Yellow Jacket Mining Co. v. Tegarden

149 S.W. 518, 104 Ark. 573, 1912 Ark. LEXIS 295

Opinion

Frauenthal, J.,

(after stating the facts). We are of the opinion that the construction which the court placed upon the written contract is correct. The subject-matter of the contract of sale was a lot of machinery and appurtenances, constituting a concentrating mill which had been operated for several years. Before purchasing the property, defendant sent its representatives to examine same, which they did. It was second-hand property, and so known to defendant when it bought it. In determining the true meaning of this contract, it is necessary not only to take into consideration each of its parts, but also the subject-matter of the sale. In the contract it is provided that the “mill herein conveyed is to be a first-class one.” This, we think, was a warranty of the condition of the property sold. It is not provided, however, that the machinery shall be new, but only that the mill shall be a first-class one. The property purchased was second-hand, and therefore by this provision it is clearly meant that the mill and its parts should be in a first-class condition as second-hand machinery.

Ordinarily, in the sale of second-hand machinery, there is no warranty as to the quality or condition of the property unless expressly made. Hartin Comm. Co. v. Pelt, 76 Ark. 177; J. I. Case Threshing Machine Co. v. Bailey, 89 Ark. 108.

But, by the above provision of the contract, we think that the mill, though second-hand, was warranted to be in first-class condition. In the contract it is provided that, in order to test the construction of the mill and buildings, “and as further guaranty of its good condition,” the plaintiffs would operate it until they had milled one carload of concentrates. It is urged by plaintiffs that the act of the representatives of defendant in taking over the property on February 4, after plaintiffs had milled the above carload of concentrates, was an acceptance of the property and an approval of the condition of the mill, and that thereafter plaintiffs were only liable for defects in the erection thereof. This contention is also made on the ground that in the contract it is provided that, “in the event that there should be any defects in the erection of said mill occasioned by the negligence or lack of skill” of plaintiffs, that defendant should have the right to remedy the defects therein and deduct the cost thereof from the purchase price. But the contract must be read as a whole. It is a familiar rule of construction that no word in a contract should be treated as surplusage and disregarded if any meaning which is reasonable and consistent with the other parts thereof can be given. The contract should be construed so that each part should take effect. Earl v. Harris, 99 Ark. 112; Doniphan, Kensett & Searcy Rd. Co. v. Mo. & N. Ark. Rd. Co., ante, p. 475.

It manifestly appears from the contract, taken as a whole, that the plaintiffs were to furnish every part necessary to constitute a complete plant, “so that the said mill when erected should be complete in every detail.” And it is provided therein that, after the taking over of the property and the payment of $2,000, the defendant should have thirty days in which to test it, and that the payment of $4,000 should then be made, provided “the mill shall prove satisfactory and free from defects.” The taking charge of or retention of the property purchased does not waive the breach of a warranty, whether express or implied, nor whether the defect therein is open and known or latent. Weed v. Dyer, 53 Ark. 155. So that the mere taking over of the property and the operation thereof by defendant did not waive its right to any damages growing out of a breach of the warranty that the machinery was in first-class condition as a second-hand mill. The provision that the $4,000 was not payable if, during the, thirty days, the mill should not be found satisfactory and free from defects clearly applies to all defects, and to the fact that the mill would not be satisfactory in event it was not of the warranted capacity. The court was therefore correct in holding that plaintiffs were liable for all damages arising from material defects in every part of the mill.

The court found that when the mill was turned over to the defendant it was not so constructed that it had a capacity of 100 tons daily. It is contended by defendant that it operated the mill for fifteen days while making the test before discovering that the mill did not have the required capacity. It therefore urges that the court erred in not allowing to it damages for the loss arising during that time from the failure of the plant to mill the warranted quantity of ore. But we think that it clearly appears that this was not one of the elements of damages contemplated by the parties or provided for by the contract. The defendant was given the right to test the mill for the period of thirty days in order to see if it was satisfactory and free from defects. The mill itself, with its twenty-four inch rolls and other parts, was one which had, according to the testimony of J. H. Klinefelder, one of defendant’s principal expert witnesses, a 100-ton daily capacity, and he testified that “if properly put in, they will make that much dirt.” J. L. McCarty, defendant’s superintendent, testified that the capacity of the mill was reduced by reason of defects in the jigs, elevators and other parts of the machinery, as well as in the manner in which it was erected. The repair, of these defective parts would bring the mill, therefore, up to the warranted capacity. It is not provided in the contract that defendant should recover any damage for any loss occurring during the period it was making the test by reason of any failure of the mill to reach the warranted capacity; but in the contract it is provided that the defendant might remedy any defects discovered, and deduct the cost from the purchase price. The existence of the defects, therefore, was the element warranting recovery of damage to which defendant was entitled in case of breach of the contract, and the measure thereof was either the difference between the value of the parts in a first-class condition as second-hand machinery and in their defective condition, or the cost of putting them in a first-class condition. There was no testimony showing the value of the various parts of the mill in their defective condition, nor the value thereof in a first-class condition. The testimony adduced was directed entirely to the condition of the various parts and the cost of placing same in a first-class condition. The testimony is conflicting, both as to the various parts of the machinery which were defective and the cost of remedying the defects. ' The chancellor appears to have examined this testimony carefully, and thereupon made a finding in which he specified each item of the property which he found was defective, and the cost of putting each of said items in a first-class condition. We have examined the testimony as searchingly as we are able to do, and after fully considering it we are unable to say that the chancellor erred in his findings as to the parts which were defective and the damages to which the defendant is entitled by reason thereof. The defendant operated the mill in its defective condition for four months after it had obtained knowledge of such defects, and thereafter repaired and reconstructed it virtually as a new mill. It bought many new pieces of machinery to replace parts of the second-hand machinery which it still retained. Some of the parts could have been placed in first-class condition as second-hand machinery at much less expense than the cost of new parts and other parts, notably the new rolls purchased, were larger and more costly than the second-hand rolls. The second-hand rolls, with slight if any expense, could have been placed in proper condition as second-hand machinery. The contract warranting the condition of the property only related to it at the time when it was turned over. It did not cover the condition of the property after it had been operated for four or five months beyond that date. The contract provided for a recovery only of the cost of remedying the defects and placing the secondhand machinery in a first-class condition, and this necessarily referred to the time the mill was turned over to defendant, or at the furthest to the time when the defects were discovered by it. Haskell v. Sevier, 25 Ark. 152; So. Engine & Boiler Wks. v. Globe C. & L. Co., 90 Ark. 482; 35 Cyc. 414.

After as careful an examination of the testimony as we are able to make, we can not say that the findings of the chancellor as to the parts which were defective, and the damage arising therefrom, are contrary to the weight of the evidence. It follows that his findings must stand, and that the decree should be affirmed. It is so ordered.