
    William T. Laing, Respondent, v. Pelton Water Wheel Company, Appellant.
    First Department,
    December 13, 1907.
    Sale — waiver of inspection—when implied warranty survives acceptance — seller estopped from requiring tender back.
    When, after a buyer has objected to the. quality of pipe delivered, the seller claims that it is all right and requests the buyer to ship it to its vendee, there is a waiver of acceptance upon delivery, and the time for inspection is postponed until the pipe reaches the buyer’s vendee.
    When after said pipe is received by the buyer’s vendee it is rejected by him, and . the original seller, upon notification of the rejection, claims that there is no way of telling whether the pipe is reasonably adapted for the purpose intended unless it is laid in position and tested, the seller is estopped from claiming that the implied warranty that it was merchantable and reasonably adapted for the use intended did not survive its delivery to the buyer, and is likewise estopped from insisting that the goods must be tendered back as a condition precedent to a counterclaim for breach of implied warranty.
    Appeal by the defendant, the Pelton Water Wheel Company, from a judgment of the Supreme Court; in favor of the .plaintiff, entered in the office of the clerk of the county of Hew York on the 7th day of February, 1907, upon the report of a referee, with notice of an intention to bring up for review upon such appeal an order entered in said clerk’s office on the 6th day of February, 1907,. granting the plaintiff an extra allowance of costs.
    
      Frederick F. Anderson of counsel [Si/rau'ss do Anderson, attorneys], for the appellant.
    ^ Benjamin N. Cardoso of counsel [Si/nvpson, Werner do Cardoso, attorneys], for. the respondent.
   Clarke, J.:

This is ah action on an assigned claim by the Carroll-Porter Boiler and Tank Company to the plaintiff to recover a balance of $9,369.28, with interest, on a contract for the manufacture and sale of merchandise consisting of riveted steel pipes made and delivered by the plaintiff’s assignor to the defendant between the 3d day of June, 1898, and the 28th day of .August, 1900. The defense is the breach of an implied warranty that. the pipe in question, being a manufactured article, should be merchantable and reasonably adapted to the use for which if was intended, to wit, the carrying of water under high pressure for. the purpose of furnishing power for what are known as hydro-electric installations in the Republic of Mexico.

The defendant in its answer admits the sale of the merchandise in question but sets up as and by way of offset or counterclaim, that the defendant was compelled to lay out and expend large sums of money on the alteration and repair of the pipe and its accessories in order to make the same, as far as possible, answer .the purpose for which it was intended, and in replacing large portions thereof with new pipe where the pipe was so imperfect as to make it impossible to make the same water-tight; that the said defendant was thereby greatly hindered and delayed in the carrying out of contracts for the purpose of which said pipe and accessories had been ordered, all to the damage of the defendant in the sum of $11,500, which said sum the defendant offset and counterclaims against the alleged cause of action, in the complaint set forth.

They were two kinds of pipe contracted for, a flanged pipe for the bulk of the installments and a slip-joint pipe for an installation known as the San Miguel. So far'as the flanged pipe is concerned,we are satisfied with the conclusion of the learned referee. A different question is presented in regard to the slip-joint pipe. The contract provides that the pipe should be delivered f. o. b. in New _ York, and the directions were to deliver on lighters alongside the ship. The defendant téstified that it sold, the pipe to a certain Mexican concern and delivery to it was made by the transfer of the bill of lading, so that delivery to the defendant and delivery by it to its vendee was a simultaneous act. Mr. Doswell, an employee of the defendant, sent by it from time to time to inspect the pipe, examined the pipe for the San Miguel line on the lighter alongside the Southern Pacific Steamship dock. He. .observed that-the slip joints were not made in a proper manner; that the plates' were not sheared parallel with the rivets; that too much lap was left on them, and his impression was that with the way the slip joints- were made it would not be possible to make a tight joint of the pipe. He reported the condition of the pipe to Mr. Kunze, the manager of the defendant, and subsequently made a second inspection with Mr. Ticer, the sales agent of. the plaintiffs assignor. Mr. Kunze testified that when Ticer returned after looking at the pipe with Doswell he said that Doswell had greatly exaggerated the situation; that the pipe, while it was a rough job, was all right, to go ahead and ship it.. He said he was- confident we would have no trouble. * * * I said very well, we will do so but if there is any trouble you will have to make good.’ He said there would be no trouble, the pipe was. all right. He requested me to go ahead and ship the pipe.” Ticer testified that he received a letter from Kunze, written - on September 13, 1899, giving him Doswell’s report on the pipe and thereafter examined it himself. Ticer wrote to plaintiff’s assignor September 16, 1899, in regard to this pipe: This pipe is not a good job by any means. * * * I must say that your interests will suffer greatly if you are not here Monday morning to examine this pipe before shipment. I feel quite sure that heavy claims will result and that Pelton will not pay you in full for this job until they have gotten settlement out of their custor mer.” He wrote again on September eighteenth: “ I have already told you the condition that I found the pipe in on personal examination of it and I have nothing more to add. I have arranged with Pelton to ship it forward, and when it reaches destination Mr. Kunze will be down there himself and if the .work is not right will notify you, and you must make it so or he will be obliged, to do it at your expense. * * * Mow that is all that there is in Mr. Kunze’s contention in the matter and he would be glad to have the pipe. go , through without any trouble, but if it does not, and defective workmanship is clearly demonstrated, what can. he do but to look to you to make it light ? Such will undoubtedly be his course of action in the matter.”

It- seems to me that, taking all of this testimony together there was a waiver of acceptance upon delivery, and that the time for inspection was postponed until the pipe should arrive in Mexico. After it reached Mexico there were renewed complaints of the condition of this pipe. On December 4, 1899, Ticer telegraphed “customer rejected Fourteen seventy-four,” the San Miguel job. On December 5, 1899, plaintiff’s assignor wrote : “ If the pipé is not yet in position they have no way-of telling what the leaks will amount to. * * * For a man to go on the ground as their superintendent has and condemn work without trying it is not very great proof of his supposed experience.” Thereafter' Mr. Porter of Carroll-Porter Company, plaintiff’s assignor, went personally to Mexico with an employee, and worked for some time installing this line. While he was there plaintiff’s assignor wrote to defendant January 5, 1900: “ There is no question in our mind but that this pipe will be made perfectly satisfactory and we can guarantee such results, such being the case, coupled with the fact that we are making shipments on your other contracts right along, we would ask that you as early as possible send us, if not settlements for old accounts, an amount which would be equivalent.” ■

The line nevér did hold water. Mew material had to be bought and substituted to some extent; and the defendant in making the line good, expended various sums of money. The referee l^as found that the difference between the value of the San Miguel line as it was and as it would have been if said defects had not existed "was $1,121.02. . '

It seems to me, taking all the facts together, that the plaintiff’s assignor waived acceptance upon delivery in Mew York and postponed inspection and insisted upon actual installation of the line; and that under these circumstances they are estopped from' claiming that the implied warranty of a manufacturer did not survive delivery in this port upon the lighter and are likewise estopped from insisting upon a tender back of the pipe line which they required should be actually installed in Mexico before they would admit that proper inspection was possible.

Under the facts as here developed, the judgment should be modified by reducing the amount thereof by $1,121.02, the sum found by the referee, and as so modified affirmed, without costs to either party.

Patterson, P. J., Ingraham, Laughlin and Scott, JJ., concurred.

Judgment modified as directed in opinion, and as modified affirmed, without costs to either party. Settle order on notice.  