Dow v. International Business Machines Corp.

14 A.D.2d 756, 220 N.Y.S.2d 373, 1961 N.Y. App. Div. LEXIS 8361

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: October 24, 1961
• Status: Published

Opinions

Per Curiam.

The complaint contains five causes of action. It alleges that in March of 1956 the parties entered into an agreement whereby the defendant sold and the plaintiff purchased a pilot model for a ship’s telegraph recorder, together with the pertinent patents, plans and specifications for the same, for the sum of $15,000, $1,000 of which has been paid.

The first cause of action seeks rescission of this contract. The third cause of action seeks damages for fraud in inducing the contract. The basis of these causes of action is a representation alleged to have been made to the effect that the model was suitably designed for manufacture by other manufacturers of similar equipment and fully marketable as such without the need of further redesigning or re-engineering.

It is further alleged that the representation was false in that the model was composed of outmoded components designed and manufactured only by the defendant. Attached to the complaint is the contract of sale and purchase. The difficulty with plaintiff’s position is that the claim of falsity does not come within the claimed representation. As stated, all that was represented to the plaintiff was that the recorder could be manufactured by manufacturers other than the defendant without the necessity of redesigning. As the instrument is composed of various parts, this would mean that a manufacturer would either have to procure or make the necessary parts. Defendant never obligated itself to make or supply these parts; nor did it represent that any other manufacturer was then producing such parts. What it did represent was that these parts composed a working machine on which no improvements to make it work were required. It must be obvious that, as the machine was patented, it was composed of parts that were in some way distinctive and novel and differed from such as might be readily purchasable. When the plaintiff made the purchase, his ability to produce the machine would depend on his making or finding a manufacturer to make parts of the kind contained in the machine. The language of the representation cannot be tortured into a statement to the effect that the plaintiff would be able to find such a manufacturer or that the defendant would agree to supply him with those parts.

The second and fourth causes of action are similarly for rescission and are based upon another representation. It is alleged that the defendant represented that it was going out of the business of manufacturing machines for marine use and was going to concentrate on the making of business machines. While it is not disputed that defendant intended to and did do this, it is alleged that the defendant concealed the fact that it was selling this branch of its business to another concern. We are not able to see how this distinction in any way affects the contract in question. Whether defendant was selling its business or ceasing it entirely, it was clearly disposing of this particular item, and whether the balance of its items were being sold individually, discontinued without sale, or sold as a unit could have no effect on the plaintiff’s purchase, as such concealment is not shown to have been something upon which plaintiff could have relied in the making of the contract.

The fifth cause of action is for breach of warranty based upon unfitness of the model for the use for which it was intended, namely, for production. This cause of action is subject to exactly the same deficiencies as the preceding causes of action.

Defendant counterclaims for the balance of the purchase price. Aside from the contentions of the complaint, there is no defense to this claim. This clearly appears from the plaintiff’s own writings. For more than two years he sought, with full knowledge of the situation, to interest various manufacturers in making the parts in question. It was only when his efforts proved unsuccessful that he sought to resist defendant’s requests for payment on the contract.

The order denying the defendant’s motion to dismiss the complaint and for summary judgment on the counterclaim is reversed, and the motion is granted, with costs, for the relief demanded in the counterclaim.