Opinion
No. 21758.
December 8, 1952.
APPEAL FROM THE CIRCUIT COURT, GENTRY COUNTY, RAY WEIGHTMAN, J.
C. W. Allen, Rock Port, John M. Gerlash, Tarkio, for appellant.
Fred Kling and E. L. Redman, Albany, for respondent.
The plaintiff (appellant) sued to recover a balance claimed to be due him from defendant on a written lease to defendant of a "caterpillar" grading tractor. Defendant denied the claim, alleging breach of contract by the plaintiff, rescission by the defendant, and pleaded a counterclaim for damages for the breach, and a counterclaim for grading work done for the plaintiff. Verdict was for the defendant on plaintiff's petition, and for the defendant on each of his counterclaims, awarding him $1 damages on each. Judgment was rendered accordingly, with costs assessed against the plaintiff. Plaintiff has appealed.
Plaintiff's petition alleged the execution of a written lease on August 9, 1948, by and between plaintiff and defendant, whereby plaintiff rented to defendant (with option to purchase) a certain Allis-Chalmers Gasoline Model "S" self-laying track tractor for the term of nine months from date; that defendant agreed therein to pay a rental of $700 a month; that defendant took possession of the machine and by the terms agreed to pay and become liable for the breakage and repair of same; that defendant paid $700 on August 9, 1948, $700 on September 8, 1948, and $600 on November 8, 1948, and that defendant did certain work for the plaintiff, for which plaintiff credited the defendant with $240, but that the balance of $4060 due as rent under the lease is unpaid; that defendant agreed in the lease to keep the tractor in repair and to pay for such repairs. It is further alleged that plaintiff furnished and paid for repairs on the tractor in the sum of $406.50, which defendant agreed to pay and refused to do so, making a total amount due the plaintiff of $4,466.58, for which plaintiff seeks judgment.
The copy of the lease attached to the petition as an exhibit is in its material aspects substantially as pleaded, describing the tractor as "1-Allis-Chalmers Gasoline Model `S' self-laying track tractor, Serial No. ___," but as to the repairs the lease provides that all ordinary breakage in the regular course of operation of the equipment was to be at the cost of the lessee, who agreed if the machine were returned to the lessor, to put it in as good a condition as received, subject to wear and tear, and to take care and keep the tractor in as good a condition as he would if it were his own property. The total amount of the rental is stated as $6000, the ninth installment to be $400, all subject to adjustment as mutually agreed, an option to purchase the property at the sum of $6000 at any time being granted to the lessee, the rentals paid to be applied to the purchase price.
By his answer defendant admitted the written lease, denied that he owes anything under its terms, asserted that he has paid all that is due thereunder, $2100; that he had the privilege under the lease to terminate it at any month of the rental period; that he fully satisfied the lease in October, 1948, paid the amount due, and returned the tractor to the plaintiff; that after the written lease had been so settled, the plaintiff orally requested the defendant to retake the tractor and warranted that it would be put in a condition so it could be used in defendant's business of grading, the rental to be $700 a month thereafter; that relying upon such representations and warranty, defendant paid the plaintiff $700; that the plaintiff wholly failed to place the tractor in such condition of repair, so that defendant could use the same in his grading business, although often requested so to do, and thereby breached his contract; that defendant was unable to use the tractor; that defendant's own grading equipment was under lease to a railroad and he was in need of an additional caterpillar tractor to perform "by the hour" grading contracts; that at the time of the written lease plaintiff, as an inducement, represented to him that he had such a tractor then being overhauled and completely rebuilt with new parts, and which would be as good as new and suitable for defendant's business, and so warranted the same, and relying thereon, defendant executed said lease; that except for such representations and warranties he would not have signed the lease; that in truth and in fact such representations were false and untrue; that the machine was defective, was in need of additional parts and repairs, and he was unable satisfactorily to perform his grading contracts therewith although plaintiff, on notice from the defendant, promised to repair same and failed so to do, and as a result thereof, defendant returned the tractor to plaintiff in October, 1948, having paid $2100 for rental, under the lease, and said lease was thereby fully settled.
For his first counterclaim the defendant alleges that by reason of plaintiff's said breach of contract, defendant has lost time, rent money and business, and has paid for some repairs on the tractor, all to his damage in the sum of $5000.
For his second counterclaim defendant states that plaintiff hired him to perform certain grading work for himself with defendant's own equipment, for which the charge was $639 for furnishing the labor and machinery, which plaintiff has failed and refused to pay.
The evidence was that at the time the lease was made, plaintiff, a dealer in seeds and appliances, had acquired in settlement of a debt to him, the 1936 model tractor in question, and had placed it is a shop to be rebuilt. He had obtained a 30 day unconditional guarantee from the repair shop, and for an additional 30 days thereafter parts furnished by the owner would be installed without charge by the shop. Plaintiff paid $3187.82 for the overhauling job. Defendant, a grading contractor, had his own grading machinery under lease to a railroad and needed a small tractor to perform "by the hour" grading jobs available. Through a local banker defendant learned of the plaintiff's tractor being overhauled, had conversations regarding the lease or purchase thereof, and a lease was prepared by the banker on a form furnished by the defendant, which was executed by the parties.
Over the objections of the plaintiff, he was required to testify on cross-examination as to conversations prior to the execution of the lease and said he told defendant he was having the tractor rebuilt "from the bottom up", and told him of the shop's guarantee, and that the machine would be as near like new as possible to make a used machine. Following the signing of the lease defendant several times called at the repair shop to investigate the progress on the machine and on August 18, took possession of it. Two monthly rental installments of $700 each were paid by the defendant when due. According to the plaintiff's evidence, after defendant had operated the tractor over three months and not having paid the third rental payment, the plaintiff, in November, demanded that the defendant perform his obligation under the lease and was told by the defendant that the defendant no longer needed the tractor since his own equipment had been returned by the railroad. Plaintiff demanded that defendant continue his lease contract. Defendant then complained that the tractor was unfit for his use of it, whereupon plaintiff then accompanied defendant to the repair shop and instructed that concern to make whatever repairs were needed. For repairs then made the plaintiff paid $456.14. Thereupon the defendant paid the third rental installment of $700, and retained possession of the tractor and kept it until February 29, 1949, when he returned it, refusing to make any further rental payments. Plaintiff testified that he had credited the defendant with $240 for grading work done by the defendant for the plaintiff, which amount the plaintiff testified was the amount demanded for that work by the defendant.
Over the plaintiff's objections defendant introduced evidence which tended to prove that plaintiff, with knowledge of the type of work for which defendant desired to use the tractor, and prior to execution of the written lease, represented to defendant that the tractor was being rebuilt from "the ground up," and when completed would be like new, and would carry a new guarantee; that new parts would be used where needed, and that the repair shop would guarantee the completed job as good as a new machine. Defendant testified further that he had not seen the tractor when he signed the lease, but saw it a few days thereafter, when it was not yet assembled; that proper repairs were made to the clutch and transmission, but numerous defects were found in the tractor when delivered to the defendant on August 18, 1948. Defendant immediately wrote plaintiff, but complained only that the generator would not work, and plaintiff answered that the shop was "supposed to guarantee everything", but did nothing about it; that the tractor proved to be otherwise out of adjustment and needed other repairs and parts; the gaskets were put in backwards, sealing up the oil distribution; oil lines were improperly connected, the motor missed and lacked power, the compression was lost and it used excess oil and gasoline; the governors would not work; the blade was not level and many other defects were discovered.
Defendant's evidence also tended to prove that he used the tractor on various jobs and on October 5, told plaintiff he could not use it further unless it was fixed up. Plaintiff promised to have the shop make good its guarantee to him on the repair job. Having paid $700 at the signing of the lease, defendant also paid a second month's rent in the same amount. On plaintiff's promise to have the repairs made, defendant used the machine on four more contracts and continued to have trouble making it operate as it should. He did a job with it for one Donald King, for which King paid $123; another job for E. P. Clark, for which he paid defendant $412; also a job for Milton Rogers, and was paid $316; and a job for Marvin Miller and was paid $33. On all these jobs, the work was not satisfactory and plaintiff promised to send the repair men to fix the machine. The men did not appear and about November 1, the defendant took the tractor back to the plaintiff. Plaintiff then proposed that they both take the tractor back to the repair shop which had guaranteed the overhauling, and have the tractor put in proper condition, and that defendant continue to rent it at the same rental. He said plaintiff stated he would have it fixed up so that it "would work allright", that it was supposed to be like new. After this "new agreement" defendant paid plaintiff another $700 and again took possession of the tractor from the shop in the latter part of November, and undertook to continue to use it in his business. He did a job with it for Ralph McCampbell, but it was again unsatisfactory to defendant and to his customer; it lacked power, was slow, would not remove trees of the size that it should remove and could only carry about one-third as much dirt as it should. Defendant reduced his charge for the work from $565 to $500, which Mr. McCampbell paid. Plaintiff's repair men came about December 1, and made further repairs, which again were unsatisfactory. However, defendant signed a paper that acknowledged such repairs were satisfactory. Defendant then took the tractor to Nebraska to shovel snow on a Government contract and operated it sixty hours, although it lacked the power to operate properly. Defendant took the tractor to Rock Port, Missouri, and after working it on a few local jobs, delivered it to the plaintiff in February. After that he did grading work for the plaintiff with defendant's own equipment, for which the charge was $639. Defendant estimated he had used plaintiff's tractor about sixty days in all.
According to the rebuttal evidence, plaintiff, after defendant's complaints, had the repair shop furnish additional parts and labor in the amount of $456, which plaintiff paid, and which work was acknowledged as satisfactorily done over the signature of the defendant. The repair men testified that the additional labor and parts so furnished were made necessary by the usual and ordinary wear and tear of the machine over the period from August to December.
Plaintiff's first point of error is that the court erred in admitting, over the objection of plaintiff, parol evidence of an oral warranty not appearing in the written contract and at variance with its terms. He contends that the defense was based on a breach of warranty not set out in the written lease; that the contract cannot be varied by oral evidence to add a warranty not contained in the written contract, even if offered under the guise of a collateral agreement.
From the pleading and argument of the defendant, we understand the theory of the defense to be that, while he admits the execution of the written lease, he asserts that he rescinded that contract on or about October 5, 1948, returned the tractor to plaintiff after payment of all sums due, $2100, and the parties "settled" and satisfied the written lease, and thereafter, about November 5, 1948, entered into a new and verbal agreement for the rental of the tractor at the same rental and for an indefinite term, and on the condition and representation that the plaintiff would repair the tractor suitable for use in defendant's business. Defendant now asserts this verbal agreement was breached by plaintiff and rescinded by defendant, leaving the defendant no longer liable under its terms. He further asserts that the written lease was incomplete on its face, for want of a more definite description of the tractor referred to, and because of its provision for adjustment of the total rental amount, and that parol evidence is admissible to show provisions omitted.
If, in fact, the written contract was thus "settled" and terminated and a new and verbal agreement entered into, the proof of such verbal agreement and the representations and warranty, if any, in connection therewith may be made by parol evidence. On the other hand, if, in fact, no new and oral agreement arose out of the alleged conversations of the parties on or about November 5, 1948, or if one did, if it was merely collateral to the prior written contract but substantially varied its terms, then parol evidence was inadmissible to prove any warranties not contained in the written lease. We deem the written contract complete as written. 46 Am.Jur. page 472, Section 289. It was said in Sunderland v. Hackney Mfg. Co., 192 Mo.App. 287, 291, 181 S.W. 1192, 1193, as follows:
"Where parties have reduced their contract to writing and it is complete on its face, unless there be fraud, accident, or mistake, no evidence in parol can be received to add to, or subtract from, its terms under the guise of proving a collateral agreement. Parol evidence of a collateral agreement, to be admissible, must not interfere with the terms of the contract, nor must it add to its obligations. The verbal collateral agreement must be independent and distinct from the written agreement, and must not be inconsistent with it. And it must not be so closely connected with the transaction as to form a part of it. Therefore whatever is embraced in the writing cannot be nullified, qualified, or added to by the collateral agreement. Tracy v. Union Iron Works, 104 Mo. 193, 16 S.W. 203, (affirming same case 29 Mo.App. 342); Seitz v. Brewers Machine Co., 141 U.S. 510, 12 S.Ct. 46, 35 L.Ed. 837; Slaughter v. Smither, 97 Va. 202, 206, 33 S.E. 544; McTague v. Finnegan, 54 N.J.Eq. 454, 460, 35 A. 542; Naumberg v. Young, 44 N.J.L. 331, 342. Now a warranty in the sale of personal property is manifestly an important element of the contract. The vendor considers the presence, or absence, of a warranty as a substantial matter for him to think about in making up his mind whether to sell. Its absence in the writing is a part of the contract, for silence may be as forceful as speech. So it should be clear that, when the parties to a written contract of sale omit a warranty, no warranty is made".
Defendant's testimony as to the alleged verbal agreement on or about November 5, 1948, after having returned the tractor to plaintiff, was, in substance, that he told the plaintiff he had been waiting for the plaintiff to "Send those guys out to fix it up"; that plaintiff came over to defendant's house and "me and him went to Chillicothe and he said he was going over there to see that they would fix this tractor up like they said they would fix it"; that plaintiff said that he would make it work; that it was supposed to work like a new tractor; that they went together to the repair shop where plaintiff told the proprietor that the tractor wasn't doing what it should do and he would like to have it fixed up; that defendant told the repair men what he wanted; that plaintiff and the shop came to some agreement about the labor and parts; that plaintiff told defendant to bring the tractor back to Albany, where the repair men would come to make the repairs; that defendant, in the meantime, continued to use the tractor in several local jobs, although it did not work satisfactorily; that the repair men came out to the tractor with about $400 worth of parts; that defendant signed a statement that the repairs were satisfactory; that defendant, who had refused to pay the third installment, then paid it to the plaintiff. Defendant's wife testified that she over-heard the conversation between the plaintiff and defendant on or about November 5, and that the defendant told the plaintiff that the tractor didn't work right, and that he thought plaintiff should "stand by his agreement".
We do not believe the defendant's evidence sustained his contention that the written lease was "settled" and terminated when the tractor was delivered back to the plaintiff for further repairs on October 8, 1948, nor that a new and verbal contract to take its place arose from the conversations and conduct of the parties on or about November 5, 1948, or at any time. Adopting defendant's evidence on that issue, it appears nothing was done except to arrange for the repair men to make further repairs that defendant asked for, defendant continuing to use the tractor and paying the rental installment then past due. Thus the written lease was still in effect, not having been rescinded. It follows that, in the absence of fraud, no verbal warranty or other material representation that would vary the contract could properly be established by parol evidence. Colt v. Gregor, 328 Mo. 1216, 44 S.W.2d 2. Defendant is in no position to assert that there was an implied warranty since he pleaded and relied on an express warranty. A warranty that a secondhand machine being rebuilt would operate as a new machine and would be adequate and capable of doing defendant's particular type of work would be an express warranty. That defendant knew the machine was secondhand and being overhauled was admitted. In fact, it has been held that there is no such thing as an implied warranty of a secondhand machine. Norris v. Reinstedler, 90 Mo.App. 626, 629; 77 C.J.S., Sales, § 325, p. 1179. Neither can the rule be here obviated on the theory of fraud on plaintiff's part since the defendant did not sufficiently plead that the material false representations alleged were fraudulently made or made with the intent to deceive. To state a cause of action or defense based on fraud, it is essential, among other elements, to plead and prove, in substance, at least, that the representations complained of were made with the intention to deceive. Gittings v. Jeffords, 292 Mo. 678, 239 S.W. 84; Gockel v. Gockel, Mo.Sup., 66 S.W.2d 867; 24 Am.Jur. page 77, Section 247.
Plaintiff next assigns as error the admission of evidence both on the question of rescission and on the question of damages for breach. He contends that defendant had no right to rescind the contract and at the same time sue for damages for the breach of it; that to rescind he must disaffirm the contract, and to sue for damages, he must affirm the contract; that he must elect between these inconsistent remedies. Defendant insists that since plaintiff failed to make the repairs promised, defendant had the right to rescind and recover his lease payments, loss of time and loss of business. He cites Aeolian Co. of Missouri v. Boyd, Mo.App., 65 S.W.2d 111. In speaking of the remedies of a purchaser who claimed to have been defrauded in the contract, the court in that case, 65 S.W.2d at page 113, said: "He may rescind the sale in timely fashion, and recover whatever of value he has parted with by reason thereof; or he may keep the property and recover, either in an affirmative action, or by way of set-off or recoupment when sued by the seller for the purchase price, the damages occasioned him by the fraud. However, he may not pursue or attempt to intermingle the two remedies, for they are wholly inconsistent, the one being a disaffirmance, and the other an affirmance, of the contract. (Citing cases.)"
It is to be noted that in defendant's first counterclaim he seeks to recover for loss of time to himself and employees, loss of grading business and profits, injury to his reputation, cost of parts furnished by him ($125) and $2100 paid out for rentals, all of which items were submitted to the jury in defendant's Instruction 7, as elements of damage, for which the jury might allow him on that counterclaim. Yet, in his answer, defendant pleads full performance by him of the written lease by the payment of $2100 in rentals "under said lease", which lease he contends was then settled and satisfied. This is the same $2100 he now seeks to recover as damages for breach of an alleged new and oral contract of lease between the parties on the same tractor.
Defendant, having taken the position that he rescinded the contract, whether under the written lease or under his alleged subsequent verbal agreement, it was error to permit him to offer evidence of damages as for the plaintiff's breach of the same. Pfeiffer v. Independent Plumbing Heating Co., Mo.App., 72 S.W.2d 138, 143.
Plaintiff assigns error in the giving of Instructions 3, 4, 11 and 12, for the defendant because they submit to the jury whether the parties entered into as parol contract modifying or rescinding the written lease. He asserts that there was no evidence on which to base the submission of those issues. What we have already said disposes of this point in the plaintiff's favor.
Plaintiff further complains of defendant's Instruction 4, submitting the question of whether the written lease was modified by the alleged parol agreement upon the return of the tractor to the plaintiff, and his promise to make repairs on it if defendant would continue to lease it at $700 a month. The further objection made is that it submits no consideration for any such agreement. We think the point well taken. See Wilt v. Hammond, 179 Mo. App. 406, 165 S.W. 362, 365.
The next point made is that the court erred in submitting to the jury the question of any damages to defendant for injury to his reputation as a grader and for loss of business, since there was no evidence of such damage. Plaintiff also contends that defendants is precluded from claiming such damages because he used the tractor after he knew of the defects. Since we have held that under defendant's pleadings and evidence he was not entitled to claim any such damages under his theory of verbal warranty and rescission, we need not consider this further objection.
Lastly, plaintiff insists that the court erred in submitting to the jury any issue other than the computation of the balance due under the written lease, since the execution of the contract was conceded and there was not any competent evidence of any defense thereto. We think that contention overlooks the credit for work and labor admitted on plaintiff's claim under his petition, and does not consider defendant's counterclaim for such work and labor, as to which no assignment of error is made on this appeal. The lease called for a total of $6000 for the rental period, on which payment of $2100 is admitted. The petition further acknowledges a credit of $240 for work and labor furnished by defendant. As to plaintiff's further claim for repairs furnished by him after possession given under the written lease, and for which plaintiff also asks recovery in his petition, he asserts that such repairs were required by the usual wear and tear, and for which he alleges defendant was liable. But, nevertheless, plaintiff furnished the repairs and there is no proof that the cost of them was incurred and charged to the defendant with his authority, nor that he agreed to reimburse the plaintiff therefor.
The judgment is reversed and the cause is remanded, with directions to determine the amount of the rental yet unpaid under the written lease, and to enter judgment for the plaintiff on his petition for the amount so determined less an admitted credit of $240, and for the plaintiff on defendant's counterclaim in his Count 2, and for the defendant on his counterclaim in his Count 3 in the sum of $1, the costs to be assessed against the defendant.
All concur.