
    Engelbert Hardt and Others, Respondents, v. Western Electric Company, Appellant.
    
      Executory contract for the sale of goods by sample — acceptance presumed if they are not rejected within a reasonable time—no warranty survives acceptance — delivery in several shipments—acceptance of some shipments and rejection of others—when part of a shipment may be rejected—when the question whether the goods accord with sample is for the jury.
    
    Wlieie an executory contract is made for the sale and delivery of a quantity of ■ cotton yarn equal in quality to a sample agreed upon,, the vendor expressly refusing to guarantee the strength of the yarn, the vendee must, if the yarn does not conforn to the sample, reject the goods within a reasonable time after their delivery or he will be deemed to have accepted them. In such a case there is no warranty of the quality of the yarn which will survive its acceptance.
    Where the delivery ol the yarn is made in several shipments as was contem. plated by the parties, the vendee must accept or reject each entire shipment, H° cannot accept part of a shipment and refuse to accept the balance. He is not, however, precluded from rejecting an entire shipment because he hast accepted previous shipments.
    Where a single shipment consists partly of goods included within the contraéis in question and partly of goods included iñ another contract, the fact that the vendee accepts that part of the shipment which includes the goods called for by the last-mentioned contract will not preclude him from rejecting that part thereof which includes the goods called for by the contract in question.
    When the question whether yarns delivered to the vendee under the contract, in question were equal to the sample on which, the contract was based presents a question of fact which should be submitted tó the jury, considered.
    Van Brunt, P. J., and O’Brien, J., dissented.
    Appeal by the defendant, the Western Electric Company, from ■a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 4th day of February, 1902, upon the verdict of a jury rendered by direction of the court, and also from an. order entered in said clerk’s office on the 20th day of February, 1902, denying the defendant’s motion for a new. trial made upon the minutes.
    
      Iticha/rd T. Greene, for the appellant.
    
      A. Blumenstiel, for the respondents.
   Ingraham, J.:

The complaint alleges a sale and delivery of goods by the plaintiffs to the defendant, the agreed price being $5,444.90^ upon which the defendant was entitled to a credit of $4,272.85, leaving- a balance due and unpaid of $1,183.05, for which the plaintiffs -demanded judgment. The answer denies each and every allegation of the complaint, and for a separate defense alleges that in September and October, 1900, the defendant ordered certain goods, wares ■and merchandise consisting of cotton yarns from the plaintiffs at an agreed price of $4,453; that by the terms of the order the goods to be furnished were to be fully equal in quality to a certain sample which had been previously furnished by the plaintiffs to the defendant ; that the yarns shipped by the plaintiffs to the defendant u.pbn such orders of September seventeenth and October seventeenth were accepted by the defendant and paid for ; that of the goods shipped by the plaintiffs to the defendant on September 19, 1900, 523 pounds known as “ 80’s-4-5,” were defective and not of a quality equal to the sample from which said goods were ordered, and ■ that the said goods were thereupon rejected by the defendant and the plaintiffs were thereupon duly notified of such rejection, and that the defendant held and still holds such goods subject to the plaintiffs’ orders, the agreed price of which was $418.40 ; and that the balance of the goods shipped on September 19, 1900, was frilly paid for; that the goods, wares and merchandise shipped by the plaintiffs to the defendant on October 11, 1900, being 1016 pounds of cotton yarn known as “ 80’s,” were defective and not of a quality equal to the samples from which the same were ordered, and that the said 1,016 pounds were thereupon rejected by the defendant, the plaintiffs duly notified of such rejection, and that the defendant held and still holds the same subject to the orders of the plaintiffs; that the agreed price of said 1,016 pounds of cotton yarn amounted to $812.80, and that all of the other goods contained in the shipment made by the plaintiffs to the defendant on October 11, 1900, had been fully paid for.

Upon the trial the plaintiffs proved the receipt from the defendant of an order for 1,000 pounds 78’s three ends; 1,100 pounds 78’s four ends, and 2,000 pounds 78’s five ends, “ subject to approval of first shipment-. First shipment to be made as soon as possible for approval.” Nothing appears to haye been done with this order for 78’s yarn.

On August fourteenth following the plaintiffs wrote to the defendant : Referring to your order for 80’s 3, 4 and 5 ends cotton which we placed with our best spinner, and sent him a copy of your specifications for this count. He says he would prefer not to enter your order on the terms of guaranteeing particular strengths, as-owing to the variation in method of testing, this might only lead to complications. We are sending you by this post two samples of 80’s Egyptian, which he can give you, but awaits your choice before proceeding. He considers the super one the better of the two and one which will be satisfactory to you.”

In answer to this the defendant wrote, on August 17, 1900, as follows: “Tour favor of the 14th inst. at hand and we have just telegraphed you as follows : Samples $ 80 cotton satisfactory. Fill orders with this quality.’ ” Subsequently, on August 20, 1900, the defendant wrote to the plaintiffs: “ Tour favor of the 18th inst. regarding samples of No. 80 cotton yarn at hand. In telegraphing you regarding the quality of these two samples, we overlooked the-fact that there was a difference between them, but find on looking up our tests that the super quality was considerably better than the other, and your action in ordering this quality from the spinners is entirely satisfactory'to us.”

This correspondence constituted the contract. The first shipment under this contract was on September nineteenth, which included a lot of 100’s under another order and one lot of 523 pounds of 80’s four and five ends. These shipments were included in one invoice* and were sent by the plaintiffs to the defendant about September nineteenth.

On September 29, 1900, the defendant wrote to the plaintiffs: “We have received and tested the lot of § 80 four and five ends cotton yarn which you billed us on the 19th inst., and find that the yarn is so weak that it will not run on our machines. We áre obliged, therefore, to hold it subject to your orders and would like you to advise us at once what disposition to make of it.”

In answer to this letter the plaintiffs wrote, on October '4, 1900* calling the attention of the defendant to ■ the letter of August 14, 1900, and stating: “We have now taken several tests of the sample of super quality submitted together with tests of the yarn we have delivered, and enclose a copy of same. You will notice the yarn we are delivering tests up stronger and superior to the-sample, the order was placed on, and for this reason we are surprised'you should have any trouble.”

Subsequently, on October twenty-seventh, the defendant paid the invoice covering the shipments of September seventeenth and nineteenth, deducting the value of the 80’s which it had in the letter of September twenty-ninth refused to accept. Subsequent sltip-ments were made on October eleventh and October seventeenth, which included cotton yarn designated 80’s, and concerning- these two lots the defendant wrote to the plaintiffs on October 19, 1900, as follows: “ The lot of § 80/3 which you billed us on the 4th inst. gave an average breaking strength- of 6 oz. These are the two lots of yarn which we are holding subject to your order and disposition. We have now received the lot of § 80-3, 4 and 5-^ends cotton yarn which yon billed us on the 11th inst. and find on testing it that we are unable to use any of it. * * * Please advise us what disposition to make of this lot of yarn also* and oblige;”

There was subsequent correspondence about these yarns, the defendant refusing to pay for the No. 80’s. The correspondence ended by a letter from the plaintiffs to the defendant of March 22, 1901, stating that the tests that they had made proved the yarns equal if not superior to the samples originally submitted and upon which the defendant had placed its order, and insisting upon the payment of the contract price of the yarns delivered. To this demand the defendant made no answer, and this suit was subsequently brought to recover the contract price of the yarns thus delivered.

The plaintiffs had expressly refused to guarantee the strength of the yarn, basing that refusal upon the situation that has been here disclosed, that variations in the method of testing might lead to complications, but submitted to the defendant samples of the quality of the yarn which the spinner who was to manufacture it could manufacture for the defendant; the defendant.accepted one of the samples, and it was based upon this sample that the order was given. The order of the 80’s yarns must he treated as a separate order, and although the 80’s yarn was delivered with other yarns ordered by the defendant, the defendant undoubtedly had the right to reject the shipment of the 80’s yarn if it was not what it had contracted to buy, that is, of the quality of the. sample which had been submitted to the defendant and upon which it had based its order. The plaintiffs, after proving this correspondence, introduced testimony tending to show that the yarns shipped upon this order were stronger than the sample that was sent and upon which tlie order was given. The plaintiffs then rested, and the defendant produced in court the rejected yarn and tendered it to the plaintiffs, and introduced evidence tending to show that it was not equal in strength to the sample and did not stand the same test. At the end of the case the plaintiffs moved for the direction of a verdict, which motion was granted, to which the defendant excepted, stating : I take an exception to your honor’s direction of a verdict in this case, claiming that we have a right to go to the jury on the question whether the goods which were furnished pursuant to our order complied with the sample or not. I ask your honor for a new trial on all the grounds specified in the Code under section 999 ” That motion was denied and the defendant excepted.

I think that there was a question for the jury as to whether the yarns delivered to the defendant were equal to the sample upon which the order was based, and that there was evidence of a sufficient rejection under the circumstances. It would seem that this yarn was shipped directly from the spinner in England to the defendant in Chicago. There were separate shipments of the 80’s yarn included with other yarns purchased by the defendant from the plaintiffs and paid for, as to which no question arises. When the first shipment of the 80’s, that of September 19,1900,- was received by the defendant it had a reasonable time to examine the yarn to ascertain whether or not it complied with the contract which the plaintiffs had made. The defendant made that test and rejected the 80’s yarn contained in that shipment as not complying with the contract, and constantly refused to accept that yarn as a compliance with the contract. In the meantime other shipments had been made direct to the defendant in Chicago. The second shipment appears to have been of a satisfactory quality, and was accepted and paid for. The third and fourth shipments, however, according to the defendant’s evidence, failed to comply with the contract and were rejected by the defendant. When the plaintiffs were notified of the rejection of the 80’s yarns included in the shipment of September nineteenth, they requested that the matter be allowed to remain in abeyance until they could communicate with the manufacturer, and to that request it would appear that the defendant acceded. Subsequently the manufacturer insisted that the yarn delivered was equal to the sample, and the- plaintiffs insisted upon holding the defendant to its purchase and refused to accept a return of the yarn.

It is undoubtedly the rule that the defendant had no right to accept the shipment, retaining a part of it and refusing to pay for the balance ; but as these shipments were made separately (and the correspondence shows that such was contemplated by the parties when, the contract was made), the defendant was not precluded from rejecting any shipment because previous shipments had been found to be equal to the sample and acceptable under the contract-The rule in relation to contracts of this character is stated in Gurney v. Atlantic & G. W. R. Co. (58 N. Y. 358), where the court say: “ The general rule is, when articles are sold upon an executory contract like the one in question, that the delivery arid acceptance of .the articles after examination, or an opportunity to examine them, is' a consent or agreement that the articles correspond with the contract, and precludes a recovery for any defects which may exist. * * * The. vendee must immediately rescind the contract and return or offer to return the goods. He cannot retain the property and afterward claim damages by action or recoupment, for inferior quality. Such a transaction differs from a sale with warranty in that the stipulated quality is a part of the contract, itself, and not collateral to it.”

In Pierson v. Crooks (115 N. Y. 539) this distinction between a. warranty that survives the acceptance of the goods, and an executory contract for the future sale and delivery of goods óf a specified quality where the vendor is bound to furnish articles corresponding with the description, is again discussed, and Judge Andrews there, says : “ There is no dispute as to the rule of law touching the rights, of parties under an executory contract for the future sale and delivery of goods of a specified quality, in the absence of expresa warranty. The quality is a part of the description of the thing agreed to be sold, and the vendor is bound to furnish articles corresponding with the description. If he tenders articles of an inferior quality the purchaser is not bound to accept them. But if he does accept them, he is, in the absence of fraud, deemed to have, assented that they correspond with the description, and is concluded from subsequently questioning it. This imposes upon the vendee the duty of inspection before acceptance, if he desires to save his. rights in case the goods are of inferior quality. There is in such case no warranty of quality which survives acceptance, and the vendee cannot reject the goods after acceptance or recover damages, for inferior quality. He can do nothing inconsistent with the right of rejection, or do what is only consistent with acceptance and ownership, without precluding himself; ” and the general rule as. stated in Benjamin on Sales (7th Am. ed. § 703), is approved, that where goods are sent to the buyer in performance of the vendor’s, contract, the buyer is not precluded from objecting to them by merely receiving them, for receipt is one thing and acceptance anotherj “ but receipt will become acceptance if the right of rejection is not. exercised within a reasonable time, or if any act be done by the buyer which he would have no right to do unless be were owner of the goods.” In Smith v. Coe (55 App. Div. 585 ; affd., by the Court; ■of Appeals, 170 N. Y. 162) the same rale is recognized as estáb- • lished in this State.

Applying this principle, it is quite evident that there was no warranty as to the quality of the yarn to be supplied under this contract. There was an express refusal to guarantee the strength of the yarn which the parties understood was to be manufactured by spinners with "whom the plaintiffs would place the order, but samples of yam manufactured by these spinners were sent to the defendant, and it was asked to determine which of the samples it would ■select as indicating the quality of yarn to be manufactured for¡ it, It selected one of the samples known as the “ Super Quality,” -and approved of the plaintiffs’ action in ordering this- quality from "the spinners. Here the" exact situation was known to the parties; The plaintiffs were to order the quality of yarn indicated by ¡the ^sample selected by the defendant, and upon ordering that quality of yam and the delivery to the defendant of the quality indicated, the plaintiffs complied with their contract. The fh-st shipment of this-yarn was received by the defendant on the nineteenth of September, -and a bill for yarn was sent to the defendant. The first objection to this yam appears in a letter of September twenty-ninth in which 'the defendant'stated that it had received and tested a portion of the yam and found that the yarn was so weak that it would not run on ■its machines and that it held it subject to the plaintiffs’ order. .

Considering the method of delivery contemplated by the parties, it would seem that the defendant adopted the only available method -of rejecting this yarn as a compliance with the contract, and when "the defendant insisted upon its rejection of the yarn, the plaintiffs wrote, “We sent these tubes on to Messrs. McConnel & Co., Ltd. ¡and have asked them to go into the whole matter very closely and report to us fully at once. We will ask that this whole matter be left in abeyance until we hear from them, as in the case of an allowance on the yarn you are using which you claim is weak, we would have to liave their authority for making same. We will take this matter up with you again as soon as we hear from them, as we wish to have it •¡adjusted at the earliest moment.” There was no objection on the part of the plaintiffs to the defendant’s accepting one shipment .and -rejecting the others, and the plaintiffs requested that the whole -matter be left in abeyance until the manufacturers were heard from; and in that the defendant acquiesced. The rejected yarn was produced in court and tendered to the plaintiffs at the trial, and the defendant’s liability for this yarn thus delivered depended upon whether or not it was what the plaintiffs had agreed to sell to the defendant, viz., yarn of the character indicated by the sample upon which the order was given. The order for this 80’s yarn being separate from the other yarn that was sold and delivered, the acceptance by the defendant of the other yarn, although included in the same shipment, was not an acceptance of any part of the 80’s yarn sold and delivered under a separate contract. The defendant within a reasonable time rejected the first shipment of the 80’s yarn made under the contract for those goods, and based such rejection upon the claim that the yarns were not of the strength indicated by the sample. That, I think, the defendant had a right to do, and the question as to its liability for these yarns was reserved until the manufacturers could be heard from. We recognize the rule that the defendant could not accept a part of a shipment and refuse to accept the balance, but there is no evidence that it accepted any part of the shipment of these 80’s yarns, except the entire shipment of October thirteenth, which it accepted as a compliance with the contract and for which it has paid. The one question in the case was as to whether the shipments that the defendant refused to accept and pay for complied with the plaintiffs’ contract, and that question was upon this evidence a question of fact for the jury and should have been submitted to them.

It follows that the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Patterson and Hatch, JJ., concurred ; Van Brunt, P. J., and O’Brien, J., dissented.

Judgment reversed, new trial ordered, costs to appellant to abide event.  