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and tested if it did not perform the warran-17.
[Ed. Note. For other cases, see Sales, Cent. Dig. § 709; Dec. Dig. § 250.*]
SALES (§ 439*)-WARRANTY-BREACH-DUTY OF BUYER.
Where a contract for the sale of machinery provided for installation by the buyer and reserved to him the right to make a test of the strength, efficiency, etc., to determine whether the machinery furnished complied with a warranty, the burden was on the buyer claiming a breach of such warranty to show not only a proper installation but that an efficient and accurate test had been made within a reasonable time under actual working conditions which demonstrated that the warranty had been broken.
[Ed. Note.-For other cases, see Sales, Cent. Dig. §§ 1258-1260; Dec. Dig. § 439.*]
3. SALES (§ 250*)-DELIVERY-ACCEPTANCE 8. TRIAL (§ 356*)-FINDINGS-FAILURE TO OF PART-CONDITION PRECEDENT-WARRANTY.
A failure to find the existence of essential facts necessary to establish a breach of warranty of goods sold is equivalent to a finding against the buyer having the burden of proof on such issue.
Where defendants had received and accepted a substantial part of water power machinery, delivered under a contract of sale, without any objection, a provision of the contract that the machinery when completed would [Ed. Note.-For other cases, see Trial, Cent. develop a specified amount of power, though Dig. §§ 849-854; Dec. Dig. & 356.*] regarded as a condition precedent to recovery 9. SALES (§ 441*)—WARRANTY—BREACH—TEST of the price, became a warranty or an inde-9. OF MACHINERY-FINDINGS EVIDENCE. pendent agreement which afforded the buyers no defense to an action for such balance, but water power machinery to comply with a warOn an issue as to the efficiency of certain merely gave a right to recover damages by way of counterclaim for insufficient perform-sufficient to warrant a finding that the buyer in a contract of sale, evidence held inhad made a proper or accurate test so as to [Ed. Note. For other cases, see Sales, Cent. show that the machinery did not develop the Dig. 709; Dec. Dig. § 250.*]
4. SALES (§ 121*)-MACHINERY-INSTALLATION-ACCEPTANCE.
power contracted for.
[Ed. Note.-For other cases, see Sales, Cent. Dig. §§ 1277-1283; Dec. Dig. § 441.*]
MEASURE OF DAMAGES-ASCERTAINMENT.
On a counterclaim for breach of warranty of the efficiency on a sale of water power machinery, the measure of damages was the difference between the value of the machinery delivered and its value had it complied with the warranty; the contract price being prima facie the latter value and such damage could not be properly ascertained by determining the percentage of deficiency in power and deducting such percentage of the contract price, cost
Plaintiffs, having contracted with defendant for water power machinery to be install-10. SALES (§ 442*)-BREACH OF WARRANTY— ed in the plant of a corporation under a guaranty that the machinery would develop a specified horse power, received the two units first delivered and installed them and, after finding them deficient in power, also received and installed the third and fourth units. After this the machinery was mortgaged and transferred as an integral part of the plant to others, and remained in constant use for several years without any offer to return the same. Held that there was an acceptance of the machines which precluded plaintiffs from rescinding and relying on exact performance as a condition precedent to liability to pay the purchase price.
[Ed. Note. For other cases, see Sales, Cent. Dig. §§ 296-301; Dec. Dig. § 121.*]
5. INTEREST (§ 15*)-RIGHT TO RECOVERSALES-UNPAID PORTION OF PRICE.
Under Burns' Ann. St. 1908, § 7952, providing that money due on any instrument in writing shall bear interest at the rate of 6 per cent., a balance due on a written contract for the sale of machinery which the buyer had accepted bore interest at the statutory rate from the time the unpaid portion of the price was payable under the contract.
[Ed. Note. For other cases, see Interest, Cent. Dig. § 28; Dec. Dig. § 15.*] 6. SALES (§ 82*)-PRICE-TIME OF PAYMENT CERTAINTY.
Where a written contract for the sale of machinery provided for payment of half cash on receipt of the goods at destination, onefourth in 90 days from date of shipment, and the balance six months after date, the fact that the specifications reserved to the buyer the right to test the machinery after being put in commission to determine the fulfillment of a warranty as to strength, power, and efficiency before final settlement did not postpone or make the time of payment uncertain. [Ed. Note.-For other cases, see Sales, Cent. Dig. § 229-233; Dec. Dig. § 82.*]
of installation, etc.
[Ed. Note.-For other cases, see Sales, Cent. Dig. §§ 1284-1301; Dec. Dig. § 442.*]
Appeal from Circuit Court, St. Joseph County; Walter A. Funk, Judge.
Action by the Trump Manufacturing Company against Edwin N. Sanderson and others. Judgment for plaintiff for less than the relief demanded, and defendants appeal, and plaintiff prosecutes cross-errors. firmed on defendants' appeal and reversed with instructions on plaintiff's appeal.
Marshall L. Howell, Demas D. Bates, Gilbert A. Elliott, and Vitus G. Jones, all of South Bend, for appellants. A. G. Graham, G. A. Crane, and F. H. Wurzer, all of South Bend, for appellee.
COX, J. The St. Joseph & Elkhart Power Company was organized and incorporated in this state in 1900 for the purpose of building and maintaining a dam across the St. Joseph river east of Mishawaka, at a point known as Twin Branch, and erecting and maintaining in connection therewith a power house with hydraulic and electrical machinery for the purpose of generating and
"And plaintiff further avers that under the terms of said contract, and at the special instance and request of said defendants, it furthermore furnished materials and performed labor for which said defendants undertook and agreed to pay this plaintiff the reasonable value thereof; and that the reasonable value of such additional materials furnished and labor performed is $318.50;
"That said defendants from time to time made payments under said contract for said turbines and said additional materials furnished and labor performed amounting in all to $22,792.77; a bill of particulars of all of which is filed herewith and made a part hereof, and marked 'Exhibit B';
selling electrical current. Thereafter this | sum of $32,420, payable in installments as company let the contract for all the work of in said contract provided; construction to the Union Construction Company, a Connecticut corporation, which in turn sublet the work to appellants, engineers and contractors of New York City, doing business in the firm name of Sanderson & Porter. Appellants thereupon went into the open market to buy materials for building and equipping the dam and power house. They received from appellee, a corporation of Springfield, Ohio, engaged in the business of manufacturing water turbines, a written proposal to furnish certain described water wheels or turbines required in the equipment of the plant. Appellants met this proposal by a writing denominated specifications for water turbines. These writings with accompanying blueprints were mutual- "And plaintiff further avers that it did ly accepted and, it is agreed, became the deliver said turbines f. o. b. cars at their contract between the parties on July 19, factory in Springfield, Ohio, to the said de1902. The contract was for two different fendants; and that this plaintiff has fully classes of turbines, known respectively as performed all of the terms and conditions of "Exciter Line Turbines" and "Generator Line said contract by it to be performed, and that Turbines." This controversy involves only said defendants have received and accepted the latter class. Five of these turbines were said property, but have failed to pay plainto be set on a horizontal shaft so attach-tiff according to the terms of said contract; ed that they would operate in unison to that there is now due and unpaid the resiturn the shaft which was to be coupled to due of $9,945.73; that of said residue $2,a generator to produce the electric current. 516.25 was due and payable on or before Each set of five turbines so set on a single May 26, 1905, and $7,429.48 was due and shaft was termed a unit. They were to be payable on or before June 26, 1905; that installed in the power house of the power there has accrued on said unpaid balance incompany by appellants. Four of these units terest at 6 per cent. per annum, amounting were ordered by appellants at different times to $1,355.27; and that there is now due and furnished by appellee under the contract plaintiff from said defendants under said and installed by appellants as received in contract, and wholly unpaid, the sum of $11,the power house of the St. Joseph & Elkhart 301. Power Company as the parties contemplated when the contract for them was made. Payments were made by appellants from time to time, when, claiming that the turbines had failed, in actual work, to produce the power and efficiency guaranteed by appellee, they refused to make further payments, and this action was brought by appellee to recover the balance claimed to be due, with interest. The complaint was in four paragraphs. The first declared on an oral contract. The second sought to recover the value of the machinery without reference to a contract. The second paragraph was taken out of the case, by a voluntary dismissal by appellee. The first paragraph is not of importance as it is agreed by the parties, and the court found, that the contract was in writing. The third paragraph, after allegations of the making of the contract and referring to it as an exhibit made a part of the complaint, is as follows:
"That under the terms of said contract the plaintiff sold to the aforesaid defendants two exciter line turbines and four generator line turbines, to be made by plaintiff and delivered to the said defendants f. o. b. cars at plaintiff's factory in Springfield in the state of Ohio, for all of which the said defendants, by the terms of said contract,
"Wherefore plaintiff sues and demands judgment for twelve thousand ($12,000) dollars, and for its costs herein and for all other proper relief."
The fourth paragraph is not different in legal effect from the third. It alleges the sale and delivery to appellants of two exciter line turbines and two generator line turbines under the contract at the contract price at one time, and two additional generator line turbines at a later time by a later written order referred to as another exhibit. Otherwise the allegations and the demand are the same as in the third.
Appellants answered the complaint in five paragraphs. The first is a general denial and the second a plea of payment. The third paragraph sets up certain guaranties and conditions relating to the power and efficiency of the turbines and alleges their failure, after installation, to meet these requirements as to power and efficiency, for which failure appellee's right to recover anything is denied. This paragraph of answer is conceded by appellants' counsel to be merely an argumentative general denial.
The fourth paragraph of answer is pleaded as a counterclaim and in it the execution of the contract shown by the exhibits made a part of the complaint and a part
particulars alleged appellants owed appellee nothing, but that they had been damaged in the sum of $12,000, for which sum they asked judgment.
The fifth paragraph is also pleaded as a counterclaim and its allegations are the same as the fourth paragraph, except it is alleged that appellants paid appellee $22,
appellee had furnished them turbines of the
Appellee demurred to each of the third, fourth, and fifth paragraphs of the answer. These demurrers were overruled and appel
The court stat
alleged that pursuant to that contract appellee did furnish to appellants, together with the other turbines and materials not in controversy in this appeal, the four units of "Generator Line Turbines" in question; that by the terms of the contract appellee warranted that each of these units could and would, under ordinary conditions, gen'erate 1,750 horse power under a working | 792.77 on the contract price in the belief that head of 18 feet and under such conditions would make 120 revolutions per minute; that appellee further warranted that each of these units would furnish 1,200 horse power under a working head of 15 feet and under such conditions maintain a speed of 120 revolutions per minute; that all of these turbines were furnished by appellee and received by appellants under an express warranty in the particulars named. It is then alleged that these units will not fur- lee excepted. The issues were closed by a nish 1,750 horse power each under a working head of 18 feet and make 120 revolutions reply of general denial addressed to the second, third, fourth, and fifth paragraphs per minute as warranted, but, on the conof answer. The issues were tried by the trary, will not furnish over 1,200 horse pow-court, and, upon the request of both parties, er each; that they will not furnish 1,200 the facts were found specially and concluhorse power each under a working head of the facts were found specially and conclu15 feet, but, on the contrary, will not fur- sions of law stated thereon. nish over 800 horse power under the work- ed as its first conclusion of law upon the ing head of 15 feet. It is then alleged that facts found that appellee was entitled to reit was warranted by appellee that each unit cover on its complaint $12,804.45. The secshould be of such dimensions and construc- ond conclusion of law was that appellants tion as to easily and without undue fatigue were entitled to recover upon their counterof any part, develop and deliver the com- claim $5,720. bined power of wheels at full gate, on one end of the shaft when operating under a maximum effective head of 22 feet, measured from the surface of the water in the tailrace under the turbines to the surface of the water in the forebay above; that the said wheels were not of dimensions and construction so as to, without undue fatigue of any part, develop and deliver the power as in said contract set out and specified, but, on the contrary, they have wholly failed to furnish the amount of power warranted by the terms of the contract. It is further alleged that under the specifications which formed a part of the contract these units were furnished for direct coupling to a shaft for the generating of an alternating current of 1,000 kilowatts of electricity and were warranted to run at a constant speed of 120 revolutions per minute under all variations of the load within their capacity, and under all variations of head down to 15 feet, but that they will not perform the work as specified and warranted. It is further alleged that these turbines were warranted to develop an efficiency of not less than 75 per cent. under actual working conditions at a constant speed of 120 revolutions per minute under an effective head of 18 feet with a three-fourths gate opening, but that they will not develop such efficiency under such conditions. It is then alleged that appellants have at all times been ready and willing to perform all their part of the contract, but that appellee failed to do so, and
And the third conclusion of law was that appellee was entitled to a judgment against appellants for the difference, $7,084.45, with interest from the date of the finding at the rate of 6 per cent., and judgment was rendered accordingly.
Appellants excepted to each conclusion of law, and rely for reversal upon the claim that the first and third conclusions were erroneous.
Appellee assigns cross-errors which call in question the rulings on appellee's demurrers to the third, fourth, and fifth paragraphs of appellants' answer and the correctness of the second and third conclusions of law.
The special finding is very long and contains much that is mere evidence. The material facts found show that under date of June 13, 1902, appellee submitted to appellants a written proposal to furnish them the water turbines in question. The proposal is set out in the finding and is identical with that attached to the complaint as an exhibit, as a part of the written contract, and. so far as it is material, is as follows:
"We purpose to furnish five Trump turbines on draft-chest. Turbines to have shafts as follows:
Beginning with 11 in. in diameter...........1st wheel 8 in. in diameter........
Reduced to 10 in. in diameter...
..2d & 3d wheel .4th & 5th wheel
"These turbines to be of our best make with forged steel' buckets. The diameter of runner to be such as will give the proper speed under your head.
give 1,200 h. p. and make 120 r. p. m. Figuring on 18-foot head the wheels to give 1,750 h. p. and make 120 r. p. m."
The proposal then continues with a description of the kind of material, gates, draft-chests, stands, exciter wheels, and water cushions all appurtenant to the generator line turbines and then the following: "We guarantee to carry the turbines absolutely in one position without any endmovement of the shaft using this device.
"We guarantee the generator line to give 1,750 h. p. under a working head of 18 feet, and make 120 r. p. m.
"We also guarantee 1,200 h. p. at 15-foot head and maintain a speed of 120 r. p. m. "We guarantee the exciter line to give 200 h. p. and make 230 r. p. m.
"Price: Exciter line $1,500.00 f. o. b. cars factory. Generator line, $7,355.00 f. o. b. cars factory.
"Terms: 2 cash on receipt of goods at destination. 14 in 90 days from date of shipment. Balance in six months from date of shipment.
"We guarantee runners of our turbines against breakage from actual use for a period of six years and should a runner break within that time, we furnish a new one f. o. b. free of charge."
The proposal was met by additional specifications for the turbines and work prepared and submitted by appellants, the material parts of which are as follows:
"Specifications cover turbines for direct coupling to shaft of 1,000 kilowatt alternating current generators. * Turbines are to be of the horizontal shaft type, set in open masonry flume. Each unit of wheels shall be of such dimensions and construction as to easily, and without undue strain or fatigue of any part, develop and deliver the combined power of wheels at full gate, on one end of the shaft when operating under a maximum effective head of 22 feet (measured from surface of water in tailrace under turbines to surface of water in forebay above turbines). These turbines are to run at a constant speed of 120 r. p. m. under all variations of load within their capacity, and all variations in head down to a minimum of 15 feet effective
Horse power developed on shaft will be not less than Cubic feet of water used per
"Should power exceed that named a proportionate increase in water consumption will be allowed."
These specifications continuing then describe the kinds of materials and construction to be used in the appurtenances to the turbines and then state the following:
"The contractor for turbines agrees to replace, free of all charge, any and all parts which may prove defective within one year from date of starting, providing that such defects are shown to have existed when wheels were started, and that same were caused by poor design, material, or workmanship.
"All work is to be furnished under the inspection and supervision of Sanderson & Porter (or their duly authorized representative), engineers and contractors for above installation.
"All general and detailed drawings are to be furnished to and approved by Sanderson & Porter.
"The maker guarantees that all runners will show an efficiency of not less than 80 per cent. when tested on vertical shaft, under following conditions: head 15 feet to 16 feet, speed 113 to 116 r. p. m.
"The right is reserved by Sanderson & Porter to have at their discretion any or all of the turbines tested after being put into commission to determine the fulfillment of guarantee as to strength of parts, amount of power developed, and efficiency of units beThe expense fore final settlement is made. of such test, if made, is to be paid by the purchaser.
"Purchaser is to furnish base plates, Ibeam husk frames, draft tubes, flume heads complete with babbitted adjustable, self oiling, bearing, and generator coupling with key.
"Purchaser is to pay all freights, cartage, handling and erection expenses, and is to furnish all common and other labor for erection. These are a part of a contract between Trump Mfg. Co. and Sanderson & Porter, dated June 13, 1902, and accepted July 19, 1902."
The proposal of appellee and the specifications of appellants were mutually accepted and became the contract between the parties July 19, 1902. On June 6, 1903, appellee delivered to appellants two units, that is two lines of five wheels each, of the generator line turbines. On January 28, 1904, the third unit, and on June 26, 1905, the fourth. The four units of generator line wheels delivered to appellants by appellee were standard Trump turbines, horizontal shaft type of the size, dimensions and material, constructed and arranged, and provided with shafts and mounted on draft-chests with journal boxes, and water cushions, as described in the contract, in so far as size or dimensions were given therein, and were delivered to appellants by appellee in and
to the shipment of units 1 and 2, they were set up in the factory of the appellee and one Lang, hydraulic engineer and general superintendent of construction of power plant for appellants, examined and inspected said units 1 and 2. Units 3 and 4 were duplicates in construction, dimensions and material and workmanship of units 1 and 2, and all of the units 1, 2, 3, and 4, were identical and similar in all of their parts.
Units 1 and 2 were installed by appellants in flumes at the Twin Branch dam of the St. Joseph & Elkhart Power Company during the fall and winter of 1903, and were ready for operation in January, 1904. Unit 3 was installed in a flume at the dam after March 21, 1904, and was ready for operation June 1, 1904. Unit 4 was installed in a flume at the dam in the summer of 1905 and was ready for operation in the fall of 1905.
the closing up of the affairs of the latter, the various mortgages, and the merger.
Immediately after the installation of each of the four units of generator line turbines, and as soon as they were ready for operation, they were put in use and operation by the St. Joseph & Elkhart Power Company for the development of power for commercial purposes. The use of units 1 and 2 began in January, 1904, of unit 3 in June, 1904, and of unit 4 in December, 1905, and such use was continued by that company and its successors up to the time of bringing this suit and after.
Appellee knew before and at the time the contract was made that the turbines were to go into a hydro-electric plant which was not the property of appellants, and that the plant was in process of construction; and appellee was informed that the owner desired its speedy completion and intended it to go into operation before all the turbines were furnished and before the last payment on those furnished would be due under the terms of the contract and that the plant was in the hands of the operating company, and made no objection. At the time of making the contract appellee knew the conditions and place, purpose and manner in which the turbines were to be installed and used and
was familiar with the conditions under which installation and never made any objection they were required to operate after their to their use by the operating company.
The turbines which appellee agreed to fur
a kind and character and of such construc
After the organization of the St. Joseph & Elkhart Power Company, of which one of the appellants was an organizer and stockholder, it entered into a contract with the Union Construction Company, a Connecticut corporation, for the construction of its dam and power plant with all equipment including the water turbines. Appellants became Appellants became subcontractors for construction and equipment, including turbines. The St. Joseph & Elkhart Power Company, March 12, 1903, mortgaged its plant, including real estate, rights, and franchises, equipment and machinery of every description, including turbines, then owned or thereafter to be acquir-nish appellants under the contract were of ed, to a trustee to secure $600,000 of construction bonds. These bonds were to be delivered by the trustee from time to time as the work progressed to the Union Construction Company. The turbines sold by appellee to appellants and installed by the latter were the only water turbines installed in the flumes of the power plant from the inception of the St. Joseph & Elkhart Power Company to the time of suit. The affairs of the Union Construction Company were wound up in 1904 or 1905. June 22, 1907, the St. Joseph & Elkhart Power Company was merged into the Indiana & Michigan Electric Company which became the owner of all the property of the former concern and took possession of it and used it in the business of producing and selling power. One of appellants was a director of the new company, and appellants were at all times stockholders of both companies. Prior to July 24, 1907, the mortgage to secure construction bonds was released and on that date the property of the Indiana & Michigan Electric Company, specifically including turbine wheels, was mortgaged for $7,000,000. On July 25, 1907, another mortgage for $900,000 was given covering the same property. Appellants at all times knew all the facts relating to the incorporation of the St. Joseph & Elkhart Power Company, its construction contract
tion that the amount of power which they would develop and the efficiency which they would show in working condition could not be known by an inspection of them after their manufacture; but that their power and efficiency under the terms and conditions of the contract could only be known and determined by a practical test or trial in a flume and operated by water power. By reason of the character of the flumes and water power plant of the St. Joseph & Elkhart Power Company at Twin Branch, where said wheels were installed, and by reason of their being set and placed on horizontal shafts, it was physically impossible to test the efficiency of said wheels on a vertical shaft at the Twin Branch dam; that the efficiency of said wheels could be tested when used on vertical shaft at the testing flume of Holyoke, Mass.; that said fact was well known both to appellee and appellants; and one of appellants had the clause referring to 80 per cent. efficiency on a vertical shaft inserted in the contract so that they would have the right to make the test at Holyoke. If said wheels had been tested at the testing flume at Holyoke on vertical shaft, and the result obtained therefrom, that such results or facts could be used as a basis from which to calculate and ascertain the efficiency as well as