THE GERMAN BAY CO-OPERATIVE DAIRY COM PANY (LIMITED) v. SCOTT. Contract-Sale of Goods-Season's Output-Implied Condition-Delivery by S.C. IN BANCO. CHRISTCHURCH. 1901. April 24; A contract for the sale of the output of the cheese of a dairy factory DENNISTON, J. for a defined period, without any express condition as to quality, and at a uniform price, is not a severable contract, although deliverable by instalments; nor is there any implied condition that the cheese should be of first-class quality only. S. contracted with the appellant company to take its output of cheese from October to the end of March at a uniform price per pound f.o.b. at Lyttelton, cash to be paid on each shipment. The contract contained no stipulation as to quality. S. received and paid for all cheese up to February, when he refused to accept or pay for fifty-four cases, on the ground that it was of inferior quality. All the cheese previously accepted had been graded by the Government Grader at from 88 per cent. (the minimum for that class) to 89 and 891⁄2 per cent. The rejected cheese was graded as second class at 85 per cent., and was saleable in London. Both parties knew that the cheese was required for the English market. Held, That there was no implied condition that the cheese should be of first-class quality, and that, as it was saleable in the London market, though not as first-class, it was reasonably fit for the purpose for which it was required. Held, also, That it was a contract for sale which was not severable, and as to which, the buyer having accepted part of the goods, and there being no condition in the contract expressed or implied enabling him to reject the goods, his only remedy for any breach was an action for damages for breach of a warranty. APPEAL PPEAL on fact and law from the decision of R. Beetham, Esq., S.M., given at Christchurch on the 25th of March, 1901. The facts, so far as they are material to the case, are fully set out in the judgment. Beswick, for the appellant company : Delivery of the cheese was taken by its being put on board. The respondent is bound to take delivery of the whole output of the factory if the cheese is fit for human food. The respondent rejects the cheese as being classed as second quality, and says it is of inferior quality. The contract discloses nothing whatever about grading; therefore the matter must S.C. 1901. GERMAN BAY V. SCOTT. be treated as if no grading had taken place. At the time the contract was entered into grading was not in force, the Government simply ascertaining the value of the cheese by points. The first grade is 88 to 100, and this cheese was graded as 85 —that is, only three points below the first-grade number. This case is governed by "The Sale of Goods Act, 1895," section 13. The respondent contracts to take the whole of the output. The contract is not separable: he cannot say after taking one part of it that he will not take the other. There is an implied warranty that the goods will be of a marketable quality Beer v. Walker(1). If the cheese is fit for human consumption he is bound to accept it: Randall v. Newson(2). Russell, for the respondent: From August until December, cheese of a certain quality was sent; from the 4th of December, and after that date, cheese of an inferior quality was sent. It was proved by a witness for the appellant company that the rejected cheese was defective, inasmuch as it was "acid-cut." The same witness further said, "If the cheese was acid-cut' it was no fault of "mine. The milk was too far advanced." This being so, it was this bad milk that made the cheese bad. There is an implied term that the company would give to its cheese-maker materials which would enable him to make good cheese. The price was for the best-quality cheese. It was never contemplated that the company would allow bad materials to be used in the making of its cheese. There must be implied in the contract that the materials were reasonably fit and good for the work. If the cheese was condemned by the Government Grader the company might say that it was part of their output, and the respondent was bound to take delivery. Beswick in reply. DENNISTON, J. :— Cur. adv. vult. The respondent, in October, 1900, agreed in writing with the appellant, the German Bay Co-operative Cheese-factory, to buy its output of cheese (except 10 tons for local trade) to end of March, at a price per pound free on board at Lyttelton. Cash was to be paid on each shipment. The respondent received and paid for all cheese made by the appellant until February, when he refused to accept or pay for fifty-four cases on the ground that the cheese was of inferior quality. It (1) 46 L.J. C.P. 677. (2) 2 Q.B.D. 102, 109. S.C. 1901. BAY was found that all the cheese previously accepted had been graded by the Government Grader at from 88 per cent. (which is the minimum for that class) to 89 per cent. and 89 per GERMAN cent., and that the rejected cheese was graded as second class, Co-OPERATIVE at 85 per cent. The difference in value would, according to DAIRY the Government Grader, be 6d. against 54d. The cheese was saleable in London. 66 I do not agree with Mr. Beswick's contention that this is a contract for specific goods the property in which has passed to the buyer, and therefore within subsection 3, section 13, of The Sale of Goods Act, 1895." I think, however, that it is a contract for sale which is not severable, as to which the buyer has accepted part of the goods. The contract is for a definite subject-matter-the entire season's output. The price is fixed on that assumption. The fact that the goods have yet to be manufactured, and are to be delivered and paid for in instalments, does not make it a number of contracts contained in one agreement. Any breach of a condition to be fulfilled by the seller can therefore, in terms of subsection 3, section 11, only be dealt with as a breach of a warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract expressed or implied to that effect. It is to be observed, however, that the respondent does not profess to have repudiated the contract; what he claims is to be entitled to refuse acceptance as delivery in terms of the contract of anything but first-class cheese. To justify this he must claim to read into the agree ment some such qualification of the word "output" as would make the tender of any but first-class cheese no fulfilment of the terms of the contract. The contract is in writing, and contains no such qualification. It is an agreement to purchase all the cheese which the appellant produced in the ordinary course of its operations. The claim of the respondent does not seem to me to be based on a breach of condition going to the root of the contract. The respondent could have stipulated for the purchase of only first-class cheese; he has forborne to do so. Assuming, however, that the claim is based on such an alleged breach, is there such a condition? As I have said, there is no such condition expressed. Is there any implied? This is not a contract for the sale of goods by description or by sample. The buyer relied upon the character of the factory and the ability of the manager, and seems to have deliberately waived any condition as in COMPANY v. SCOTT. S.C. 1901. GERMAN BAY COMPANY v. SCOTT. quality. Subsection 1, section 16, of the Sale of Goods Act was not referred to in the argument. Both parties knew the goods were required for the English market, and had the evidence shown that the goods were not reasonably fit DAIRY for that purpose there might have been ground for suggesting that they were not within the contract. It is, however, clear that they were saleable in London as cheese, though not first class. That being so, the respondent's remedy, if any, would be an action for damages. In Jones v. Just(1), which contains, I think, the fullest discussion of this subject, it was found that the goods were not merchantable. Apart from this, if I am warranted in holding that this contract is not severable, a breach of this condition, if it were a condition, and if it had been broken, would be ground for an action for breach of warranty, and not an answer to the present action. It is therefore unnecessary to consider whether the Magistrate was justified in his finding that the inferiority of the cheese rejected was owing to the neglect and carelessness of the appellant's employees, and whether such neglect or carelessness would give respondent a right of action. The appeal will be allowed, with £7 7s. costs. Solicitors for the appellant: Beswick & Harris (Christchurch). Solicitors for the respondent: Smith, Chapman, & Sinclair (Dunedin). S.C. IN BANCO. 1901. April 25; WILLIAMS, J. HINCHEY v. KEAM... Principal and Agent-Revocation of Agency-Damages. An agent employed to effect a sale has no claim on his principal in consequence of revocation of the agent's authority before a sale is effected unless he has, before the revocation, found a person ready and willing to purchase on the terms fixed by the principal. APPEAL from the Stipendiary Magistrate's Court, Inver cargill. Hinchey employed Keam to find a purchaser for Hinchey's hotel, stock, and furniture for £1,450, and agreed to pay him £50 if successful. Keam entered into negotiations with one Dumbleton for the sale to him of the hotel, &c. Dumbleton (1) L.R. 3 Q.B. 197. expressed himself as willing to buy at the price mentioned if his inspection of the premises was satisfactory. Before he had an opportunity of inspecting, Hinchey revoked Keam's authority. The Magistrate, relying on the case of Capstick v. Chapman(1), gave judgment for Keam for £50. From this decision Hinchey now appealed. Sim, for the appellant: In a case of this kind the principal has power to revoke before the work which the agent was employed for is done: Campanari v. Woodburn(2); Simpson v. Lamb(3); and the only claim of the agent would be for his expenses before revocation; and there is no evidence of any such expenses: Bousted on Agency(4); Tutchen v. Stubbs (5). The Magistrate treats the revocation as wrongful: but that is the fallacy of his judgment. In Prickett v. Badger(6) the agent had done all that was required of him. Hosking, for the respondent: The question is whether, upon any view of the facts, the decision of the Magistrate is wrong: The Mayor, &c., of Dunedin v. The Mayor, &c., of Roslyn(7). The contract was to find a buyer, not an actual purchaser. "Buyer" does not mean a person bound by a concluded contract, but a person ready and willing to buy on the seller's terms; and the Magistrate must be taken to have found that Keam had found a buyer: Wilkinson v. Alston(8). It was the act of the appellant that prevented a concluded contract: Inchbald v. Western Neilgherry Coffee, &c., Company (9). The Magistrate found the chance equal to certainty: Story on Agency(10). In Prickett v. Badger(11) there was no concluded contract. to the amount recoverable where the agent is prevented from earning the commission by the wrongful interference of his principal: Roberts v. Barnard(12); Fraser v. Kennedy(13); Grogan v. Smith(14): Green v. Reed(15); Toppin v. Healey(16); Nosotti v. Auerbach(17). As S.C. 1901 HINCHEY V. KEAM. . (3) 17 C.B. 603. |