three drafts, or trade acceptances, each for the sum of $3,012.61 and payable in 30, 60 and 90 days; that afterwards, and within a reasonable time, on October 5, following, it discovered that the sugar was not as warranted and immediately notified plaintiff that it refused to accept and rejected the sugar and requested plaintiff to take it back or direct disposition of it; that on October 30 it paid the first draft then matured [733]*733“In the expectation and. belief that plaintiff would make adjustment covering the entire subject, by return of the sugar, and cancellation of the drafts, or in some other manner”, but plaintiff afterwards denied the right of defendant to reject or return the sugar, refused to cancel the drafts, refused to deliver to defendant the kind and quality of sugar agreed to be sold, and that therefore the consideration for the drafts wholly failed, whereby defendant has sustained damages to the amount of the purchase price, represented by the drafts, $9,222.28, and is willing to offset the sum of $6,025.22 against the drafts sued on and is entitled to recover the amount of the draft paid, $3,012.61, and tenders delivery of all of the 402 bags of sugar to plaintiff, or its order. What is this plea? It is marked plea “No. 3. Failure of Consideration”. It sets out facts on which it relies for a rescission of the contract. It asks for recovery of the money paid, cancellation of the drafts for the balance, and proffers a return of the sugar, on the ground that it is not the article bought, a breach of the warranty. A return of the money paid, cancellation of the acceptances outstanding, and return of the entire shipment would be a complete rescission of the contract. This is evidently what is intended as the defense. Defendant claims to have rescinded the contract on October 5, within a reasonable time for inspection after it received the goods, and then refused to accept them and so notified plaintiff, and yet it avers that twenty-five days after it had so rescinded, it paid one-third of the price of the goods, relying upon the warranty, or upon some adjustment covering the entire subject, by return of the sugar, cancellation of the drafts, “or in some other manner”. Can we consider it as a plea of set-off for a breach of warranty? If there was a rescission there was no contract and therefore no breach. The defenses, rescission and breach of warranty, are inconsistent, and ought not to be set up in the same plea. The contract cannot be rescinded for breach of the warranty. The contract was not severable, was executed, the title and possession passed, the goods were paid for by the accepted drafts and later, and after discovery of a breach of the implied warranty, partial payment was made. We think that [734]*734under such facts there could be no rescission, and consequently the plea setting up rescission is bad. Ellison v. Grocery Co., 69 W. Va. 380; Mechem on Sales, sec. 816. We seem to be committed to the principle followed by the English courts, that an executed sale cannot be rescinded for a breach of warranty, unaccompanied by fraud, or an agreement to rescind. Manufacturing Co. v. Pipe Co., 74 W. Va. 228. Coupled with the unexplained delay in making inspection from date of receiving the goods, September 1st to October 5th, is part payment twenty-five days after discovery of breach of warranty. Unexplained delay in making inspection after receipt of the article sold has been held to be fatal to the right to rescind. Noble v. Burvell, 96 Me. 73. The right of inspection in sales of this character is always accorded to the buyer, but it must be asserted within a reasonable time after the goods are delivered, and if he takes possession with full opportunity of inspection, and after-wards exercises dominion over the goods, makes payment in cash or by note or like obligation, he will be deemed to have waived his right of inspection, and to have relied upon the warranty. “According to the view taken in most cases after the buyer under an executory contract of sale has had an opportunity to examine the article, and accepts it, as fulfilling the contract, he is concluded by such acceptance and cannot, in the absence of fraud or express warranty, allege its defective quality. Thus, “acceptance after inspection or fair opportunity to inspect it, of wheat furnished under a contract for wheat of a certain grade, precludes the’ buyer from denying that the contract was satisfied.” 23 R. C. L. p. 1439, sec. 264. The plea says that relying upon the warranties and description of the sugar, the three acceptances were made on September 30, which was nine days after it had received the sugar in its warehouse. It had ample time for inspection. The fact that the sugar was in bags does not preclude inspection or relieve from the duty to inspect. Proctor v. Spratty, 78 Va. 524. It is well settled in this State that where the contract is executed, and warranty, is relied upon, rescission cannot be had. Ellison v. Grocery Co., supra; Mfg. Co. v. Pipe Co., supra. The plea being one setting up rescission, [735]*735cannot be good as a plea for breach of warranty. If there was' a rescission, then there was no contract in existence; and there could be no breach of a contract not in existence. We do not mean to say that the case is not such that a proper plea of a breach of warranty may not be filed, containing the proper averments of resulting damages.

Can this plea be considered as a notice of recoupment to the acceptances sued on ? Recoupment in its nature acknowledges the contract, the acceptance of the goods purchased, and demands an abatement of the purchase price to the amount of damages. sustained by a breach of the warranty. The plea asks for recovery of $3,012.61, the amount of the accepted draft paid October 30, 1920, above the amount of the two drafts sued on. A recovery over in excess of the sum sued for cannot be- had under recoupment. Ohio River Contract Co. v. Smith, 76 W. Va., 503. Damages may be recouped under the general issue but notice thereof must be given that on the trial defendant will claim to have such damages recouped.

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Bluebook (online)
111 S.E. 759, 90 W. Va. 730, 1922 W. Va. LEXIS 282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-sugar-refining-co-v-martin-nelly-grocery-co-wva-1922.