
    William Anson Wood Mower and Reaper Company, Resp’t, v. F. Porter Thayer, App’lt.
    
      (Supreme Court, General Term, Third Department,
    
    
      Filed December 31, 1888.)
    
    1. Practice—Judgment—What can be included in.-
    The recovery allowed by a judgment must be within the case made by the pleadings, unless the parties to the suit consent to disregard them.
    
      %. Warranty—Executory sale—When liable.
    In executory sales of merchandise there is an implied warranty that it will be merchantable, and that it will be what its name imports. If sold by the manufacturer, that it is free from any latent effect growing out of the process of manufacture 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
    3, Same—Factor—When principal warrants goods.
    Where one becomes the factor of the manufacturer for the express purpose of making sales of machinery made by such manufacturer, it is of the essence of the contract that the machines furnished shall be salable.
    4. Same—Principal and factor—When factor does not waive claim for damages.
    The plaintiff furnished certain machines to the defendant under a contract, by which he vVas to sell them, retaining a certain commission. The machines, proving to be defective,, were returned after being sold by the defendant, and under and at the request of the plaintiff defendants sold them at a reduced price. Held, that the defendant did not thereby waive liis claim for the injury which the plaintiff’s breach of contract in furnishing defective machinery had cost him.
    5. Account stated.
    Where the items of an account stated are challenged by the party to whom it is rendered, the party rendering it is not concluded thereby, but it is open to him to make corrections therein.
    Appeal by the defendant 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 tq 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 twenty-five per 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 steamboat, at Albany, to defendant as directed by him, machines which at the price 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 been 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 Mm 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 acts of the first statement.
    The referee also found “That some of the machines so-shipped, were not constructed in a good and workmanlike 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 sub-agents under defendant refused to-settle and account for machines, because of the defects above stated. In consequence of the defects in the machines aboved 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 commissions 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 for -commission and freight $168.06, and the commission upon $1,940 of “insurance collected,” $485; these items amounting to $746.61. Also with $258 net received by the plaintiff upon exhibit B after the same was rendered. Also for the machines unaccounted for in exhibit D at the rate of thirty •dollars per machine, less commissions amounting to $742.50, and for these items, with interest, the referee rendered judgment against 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 refusals to find.
    
      M. Hale, for app’lt; H Harris, for resp’t.
   Landon, J.

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; 13 N. Y. State Rep., 864) 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 workmanlike 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 workmanlike manner and of proper materials, were reasonably fit for the purpose for which they were made, and were salable. Unless these machines should be o£ 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 id., 358. In executed sales, a warranty is implied that the article is what its name imparts. White v. Miller, 71 id., 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. No 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 thirty-three machines at $30 each, less commissions at twenty five 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 prrice. They are parcel of 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, a new trial granted, costs to abide the event.

Learned, P. J., and Ingalls, J., concur.  