Brown et al., v. Unger, et al.

or quantity of merchandise, divisible: Producers' Coke Co., v. Hillman, appellant, 243 Pa. 313, 316.

He contends, furthermore, that "the defendants were bound to inspect the yarn to ascertain its quality before manufacturing it into underwear" and that, having exercised ownership over that delivered in December, the contract could not afterwards be rescinded by them. In the first place, this contention entirely loses sight of the controlling fact that the defendants claim to have rescinded on account of the defective quality of the shipments of January as well as of those of December and that the former, except as to a small quantity, of which no account is made, were not either retained or used, but were promptly returned. And, in the next, it is to be observed that the defendants have also averred that plaintiffs' breach of the contract would have been continuing in character. They say that plaintiffs merely offered to replace the defective yarn, then in the possession of the defendants with goods of the same character, "not true to number, kind, weight, and quality"; wherefore the offer was not made in good faith. It may well be that ordinarily and before the act of 1915, their acceptance of the instalments which were delivered in December and which were defective in quality would have estopped them from doing more than refusing the January deliveries, if they were also defective: Smith v Levy, 37 Pa. Sup. Ct. 551; but, even then, they were bound by no such limitation when the seller insisted upon continuing the delivery of inferior goods. In that event the buyer could rescind the entire contract: Cahen v Platt, 69 N. Y. 348. See, generally, note to 38 L. R. A. (N. S.) 539. The plaintiffs' right to judgment is not clear and the case must, therefore, go to a jury.

And now, 21 May, 1920, the rule is discharged.

VOL. XXXVI-No. 25

Court of Common Pleas of Montgomery County

Brown et al. v. Unger et al.

Defendant entered into a contract with plaintiffs to furnish cotton yarn of a certain number from a certain mill, several consignments of yarn were received which upon being worked into the garments were found not to be true to number. Whereupon plaintiffs agreed to furnish yarn from another mill to which defendant assented providing quality should be as good as that of yarn already used from this mill, together with the understanding that proper allowance should be made on all defective deliveries made. The plaintiffs did not agree to the requirements made by the defendants both as to the quality of the yarn as well as to the allowance for yarn already delivered which was not in conformity with the contract. The defendants then rescinded the contract, the plaintiffs bring suit for damages sustained by reason of the rescission of this contract. The question was raised as to whether this was a severable contract or not. Defendant has set up sufficient matter as a defense to this suit to warrant its being sent to the jury whose province it is to determine whether contract is severable and whether there has been a breach of same by plaintiffs.

No. 73. June Term, 1919.

Rule for Judgment for Sufficient Affidavit of Defense.

Edward M. Biddle and Aaron S. Swartz, Jr., Attorneys for Plaintiff.

Larzelere, Wright & Larzelere, Attorneys for Defendant.

Opinion by Miller, J., May 21, 1920.

The plaintiffs, who are dealers in cotton yarn, sue in this case for the recovery of damages from the defendants, who are manufacturers of underwear, for an alleged breach of contract by the latter. Its facts are closely interwoven with those of another between the same parties, being No. 72 June Term, 1919, in which an opinion discharging a rule for judgment for want of a sufficient affidavit of defense is filed herewith. Much that has been said in that opinion also applies here.

The facts of this case, as they appear by the pleadings and are to be regarded as established for the sole purpose of disposing of this rule, are, rather elaborately stated, as follows:

1. By contract in writing, the plaintiffs agreed to furnish to the defendants 50,000 pounds of No. 12 single cones carded peeler cotton yarn. in weekly instalments of 3000 to 4000 pounds each, beginning January 1st, 1919, from mills Nos. 117 and 121 at Talla

Brown et al. v. Unger et al.

dega, Ala., for 62 cents per pound, net, 30 days, F O. B. Talladega. By mutual consent, on January 30th, the terms of payment were reduced to 2% thirty days

The purpose for which the defendants bought the yarn in question, being the manufacture of ladies' underwear, was well known to the plaintiffs and in their contemplation when the contract was made.

2. Between January 6th and 18th, the plaintiffs, pursuant to said contract, delivered to the defendants 6529 pounds of cotton yarn, which was promptly paid for in full by them. No point is made of the fact that these deliveries were not made at the times and in the quantities, required by the contract.

3. Between the same dates, or on the 6th and 13th, two additional shipments were made of 2031 and 2072 pounds, respectively, but the defendants declined to receive them because the cases in which they were contained were in a damaged condition upon their arrival at destination. The plaintiffs make no demand for the contract price of these two shipments, although the defendants' claim would appear to have been against the carrier instead of the plaintiffs.

4. By subsequent agreement of the parties, entered into on or about January 29th, further deliveries under the contract were suspended or postponed until April 1st, 1919.

5. Sometime after January 29th, the defendants discovered that the 6529 pounds of yarn, which had been received by them, were not according to contract in "number, quality, kind and weight." All of this yarn, when received, had been stored for future use as needed in the defendants' business. When the cases in which it was containd were opened, preparatory to such use, and an examination or test of their contents was made by reeling, it was first learned that the yarn ran heavy, or in other words, instead of its being all 12's, as ordered, it was mixed and ran from 10's to 12's. When it was afterwards used it produced a manufactured fabric much heavier than, and consequently much coarser and inferior in texture to, that made from uniform No. 12. On discovery of the defect, the plaintiffs were notified of the condition found. Their representative then called at the premises of the defendants and examined the yarn. He admitted it to be heavy and not according to contract specifications, "but would not take back the yarn as not in compliance with the contract warranties." The time of this visit is not averred, but it was before March 27th.

Brown et al. v. Unger et al.

6. The yarn in question had been ordered and paid for, as was the custom and necessity of the trade, in advance of the time when it would be required for use. Under the usual custom of the trade and course of dealing between spinners and manufacturers, the inspection of such goods is not made or required until the time for the actual use of the yarn arrives. Yarn thus ordered and kept in stock in large quantities is held subject to later inspection when ready for use by mutual custom and agreement.

7. The plaintiffs had, at the same time, another and a somewhat earlier contract to supply similar yarn to the defendants. It had been a source of difficulty and embarrassment to the defendants. Large quantities, furnished under that contract, had been used by them in their business. Thereafter, as they contend, but the plaintiffs deny, it was discovered that this yarn had also not been according to contract in that it, too, was mixed, thereby causing the product of the defendants' factory to be injuriously affected in its uniformity and value.

As some of the yarn which had been furnished under the first contract had been used by them and could not be returned, the defendants demanded an allowance for the deficiency. Negotiations followed, but the allowance was finally refused. These negotiations. started sometime in the latter part of January and prompted the above-mentioned request by the defendants of January 29th, that further deliveries under the contract now before us should be delayed until after April 1st. This request was preferred before the defective quality of the yarn which had been furnished under this contract had been discovered, however. After it was discovered, the 6529 pounds of yarn were held by defendants pending a termination of the negotiations.

8. Notwithstanding the fact that the original contract called for yarn from the mills at Talladega and all of the 6529 pounds furnished had come from them, it was subsequently suggested by the plaintiffs that Kingston yarn should be substituted under the contract, as to all yet undelivered. To this the defendants assented if its quality should be as good as that of yarn they had already used from Kingston mill, and with the further understanding on their part that an allowance was to be made to them for the defective yarn which had been furnished under the other contract. As already stated, this allowance was afterwards refused by the plaintiffs, who also failed to agree that the Kingston yarn should be of a quality "as good as already used in defendants' mill."

Brown et al. v. Unger et al.

9. The defendants gave notice to the plaintiff's on March 27, 1919, that they rescinded the contract "on account of the failure of the yarns to be of the number, quality, kind and weight" provided by it.

10. As also already stated, the 6529 pounds of yarn re eived by the defendants had been promptly paid for in full at the contract price. By March 27th, the market value of the yarn described in the contract had fallen to 41 cents per pound. The agent of the plaintiffs had refused to take back the defective yarn, all of which still remained in the defendants' possession. The latter, therefore, made no further effort to return it and afterwards, in order to save an entire loss of value to the plaintiffs," used it in their business.

11. After this attempted rescission, or on April 2, 1919, the plaintiff's tendered to the defendants 1222 pounds "of the remaining amount under said order." Its acceptance was refused, as not having been made in good faith.

12. The plaintiffs, alleging a breach of the contract by the defendants, sue for the difference between the contract price of 43,471 pounds of yarn and the market price of each instalment thereof at the time appointed for its delivery.

13. The defendants, alleging to the contrary a breach of the contract by the plaintiffs and claiming their rightful rescission of it on that account, make counter-claim, which it is unnecessary to discuss further than to suggest that it is at least doubtful whether they have adopted the correct measure of compensation.

Here, again, we have one executory contract or bargain, made at one time, for the sale of a large, but definitely fixel, quantity of merchandise, to be delivered in instalments and with the consideration measured by a price per pound. It differs from that in case No. 72 only in that, while here the goods were to be paid for at the end of 30 days after each delivery, there, a single payment was to be made on the 10th of each month for all delvieries made during the preceding month. In either case, under our decisions, the contract may reasonably be contended to have been an entire one. Such appears to have been the intention of the parties to it. The character of the goods, their intended use, the necessity of defendants arranging long ahead for anticipated requirements, the importance of insuring uniformity in the size or weight of the yarn they used, the rapid and radical fluctuations in market value of cotton yarn, as well as the form and character of the contract itself, all combine