
    William P. Callahan and Thomas De Armon, as Surviving Partners of the Firm of W. K. Callahan & Co., Respondents, v. Agnes L. O’Rourke, as Executrix, etc., of John H. O’Rourke. Deceased, Appellant.
    Second Department,
    December 29, 1905.
    Sale—contract to manufacture and sell ice machine — acts of vendee showing acceptance — failure to show breach of express warranties by vendor.
    When the vendee of an ice-making machine, who has a general knowledge'of mechanics, has had an opportunity to examine and test the same for two months, and thereafter sets the machine to work in his business for profit, it is an acceptance which waives defects in the machine not in the nature of express warranties, even though he makes subsequent complaints that the machine is imperfect.
    As to warranties against express defects, such acceptance is not a waiver, except as it may show an - acknowledgment by the vendee that the warranties have been fulfilled.
    A breach of warranty as to workmanship, construction, material, etc., is not . shown by the fact that the vendee wanted certain adjuncts to the machine which were not essential to its operation, construction or material, etc.
    A failure to point out breach of specific warranties followed by the acceptance of the machine aforesaid, is proof that the warranties were fulfilled. So, too, is a subsequent acknowledgment of indebtedness for the purchase price by the vendee, such as the giving of notes and requests for extension of credit.
    Facts insufficient to show a- new contract that the vendee was to perfect such machine at the vendor’s expense, stated.
    Appeal by the defendant, Agnes L. O’Rourke, as executrix, etc., of John H. O’Rourke, deceased, from a judgment of the Supreme Cdurt in favor of the plaintiffs, entered in the office of the clerk of the county of Kings on the 6th day of April, 1904, upon the report of a referee.
    
      James Ti'oy, for the appellant.
    
      R. M. Cahoone [Charles H. Hyde with him on the brief], for the respondents.
    Judgment affirmed, with costs, on the opinion of Herbert T. Ketoham, referee. '
   Hirschberg, P. J., Bartlett, Woodward and Hooker, JJ., concurred. .

The following js the opinion of the referee :

Herbert T. Retgham, Referee :

The plaintiffs seek to recover npo.n a contract under ..which they have constructed, for the defendant á system of machinery for ice - making. The agreed price was $96,900, on which.;xtbje. defendant has paid $76,866.25. . .

The defendant insists that the machinery was defective and was not in accordance with the contract, arid that it did.not conform to the warranties hereinafter specified.

There are also counterclaims, first) that the defendant has • expended,in attempting' to -remedy defects in 'the.'plaintiffs’ construction, moneys which the plaintiffs. agreed to pay and have not ■ paid, and, second, that he, at.-the plaintiffs’ request, rented and attempted to use the plant-during the plaintiffs’ endeavors to per feet it, and has suffered" damage by reason of the failure of the apparatus to manufacture ice as, required by the"contract.

Regarding the. agreement apart from the warranties, and only as , an Undertaking to construct a system of machinery, there- is no available defense. . .

The plant was assembled and put in operation upon the defend- • ant’s premises in the summer of 1893, and it was operated until the winter, when it was suspended'under the usages of the business.,

, • For at least two months prior-to the latter part of October, 1893, the defendant had, and availed himself - of, ample opportunity for ifs examination and test. He was a man of broad' experience in . practical mechanics, and it is not suggested that the conditions of ■ the’machinery were latent or uncertain. ■

In- the latter-part of October, after a fair term. of' probation, he set the apparatus at work in his own business and for'his own profit. It then passed from, the dominion of the plaintiffs and became the defendant’s property. ... ..... - .

This was an acceptance -which, for the main purposes of the contract, waived all defects in the work, confessed the ..plaintiffs’ full performance, and fixed and determined that the defendant was liable for the unpaid balance of the price, subject to the. terms of .payment prescribed. in the agreement. (Brown v. Foster, 108 N. Y. 387.)

True, this use of the machinery, was accompanied by complaints ' that the work was imperfect, but in the case cited, which presents a circumstantial resemblance to the case at bar, it was said of like complaints by the vendee : “ The complaints continued to October tenth, but so did his use of the machine, and later, until ¡November twenty-sixth, when the work on hand having been completed and the season o.ver, the machinery was uprooted and stored, with notice to.the defendants (vendors). If these things had been done at the moment of discovery that the machinery was not in compliance with the contract, the obligation of the plaintiff '(vendee) would have been discharged. At the time when they were done the right of rescission had beqn lost. The continued use of the machine in the promotion 'of his own business interests, with knowledge of its imperfections, was an unequivocal act of acceptance which no words' of his own could qualify.”

Acceptance, however, did not waive any defense based upon the specific warranties, and inquiry as to their breach is not thereby embarrassed, except so far as the acts constituting acceptance for the purposes of the general agreement may also suggest a concession on. the defendant’s part that the warranties had been fulfilled.

The warranties invoked in defense are that the whole apparatus, as well as specific parts thereof, would develop a certain manufacturing capacity, that the workmanship, construction and material involved were first class, and that each detail thereof was adapted for the purpose intended.

The evidence requires the finding that all these warranties were ‘ kept. " ■"

The warranties as to-workmanship, construction and material, and the aptitude of- the details for the purposes intended, will be first considered. .

■' In the Mtter part' of December, 1893, the defendant sent to the plaintiffs a written specification which he called á “list of wants * * to complete plant.” The things wanted were proper adjuncts to the machinery, but they were not essential either to its operation or to its workmanship, construction or material, nor did they show that the details Of the machinery were not adapted to the purpose thereby intended.

At this time the defendant had had time and opportunity for determining whether there.'were deficiencies in the plant, and it must be supposed that the list of wants specified every-shortcoming which Was then, apparent. Those which , were not then mentioned' must be presumed not to have existed", and those which were mentioned. Were thereafter supplied, with the exception Of a brass knob and an ornamental-shield over a cylinder head., /

The plaintiffs’ witnesses who were engaged upon the construe-, tion give credible testimony of the fulfillment of this warranty, and they are confirmed by the facts surrounding the acceptance.

It is- not intended to hold that acceptance has any effect to shut out inquiry as to'whether or'not the warranties were fulfilled, Or that it is of any consequence in regard to" the facts surrounding these warranties, except that when there is a conflict as to the conditions.to'which the. warranties’" relate,, any declaration or concession by any of the parties, even though evinced only by their -acts, is of the same grade of evidence as would be a declaration by words to -the same effect. •

- Such assurances'become of especial weight when the subject „of the warranties is open to inspection and its- physical conditions are appreciable by a person óf ordinary intelligence. ■ -.

Rot only was this machinery subject to a scrutiny, sufficient to discover to ordinary-observation any mechanical or physical imperfection, but the defendant gave to it his attention and was well - fitted,to reach an understanding as to its condition.

It is, hard to resist the. conclusion that when the defendant, in October, 1893, appropriated the plant to his own jise,- he -thereby implied'a .conviction on his part and an assurance to his vendor that the warranties under consideration were performed, save for '.the' details mentioned in the list of wants, and thereafter supplied.

-The'warranty of capacity to make 110 tons of ice per day was undoubtedly postponed as to its operation and test beyond the time of. acceptance, and. the ( circumstances surrounding the acceptance have-no bearing.upon Its.breach or-fulfillment.

But in-the. summer of 1894 the parties joined in .a test of(the plant, avowing.; their purpose ..to determine whether or not. it would make the required quantities and quality. This trial was conducted »■ with sufficient care and solemnity; its records are in evidence; its results., manifested the-productive ability-which the plaintiffs had warranted. Indeed, the power of the plant to fulfill this warranty was shown in its general operation apart from the test.

In reaching these conclusions it is not forgotten that the defendant’s complaints continued, and that his original list of wants, when cured, was supplemented by additional statements of grievance.

So far as his complaints affected the general liability, the case is as if there had been no semblance of deficiency, while with respect to the warranty no complaint of deficiency could 'contravene the demonstration of efficiency which was afforded by the behavior of the plant under the formal test and in its ordinary use.

In May, 1894, the defendant gave to. plaintiffs, on account of the transaction in suit, his nóte fór $15,385, which fell due about a month after the test of the machinery. This note was, in its inception, a confession of indebtedness and a request for indulgence. At its maturity the defendant paid a portion of the note and availed himself of a renewal as to the remainder, and by many.successive renewals the indebtedness was in part reduced and in part continued till November, 1895.

The defendant’s recognition of indebtedness and his requests for indulgence thereon support the determination that, whatever may have been the remaining imperfections of the machinery, its condition did not offend the warranties.

The amount represented by these notes was a portion of a sum which, under the expression of the contract, became payable'“ thirty days after completion of plant.”

" It is true that the contract provided that the payments thereby-required were not to be evidence of the acceptance of the work, but it is not payment so much as his requests for indulgence from which the defendant’s approval of the plant is to be deduced.

In the snarl of conflicting evidence which this case presents it is easier to believe that these warranties had been performed to the." defendant’s satisfaction than to accept a theory that, under circu.m- ’ stances of financial stress, continuing for- many months, he would.. repeat his promise to pay for a work , which, according to his convictions, so offended these warranties that the plaintiffs owed him a sum eventually more than the amount of the notes.

There is no proof or contention as to the counterclaim that under a rental from the plaintiffs the defendant attempted to make ice and suffered lossés from the insufficiency of the plant. This claim is abandoned. . ■ x ' "

The remaining counterclaim is. that under a new contract imposed upon the original agreement the plaintiffs authorized the defendant to make’such repairs, additions and changes' as he might find necessary to perfect the plant, and promised to repay all expenditures to be made under such arrangement."

This claim rests upon the testimony of the defendant of con ver- ■ sation with one of the plaintiffs, and in part upon the testimony of Mr. Ternes, the defendant’s engineer.

. The senior Mr. Callahan, with whom these conversations were liad, died, after the giving of the testimony without having taken • the stand in this cause. ,. .

The testimony, if accepted, would indicate that men whose business was the building of ice-making systems, and who had previously set up many like plants which had been entirely successful in operation, would abandon their appropriate business, would confess their failure to manage their affairs and their breach of their contract, would turn over their duties and their interests to one who had no previous experience in such construction, and whose interests' were inconsistent with their wn, and would give to him an unmeasured • authority to improve his own property at their expense, and to charge them with accounts, then uncalculated, and since found to ' be many thousands of dollars. ■ ■

The conversations.as given are vague and indefinite. They lack > contractual significance, .and • are without • the detail and ceremony which' would ordinarily surround a transaction involving so'much, ■ of unlimited liability on .the .one part and unhampered opportunity ■ on the other. They are offered to establish-a. transaction of. the"sort which men usually want to define with great care' and .put in written, form. • - ■

The talk to which Mr. Ternes testifies is of no value upon the/ question whether or not .Mr. Callahan had several months earlier • ■ \ ... made the promise - alleged; and it.is actually .inconsistent with an-■ already existing agreement. * ■■....

The interview to which Mr. O’Rourke refers took place in the summer of-1894. He says, “ I think it was about June.” . .

In, the previous December the defendant had submitted luis list .. o,f-wants. The assertion of faults-therein set forth and the subsequent correction thereof together indicate that in the following; summer there was-neither occasion nor probability of any agreement which contemplated large expenditures Upon .the machinery. :

The lapse of time since these conversations and the ardor of litigation suggest the likelihood of error or unconscious extravagance in the testimony. This .suggestion is reinforced by the fact that the defendant,has shown a zeal-in his own behalf which lias led " him into mistake, in part confessed by - him with frankness and in part disclosed by. the circumstances or by further examination; nor can it be disregarded that the bill of particulars of this counterclaim contains charges for expenditures which were clearly not related to the building or perfection of the plant, but were current outlays necessary .in the natural process of use, maintenance and ' reparation. ■

These particulars.cover'payments made between January, 1894, and December, 1895. The, account was constantly growing. ,It amounted to several thousand dollars early in 1895, and as early as October, 1895,. nearly reached its final total of $13,000.

■Meanwhile the defendant’s note for" $1.5,385 and its successors were running. The various renewals were attended by requests in which the defendant declared liis -financial inconvenience, promised payment by. the next ’due date,- made payments On account, and explained that-liis failure to, take,- up. the indebtedness was dii'e to '• his,-inability to sell.securities issued upon the enterprise which was." based upon this .plant, -and - other - securities Apparently not, related thereto.

Tü-'. -oñe .instance,-.--in .-.asking- for .the. reconsideration' of a refusal to-, extend ■ the-note,' -lie gives.- the grounds-which, i-n.liis judgment,-.; entitle him to indulgence, but . he-makes-no-intimation that the.", extension might-well be. accorded to one-who "held, against the payee a substantial offset.

It does not appear whether the defendant paid interest or bank discount upon the earlier renewals, but his last note was given to include interest.

It is not rationally probable that this transaction continued for more than a year and a half' and developed the features just. described, without the assertion of a counterclaim,, if there -were between the parties ah agreement under which the plaintiffs were indebted to the maker of the note in a constantly growing sum, finally larger than the note indebtedness and at all times of practical substance. „ ,

■ There were repeated requests by the plaintiffs that the defendant would render to them his account. While nothing-was said in the .plaintiffs’"letters as .to the. nature or the basis, of .this account, such requests, with all the circumstances and relations bf the parties, give color to the possibility of an understanding that the defendant. was permitted to make some disbursements on the plant -4t the plaintiffs’expense. . ’ .

But the probabilities fall short of any agreement comprehending the -broad and extended charges now asserted, and in the breadth of the defendant’s claim there is no evidence from which a contract ’ for any specific or limited expenditure Can be found.

In the absence of proof of the intention .of the parties, the various, payments made on' the contract price should, under all the circumstances, be taken as applicable to the obligations remaining Unpaid . at the time of the payments respectively in the order of their maturity. ’ ■

Hence, as calculation shows, of the sum- of $20,083.75, now unpaid, $653.75 is to be regarded as a part of the sum of $27,520, due thirty days after completion, viz., .on December 1, 1893, and the balance, $19,380,. must be considered as the last installment^ which became payable four months after completion, viz., on 'March 1, 1891. -

-There z should be judgment for the plaintiffs for $20,033.75, with .interest on the parts thereof as above ..set forth, and against the defendant for the dismissal of his counterclaims.

Counsel are requested to submit findings accordingly..  