Swift & Co. v. Aydlett

OonNOR, J.

The note sued upon in this action is identical in form with the note upon which plaintiffs sought to recover of defendant in Swift v. Etheridge, 190 N. C., 162. The defense in that action was the same as that pleaded in this action. The defense in each action is absence or failure of consideration for the note executed by defendant and payable to the order of plaintiff.

With respect to negotiable instruments, it is provided by statute, in .this State, that “absence or failure of consideration is matter of defense as against any person not a holder in due course, and partial failure of consideration is a defense fro tanto, whether the failure is an ascertained and liquidated amount or otherwise.” C. S., 3008; Uniform Neg. Inst. Act, sec. 28.

This defense is available to the defendant in an action to recover upon a note, in .form a negotiable instrument, the consideration for which, as recited therein, is commercial fertilizers sold by plaintiff to defendant. The fact that the consideration as appears in the face of the note is commercial fertilizers sold to the maker, cannot be held to deprive defendant, the vendee, of matters of defense, which by statute, are available in an action upon a negotiable instrument. It was held by this Court in the opinion written by Clark, C. J., in Jewelry Co. v. Stanfield, 183 N. C., 10, that if goods delivered by the vendor to the vendee were worthless and unmerchantable, the provisions in the contract of sale that vendee might return any of the goods, and receive from the vendor other articles of the same grade, was no warranty at all except in form; that there was a total failure of consideration for the contract to pay the purchase price of the goods sold, and such failure was a good defense in an action by the vendor to recover of the vendee the purchase price of the goods. It was further held that the goods having been sold without opportunity for inspection, there was an implied warranty that they should at least be merchantable, citing in support of the decision Main v. Field, 144 N. C., 310; Medicine Co. v. Davenport, 163 N. C., 294; Ashford v. Shrader, 167 N. C., 45.

It is immaterial that defendant, vendee, gave to plaintiff, vendor, a note, in form negotiable, for the purchase price of the goods sold; the defense of failure of consideration is available to defendant, maker of the note, as against any person not a holder in due course. Plaintiff, Swift & Company, is the payee, and not holder in due course. C. S., 3033.

The doctrine of implied warranty in the sale of personal property is too well established in this jurisdiction now to be drawn in question. It should be extended rather than restricted. Poovey v. Sugar Co., 191 N. C., 722; Swift v. Etheridge, supra. The harshness of the *335common-law rule of caveat emptor, when strictly applied, makes it inconsistent with the principles upon which modern trade and commerce are conducted; the doctrine of implied warranty is more in accord with the principle that “honesty is the best policy,” and that both vendor and vendee, by fair exchange of values, profit by a sale. In Grocery Co. v. Vernoy, 167 N. C., 427, the late Justice Brown says: “It is well settled by repeated decisions that on a sale of goods by name, there is a condition implied that they shall be merchantable and saleable under that name; and it'is of no consequence whether the seller is the manufacturer or not, or whether the defect is hidden or might possibly be discoverable by inspection.”

In Furniture Co. v. Mfg. Co., 169 N. C., 41, in the opinion of Allen, J., it is held that although there is no implied warranty as to quality in the sale of personal property, the seller is held to the duty of furnishing property in compliance with the contract of sale — that is, at least merchantable or saleable; and to this it is said, may be added that it shall be capable of being used if intended for use. Ashford v. Shrader, 167 N. C., 48 (implied warranty in the sale of oranges to be sold by the vendee, that oranges delivered are merchantable) ; Grocery Co. v. Vernoy, 167 N. C., 427 (implied warranty in sale of “Red-Marrow Beans” for food, that the beans delivered are edible, when cooked) ; Medicine Co. v. Davenport, 163 N. C., 297 (implied warranty in sale of medicines by manufacturer to dealer that the medicines delivered are at least merchantable) ; Tomlinson v. Morgan, 166 N. C., 557 (implied warranty in the sale of commercial fertilizers by a merchant to a farmer, that fertilizer delivered was suitable for crop); Furniture Co. v. Mfg. Co., supra (implied warranty in sale of a hearse to an undertaker, that the hearse delivered is capable of being used as a hearse) ; Register Co. v. Bradshaw, 174 N. C., 414 (implied warranty in sale of cash register by manufacturer to merchant for use in his business, that the register delivered is fit for use as a cash register). In a sale of an article of personal property by name which in itself represents that it is merchantable, Or saleable or fit for a specific use, the law implies a warranty that the representations are true, although there is no express warranty to that effect. A vendor of an article of personal property, by name and description, cannot relieve himself of the obligation arising from the warranty implied by law to deliver an article which is at least merchantable, or saleable or fit for the use for which articles of that name and description are ordinarily sold and bought.

In American Tank Co. v. Revert Oil Co., 108 Kan., 690, 196 Pac., 1111, 1112, cited in Williston on Sales, Vol. 1, p. 457 (2 ed.) in support *336of the statement in the text, that “it should also be noticed that fitness for a particular purpose may be merely the equivalent of merchantability,” it is said:

“A sale of a brand of manufactured article includes a contract that the article shall possess the qualities implied by the brand. ‘Gold Drop Flour,’ being a brand of flour, must make bread. Kaull v. Blocker, 107 Kan., 578, 193 Pac., 182; Bunch v. Weil, 72, Ark., 343, 80 S. W., 582, 65 L. R. A., 80 (‘Capital Brand Flour, Extra Fancy’). A tank is, by definition, a receptacle for liquid. An order given for an oil tank makes known to the builder the purpose for which it is required — a storage of that kind of liquid — and a 1,600 barrel oil tank must be able to withstand the pressure of the designated quantity of oil under ordinary conditions of use. Implied warranty cases to this effect are numerous. Those which follow are illustrative. A whiskey barrel must not permit loss of whiskey by leakage, Poland v. Miller, 95 Ind., 387, 48 Am. Rep., 730; a fertilizer must give to land additional capacity to produce crops, Wilcox, Gibbs & Co. v. Hall, 53 Ga., 635; a potato digger must dig potatoes, Hallock v. Cutler, 71 Ill. App., 471; a mine pump must be able to pump water out of a mine, Getty v. Rountree, 2 Pin. (Wis.), 379, 54 Am. Rep., 138; a self-feeder must feed a threshing machine, Parsons Co. v. Mallinger, 122 Iowa, 703, 98 N. W., 580; a piano must he so constructed that it may be used as a musical instrument of that class, Little v. G. E. Van Sycle & Co., 115 Mich., 480, 73 N. W., 554; a vessel built for a buyer must be seaworthy, 3 A. L. R., 622, annotation; a silo must preserve ensilage, Indiana Silo Co. v. Harris, 134 Ark., 218, 203 S. W., 581; an automobile must be capable of use as a vehicle, Harvey v. Buick Motor Co. (Mo. App.), 177 S. W., 774; a moving-picture screen must possess reflecting qualities East End Amusement Co. v. Atmospheric S. Co., 171 N. Y. S., 283.” See, also, American Radiator Co. v. McKee, 140 Ky., 105, 130 S. W., 977; Parker v. Shaghelean Mass., Feb., 1823, 138 N. E., 236; Kelsey v. J. W. Rengrose Nit. Co., 152 Wis., 499, 140 N. W., 66.

In Swift v. Etheridge, supra, it is held by this Court that manufacturers and vendors of commercial fertilizers, in this State, warrant that the fertilizers manufactured and sold by them contain chemical ingredients of the guaranteed analysis, required by statute to appear upon bags, barrels, or packages, in which they are delivered; this is a statutory warranty without which no commercial fertilizers may be sold in this State. C. S., 4690. It is similar to the statutory warranty required in the sale of “commercial feeding stuffs.” C. S., 4724-4731; Poovey v. Sugar Co., 191 N. C., 722. In this case it is held that a seller of “commercial feeding stuffs,” as defined by law, must supply a commodity reasonably fit for the use contemplated by the parties to the *337sale, and sucb as measures up to tbe requirements of tbe statute. A seller of commercial fertilizer to a farmer for use on crops, upon tbe same principle, must deliver to bis vendee a commodity wbicb fulfills tbe warranty implied by law, tbat it is reasonably fit for tbe use contemplated by tbe parties to tbe sale, and also fulfills tbe warranty required by statute, tbat it contains chemical ingredients of tbe guaranteed analysis.

A vendor wbo, by bis contract, bas agreed to sell and deliver to bis vendee commercial fertilizers, cannot recover of bis vendee tbe purchase price of sucb fertilizers, unless in bis action to recover same be alleges and proves delivery, pursuant to bis contract, of commercial fertilizers, containing chemical ingredients of tbe analysis guaranteed, as required by statute. A vendee, to whom goods have been delivered, as commercial fertilizers, to be used by him, in defense of an action by bis vendor for tbe purchase price, whether evidenced by bis note or otherwise, upon bis plea of failure of consideration, may show tbat there bas been a breach of tbe warranty, implied by law, tbat tbe goods are commercial fertilizers, and therefore capable by use upon land of increasing tbe yield of crops, and also tbat there bas been a breach of tbe warranty required by statute, tbat commercial fertilizers sold in this State contain chemical ingredients of tbe analysis guaranteed by representations made on tbe bag, barrel, or package in wbicb they are delivered. Evidence of a breach of warranty, express or implied, or as required by statute, is competent, not only in an action to recover damages for sucb breach, or upon counterclaim for sucb damages as a defense to recovery of judgment for tbe purchase price, but also to prove failure of consideration when sucb failure is pleaded in defense of a recovery of tbe purchase price of tbe goods sold, 8 C. J., 754. Brantley v. Thomas, 22 Tex., 270, 73 Am. Dec., 264, annotated; Perley v. Balch, 23 Peck (Mass.), 283, 34 Am. Dec., 56, annotated.

Parol evidence is competent, as between tbe original parties to a note, to show failure of consideration when pleaded as a defense. Tbe admission of sucb evidence for this purpose is not in violation of tbe well-settled rule tbat parol evidence will not be admitted to alter, vary or contradict a written instrument. 3 R. C. L., p. 139, sec. 139, note 3, and cases cited. In note to Pryor v. Ludden & Bates Southern Music House, 134 Ga., 288, 67 S. E., 654, 28 L. R. A. (N. S.), 267, tbe editor says: “Tbe weight of authority is in accord with tbe decision in Pryor v. Southern Music House in bolding tbat tbe breach of a parol warranty may be shown as a defense pro tanto in an action between tbe original parties to a note given for tbe purchase price.” Where tbe defense is total failure of consideration, defendant may show by parol evidence tbat tbe goods purchased by him were not delivered by plaintiff.

*338It is the contention of plaintiffs upon this appeal that evidence as to the results of the use of Swift’s 8-3-3, upon defendant’s land, during years previous to 1922, and during the year 1922, for the purpose of proving defendant’s allegation that the fertilizers delivered and used by him in 1922, was not Swift’s 8-3-3, as purchased by him, was incompetent and not admissible: first, because of the stipulation in the note that commercial fertilizers were sold to defendant without any warranty as to results from its use, or otherwise; second, because under O. S., 4697, no suit for damages from results of use of fertilizers may be brought in this State except after chemical analysis, showing a deficiency of ingredients; and third, because such evidence has no probative value, and is uncertain and speculative.

First. The stipulation in the contract of sale, as recited in the note, that there was no warranty as to results of the use of the fertilizers, or otherwise, is not a contractual rule of evidence agreed upon by the parties, for the purpose of excluding evidence as to such results, which would otherwise be competent. Fertilizer Works v. Aiken, 175 N. C., 398; Carter v. McGill, 171 N. C., 775, S. c., 168 N. C., 507; Guano Co. v. Livestock Co., 168 N. C., 442; Germofort v. Cathcart, 104 S. C., 125; Allen v. Young, 62 Ga., 617. Its manifest purpose was to relieve plaintiffs of liability for damages for a breach of a warranty, which in the absence of such stipulation, would have been implied by law. It cannot be held that it has any further effect than to accomplish this purpose. Fert. Works v. Aiken, supra; Guano Co. v. Livestock Co., supra; Piano Co. v. Kennedy, 152 N. C., 196. The stipulation is not broad enough to exclude, and does not exclude as evidence to sustain defendant’s plea of failure of consideration, testimony as to the effect of'the use upon defendant’s crop of the fertilizer delivered to him by plaintiff. It ought not and cannot be held as law that a vendor who has sold a well-known article which has value only for a definite, specific purpose, by implication 'of law, warrants that the article delivered is the article sold, and may in the contract of sale stipulate that he shall be relieved of his obligation to deliver the very article which he has agreed to deliver in performance of his contractual obligation. The parties to a contract may by stipulation agree upon a rule of evidence to be applied in a controversy between them as to the subject-matter of the sale; they may agree as to the damages which either may recover for a breach of the contract by the other; they may, by stipulation, limit the liability of one of the parties to the other by reason of his contractual obligations; a stipulation, however, by which the vendee would be liable for the full purchase price as fixed by the contract, for the goods sold, although the vendor has failed to deliver goods in accordance with his contract, presents a different question. Stipulation in the *339note upon wbicb tbis action is brought, may be enforceable in an action to recover damages by the vendee of the vendor, resulting from the use of the fertilizer; it cannot be construed, however, as relieving plaintiffs of their obligation under the contract, to deliver to defendant commercial fertilizers, which, when used upon land, will increase the yield of crops planted and cultivated thereon. To hold with plaintiff’s contention, would permit a vendor to sell his vendee commercial fertilizers and to recover the full purchase price as fixed by the contract of sale, whether the article delivered to the vendee was commercial fertilizer or not. Plaintiffs neither desire nor seek this result, for they insist that they have fully complied with their contract of sale; defendant, however, contends otherwise; the issue of fact thus'raised and submitted to a jury must be determined by evidence, to be considered by the jury, under proper instructions as to the law applicable to such evidence.

Second. The validity of C. S., 4697 was challenged in Jones v. Guano Company, 183 N. C., 338, 264 U. S., 171, 68 L. Ed., 623,. on the ground that it is unreasonable in its provisions and impossible of fulfillment; it was contended also that the statute is unconstitutional. The challenge was not sustained in this Court. In the opinion written for this Court by Stacy, J., it was held that the statute was not unreasonable, or' unconstitutional. The judgment dismissing that action, which was to recover damages resulting from the use of fertilizers on crops, upon the allegation that the fertilizers were deficient in chemical ingredients, because of failure to comply with C. S., 4697, with respect to a chemical analysis, was affirmed. It is said, “There is nothing in the statute which impairs the right of contract, and we think it is constitutional. Fertilizing Co. v. Thomas, 181 N. C., 274.” A chemical analysis, showing deficiency in chemical ingredients is a condition precedent to an action to recover damages, or to defeat or reduce recovery on note for the purchase price by counterclaim for damages, unless the parties to the sale contract otherwise, as provided by the statute. On writ of error to the Supreme Court of the United States, the statute.was sustained in an opinion written by Butler, J., as not repugnant to either the due-process clause or the equal-protection clause of the 14th Amendment. It is said: “The 14th Amendment does not prevent a state from prescribing a reasonable and appropriate condition precedent to the bringing of a suit of a specified kind or class so long as the basis of distinction is real and the condition imposed has reasonable relation to a legitimate object.” The statute, by its express terms applies only to an action to recover damages, and prescribes as a condition precedent to the bringing of such an action, a chemical analysis, showing a deficiency in chemical ingredients. It has been held to apply to a counterclaim for damages by a vendee to offset or reduce the amount which *340the vendor is entitled to recover as the purchase price. Pearsall v. Eakins, 184 N. C., 291. There is nothing in the statute, however, which by reasonable construction, makes it . applicable to a defense by the vendee upon his plea of total failure of consideration, involving identity of the goods delivered with the goods sold. There is no statutory condition precedent to the defense of failure of consideration in an action to recover the purchase price of commercial fertilizers, evidenced by vendee’s note where such defense is available to him by C. S., 3008, nor is there any statutory rule requiring a chemical analysis as evidence to show deficiency of chemical ingredients upon vendee’s allegation that the fertilizers delivered were not the fertilizers bought because of such deficiency. Testimony as to the results of the use of commercial fertilizers, upon crops, without a chemical analysis, by virtue of C. S., 4697, is not competent as evidence in an action by the vendee to recover damages of the vendor or upon a counterclaim by the vendee for damages in an action to recover the purchase price brought by the vendor; such testimony is not incompetent, however, by virtue of the statute, where the issue upon a plea of total failure of consideration involves only the identity of the goods delivered with the goods sold. A contract to sell commercial fertilizers of a guaranteed analysis as to chemical ingredients is not performed by the delivery of fertilizers containing ingredients of a different analysis; farmers in this State who contract to purchase commercial fertilizers containing chemical ingredients of a certain guaranteed analysis have learned by experience and observation that different crops, and lands of different qualities, require for satisfactory results from their use, fertilizers of different analysis as to essential ingredients. Scientific experiments, made from year to year under the supervision of the Department of Agriculture, or by manufacturers of commercial fertilizers themselves, confirm the lesson learned by practical farmers from their experience and observation. Manufacturers of commercial fertilizers recognize this fact; profiting by the results of experiments made by them and by others, they vary the analyses of their fertilizers to meet the different requirements of their customers, dependent upon the crops which they make, and upon the land on which the fertilizer is used. It cannot be held that a contract for the sale of fertilizers of a certain guaranteed analysis, which the vendee has purchased for use upon his land, in growing crops thereon, has been fulfilled by the delivery of fertilizers of a different analysis, or that the statute, C. S., 4697, excludes as evidence testimony as to the effect of fertilizers delivered and of fertilizers sold, which would, but for the statute, be competent upon an issue involving only the defense of failure of consideration, for that the fertilizers delivered were not the *341fertilizers bought. Experienced farmers have no difficulty, while crops are growing, or after they have matured, in determining as a basis for the exercise of judgment in purchasing fertilizers, whether any fertilizers have been used under them or not, or whether fertilizers used under one crop are the same, for all practical purposes, as fertilizers used under another crop, on the same land, during different years, when the method of cultivation and the growing seasons for the different years are practically the same. Their ability to do this, in their opinion, justifies the expenditure each year by the farmers of this State of large sums of money in the purchase of commercial fertilizers. The manufacture and sale in this State of commercial fertilizers have grown to large proportions because the farmers of the State have learned that there is practical as well as scientific justification for the purchase and use of commercial fertilizers in growing crops on lands in this State.

Third. Testimony tending to show the effect of commercial fertilizers of the guaranteed chemical analysis, purchased by defendant of plaintiffs, upon crops of previous years, and the effect of the fertilizer delivered and used on the crops of 1922 offered as evidence by defendant to sustain his contention that the latter was not of the analysis guaranteed, was not incompetent because it lacked probative value, was uncertain and speculative. Defendant has laid the foundation for the admission of such evidence, in accordance with opinions of this Court.

In Guano Co. v. Livestock Co., 168 N. C., 442, L. R. A. 1915 D, Justice Walker, writing the opinion for this Court, says: “We are of the opinion that notwithstanding the stipulation as to nonliability for results, evidence of the effect of any particular fertilizer upon crops is competent, under certain conditions, to prove that it did not contain the guaranteed ingredients, or in the proportions specified on the label put on the bag.” He cites, in support of the opinion in this respect, the following quotation from Jones v. Cordele Guano Co., 94 Ga., 14: “While it is true that the note sued on in the present case contained an express stipulation that the makers purchased on their own judgment and waived any guarantee as to the effects of the fertilizers on their crops, we think they are nevertheless entitled to show that their crops derived no benefit from the use of the fertilizers in question. It was competent for them to do this, not for the purpose of repudiating or varying the terms of their written contract, or of holding the guano company to a guarantee it had expressly declined to make, but to show that in point of fact the guano did not coiné up to the guaranteed analysis branded on the sacks, as required by law. In other words, it was the right of defendants to show that this guano did not contain the chemical ingredients set forth in the analysis. If the guano failed to produce any beneficial effect on the crops, under favorable auspices, *342this fact would, at least tend to show that it did not contain the fertilizing elements in the proportions specified in the^analysis branded on the sacks.” Evidence as to the effect of the fertilizers upon crops is held to be admissible, not only for the purpose of corroboration, but also as substantive evidence, for, says the learned Justice, whose opinion gives evidence of his usual care and exhaustive investigation of authorities, “As Cervantes wisely said in his Don Quixote, ‘the proof of the pudding is the eating,’ and by analogy the proof of the fertilizer is the using of it. It is practical instead of scientific proof, but the evidence should be admitted, cautiously and with proper and full safeguards so as by eliminating the speculative elements to show clearly the causal connection between the fertilizer used and the loss or diminution of the crop. Unless the foundation for such proof is well laid, it lacks in probative force as it has not been removed from the realm of speculation, and is only conjectural, and, of course, unreliable.” Tomlinson v. Morgan is cited with approval as sustaining the decision, although it is said that there is a radical difference between the facts in the two cases. Guano Co. v. Livestock Co., and Tomlinson v. Morgan have not been overruled in subsequent decisions of this Court; the law, as stated in the opinions in these cases, with respect to the admissibility of testimony as to the effect of fertilizers used upon crops, as evidence, has not been applied in subsequent decisions because it was held that the parties to the actions in which these decisions were rendered by contract stipulated that such evidence should not be competent in such actions, or that by virtue of the act of 1917, C. S., 4697, such actions could not be brought or maintained, except after a chemical analysis had been made.

It should be noted that in Guano Co. v. Livestock Co., the vendee was a merchant who had purchased the fertilizers for sale to customers, whereas in the instant case the vendee is a farmer, who purchased the fertilizer for use under his crops. In Carter v. McGill, 168 N. C., 507, the defendant was a farmer who purchased fertilizers, which he alleged were deficient, from plaintiff, who was a merchant. Testimony as to the effect of the fertilizers upon defendant’s crops was held competent as evidence to show breach of warranty implied by law that it was fit for use as commercial fertilizer. Justice Walker again says in his opinion in that case that “the purchaser of fertilizers may show a breach of warranty by evidence as to the effect of the fertilizer upon his crops, provided he first lays the foundation for such proof by showing that it was used under conditions favorable to a correct test of its value, such as land adapted to the growth of a particular crop for which it was purchased, proper cultivation and tillage, propitious weather or seasons, the general purpose being to exclude any element *343wbieb would render tbe evidence uncertain as to tbe cause of tbe loss or diminution of tbe crop, or rid it of its speculative character.” Upon a rebearing tbe judgment was affirmed, 171 N. C., 775.

Since tbe opinions in Carter v. McGill were written, C. S., 4697 bas been amended, providing now tbat no suit for damages from results of use of fertilizer may be brought except after analysis. By virtue of this statute, where there was no stipulation to tbe contrary in tbe contract of sale, as provided therein, it bas been held in several cases tbat testimony as to tbe results of tbe use of fertilizers upon crops was properly excluded for tbe reason tbat no analysis showing deficiency of chemical ingredients in tbe fertilizers brought in question bad been made. It was so held in actions to recover damages or to defeat recovery for purchase price by damages set up as counterclaim. Fertilizer Works v. Aiken, 175 N. C., 398; Fertilizing Co. v. Thomas, 181 N. C., 274. It bas not been held, however, tbat such testimony is incompetent where tbe issue involves only tbe identity of fertilizers delivered with fertilizers sold and arises upon a plea of failure of consideration in defense of an action to recover tbe purchase price for tbe goods sold.

We, therefore, bold tbat plaintiffs’ assignments of error based upon exceptions to tbe testimony offered by defendant are not sustained.

Defendant assigns as error (1) tbe submission of tbe second and third issues to tbe jury; (2) tbe refusal of tbe court to strike out these issues, with answers thereto; and (3) tbe refusal of tbe court to sign judgment tendered by defendant upon tbe answer to tbe first issue.

These assignments of error must be sustained. Tbe issues excepted to do not arise upon tbe pleadings and we must bold tbat it was error to submit them to tbe jury, and to refuse to strike tbe issue, and tbe answers thereto from tbe record. We fail to find in tbe case on appeal any evidence as to tbe value of tbe fertilizers delivered by plaintiffs to defendant, which tbe jury bas found were not tbe fertilizers which plaintiffs by their contract of sale, bad agreed to deliver to defendant. Tbe burden was upon plaintiffs to show tbat tbe fertilizers delivered bad value and what such value, if any, was. Plaintiffs offered no evidence.

Tbe jury having answered tbe first issue “Yes,” and thereby sustained tbe plea of failure of consideration, it was error to refuse to sign tbe judgment tendered by defendant. Tbe action must be remanded tbat judgment may be signed in accordance with this opinion. Such judgment will not bar plaintiffs’ right, if any they have, to recover, in another action, tbe value of tbe fertilizers delivered to defendant, which cannot now be returned because they have been used by him. In order tbat judgment may be rendered in accordance with this opinion, tbe action is

Remanded.