
    Isbell-Porter Company, Respondent, v. Isaac Heineman, Appellant.
    First Department,
    May 11, 1906.
    Pleading — sale of inefficient machine under guaranty as to its performance— action to recover reasonable value on alleged acceptance by defendant — express warranty — damages on — answer alleging that there was no waiver of guaranty states a defense—when purchaser cannot counterclaim extra expense caused by operating inefficient machine —demurrer to different kinds of counterclaims.^
    When a complaint sets out a contract for the installation of a refrigerating plant under a specific guaranty of efficiency, and that, although the guaranty was not fulfilled by the plaintiff, the defendant accepted the plant and refused to pay the reasonable value thereof, it is a good defense to allege that there was no waiver of the guaranty of efficiency, and that the defendant did not accept the plant, but demanded that the plaintiff retake it, which was refused. Such defense is not invalidated by the fact that the defendant retained and used the machine, for under the express warranty the defendant could retain the machine and offset his damages, for where there is express warranty the purchaser is not bound to return the property but may retain it and compel the seller to make good his guaranty.
    But when it is admitted by the pleadings that the machine was to be tested for efficiency at the defendant's expense, he cannot counterclaim additional sums expended in continuing to use the inefficient machine, for after discovering its inefficiency he could not continue to run it and charge- the extra expense to the guarantor, as such expense was iúcurréd by his own wrong.
    Appeal by the defendant, Isaac Heineman, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered .in the office of the clerk of the county of New York on the 29th day of November, 1905, upon the decision of the court, rendered after a trial at the New York Special Term, sustaining the plaintiff’s demurrer to two separate defenses set up in the amended answer.
    
      William C. Rosenberg, for the appellant.
    
      Jay E. Whiting, foy the respondent.
   Houghton, J.:

By its complaint the plaintiff alleges that it entered into a contract with the defendant for the installing of a refrigerating plant at the agreed price of $5,000, under a specific guaranty as to the efficiency of the. plant-, when completed; that it was installed, áccord- ' ihg to specifications, and that Upon test, owing to adverse conditions for which the defendant was responsible, only ninety per cent of the duty required by the. guaranty was shows.- Then follow allegations that the defendant took possession of the plant as erected, accepted and used the same for nearly -four years, refusing to permit plaintiff to remove the same, and that the reasonable value of such plant was- $4,700, only $2,500 of which has been paid, and judgment is. demanded for the balance. While,, therefore; the plaintiff sets Up a contract to erect the "plant, with a guaranty of ' efficiency,.;the action is in "reality one'on quantum meruit for .the value of the plant actually installed and retained and used by the defendant. .

- The defendant answered, admitting the entering into of the contract-, but denying that. it contained all of the agreement had between the parties,* and'also denying the other allegations of the complaint, except the incorporation of the plaintiff and the name under which defendant was carrying on lii's business. Then- follow three .separate .answers, each styled “a separate and distinct defense” and. “by Way of set-off and counterclaim.” In the first defense the. defendant alleges the'making of the-contract for the installing of- the ref rigerating plant, with guaranty as to its efficiency, and that it had never shown an efficiency equal to the guaranty, and that lie refused to accept the plant and demanded that plaintiff" remove it, and that during the erection thereof he paid $2,500 'to plaintiff, at its special instance and request, on the understanding that the same was to be applied on such contract in case, the plant was completed' jn accordance therewith, and that the repayment of Such rnoney had been demanded and refused, and that, by reason'of all these, facts the defendant had been damaged in the sum of $2,500, ■ witlr interest thereon from the time of payment.. The third defense alleges that the contract guaranteed that the machine would cool a certain number of poii-nds of brine per minuté by the Use of a certain number of pounds of steam per hour, and that it has always-required-a greater amount of steam to cool a less amount of brine, and that the defendant has been damaged' in the stun of $2,000 by being compelled to produce this excess "amount of steam in order to operate the plant. In his final prayer defendant combines these two amounts and asks judgment against the plaintiff therefor, with costs.

The plaintiff demurred to these two separate and distinct ” defenses, “ and by way of set-off and counterclaim ” on the ground that each was insufficient in law upon the face thereof,, and such demurrers were sustained, and from the interlocutory judgment entered thereon the defendant appeals.

The Code, under the heading “ when plaintiff may demur to answer,” provides that the plaintiff may demur to a counterclaim or a defense consisting of new matter, contained in the answer, on the ground that it is insufficient in law upon the face thereof.” (Code Civ. Proc. § 494.) Under the heading of “ demurrer to counterclaim when defendant demands an affirmative judgment ” various grounds of demurrer are provided, amongst them being that the counterclaim is not of the character specified in section 501 of the Code, and that it does not state facts sufficient to constitute a cause of action. (Code Civ. Proc. § 495.)

It is, therefore, apparent that provision is made by the Code for demurring t.o different kinds of counterclaims. Where the counclaim is in the nature of,, a complaint several special grounds of demurrer are provided. Where the counterclaim^set up is for the purpose of defeating the plaintiff’s recovery, with no demand for affirmative judgment, it partakes of the nature of a special defense, and it can be demurred to only on the ground, that it is insufficient in law upon its face, A demurrer to a defense consisting of néw matter can be taken only on that ground. The special answers demurred to are denominated both as defenses and counterclaims and set-offs. The sufficiency of the demurrer is, therefore, to be tested by determining whether the facts pleaded allege any one of the three. With respect to the first separate answer, we think the facts pleaded show a good defense, and that the demurrer that it was insufficient on its face was improperly sustained.

Although the complaint set forth the contract originally entered into for the installation of the refrigerating plant, recovery is sought not on the ground that the contract was performed, but upon the ground that defendant prevented completion and accepted a differ.ent plant, the value of which.was demanded. It was entirely proper fpr the defendant to plead that this was not true, and that the plant was in fact installed under the contract, and that it did not coniform to it* and did not do the work which it was guaranteed to do. M the plant was in fact installed under the contract, then the plaintiff could not recover on quantum meruit for work performed and material' furnished, if the- plant did not meet the requirements specified. -

The facts plead by defendant in substance are to the effect that the plant was erected in pursuance of the contract without waiver as- to. deficiency of duty,, and that it did not meet the efficiency which was guaranteed, and that defendant did not accept the plant as erected, but demanded that plairitiflMetake it, which demand w^s refused.

It is insisted that because it is disclosed by the pleading that the defendant retained and used the plant, and because he demands as ' damages the part of the purchase price which lie has paid,, that this plea is destroyed as a defense.

If the plant Was in fact erected under the contract arid failed to meet the contract requirements, there' being an express warranty the defendant had. a right to-retain it and recover or offset Ms damages. (Day v. Pool, 52 N. Y. 416 ; Brigg v. Hilton, 99 id. 517 ; Cooper v. Payne, 103 App. Div. 118.) Such damages would be measured by the difference between the value of the plant, as erected and the value stipulated by the -contract. (Rochevot v. Wolf, 96 App. Div. 506 ; Bates v. Fish Brothers’ Wagon Co., 50 id. 38; affd., 169 N. Y. 587.) That the defendant alleged that he paid the $2,500 under the circumstances set forth, and that he had demanded its return and concluded that he was damaged in that sum, with interest from the time of payment, does iiot destroy the-defense set forth by the other allegations. . That the defendant cannot on the facts pleaded recover the damages which he demands, or that the rule of damages is not such as lie asserts it to be, is not .good- ground for demurrer if-the facts stated show a good cause of action or defense. (Middleton v. Ames, 37 App. Div. 510 ; Abbey v. Wheeler, 170 N. Y. 122, 127.)

It is riot necessary for us to determine, as this defense now, stands, whether the defendant could recover any damages at all Tested as a defense, however, it does allege that the refrigerating plant was erected in pursuance of the contract, without waiver; that it did not comply with the contract, and that defendant refused to accept it, and demanded that plaintiff dismantle it and take it away. That the defendant may be embarrassed in this defense by the fact that he continued to use the plant is another question not arising on this demurrer.

. With respect to the other defense demurred to we think the demurrer was properly sustained. It is alleged that by the contract set forth in the complaint a certain efficiency was guaranteed by the production of a certain amount of steam. The contract so referred to provides that the fuel necessary for a test should be furnished by the defendant. That more steam was required than the contract stipulated, and, hence, that more fuel was necessary to be used, was made apparent by the test, the expense of which was to be borne by the defendant. After ascertaining this fact defendant could not continue running the plant and hold the plaintiff liable for such extra expense. Where a purchaser ascertains defects in a machine, sold with guaranty, and yet persists in using it, whereby losses and expenses are incurred, he does so in his own wrong, and cannot recover the amount of such losses and expenses as damages for a breach of the warranty. (Draper v. Sweet, 66 Barb. 145 ; Bruce v. Fiss, Doerr & Carroll Horse Co., 47 App. Div. 273.)

The interlocutory judgment appealed from should be reversed as to the first defense, and the demurrer thereto overruled, and as to the third defense the judgment sustaining the demurrer should be affirmed, without costs of appeal or in the court bélow to either party, with leave to the plaintiff to withdraw its demurrer as to such first defense and reply if so advised, and with léave to the defendant to amend his answer as to the third defense if he so desires.

O’Brien, P. J., Ingraham, McLaughlin .and Clarke, JJ., concurred.

As to first defense judgment reversed and demurrer overruled, and as to third defense judgment affirmed,-without costs here or in court below, with leave to plaintiff to withdraw demurrer as to first defense and reply, and with leave to defendant to amend answer as to third defense. Order filed.  