
    William Anson Wood Mower & Reaper Co. v. Thayer.
    
      (,Supreme Court, General Term, Third Department.
    
    December 31,1888.)
    1. Pleading—Pleading and Proof—Stipulation to Disregard Issues.
    Where it does not appear that the parties consented to disregard the issues made by the pleadings, no recovery can he had which is based on matters outside the pleadings, but supposed to be disclosed by the evidence.
    2. Sale—Manufactured Goods—Implied Warranty—Factors.
    In a contract to supply a factor with harvesting machines of a certain manufacture, to be sold in territory granted to the factor, there is an implied warranty that all the machines will be reasonably fit for the purpose for which they are intended, of good material, and salable.
    
    3. Same—Breach of Warranty—Waiver.
    In an action for the value of machines delivered to defendant as a factor for sale, it appeared that many of the machines proved unmerchantable, resulting in the loss of many sales made by defendant; that subsequently defendant consented, at plaintiff’s request, to do the best he could with the machines; that thereupon the prices were reduced, and defendant endeavored to make the loss to both parties as little as possible, agreeing to account for what he could realize out of the defective machines. Held, that this was no waiver of his rights for the injury already caused by plaintiff’s failure to deliver salable machines. •
    4. Account Rendered—Effect—When not Conclusive.
    ■ Defendant rendered an account, in which there was no charge for commissions on sales of machines which had been returned to him as defective. The account included a charge for commissions on certain insurance collected, and to this charge plaintiff made objections. Held, that the account was not conclusive against defendant.
    Appeal from judgment on report of referee.
    Appeal by the defendant, F. P. Thayer, from a judgment entered in Albany county upon the report of a referee. The complaint set forth an agreement in writing between the parties, made November 21,1879, by which the plaintiff granted to the defendant the right to the exclusive sale and control of the machines manufactured by the plaintiff in the New England states and the provinces of New Brunswick, Nova Scotia, and Prince Edward’s Island, and all export trade from the United States, except Canada, upon the consideration and agreement that the defendant should order 400 of plaintiff’s machines, to be paid for by defendant on shipment at Albany, one-half in cash, and the balance by his notes payable on or before January 1,1881, less commissions of 25 peí cent.; the prices of the machines to be the same as established in the same territory by the Walter A. Wood and Buckeye Companies. The complaint alleged performance by the plaintiff, and that between January 1,1880, and July 1, 1881, plaintiff delivered on board cars and steam-boat at Albany, to defendant, as directed by him, machines which at the prices agreed upon amounted in value to $44,602.07, upon which the defendant had made payments, and was entitled to commissions and credits amounting to $35,432.78, leaving a balance due plaintiff of $9,169.29, for which judgment was demanded. The defendant, by his answer, admitted the agreement; denied that the plaintiff had performed on its part, but, on the contrary, had delivered imperfectly constructed and unmerchantable machines, and machines unsuitable for the purposes for which they were manufactured. The answer also denied that machines of the value of $44,602.07 had beeii delivered to defendant, and denied that the balance alleged by plaintiff or any other balance was due to it; it alleged payment in full; also an account stated by defendant, and acquiesced in by plaintiff; also alleged damage to defendant in the sum of $5,000, because of the delivery to him of unmerchantable machines. The referee found that the plaintiff, during the year 1880, shipped to the defendant, or upon his order, a large number of machines, as set forth in three exhibits, A, B, D. Exhibit A set forth the “list of machines sold and settled;” Exhibit B, the “list of machines on hand;” Exhibit D, the “list of machines'returned to Albany,” etc.; Exhibit No. 3 was a statement of the accounts between the parties. These exhibits were the accounts rendered by the defendant to the plaintiff, February 1, 1883. The defendant, in 1881, rendered the plaintiff a statement of which Exhibit A was a continuation, the latter embracing items subsequent to the date of the first statement. The referee also found “that some of the machines so shipped were not constructed in a good and workman-like manner, but were defective; it was impossible to keep them in gear; they could not perform what such a machine should perform; the material of which a portion of said machines was constructed was poor; some of the one-horse machines were so constructed that they would not revolve, and in consequence no action could be got.” “In consequence of the defects in the machines shipped, some of those which were sold were returned to the [defendant’s] agents who sold them, and sales of them were lost. Some of the subagents under defendant refused to settle and account for machines because of the defects above stated. In consequence of the defects in the machines above mentioned, complaints were made to the defendant from various portions of the territory assigned to him by his contract with plaintiff, where said machines had been sold.” “In response to the complaints which were made to the defendant, and by defendant communicated to plaintiff, plaintiff promised to and did repair and put in order the machines as to which complaint was made.” The referee also found that the plaintiff made no objection to any of the statements rendered by the defendant until about the time of the commencement of this action, (April 15, 1884,) except as to defendant’s commissions upon freight, and upon an item of $1,940 for “insurance collected;” that the plaintiff discontinued its business in the autumn of 1880, and the plaintiff’s obligation to deliver further machines was terminated by mutual consent. The referee further found that, “after the making of said agreement, by the acts and declarations of the parties as proved, it appears to have been waived as to most of its material provisions, and the parties acted under an arrangement or understanding that the defendant should sell the machines as agent for plaintiff, accounting for such as were sold at the prices received by defendant therefor, less commission at the rate of twenty-five per cent., and returning and accounting for those unsold, and accounting for the extras delivered at the rate of fifty per cent, from list prices.” The referee thereupon took the Exhibits A, B, D, and No. 3 as the basis of his further findings, and charged the defendant with a balance of $93.55 shown by Exhibit A. This was not contested. Also for an overcharge therein fox-commission and freight, $168.06, and the commission upon $1,940 of “insurance collected, ” $485; these items amounting to $746.61. Also with $258, not received by the plaintiff upon Exhibit B after the same was rendered. Also for the machines unaccounted for in Exhibit D at the x-ate of $30 per machine, less commissions, amounting to $742.50. And for these items, with interest, the referee rendered judgment agaixxst the defendant. He refused to allow defendant anything for losses sustained by the breach of the agreement by the plaintiff in forwarding him unmerchantable machines. The defendant excepted to the various adverse findings and x-efusals to find.
    Argued before Learned, P. J., and Landon and Ingalls, JJ.
    
      M. Hale, for appellant. H. Harris, for respondent.
    
      
       When an article is manufactured and sold for a particular purpose, there is an implied warranty that it is tit for that purpose. Manufacturing Co. v. Williams, (Ark.) 8 S. W. Rep. 517; Hoult v. Baldwin, (Cal.) 8 Pac. Rep, 440, and note; Drew v. Edmunds, (Vt.) 15 Atl. Rep. 100, and note; Hudson v. Roos, (Mich.) 40 N. W. Rep. 467, and note; Best v. Flint, (Vt.) 5 Atl. Rep. 192, and note; Pope v. Allis, 6 Sup. Ct. Rep. 69, and note.
    
   Landon, J.,

(after stating the facts as above.) The plaintiff sought to recover as for an alleged breach by the defendant of the written contract. Its own breach was proved instead, and the causes of action alleged were not sustained. The plaintiff, nevertheless, was permitted to recover upon other causes of action supposed to be disclosed by the evidence. The recent case of Romeyn v. Sickles, 108 N. Y. 650, 15 N. E. Rep. 698, reaffirms the rule that the recovery must be within the case made by the pleadings, unless the parties consent to disregard them. This consent appears to have been given with respect to some of the items. With respect to the machines on hand hereafter considered, it does not appear that the defendant had any notice that he was to meet such a claim until the referee had decided it against him. The defendant requested the referee to find that the plaintiff, by furnishing and shipping machines upon defendant’s order, which were not constructed in a good and workman-like manner, and were not fit for the use for which they were intended, violated its contract with defendant. The referee refused so to find. This was error. The contract, construed with reference to the nature of the business, implies a warranty on the part of the plaintiff that the machines should be reasonably fit for the purpose for which they were intended, and should be salable. Otherwise, how could the defendant sell them? or, how could he realize anything from them either for the plaintiff or himself? The evidence shows that the machines, if made in a good and workman-like manner, and of proper materials, were reasonably fit for the purpose for which they were made, and were salable. Unless these machines should be of this character, the whole business would be wrecked at the outset. Instead of having salable machines, the. defendant would have a mass of rubbish. In executory sales of merchandise there is an implied warranty that it will be merchantable. Hargous v. Stone, 5 N. Y. 73; Reed v. Randall, 29 N. Y. 358. In executed sales a warranty is implied that the article is what its name imports, (White v. Miller, 71 N. Y. 118;) if sold by the manufacturer, that it is free from any latent defects growing out of the process of manufacture, and known to him; and that it is reasonably fit for the purpose for which it is intended, unless the purchaser relies upon his own judgment, (Hoe v. Sanborn, 21 N. Y. 552.) Here the defendant was the factor of the plaintiff for the express purpose of making sales of plaintiff’s machines, and it was of the essence of the contract that the machines should be salable. The referee finds that some of them were not fit to sell or use, and were so far unsalable that, after they had been sold by the defendant, the vendees returned them because of their defects, and that the sales were lost. The defendant must therefore have lost commissions upon such sales. The referee, however, finds that the contract “appears to have been waived as to most of its material provisions. ” We do not think the defendant waived the breach of the contract respecting the merchantable quality of the machines. After the plaintiff had brought him into trouble by sending him imperfect machines, it asked him, in substance, to do the best he could under the circumstances, and this the defendant consented to do. Prices were reduced, and the defendant sought to make his own and the plaintiff’s loss as little as possible, and agreed to account to the plaintiff for what he could realize out of the defective machines. He did not thereby waive his rights for the injury the plaintiff’s breach of contract had already caused him. He rendered a partial account in 1881, and full accounts on February 1,1883. We infer that he was willing the account between him and the plaintiff should be closed upon the basis of the accounts thus rendered. These accounts were not challenged by the plaintiff until about the time of the commencement of this action, except with reference to commissions. Yo claim was stated in the accounts rendered for commissions upon rescinded or lost sales, but there were charges for commissions upon certain freights paid by defendant and upon insurance collected. The account rendered by the defendant is some evidence that he had no charge for commissions lost because of the defective machines. But it does not conclude him. Especially when any of its items are challenged by the plaintiff, it is opened for correction by the defendant. Young v. Hill, 67 N. Y. 162. The refusal of the referee to find that the plaintiff was guilty of any breach of his contract shows that he did not allow him for lost commissions, because he did not consider that he ever had a valid claim to them. The referee charged the defendant with $742, being for 33 machines, at $30 each, less commissions at 25 per cent. These are the machines reported by the defendant as on hand February 1,1883. No such cause of action is alleged in the complaint. There is no evidence that the machines were salable, or were ever sold, or were worth $30 each, or any other price. They are parcel óf the machines that the defendant after February 1,1881, undertook to dispose of as best he could, and which, after reporting them on hand two years later, he does not appear to have done anything further with. If he was liable at all, it was'for neglect of duty, and not for withholding their proceeds. Respecting the other items allowed, they seem to have been contested upon the trial as if embraced in the pleadings, and the findings of the referee are supported by the evidence. The judgment should be reversed, and a new trial granted, costs to abide the event. All concur.  