#### J. A. FAY & EAGAN COMPANY v. G. EDWARD CROWELL.

(Filed 30 November, 1921.)

1. Vendor and Purchaser — Contracts—Warranty—Conditions Precedent.

Where under a written contract for the sale of machinery the' purchaser has agreed that his receipt thereof and retention for more than thirty days shall be considered an absolute acceptance, his retaining them beyond the time specified will be regarded as an admission that the machinery was as warranted, and conclude his right of action thereon, in the absence of fraud, accident, or mistake.

2. Same — Waiver.

Where there is a stipulation in a written sale of machinery that it shall be returned by -the purchaser in case it was not as represented, the purchaser is entitled to no redress in the event of a breach by the seller of his warranty, unless he has first offered to perform the condition in the absence of fraud or of such conduct as amounts to a waiver -by the seller.

3. Same — Inferior Quality.

A contract for the sale of machinery, free from ambiguity or fraud, accident or mistake, is binding upon the purchaser under conditions requiring him to return the machinery if not as warranted, within a stated time, or providing that its retention beyond that period would be regarded as an absolute acceptance; and this applies when the purchaser has retained the machinery beyond the stated time and attempts to claim damages for the seller’s breach of warranty in sending a different machine, or one of inferior quality, to that agreed upon.

Appeal by plaintiff from Bay, J., at February Term, 1921, of StaNly.

Civil action to recover balance due on ten promissory notes executed by tbe defendant and delivered to tbe plaintiff for a certain quantity of mill machinery. Defendant denied full liability, and alleged tbat said notes “would bave been paid in full if tbe plaintiff bad given defendant proper adjustment and offsets on tbe machine No. 257, known as tbe resaw, on account of tbe defects in said machine as hereinbefore fully set out.” Defendant also alleged tbat tbe machinery shipped was differ*533ent from and less valuable than tbat wbicb be bad ordered; and tbat tbe same was defective in certairt particulars, said defects being set up and pleaded by way of counterclaim.

Upon issues submitted, tbe jury returned tbe following verdict:

. “1. In wbat sum, if any, is tbe defendant indebted to tbe plaintiff? Answer: '$1,010, with interest on same from 8 February, 1919.’

“2. Did tbe plaintiff sbip tbe defendant a different band resaw'ma-chine from tbat ordered under tbe contract of 23 January, 1919? Answer: 'Yes.’

“3. Wbat difference in value, if any, was there in tbe machine shipped by tbe plaintiff and tbe one contracted for by tbe defendant ? Answer: '$250.’

“é. Wbat damage, if any, is defendant entitled to recover on tbe counterclaim? Answer: '$150.’”

From a judgment reducing tbe amount of plaintiff’s recovery in accordance with tbe jury’s answer to tbe third and fourth issues, tbe plaintiff appealed.

Sinclair, Dye & Clark for plaintiff.

JR. L. Smith & Son for defendant.

Stacy, J.

On 23 January, 1919, tbe plaintiff, through its agent, sold to tbe defendant a certain quantity of mill machinery, guaranteeing tbe same in every respect; and, in payment therefor, it was agreed tbat tbe plaintiff would accept in exchange tbe defendant’s second-hand machine as part payment, $525 in cash, and bis promissory notes for tbe balance. Tbe contract was in writing and contained tbe following stipulation: “That in case of rejection tbe undersigned will promptly deliver it (tbe machinery) to consignor, f. o. b. Cincinnati, Ohio; tbat this contract is not modified or added to by any agreement not expressly stated herein, and tbat a retention of tbe property forwarded, after thirty days from its arrival at destination, shall constitute a trial and acceptance, be a conclusive admission of tbe truth of all representations made by or for tbe consignor, and a fulfillment of all its contracts of warranty, express or implied.”

Within thirty days after tbe receipt of said machinery tbe defendant notified plaintiff’s agent by wire tbat tbe same was not satisfactory, and asked him to “come to Oakboro at once in regard to resaw.” Tbe agent did not come, but immediately called over tbe telephone; and, in answer to plaintiff’s inquiry about a missing band-wheel, stated tbat this was not necessary, as tbe machine was equipped with a “lever-shift.” Defendant further testified: “Later on in tbe year Mr. Whitlock (plaintiff’s agent) came up. I told him about it and showed him tbe machine, *534and told bim tbe defect, and be said be would bave it adjusted. He never said a word about it not being tbe machine be sold. I told bim it was not tbe machine, and be said they would bave it fixed. I never bad any other negotiations with them. Never beard anything, and they didn’t fix it. I bad no more negotiations with tbe company in regard to tbe machine after that; it just rocked along. I was waiting on them.”

Tbe defendant continued to use tbe machine and still has it in bis possession. There is no contention about tbe balance of tbe machinery. Tbe “resaw” alone is in controversy. After tbe property bad been used for several months, tbe defendant made a further payment of $50 on one of tbe notes; and be says tbe payments already made are sufficient to cover tbe value of tbe machinery, not including tbe resaw.

Tbe agreement between tbe parties to this suit in regard to tbe subject-matter of tbe action is in writing. It is clear and free from any ambiguity. Hence, both sides must stand or fall by tbe terms of tbe written instrument — there being no claim or suggestion that tbe contract was entered into as a result of any fraud, accident, or mistake. Harvester Co. v. Carter, 173 N. C., 229; Machine Co. v. McClamrock, 152 N. C., 405. In some of tbe cases and by a number of writers it has been styled a “contract of sale and return” (Mfg. Co. v. Lumber Co., 159 N. C., 507); because it is stipulated as a part of tbe warranty that tbe goods shall be promptly returned if not as represented. It is further specified that a retention of tbe property for more than thirty days after its arrival at destination shall constitute an absolute acceptance, etc. This may not bave been a very wise provision, but tbe parties bave so contracted, and it is but meet that they should abide by whatever obligations they bave voluntarily assumed. Burch v. Bush, 181 N. C., 125. This is tbe law of contracts fairly and freely made. Clancy v. Overman, 18 N. C., 402; Bland v. Harvester Co., 169 N. C., 418; Guano Co. v. Livestock Co., 168 N. C., 447, and cases there cited. Any other rule would render all business transactions relating to sales of personal property unsafe and subject vendors to many hazards, and possibly grievous burdens. Parker v. Fenwick, 138 N. C., 209. Tbe retention by tbe defendant of tbe property during tbe time referred to in tbe above stipulation amounted to an admission that tbe representations made by or for tbe plaintiff were true and avoided all warranties. Fay & Eagan Co. v. Dudley, 58 S. E., 826 (which, by tbe way, is a case on all-fours with tbe one at bar and involving tbe identical contract now before us).

It has been tbe settled bolding with us, in a long line of decisions, that where there is an express warranty in tbe sale of personal property, and it is stipulated as a condition of tbe contract of sale that tbe property is to be returned within a specified time, if not as represented, tbe complaining party is entitled to no redress by reason of a breach of tbe *535warranty, in tbe absence of fraud or a waiver of tbe condition, without first offering to return tbe property witbin tbe time fixed by tbe contract. Robinson v. Huffstetler, 165 N. C., 459, and cases there cited. See, also, 35 Cyc., 437.

In tbe absence of fraud, this rule applies equally to a case where tbe goods delivered are different from, and inferior to, those sold, as where tbe property, though corresponding in description with tbe article purchased, is defective or wanting in quality. If tbe vendor tender goods of less value than those purchased, tbe vendee is not bound to accept them. But if be does accept them, under the terms of bis agreement, be is deemed to assent to a fulfillment of tbe contract on tbe part of tbe vendor. Pierson v. Crooks, 115 N. Y., 539. And in tbe instant case such acceptance and retention afford a “conclusive admission of tbe truth of all representations made by or for tbe consignor, and a fulfillment of. all its contracts of warranty, express or implied.” See, also, Farquhar Co. v. Hardware Co., 174 N. C., 369, and Ward v. Liddell, ante, 223, and cases there cited.

Tbe Supreme Court of Utah, in a comparatively recent case, states tbe law with clearness as follows: “Tbe rule is well established that when tbe quality of an article sold is guaranteed by warranty, one of tbe conditions of which being that, in case of a defect being discovered, tbe seller shall be liable only on condition of tbe production or return of tbe defective article, such condition is a condition precedent, and must be complied with or there can be no recovery (citing authorities). Tbe rule deduced from tbe authorities is that when tbe parties have not stipulated as to tbe course which shall be taken in case of a failure of tbe warranty, tbe vendee has bis election either to sue on tbe warranty or to rescind tbe contract.by returning tbe property and bringing an action for tbe money received by tbe seller. But it is competent, however, for tbe parties to provide by contract that a particular course shall be pursued on a failure of tbe warranty.” Wasatch Orchard Co. v. Morgan Canning Co., 12 L. R. A. (N. S.), 540. See, also, Frick v. Boles, 168 N. C., 654, and cases there cited.

In tbe light of tbe foregoing authorities, and upon tbe record, we think bis Honor should have directed a verdict in favor of tbe plaintiff for tbe balance due on tbe unpaid notes.

New trial.

WalKee, J., dissenting.