1. The contract for the purchase of a sawmill contained the following: "No agent of the seller has the authority to alter, add to or waive the above warranties, which are agreed to be the only warranties given and in lieu of all implied warranties."
2. One phase of the evidence authorized a finding that the Daniel Implement Truck Company and the Meadows Mill Company, its assignee, had lived up to the written contract, and that the defendant had not complied with the condition precedent relating to the warranty as provided in the contract of sale.
3. The evidence did not authorize a finding that Daniel Implement Truck Company was the agent of Meadows Mill Company, but the evidence was undisputed that the latter company was merely the assignee of the former. *Page 544
4. It was error to charge that the implied warranty under this phase of the evidence would not be excluded, as stated in the contract of sale, unless Daniel Implement Truck Company was the agent of Meadows Mill Company.
DECIDED MARCH 13, 1946. A sawmill was purchased under a contract of sale, including the following warranty and agreement: "The seller agrees to furnish free (except for freight or express charges) a new part to replace any part which, with proper use, breaks or proves defective during the first ninety days after delivery, provided the defective part is promptly returned. The purchaser agrees to give each machine a fair trial as soon as possible after receiving and within two days after first use. If it then fails to work properly and prompt notice is given, the seller will send a man within a reasonable time to put it in order, the purchaser agreeing to render friendly assistance. If it still fails to work properly and the purchaser promptly returns it to the seller at the place where delivered, the seller will refund the amount paid, which shall constitute a settlement in full. Retention of possession or continued use shall constitute an acceptance and satisfaction of warranty, and further assistance rendered the purchaser shall not be considered a waiver of this provision. The purchaser agrees to pay the expense of remedying any trouble due to improper handling. No agent of the seller has authority to alter, add to, or waive the above warranties, which are agreed to be the only warranties given and in lieu of all implied warranties. The seller agrees to deliver goods as ordered unless prevented by causes beyond his reasonable control. After delivery, all goods shall be held and used at the purchaser's risk and expense, but title, with right of repossession for default, is reserved to the seller until the full purchase-price has been paid in cash."
The suit here was for the balance due on a note and contract given for the purchase-money of a sawmill. On the trial of the case, the defendant admitted a prima facie case and assumed the burden. Yawn, the defendant, testified in part: "I bought this No. 1 sawmill, one extra headblock, two throwout knees, one underslung sawdust conveyor, one 10-foot extra mandrel, and one 48-inch regular saw. I gave an order for that outfit to Mr. Daniel. *Page 545 . . I bought some extras to the mill, . . one-third down, . . and the balance in 12 notes of $41.69 each. . . The mill was shipped to me at Chauncey. I reckon the mill was shipped to me by Meadows Mill Company, I don't know. I bought it from Mr. Daniel. Fact about the matter is, Malcolm Tillman approached me about selling me the mill, said he'd been selling Meadows Mills for some time, good mills, and it was from two to three weeks before I ever decided to let him ship it to me, and he brought Mr. Daniel up there and they talked to me about it, and I finally agreed to buy the sawmill from Mr. Daniel and an International power unit . . . and when I bought the sawmill from Mr. Daniel, I told him I wanted a 12-inch solid mandrel sawmill. That's what I was supposed to get, a one-piece mandrel, and Mr. Daniel came up there and told me that they didn't have the 1-piece mandrel, and I told him, I said, `Mr. Daniel, I don't think that thing will be satisfactory,' and he said, `If it ain't, it won't cost you a cent.' He said, `We got a man, keep a man, to install these mills and we'll furnish the man to you to install it and help you get it ready, and if it don't operate it won't cost you anything.' So Ralph Pullen came up there [the man Mr. Daniel was referring to]. . . The very first day that we got it ready to go, we turned it on, and the thing tore up. I called Mr. Daniel and said, `Your mill has gone to the bad.' He said, `Mr. Pullen will fix it for you.' Well, I done everything Mr. Pullen told me to, and lots he didn't tell me to. . . I went to Hawkinsville and paid Mr. Mobley over there $50 to make me a mandrel for it. The Daniel Mill Company didn't pay that $50 — I paid it myself. . . I mighty near bought the whole outfit new again, and worried with it there until I just, well, I finally got it to where it would saw a little bit, and it just kept worrying me and I kept losing money, and I just discontinued altogether and bought me a mill. I don't think it was any part of the Meadows Mill I rebuilt that I sold, because I gave approximately a $1000 for the power unit and pulleys, and I taken $800 for it — sold it for $800 — never did get it; I sold it for $200 less than the power unit. . . I tried and I tired [to operate]. I called Mr. Daniel up there when I first started, called him up there, and told him, `You said if this sawmill didn't run, it wouldn't cost me anything; I want you to take it back and give me my money back so I can *Page 546 get one that will run;' and he kept telling me, and I like Mr. Daniel, and he kept telling me right on, and I still like him, but he just kept putting me off, saying that Mr. Pullen would fix it for me, and I don't know just how long Mr. Pullen did worry with that — 2, 3, or 4 or 5 months. He wouldn't give me no money back, and that was when I had practically rebuilt the thing from one end to the other. I tried to give him the thing back to start with. . . When I offered the mill back, Mr. Daniel wouldn't agree to take it back and give me my money back. He said he would take it back and wouldn't give me what I had paid on it. Well, I had $500 and some odd dollars in it, paid something on the express, and give him $400 and something." On cross-examination, he testified in part: "I had discontinued it for a year or so before I ever did sell it. I may have had it in my possession about five years before I sold it. . . As to being in a hurry for the mill, I wanted it, I was like anybody else. I bought it and it wouldn't work, and I wanted something I could work with. When I was informed that they couldn't send me a 1-piece mandrel, I instructed Mr. Daniel to let a 2-piece mandrel come. I told Mr. Daniel, I said, `I don't think it will work, Mr. Daniel,' and he said, `I'll guarantee it won't cost you a dime if it don't work.' I didn't send that mandrel back. I offered it to Mr. Daniel, and he said he had no use for it. I didn't offer it back to Meadows Mill Company. To tell you the truth, I didn't know anything about the Meadows Mill Company. I bought it from Mr. Daniel. I reckon they were the people that shipped it to me. I bought it from Mr. Daniel. . . I sent payments to Meadows Mill Company, and the note in settlement was to them. I gave Mr. Daniel the note; he brought it to me and I signed it. . . I offered the mandrel to Mr. Daniel. I tell you the truth, the man I bought it from and the one that was guaranteeing it to me was Mr. Daniel, and he was the man I communicated with. He was here with me and he would be the one I notified about the trouble. In fact, he is the man that sent the man there to install it." On redirect examination, he testified in part: "The mill I kept for about four years and then later sold was a new one altogether, one I built."
The defendant made two payments to the plaintiff on said note, of $41.69 each, but testified that he made such payments relying *Page 547 on the promises of said Daniel to fix said mill; that he offered to deliver it back to Daniel, but that Daniel told him he would not take it unless he could keep the payments made on it. Daniel denied that the defendant had offered to return the mill. The testimony of the plaintiff's witnesses, R. G. Finley and A. J. Bannerman, which was not disputed, was to the effect that the sawmill as delivered was designed to be operated with a 300-power unit that operates at a speed of approximately 1000 revolutions per minute; that the power unit used, a PK-40, had a minimum speed of 1800 to 1900 and a maximum speed of 1980 revolutions per minute, and that the pulleys furnished for the operation of the mill with a 300-power unit, operated with a PK-40 unit, would run the mill so fast as to tear up the sawdust conveyor, and, with the pulleys supplied, to ruin the saw in a short period of time.
The plaintiff (Meadows Mill Company) was never given any notice of any defect in any part of said mill, except that it was notified on October 13, 1937, that the mandrel was giving trouble; and immediately on receipt of this notice it offered to replace the mandrel or pay to the defendant the cost to the plaintiff of replacing the mandrel. No notice was ever given to the plaintiff of any defective part in the mill or its equipment, or of its failure to work, except as to the mandrel, and no offer was ever made to return the mill or any part of it to the plaintiff, at the place of delivery or elsewhere. On the contrary, the defendant kept and used the mill for four or five years and then sold it, claiming that in the meantime he had practically rebuilt it and that the mill he sold was practically a new or different mill.
The undisputed testimony of the plaintiff's witnesses was that the trouble with the sawmill was brought about by using it in operation with a power unit that operates at a speed of 1800 to 1900 revolutions per minute, instead of operating it with a unit whose speed was only a maximum of 1000 revolutions per minute; and that the sawmill was designed to be operated with the latter power unit of not more than 1000 revolutions per minute, and not with a power unit with the higher speed of the one used. The judge charged the jury the law of agency, *Page 548 and that the express warranty in the order would be effective and would exclude an implied warranty only in the event that the jury found that Daniel Implement Truck Company was the agent of the plaintiff; that if they so found, then the defendant could not set up an implied warranty unless the defendant delivered said mill back to the place where received, or offered to do so and the plaintiff waived delivery; and that, if the defendant offered to return said mill to Daniel Implement Truck Company, and Daniel Implement Truck Company was the agent of the plaintiff and refused delivery, then Yawn could defend on an implied warranty. We assume that this was on the theory that the duties arising out of a contract are due only to those with whom it is made or to one who is in privity, and that the action at law must be brought by one of them.
The note in question was a purchase-money note describing the machinery therein for which the note was given. The warranty on which the machinery was sold was for the replacement of defective parts, which, with proper use, might break or prove defective, provided the defective part was promptly returned; that if the machinery after fair trial and within two days after the first use failed to work properly, and prompt notice was given, a man would be sent within a reasonable time to put the machine in order; and if it still failed to work, the purchaser should promptly return the machinery to the place where delivered to him. The contract for the purchase of the sawmill included the following warranty and agreement: "No agent of the seller has authority to alter, add to, or waive the above warranties, which are agreed to be the only warranties given and in lieu of all implied warranties." (Italics ours.) The undisputed evidence showed that the way in which this transaction was handled was, that Daniel sold the mill to Yawn, and Daniel in turn bought the mill from Meadows Mill Company. That company sent Daniel the mill which he had ordered. In making settlement with Meadows Mill Company, Daniel turned in the note and enough cash to make his settlement with the company. Instead of taking the note payable to himself and indorsing it to Meadows Mill Company, Daniel took the note made payable to the company and guaranteed it. He gave Meadows Mill Company this note in settlement of the account of Daniel Implement Truck Company for the purchase-price of *Page 549 the mill that Daniel had ordered. The way in which this transaction was handled — the settlement by Yawn of his account with Daniel for the purchase-price owed by him to Daniel — was that, at Daniel's instance, Yawn's note for the purchase-price due Daniel was made payable to Meadows Mill Company direct, and there was an equitable assignment and transfer of that indebtedness by Daniel to Meadows Mill Company with the knowledge and consent of the defendant Yawn. 4 Am. Jur. 287, 288, §§ 75, 76; 6 C. J. S. 1105, § 59; McClure v. Century Estates, 96 Fla. 568 (120 So. 4). Since the note was made payable to Meadows Mill Company direct instead of to Daniels Implement Truck Company, the seller to the defendant Yawn, the defendant could make any defense to the note that he could have made if the note had been made payable to, and was being sued by, Daniel Implement Truck Company. When a note is so made, payable to a third party, the payee is not a holder in due course so as to cut off defenses that would be available to the maker had the note been payable to the seller (Daniel Implement Truck Company). Davis v.National City Bank of Rome, 46 Ga. App. 194 (167 S.E. 191).
One phase of the evidence authorized a finding that Daniel Implement Truck Company and Meadows Mill Company, its assignee, had lived up to the written contract, and that the defendant had not complied with the condition precedent relative to the warranty as provided in the contract of sale. Another phase of the evidence tended to show a novation by parol evidence and a violation thereof. Under the phase of the evidence first mentioned, the charge excluded the rule of law applicable to it, that if the contract had been complied with by Daniel Implement Truck Company and Meadows Mill Company, and the defendant had not complied with the condition precedent relative to the warranty provided in the contract of sale, and there was no novation, the implied warranty would be excluded under the terms of the written contract of sale itself; and it was error to charge that the implied warranty would not be excluded as stated in the contract, unless Daniel Implement Truck Company was the agent of Meadows Mill Company. The evidence did not authorize a finding that Daniel Implement Truck Company was the agent of Meadows Mill Company, but was undisputed that Meadows Mill Company was merely the assignee of Daniel Implement Truck *Page 550 Company. Thus, the charge on implied warranty was harmful error because there was a sharp issue of fact as to whether the defendant had complied with the condition precedent as provided in the written contract as it related to the express warranty. For this error in the charge the case is reversed.
Judgment reversed. Broyles, C. J., and Gardner, J., concur.