Opinion
No. 11595.
March 30, 1971. On Rehearing September 8, 1971. Writ Granted November 30, 1971.
APPEAL FROM FIRST JUDICIAL DISTRICT COURT, PARISH OF CADDO, C. J. BOLIN, JR., J.
Tucker, Martin, Holder, Jeter Jackson, by T. Haller Jackson, Jr., L. Edwin Greer, Shreveport, for defendant-appellant.
Gamm, Greenberg Kaplan, by Jack H. Kaplan, Shreveport, for plaintiff-appellee.
Before BOLIN, PRICE and HEARD, JJ.
Plaintiff, Del Cryer, instituted this suit against the defendant, M M Manufacturing Company, Inc. to collect royalties and attorney's fees under a written contract entered into between plaintiff and defendant.
It was established by the evidence that plaintiff, Del Cryer, acquired ownership of the Jet-Glo Multi Purpose Heater in a judgment against Pioneer Manufacturing Company. He retained the services of Green Research Engineering Company for testing and improving the heater for orchard heating purposes. After testing and making minor improvements, George J. Green, Jr., owner of Green Research Engineering Company, rendered his report which stated that the maximum burning rate of the heater using commercial kerosene was 275,000 BTUs per hour suitable for heating for outdoor laborers, preventing vegetables and fruits from freezing and protecting newly poured concrete. It could be safely refueled in operation, was explosion proof and well-suited for orchard and tender vegetable protection. In his report Green stated that the tests were extended over two 24 hour periods.
Cryer took the report and endeavored to find a manufacturer for the heater. He made contact with Thayer T. May of the M M Manufacturing Company, Inc. around the third of July, 1965, giving him the heater and the Green report. He stated he wished May to test the heater and to do anything that he wanted to in connection with his testing. May took the heater and report with him to south Louisiana and Florida to get fruit and vegetable growers' reaction to the marketability of the heater. On August 17, 1965 Cryer and M M Manufacturing Company, Inc. entered into a written contract whereby Cryer sold to M M the following:
"All and the entire manufacturing rights, distribution rights, production rights and all rights of whatsoever kind and nature necessary for the manufacture and sale of the Jet-Glo Multi Purpose Heater, said heater being a multi purpose heater burning low cost kerosene designed for use by nurserymen, orchard growers, poultrymen, sportsmen, etc., said heater being more fully described in the file of the patent pending number of U.S. Serial Number 326731, it being the intention of DEL CRYER to convey to M M MANUFACTURING COMPANY, INC., the entire and exclusive manufacturing and production rights and distribution rights throughout all of the States of the United States and any part of the world, together with any and all rights to any improvements, changes, alterations, etc., made to said heater, whether patent applied for or not, DEL CRYER transferring herein all manufacturing, production and other rights acquired by him from Johnny Maniscalco and D. O. Furr, Sr., in a contract between the said parties executed pursuant to option dated July 9, 1965, in connection with said heater.
"The entire stock of parts and dies and inventory for the production of the above referred to heater, said inventory having been acquired by DEL CRYER at Sheriff's Sale in Suit Number 168,309, entitled Del Cryer versus Pioneer Manufacturing Company, Inc., and being more particularly described therein, said inventory being located at 151 Ute Trail, Shreveport, Caddo Parish, Louisiana."
The consideration given by M M was $12,500 and a royalty of $1.25 per unit on each unit manufactured, M M binding itself to manufacture a minimum of 5,000 units in the first year of production. M M thereafter took the parts to the heater and initiated steps in its manufacture. During the period before manufacturing operations actually began, problems with soot buildup within the heater developed. The heater was found to burn at high temperatures for three or four hours when a soot buildup would begin that reduced the burning capacity to minimal levels. M M made extensive efforts over several months to perfect the heater but gave up all efforts considering the heater would be unmarketable.
After a year from the date of contract Cryer made demand for royalties due him under the contract. M M refused payment and Cryer filed suit October 4, 1966 for $6,250 royalties and $2,000 attorney's fees. By supplemental petition Cryer alleged that he was entitled to an additional sum of $30,000 royalties for each and every year after the original year under contract. M M answered, admitting that it had not manufactured the 5,000 units and reconvened for rescission of the contract on the grounds of error of fact and failure of cause and redhibition. M M also asked for expenses of the sale in the amount of $27,158.22.
The case was tried before Judge Henry F. Turner, who retired before a decision was reached. His successor in office, Judge C. J. Bolin, Jr., found that the heater was defective but reduced the purchase price only and rejected M M's demands for expenses of the sale and Cryer's demands for royalties and attorney's fees.
M M has appealed, alleging difficulties in the heater were such that they could not be corrected, and for that reason, reduction of the purchase price to the amount paid was improper, and rescission of the contract and expenses of the sale should be granted. Cryer answered the appeal, alleging the propriety of the rejection of the reconventional demand but asking modification of the judgment to award him the amounts he asked for in his petition.
The primary issues in this case are: first, do the articles on redhibition in our Civil Code apply to this particular sale, and second, if not, was there a misrepresentation as to a material fact so as to warrant rescission of the contract for failure of cause?
M M relies on LSA-C.C. Art. 2520 for rescission of sale. This article reads:
"Redhibition is the avoidance of a sale on account of some vice or defect in the thing sold, which renders it either absolutely useless, or its use so inconvenient and imperfect, that it must be supposed that the buyer would not have purchased it, had he known of the vice."
M M asserts that because of the sooting and resulting heat loss the heater is absolutely useless and so imperfect that it would not have purchased the rights had it known of the defect. M M further asserts that under LSA-C.C. Art. 2521 the defect was not apparent.
The articles cited by M M and all cases referred to thereunder are based on "a vice and a defect in the thing sold * * *" Counsel has cited no case nor have we found one for the proposition that rescission of a contract for a redhibitory vice applies to sales of incorporeals. In this case plaintiff, Del Cryer, did not sell a Jet-Glo Multi Purpose Heater but "all of the entire manufacturing rights, distribution rights, production rights and all rights of whatsoever kind and nature necessary for the manufacture and sale of the Jet-Glo Multi Purpose Heater, * * *" This is not a sale of a thing but the manufacturing, distribution and production rights of the Jet-Glo Heater. LSA-C.C. Art. 2449 provides that incorporeal things may be sold but there is no reference anywhere in the Civil Code that redhibition would apply to any of these incorporeal things.
Although counsel for M M admits that the basis of the sale in question was the right to manufacture and distribute Jet-Glo Multi Purpose Heaters, it is contended that the heater was the very foundation upon which the sale rested. The defect in the heater rendered the thing sold, the right to manufacture and distribute the heater imperfect for the purpose intended, but the contract is clear that Del Cryer sold the right to manufacture and distribute the heater and that is what M M acquired. In view of these findings it is our opinion that redhibition does not apply.
The second defense set forth in the defendant's answer is that the contract should be rescinded because of error of fact and error of cause.
LSA-C.C. Art. 1779 specifies four requisites necessary to the validity of a contract. They are: (1) Parties legally capable of contracting; (2) Their consent legally given; (3) A certain object which forms the matter of agreement, and, (4) A lawful purpose. Consent is defined in Art. 1819 as being the "concurrence of intention in two or more persons, with regard to a matter understood by all, reciprocally communicated, and resulting in each party from a free and deliberate exercise of the will * * *." There is no consent where the intent has not been mutually communicated or where it has been produced by error, fraud, violence or threats. In this case since the only allegation is error, it is not necessary to discuss the other three.
Article 1820 provides that there are two types of error: error of fact and error of law. We are concerned only with error of fact. LSA-C.C. Art. 1821 states:
"That is called error of fact, which proceeds either from ignorance of that which really exists, or from a mistaken belief in the existence of that which has none."
Not every error will invalidate a contract. LSA-C.C. Art. 1823 states that error must be as to the principal cause for making the contract; either as to the motive for making it, the person with whom it is made, or to the subject matter of the contract.
The existence of cause is a condition precedent to a contract. LSA-C.C. Art. 1824 provides that consent would not be given were there no real cause because motive determines the will and if there is no cause or it is falsely represented, there is no valid contract. A person is bound by his will but he cannot be bound without having willed it. 12 La. Law Review 2, 10, J. Denson Smith, A Refresher Course in Cause (1951). To invalidate a contract error must be as to principal cause where there are several. This is called motive, the consideration without which the contract would not have been made. LSA-C.C. Art. 1825. However, no error and motive can invalidate the contract unless the other party was appraised of it as the principal cause of the agreement, or unless from the nature of the contract it can be presumed that he knew it. LSA-C.C. Art. 1826.
In this particular instance we are asked to decide whether the sale of the right to manufacture may be rescinded because of error of fact or failure of cause. To begin with the contract may not be set aside unless the error was in the principal cause of the contract. For M M's position to be upheld this court must find that the principal motive or cause of the contract was a heater that would burn for long periods of time at high BTU levels but here again we are hobbled by the previous determination that what was sold was the right to manufacture and distribute. If this was the cause of the contract then M M got what it paid for.
The jurisprudence is uniform in holding that rescission can only be had if there is error as to principal cause. Calhoun v. Teal, 106 La. 47, 30 So. 288 (1901); Boehmer Sales Agency v. Russo, La. App., 99 So.2d 475 (Orl.La. App. 1958); Pan American Production v. Robichaux, 200 La. 666, 8 So.2d 635 (1942); Gibert v. Cook, La. App., 144 So.2d 683 (4th Cir. 1962) and McCarty v. Anderson, La. App., 58 So.2d 255 (1st Cir. 1952). Other cases have stated that principal cause is that without which the parties would not have contracted. Stack v. Irwin, 246 La. 777, 167 So.2d 363 (1964) and National Company, Inc. v. Krider, La. App., 150 So.2d 592 (4th Cir. 1963).
Also if the error is induced by the seller's misrepresentations then the contract may be rescinded. Overby v. Beach, 220 La. 77, 55 So.2d 873 (1951) and Schmitz v. Peterson, 113 La. 134, 36 So. 915 (1904). However, if the contract is entered into irrespective of the seller's representations then there is no error. Claiborne Butane Company v. Hackler, La. App., 138 So.2d 234 (2d Cir. 1962); and Housecraft Division of Southern Siding Company v. Tatum, La. App., 130 So.2d 524 (4th Cir. 1961).
Examination of the jurisprudence and legislation reveals that several questions must be answered before rescission can be granted. First, it must be decided that there was error. If error was found then it must be decided if error went to the principal motive of the contract. If misrepresentation is urged the misrepresentation must be to the principal motive of the contract without which the buyer would not have contracted and the buyer must have relied upon the seller's misrepresentations. In this case there was no misrepresentation present. Cryer did not represent anything but told May to take the heater and do anything he pleased. The only representation that was made was the engineering report and it stated the features in general terms. There is no evidence that the performance of the heater was a condition of the sale. There is no evidence that representations made were more than mere salesmanship. The case of Claiborne Butane Company, Inc. v. Hackler, supra, sheds a great deal of light on the question.
The question which remains unanswered and an obstacle to rescission was the object of the sale. All parties are in agreement that the thing sold was rights to manufacture and distribute. There is no error or misrepresentation regarding rights which were sold. M M has them and may exercise them as it pleases. We are of the opinion that M M has presented no grounds for rescission on account of error or fact or error of cause.
As we stated in the beginning, the only defenses presented by defendant was rescission of the contract on the grounds of redhibition and error of fact or error of cause. In view of our findings the defenses contended by defendant must fall. There is no dispute that the contract was entered into by both parties and for the consideration therein set forth.
Plaintiff, Del Cryer, sued for $6,250 royalties for the first year by the terms of the contract. He is entitled to this sum. He also sued for $2,000 attorney's fees. There is no provision in the contract for attorney's fees. LSA-C.C. Arts. 1930 and 1934 provide for payment of damages for breach of contract. Art. 1934 states that to entitle plaintiff to attorney's fees as part of his damages it must be shown that there was bad faith on the part of defendant. Berry v. Ginsburg, La. App., 98 So.2d 548 (2d Cir. 1957) and Raney v. Gillen, La. App., 31 So.2d 495 (2d Cir. 1947).
It is not shown by the evidence that there is any bad faith on the part of defendant to breach the contract. Therefore, the attorney's fees are denied. The claim for $30,000 for future royalties also has no merit.
For the reasons herein set forth, the judgment of the District Court is reversed and there is judgment in favor of the plaintiff, Del Cryer, and against defendant, M M Manufacturing Company, Inc., in the full sum of $6,250 with legal interest from judicial demand until paid thereon, and for all costs.
The demands in reconvention are denied.
ON REHEARING
Before AYRES, BOLIN, PRICE, HEARD and HALL, JJ.
On rehearing, defendant M M Manufacturing Company, Inc., has urged error in our original opinion in several respects. Principally, defendant reurges its basic position that the contract with plaintiff, Del Cryer, should be set aside because of error of fact, failure of cause and redhibitory defects. It is contended that the principal cause or motive for the contract was the right to manufacture and distribute a high temperature, long-burning orchard heater which could be sold in large quantities to orchard farmers and that defendant never would have entered into the contract if it had known the heater would soot up after a few hours use, rendering it unmarketable as originally contemplated by both parties. Defendant also contends that the error of fact was induced by plaintiff's misrepresentations.
We have carefully considered the allegations of error and reach the conclusion that our original judgment is correct and should be reinstated, with some clarification or restatement of the reasons for our decision.
By virtue of the contract involved in this case, plaintiff sold and defendant purchased the "* * * entire manufacturing rights, distribution rights, production rights and all rights of whatsoever kind and nature necessary for the manufacture and sale of the Jet-Glo Multi Purpose Heater * * *". The incorporeal thing sold was the right to manufacture and distribute a product for which the seller held a patent or patent application. The right to manufacture and distribute was the principal cause of the contract. The seller had this right, transferred it to the buyer, and the buyer got what it paid for. There was no vice or defect in the thing sold and there was no error or vice of consent or failure of cause as to the thing sold or the principal cause of the contract, that is, the right to manufacture and distribute.
The purchase of the right to manufacture a new invention or product always involves considerable risk as to ultimate profitability of the venture. Entering into whether the manufacturer can profitably manufacture and market the product are many factors including performance of the product, cost of materials, cost of labor, market conditions, competitive products, and others. Here, defendant was unable to perfect the product to a point where it could be successfully manufactured and sold in the manner originally envisioned and hoped for by both the seller and buyer. The fact that the venture did not turn out to be a success for the buyer-manufacturer should not entitle the buyer to set aside the contract and demand a return of the purchase price and damages as it received and still has what it paid for, that is, the right to manufacture and distribute. This may be a right without substantial value at this point, but the buyer purchased and received the rights which it considered valuable and worthy of pursuit at the time the contract was executed. The evidence does not support a finding that the product is totally worthless or without value or utility, although it is certainly true that it does not have the long-burning characteristic which indicated a substantial profit potential in sales to orchard growers.
One of the issues raised by the parties is whether redhibition is applicable to the sale of an incorporeal. We do not consider it necessary to pass directly on this issue because even if redhibition is applicable to the sale of incorporeals generally, it does not apply in this case. There was no vice or defect in the thing sold, the right to manufacture, and thus redhibition is not available to the defendant here.
In our original decision, we denied plaintiff's claim for attorney's fees, stating that in order for plaintiff to be entitled to attorney's fees as part of his damages it must be shown that there was bad faith on the part of defendant. In view of our decision in Lloyd v. Merit Loan Company of Shreveport, Inc., 253 So.2d 117, decided this day, we point out that bad faith is immaterial and that plaintiff is not entitled to attorney's fees for the reason that they are not provided for here either by statute or contract.
For the reasons assigned, our original judgment is reinstated.
AYRES, J., dissents with written reasons.
Because of the importance of the principles involved, as I appreciate them, it appears appropriate I respectfully set forth, in some detail, the basis of my dissent from the majority opinion.
By this action, plaintiff seeks the enforcement of the provisions of a contract of sale wherein, for a price paid in cash and defendant's obligation to pay certain royalties, plaintiff conveyed to defendant the right to manufacture, distribute, and sell a kerosene-burning Jet-Glo multipurpose heater described by reference to a patent pending. The heater was designed for use by nurserymen and fruit and vegetable growers for the protection of their plants, fruit, and produce from cold and freezes. A small stock of parts and a set of dies were also included in the sale. More specifically stated, plaintiff seeks to recover royalty at the rate of $1.25 per heater unit on 5,000 units obligated by defendant to manufacture during the first year of production following execution of the contract, and an additional sum as royalty on units which, it is alleged, should have been manufactured during subsequent years.
The trial court found the heater so imperfect that it must be supposed a buyer would not have purchased it had he known of its vices and defects. The heater would burn for only short periods of time when, by the accumulation of soot, the fire would be extinguished. Before relighting, the unit would have to be dismantled and the parts cleaned. Hence, it would not generate heat to serve the purposes for which it was intended. Nevertheless, rescission of the sale was denied on a basis of redhibition because defendant was no longer in position to return the dies and parts.
However, under the provisions of LSA-C.C. Art. 2543, the court decreed a reduction in the purchase price of the property and rights conveyed to the extent of $6,250.00, an amount equal to the royalty contracted for the first year's production. Accordingly, the trial court rejected the demands of both plaintiff and defendant.
In our initial review of the record, we found no error in the conclusions reached by the trial court that the heater was defective, would not operate successfully or satisfactorily, and could not be made to do so despite numerous and expensive efforts, and accordingly concluded that the heater was without value and was worthless. On rehearing, the majority opinion states:
"* * * The evidence does not support a finding that the product is totally worthless or without value or utility, although it is certainly true that it does not have the long-burning characteristic which indicated a substantial profit potential in sales to orchard growers."
On a basis of mutual error predicated upon the language of LSA-C.C. Arts. 1820, 1881, and 1882, the obligation of warranty as set forth in LSA-C.C. Arts. 2475 and 2476, and for described defects allegedly rendering the heaters useless and worthless as denounced by LSA-C.C. Art. 2520, as well as for a want or lack of cause or consideration as prescribed by LSA-C.C. Arts. 1893 et seq., defendant contends that the sale is voidable and prays that it be annulled, avoided, rescinded, and set aside; and that, accordingly, plaintiff's demands be rejected and plaintiff condemned to return to defendant the purchase price paid of $12,500.00, together with expenses of $27,158.82, as damages incurred in the testing and in the attempt to perfect the heaters so that they would serve the purposes intended.
The motive inducing and prompting the parties to enter into the contract with which this action is concerned was that the heater would serve the purpose, as already noted, of protecting fruit, vegetables, and other produce from damage occasioned by freezes and cold. Such was the intent of both parties. Both parties envisioned, in their agreement, a heater that would function properly and render satisfactory service. The parties obviously hoped that their contractual relationship would inure to the interest and advantage of both. In these respects they were in error. The venture was a complete failure, not from any act or omission of either party but because the heater as designed and as described in a patent pending, and despite their early belief and high hopes in its workability, would not function or render the services intended. The consent of the parties to the contract was based upon error of fact, without a belief in the reality of which the parties would never have entered into the agreement. Consent to the contract was, therefore, induced by and predicated upon error.
Appropriate to the situation here are the pronouncements in LSA-C.C. Art. 1819, the language of which reads:
"Consent being the concurrence of intention in two or more persons, with regard to a matter understood by all, reciprocally communicated, and resulting in each party from a free and deliberate exercise of the will, it follows that there is no consent, not only where the intent has not been mutually communicated or implied, as is provided in the preceding paragraph, but also where it has been produced by —
"Error;
"Fraud;
"Violence;
"Threats." (Emphasis supplied.)
As pointed out in Pan American Production Co. v. Robichaux, 200 La. 666, 8 So.2d 635, 639 (1942):
"Consent in law is more than a mere formal act of the mind. Legal consent is an act unclouded by error or mistake. Consent is vitiated by error. Consent produced by error of fact is not legal consent."
However, it is recognized that it is not every error which will invalidate a contract. To afford ample protection to both seller and buyer, the rule is amplified and explained in LSA-C.C. Art. 1823. There it is said:
"Errors may exist as to all the circumstances and facts which relate to a contract, but it is not every error that will invalidate it. To have that effect, the error must be in some point, which was a principal cause for making the contract, and it may be either as to the motive for making the contract, to the person with whom it is made, or to the subject matter of the contract itself."
Thus, immaterial errors are eliminated. Importance is placed on the essential aspects of a transaction. Thus, says LSA-C.C. Art. 1825:
"The error in the cause of a contract to have the effect of invalidating it, must be on the principal cause, when there are several; this principal cause is called the motive, and means that consideration without which the contract would not have been made." (Emphasis supplied.)
Thus, this article defines "principal cause" as "motive," which, as it states, means "that consideration without which the contract would not have been made."
LSA-C.C. Art. 1826 provides that:
"No error in the motive can invalidate a contract, unless the other party was apprised that it was the principal cause of the agreement, or unless from the nature of the transaction it must be presumed that he knew it."
Unquestionably, the motive or purpose of defendant in entering into the contract was to manufacture and sell the heater in large quantities to fruit growers in need of an effective heater that would burn and furnish protection over long periods of time. Plaintiff understood this motive and promoted the heater as capable of furnishing such protection. A heater that could not so perform and furnish such protection was not the product that defendant intended to purchase nor that which plaintiff intended to sell. Had defendant known that the heater would not so perform and furnish the contemplated protection, defendant obviously would not have signed the contract. This constitutes error that vitiates the will and consent of the parties and renders the contract voidable. See Carpenter v. Skinner, 224 La. 848, 71 So.2d 133 (1954), and the authorities therein cited and quoted.
In addition to redhibition and error of fact through which contracts may be avoided, failure of cause likewise supplies a basis to avoid a contract. It is provided that "An obligation without a cause, or with a false or unlawful cause, can have no effect." LSA-C.C. Art. 1893. By way of definition, LSA-C.C. Art. 1896 explains:
"By the cause of the contract, in this section, is meant the consideration or motive for making it; and a contract is said to be without a cause, whenever the party was in error, supposing that which was his inducement for contracting to exist, when in fact it had never existed, or had ceased to exist before the contract was made."
There is a close relationship between the concept of failure of cause and the warranty expressed in the codal provisions relative to redhibition. Through the implied warranty under LSA-C.C. Art. 2520 and the express warranty provided in LSA-C.C. Art. 2529, the law requires that the seller fulfill the cause of the buyer's obligation by delivering a useful thing which the buyer supposed he was buying. For instance, see a comment in 23 Tul.L.Rev. 83, 88 to the effect that:
"The breach of the warranty is the same in principle and result as the failure of the cause of the buyer's obligation. Thus, where an engine was warranted to run the buyer's mill and the engine did not generate sufficient power, it was held that under Article 1893 the obligation was without a cause and could have no effect. [Brown-Roberts Hardware Supply Co. v. Mounger, 5 La. App. 479 (1927).] The court could have based its opinion upon Article 2529 because the declared quality which was the 'principal motive for making the purchase' did not exist." (Emphasis supplied.)
The rule that an obligation without a cause or with a false or unlawful cause can have no effect has been consistently followed in Louisiana. For instance, we had occasion to state in Webster Tractor Implement Company v. Roseberry, 98 So.2d 676, 677 (La.App., 2d Cir. 1957):
"It is elementary that an obligation without a cause or with a false or unlawful cause can have no effect and that such obligation must be supported by consideration, without which there is no valid obligation or contract."
Moreover, LSA-C.C. Art. 2529 provides:
"A declaration made in good faith by the seller, that the thing sold has some quality which it is found not to have, gives rise to a redhibition, if this quality was the principal motive for making the purchase."
As was observed in Kardis v. Barrere, 17 La. App. 433, 136 So. 135 (Orl.1931 — cert. denied), where there was involved an innocent misrepresentation or a breach of an express promise and warranty and not a "vice or defect" in the thing sold, as described in LSA-C.C. Art. 2525, although Art. 2520 seems to be restricted, the right of redhibition or rescission is, however, extended by Art. 2529 to all cases where there is a breach of an express warranty, even where the misrepresentation is made in good faith. It was stated in the cited case:
" It is clear that under this article quoted above [LSA-C.C. Art. 2529] a redhibition is allowed where there has been an innocent misrepresentation as to the quality or character of the thing, even though there is not 'vice or defect' within the meaning and intent of article 2520. In our opinion, article 2529 clearly extends the class and character of cases in which redhibition or rescission is permitted, * * *." 136 So. 138-139. (Emphasis supplied.)
Thus, it was held that redhibition is authorized under LSA-C.C. Art. 2529, provided that a declaration made in good faith by the seller that the thing sold had some "quality" which it is found not to have, if this quality was the principal motive for making the purchase, even though there is not a "vice or defect" within Art. 2520, for Art. 2529 extends the class and character of cases in which redhibition or rescission is permitted.
That the contract, sought to be enforced by plaintiff and to be rescinded by defendant, conveyed the right to manufacture, distribute, and sell a heater of a described design to perform particular services, rather than the heater itself, is immaterial and of no importance, because, as heretofore noted, the primary and principal motive or cause prompting the parties to enter into the contract was the production of a heater that would render the services and fulfill the purposes intended by both parties.
The record does not support the position of the majority opinion to the effect that, by entering into the contract, the parties merely took a chance on the proper functioning of the heater and, thus, that the defendant "gambled and lost." That the parties were serious and in earnest is evidenced by the fact of the cash payment of the purchase price of $12,500.00 and by the enormous amount expended, primarily by defendant, in an unsuccessful attempt to perfect the heater so that it would operate properly and render the services for which it was intended.
It would be illogical and not in accord with reality to hold that by the contract defendant acquired what it bargained for, that is, the mere right to manufacture and sell an article irrespective of a mutual error as to the principal cause or motive inducing the parties to enter into the contract. In this regard it appears appropriate to point out that while a patent may give a patentee the title to an intangible, incorporeal, right in the nature of a privilege or franchise to manufacture, distribute, and sell a described article (69 C.J.S. Patents § 6, pp. 175-176), and although such right may be transferred and assigned without reference to any implied warranty or validity, yet the assignee may refuse to pay the purchase price where there is a total failure of consideration flowing from the assignor, and where the patented device is inoperative, useless, and wholly worthless. 69 C.J.S. Patents § 238, p. 757.
As to the above-stated rule, this observation has been made:
"Since a patent cannot properly issue unless the invention is of some utility, the view is generally taken that in the sale of patent rights there is either an implied warranty that the patent is not wholly worthless as an invention, or the same result is reached by holding that if the patent is worthless there is a total failure of consideration, entitling the buyer to defend an action for the price or recover the same if paid." (Emphasis supplied.)
40 Am.Jur., "Patents," Sec. 133, p. 622.
Generally, the principal cause in contracts of this nature is not simply the purchase of property; it is the purchase of property that could be used for the purchaser's purposes. In C. H. Boehmer Sales Agency v. Russo, 99 So.2d 475 (La.App., Orl. 1958), it was held that the prospective purchasers were entitled to the return of the consideration paid for an option to purchase, on the theory that they labored under an error of fact concerning the principal cause for taking the option, where the property could not be used for the purpose intended by them. Of similar holdings are the decisions in these cases:
Carpenter v. Skinner, 224 La. 848, 71 So.2d 133 (1954);
Calhoun v. Teal, 106 La. 47, 30 So. 288 (1901);
National Company v. Krider, 150 So.2d 592 (La.App., 4th Cir. 1963);
Gibert v. Cook, 144 So.2d 683 (La.App., 4th Cir. 1962).
Thus, it is not correct that defendant merely acquired the "rights" to manufacture, distribute, and sell the article in view of the fact that such "rights" were worthless for defendant's purposes, as understood by and well known to plaintiff.
Finally, in my opinion, it can only be correctly concluded, from the established facts of this case, viewed in the light of the aforesaid principles of law, that the sales agreement between plaintiff and defendant is voidable, and, at the instance of the defendant, should be avoided, rescinded, and set aside, not only for error vitiating the consent of the parties and for its failure with respect to motive or cause but for redhibitory vices and defects in the heater, which formed the principal motive for the sale.
Plaintiff nevertheless contends that a rescission, or an avoidance, of the contract of sale, cannot be decreed because defendant neither alleged, nor made, a tender of the stock of parts and dies included in the sale. Our search of the record fails, however, to disclose that such an issue was presented by plaintiff's answer to defendant's reconventional demands or by other pleadings. It was early observed in Woodward-Wight Co. v. Engel Land Lumber Co., 123 La. 1093, 49 So. 719, 724 (1909), after the court found a plea of prescription untenable:
"Nor do we find the plaintiff more fortunate in urging (in this court, for the first time, as we understand it) the objection that defendant has made no tenders of the skidders [the property which was the object of an alleged sale]. The objection should have been specially pleaded. Wood v. Nicholls, 33 La. Ann. 744; Ware v. Berlin, 43 La. Ann. 536, 9 So. 490. Moreover, by the institution and prosecution of this suit, for the balance of the price of the skidders, plaintiff, in effect, declared its intention to enforce the contract, and made it evident that a tender in avoidance of that contract would have been but a vain thing." (Emphasis supplied.)
The court then continued to say:
"We are, however, of opinion that the machines, in the condition in which they now are, should be returned, as a condition precedent to the execution of the judgment for the repetition [return] of the amount paid on account of the price."
It was likewise held in Mohana v. Woodall, 69 So.2d 163 (La. App., 1st Cir. 1953), that the purpose of a redhibitory action is, as a general rule, to restore the parties to their status quo. The buyer is required to return the article purchased to the vendor, who is required to return the purchase price to the vendee. But where a buyer seeks rescission on a reconventional demand to a suit by a vendor for the price of the object sold, tender by the vendee is unnecessary. See 23 Tul.L.Rev. 130, 131. Nor does the law require or contemplate the tender or return of defective objects purchased where the circumstances and condition of the objects or things do not permit such tender or return. Such an exception was involved in Brown v. Madison Paint Co., 170 So. 353 (La.App., 2d Cir. 1936), wherein plaintiff sought to recover the price paid for a barrel of liquid roofing material because the material did not fulfill the purposes for which it was bought, the court treated the action as one in the nature of a redhibitory action and affirmed a judgment in favor of the purchaser for the amount of the purchase price of the material. The impossibility of tendering or returning the material was obvious to all. No point was raised with reference thereto.
Moreover, in the instant case, the inclusion of the parts and dies in the contract was only incidental to the primary concern and intention of the parties. They were of only secondary concern or consideration. Moreover, the intent of the parties was that these movables would be used in the construction of the heaters and would thereby be consumed or worn out in the use to which it was contemplated they would be put. Rescission of a sale, so far as I have been able to determine, has never been denied on that account.
Nor is there, in my opinion, any merit in plaintiff's plea of prescription of one year directed against defendant's reconventional demands for a rescission of the sale, return of the purchase price, and for damages. This plea, urged under the provisions of LSA-C.C. Art. 2534, was, in my opinion, properly overruled. However, plaintiff did not appeal from the ruling nor from the judgment rendered on the merits of the cause. Nor did plaintiff, in his answer to defendant's appeal, complain of any error with respect to the action taken overruling the plea of prescription. The plea is not properly before this court for consideration.
The record, nevertheless, discloses plaintiff was, as late as March, 1966, engaged in an effort to remedy the defects in the heater. A rule has been developed in the jurisprudence of this State, which has been generally followed, to the effect that prescription in a redhibitory action does not begin to run until the vendor ceases his efforts to remedy the defects in the thing sold. The principle is based on the premise that when a vendor attempts to remedy a defect in a thing sold after the defect has been discovered by the vendee, the vendee is not definitely put on notice that an action in redhibition will be necessary until the vendor abandons his efforts to remedy the defect. See:
Woodward-Wight Co. v. Engel Land Lumber Co., supra;
A. Baldwin Sales Co. v. Mitchell, 174 La. 1098, 142 So. 700, 703 (1932);
Goff v. Dewey Olivier, Inc., 137 So.2d 393 (La.App., 3d Cir. 1962 — cert. denied);
Brown v. Dauzat, 157 So.2d 570, 575 (La.App., 3d Cir. 1963);
Motorola Aviation Electronics v. Louisiana Aircraft, 172 So.2d 118 (La.App., 1st Cir. 1965 — cert. denied).
Under the facts of this case, the liability of plaintiff as a seller in good faith is to make restitution to defendant, likewise in good faith, of the purchase price. In this regard, LSA-C.C. Art. 2531 provides:
"The seller who knew not the vices of the thing, is only bound to restore the price, and to reimburse the expenses occasioned by the sale, as well as those incurred for the preservation of the thing, unless the fruits, which the purchaser has drawn from it, be sufficient to satisfy those expenses."
The provisions of the above-quoted codal authority limit reimbursement, where the vendor was in good faith, to expenses "occasioned by the sale" and "those incurred for the preservation of the thing" sold. No contention is made that any expenses paid were occasioned by the sale. As to the expenses purportedly incurred there is no showing that such expenses, or what amount thereof, were incurred for the preservation of the heaters.
My conclusion is that the sale involved in this litigation should be avoided and rescinded and that, accordingly, plaintiff should return to defendant the purchase price paid.