HAJOCA CORPORATION
v.
R. M. BROOKS.
No. 252.
Supreme Court of North Carolina.
October 8, 1958.*126 Brock Barkley, Charlotte, for plaintiff, appellant.
Mason & Williamson, Laurinburg, for defendant, appellee.
BOBBITT, Justice.
It appears from the record and briefs that the trial was conducted by Judge Craven, without a juury, as a "small claims action," for which provision is made by Ch. 1337, Session Laws of 1955. When made applicable to a particular county by appropriate resolution of its board of county commissioners, the right to jury trial in such county may be waived as provided in said statute. To this extent, said statute supplements GS § 1-184. Construing these statutes in pari materia, it is clear that the provisions of GS §§ 1-185, 1-186 and 1-187, relating to proceedings upon waiver of jury trial under GS § 1-184, apply equally when a jury trial is waived under said 1955 statute.
There was ample evidence to support the court's findings of fact as to the alleged warranty and plaintiff's breach thereof. Originally, defendant had the right either to rescind and recover the $982.06 or to affirm the contract and recover the damages caused by plaintiff's breach of warranty. Hendrix v. B & L Motors, Inc., 241 N.C. 644, 86 S.E.2d 448; Robinson v. Huffstetler, 165 N.C. 459 81 S.E. 753; May v. Loomis, 140 N.C. 350, 52 S.E. 728; Powers v. Rosenbloom, 143 Me. 361, 62 A.2d 531. These remedies, in respect of the basis for determining defendant's recovery, alternative and inconsistent, are mutually exclusive. Williston on Sales, Revised Edition, Sec. 612.
The judgment is predicated solely on the adjudication that defendant was entitled to rescind and did rescind his contract with plaintiff and defendant's recovery is that applicable in an action for rescission.
Ordinarily, the buyer waives and loses the right to rescind if he continues to use the chattel for the purposes for which it was purchased and designed after he discovers or has reasonable opportunity to discover the defect. 46 Am.Jur., Sales, Sec. 765; 77 C.J.S. Sales § 345(d); Annotations: 77 A.L.R. 1165, 1167; 41 A.L.R. 2d 1173, 1177.
In Hendrix v. B & L Motors, Inc., supra, this court approved, as in accord with North Carolina decisions, the following excerpt from the opinion of Furches, J., in Huyett & Smith Manufacturing Co. v. Gray, 124 N.C. 322, 325, 32 S.E. 718, 719, viz.:
"The purchaser is not compelled in all cases to reject the property at once upon its receipt. If it is machinery, he has a reasonable time to operate the machinery for the purpose of testing it. But when this is done, and it is found that the machine or the machinery does not fill the specifications of the contract and warranty, he must then abandon the contract, and refuse to accept and use the property; and if he does not do this, but continues the possession and use of the property, he will be deemed in law to have accepted the property, and his relief then will be an action for damages upon the breach of the warranty."
The evidence relevant to defendant's right to rescind, considered in the light most favorable to defendant, tends to show these facts:
1. Time and method of installation. A new house was being constructed for defendant. After delivery, the unit, crated, remained "for quite some time" on the porch. It was not uncrated until after *127 Smith, defendant's electrician, had installed the house wiring. Then, "someone set it up in the basement." Smith, who connected the unit, testified: "This was a complete unit in itself, requiring no work inside the unit, and all that was necessary to put it into operation was to connect up the outside wiring." Defendant testified: "The furnace part of the unit was hooked up first, * * *." Later, the air conditioning part of the unit was connected; but there is no evidence as to when and by whom this connection was made.
2. Nature of defect. Defendant testified: "* * * every now and then the furnace would cut off and it wouldn't start up again until I had pressed two buttons on the furnace." Again: "It just cuts off when it ought not do so, * * *. Sometimes it will run a week without cutting off and then sometimes it will cut off two or three times in a day. It cut off in the bitter cold spells of this past (1958) Winter and I woke up to a cold house." Again: "This has been going on ever since we moved, both as to heating and cooling. It acts worse in extreme cold weather and repeatedly went off during the extreme cold weather last (1958) winter." Smith testified: "It would cut off and you would have to press the relay button to start it up again."
3. As to tender. The unit "was turned on while the house was being built to help dry out the walls. It started to give trouble at once." Between then, early in 1956, and May, 1956, when defendant moved into the house, neither plaintiff's respresentatives nor electricians employed by defendant, despite repeated efforts, were able to fix it. Defendant testified: "These people from Hajoca came down to try to fix the furnace before I had moved in. They didn't come back after I had moved in, and I had to call Mr. Smith and those Laurinburg electric people to try to fix the furnace when the Hajoca people didn't come back." The last dealings between plaintiff and defendant were in May, 1956. Defendant testified: "I told themMr. Ottmanthe furnace was no good and that I wanted a new unit or my money back and further, that I was not going to pay my bill until they did what was right. I also later told Mr. Jennings the same thing." Again: "* * * I told him (Mr. Ottman) then the unit did not work, was no good, and that it should either be fixed by them or I wanted a new unit or my money back. I also told him I would not pay my bill until this was done. He later (in May, 1956) sent some switches but these did no good."
4. As to retention and use. Defendant (April, 1958) testified: "I have used this heating and air-conditioning unit all of the time since it was installed. I do not have any other one to heat my house in Winter or to cool it in Summer. I am still using it, and it is in use at my house now." Upon oral argument in this Court, it was stated frankly by defendant's counsel that defendant has continued to use the unit pending appeal.
It is noted that no complaint was made as to the heating or air conditioning provided by this unit while in operation. The defect related solely to the automatic control.
The evidence for defendant tends to show that until May, 1956, plaintiff made several unsuccessful attempts to discover the cause of the defect in the automatic control and to remedy such defect. Defendant's retention and use of the unit until May, 1956, when plaintiff discontinued such efforts, would not bar defendant from electing then to rescind the contract and demand the return of the purchase price.
In May, 1956, defendant had discovered and was fully aware of the defect in the automatic control.
Appellee cites Rohland v. International Harvester Co. of America, 182 Ok1.200, 76 P.2d 1078, 1080, holding that a purchaser does not waive his right to rescind the contract for breach of warranty "where the retention was at the instance and request of *128 the seller and for the benefit of the seller in his endeavors to remedy the defective machine so that it would properly perform the functions for which it was warranted and sold." See 77 C.J.S. Sales § 345(b). Application of this rule to the facts of the present case simply means that defendant's retention and use of the unit until May, 1956, did not constitute a waiver of his right to rescind the contract.
We pass, without decision, whether defendant's statements to plaintiff in May, 1956, were sufficient to constitute notice of an election to rescind. 46 Am.Jur., Sales, Sec. 763; 17 C.J.S. Contracts §§ 434,435. It is noted that defendant gave no notice that he had discontinued use of the unit or that he held it for plaintiff and subject to its instructions. It is noted further that defendant did not allege that he had tendered possession of the unit to plaintiff prior to the tender made in paragraph (10) of the counterclaim. If it be conceded that defendant gave sufficient notice of an election to rescind, the legal effect thereof was nullified when he continued to use the unit for his own benefit and not merely in compliance with his duty as bailee of plaintiff. Annotations: 77 A.L.R. 1165, 1178; 41 A.L.R. 2d 1173, 1185.
While defendant's evidence tends to show that the defect in the automatic control caused considerable inconvenience and dissatisfaction, the fact remains that since May, 1956, the unit has been in operation in defendant's home and has provided both heat and air conditioning for defendant. This continued use of the unit by defendant, for his own use and benefit, is wholly inconsistent with the concept that his possession was that of bailee of plaintiff. See Critcher v. Porter-McNeal Co., 135 N.C. 542, 47 S.E. 604.
All that was required to put the unit in operation was to connect it with the outside wiring. Conversely, all that was required to discontinue it from operation was to disconnect it from the outside wiring.
Appellee relies strongly on Holland Furnace Co. v. Korth, 43 Wash.2d 618, 262 P.2d 772, 41 A.L.R. 2d 1166, where it was held, in the circumstances then considered, that the continued use of the furnace did not bar the remedy of rescission. Suffice to say, the opinion in that case discloses a substantially different factual situation.
Our conclusion is that the evidence does not support the finding (No. 6) that there was a total failure of consideration, Cooley v. Stoeffler, 120 Ind.App. 617, 91 N.E.2d 653, or the findings (Nos. 7 and 8) to the effect that defendant was entitled to rescind and did rescind the contract. Hence, a new trial is awarded.
No question is presented as to the sufficiency of defendant's allegations or evidence to support a recovery of damages for breach of warranty. See Hill v. Parker, N.C., 104 S.E.2d 848. Even so, defendant may desire to ask leave to amend his pleading so as to draw the pertinent issues into clearer focus.
New trial.
JOHNSON and PARKER, JJ., not sitting.