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Brown et al. v. Unger et al.

to support this construction. The fact that the plaintiffs were dealers or brokers, is another illuminating circumstance in this connection. They were selling the product of distant mills. It was important that their commitments, thus definite in character, should be covered. We refer especially to Shinn v. Bodine, 60 Pa. 182, and Producers' Coke Co., v. Hillman, appellant, 243 Pa. 313, 316, and note that the only circumstance that would seem to cast doubt on the soundness of this contention is the definition of a divisible contract to be found in section 76 of the Sales Act of 1915. But under that act this question, as it is raised here, is now one of fact for a jury and not of law for the court.

Its section 45 expressly recognizes the right of rescission by a buyer of an instalment contract if the seller makes defective delivery in respect of one or more instalments, and it depends in each case only on the terms of the contract and the circumstances whether the breach is so material as to justify the buyer in refusing to proceed further and treat the whole contract as broken, or so immaterial that the breach may be treated as severable, in which event the buyer is entitled to compensation only. In the latter contingency, he cannot rescind the contract.

The plaintiffs' breach in this case is claimed by the defendants. to have been a material one. The relative quantity of yarn involved was large and, for all practical purposes, the two shipments made so near together in January may be regarded as the first instalment under the contract. Its inferiority was serious. They say it violated the contract in number, quality, kind and weight. It was mixed and utterly unfit, as furnished, for the purpose intended. While the defendants had not relied on the plaintiffs' skill and judgment in this regard and there was, therefore, no implied warranty of reasonable fitness for the use intended, yet the plaintiffs knew of, and had it in contemplation when the sale was made. This fact is an additional circumstance to be taken into consideration by a jury in passing upon the materiality of the breach, especially where, as here, it is, in effect, averred by the defendants that the default was deliberate and intentional. To insure uniformity in their manufactured product, the defendants had taken the precaution, by this contract, to cover their future requirements for a large quantity of yarn and it was the duty of the plaintiffs to deliver the goods in accordance with the terms of the contract. Under these and the other related circumstances of the case, as they now appear,

Brown et al. v. Unger et al.

the question of whether the contract was entire or divisible must, therefore, be submitted to a jury.

The yarn carried with it, of course, the implied warranties by the plaintiffs that it should correspond with its description in the contract and be of merchantable quality. Primarily, the defendants were entitled, after its receipt by them, to a reasonable opportunity of examination before they could be deemed to have accepted it and this right was enlarged or extended in this case by the custom of the trade, whereby such examination was to be deferred until the yarn, which was placed in storage, came to be taken out for use. That time finally arrived. It was sometime after January 29th and before March 27th. It was then examined and tested by the defendants and found to be defective, as described. Its unsatisfactory condition was so marked, as a matter of fact, that it was apparent on casual inspection. It, thereupon, became their duty to act promptly and unequivocally, because the right to terminate the contract, assuming that the jury shall find it to have been an entire one, was given for their benefit. They were bound then either to elect to rescind it or to treat it as a subsisting one and sue on the warranties: Spiegelberg v. Karr, appellant, 24 Pa. Sup. Ct. 339. The former would, of course, operate as a disaffirmance or repudiation of the contract and the latter as an affirmance of it. They could not do both, because the action would be hopelessly inconsistent.

It is not within our province to say that, under all the circumstances, they did not act with the promptness required of them. They first offered to return the goods and their offer was refused. They then wrote to the plaintiffs, under date of March 27th,formally rescinding the contract, but they made no further offer to return the yarn nor effort to accomplish such return and afterwards actually used it in their business. This brings us to that which may be regarded as the real present difficulty in the case.

Ordinarily, a buyer who elects to rescind such a contract must not accept the goods, even when they have been paid for, nor do anything with them inconsistent with their ownership by the seller. On the contrary, it is his duty to reject them, notify the seller within a reasonable time of his election to rescind and return or offer to return the goods on repayment of the price. If the seller then refuses to accept a return, the buyer may thereafter hold the goods, as the property of the seller, subject to a lien to secure the price already paid, with adequate remedies for its enforcement. Sales Act

Brown et al. v. Unger et al.

of 1915, sec. 69, 5th par. P.L. 563. The reason for the law is that the status quo of the seller may be preserved and it shall not become possible for the buyer thereafter to make such use of the goods as may enure to the advantage of himself or the disadvantage of the seller. They thereby again become the property of the seller. As stated, such was not done in this case and the question therefore arises whether, on that account alone, the defendants have forfeited their right to defend against the plaintiffs' claim. We think not. The circumstances are unusual.

They had paid 62 cents a pound for the yarn and its market value had then fallen to 41 cents. If it had been rightfully returned the plaintiffs would have had to repay at the rate of 62 cents. Under a rescission and failure to return the defendants cannot recover back the price and it is at least doubtful whether they can hold the plaintiffs in damages on the implied warranty of description. The latter are, therefore, in the position of having been paid at the contract price for all the yarn they delivered whereby they have lost nothing and, it may be, have been saved from a substantial claim for damages, by the defendants' failure to return the goods. In fact, they have been benefited, instead of injured, thereby. Enterprise Mrg. Co. v. Oppenheim, Oberndorf & Co., 79 Atlantic 1007.

Furthermore, the defendants, in effect, aver that their retention and use of the yarn were for the very purpose of lessening "the loss thereon to the plaintiffs" after the latter's agent had refused to take it back. See Iron & Coal Co. v. Smith, 66 Pa. 340; Sharer v. Dobbins, 195 Pa 82; White v Miller, 43 Pa. Sup. Ct. 573; Clark v. Wells, 127 Minn. 353. This averment raises a question of fact which is also for a jury to decide. The court cannot, as a matter of law, now declare that, under the circumstances, such reftention and use operated as waiver of the notice of rescission or precluded the defendants from making defense to the plaintiffs' claim for damages. It is also to be remembered that, after March 27th,they held the yarn as bailees for the plaintiffs. It was a cumbrous article. They had a substantial sum of money locked up in it. It was not their duty to keep it on hand to wait the good pleasure of the plaintiffs, but they could dispose of or use it and all the vendors could in reason ask would be a credit for its actual market value: Iron Co. v. Smith, supra.

We, therefore, conclude that the plaintiffs are not entitled to

Brown et al. v. Unger et al.

judgment. This renders it unnecessary to discuss the tender of April 2nd. If the contract was lawfully rescinded on March 27th, the subsequent tender was of no effect. If it was not, then an entirely different question will arise. As we may assume, for the present, that the defendants will establish their defense at a trial of the case, we shall, in an opinion already too long, at this time not anticipate that question further than to refer to the case of Smith v. Levy, 37 Pa. Sup. Ct. 551, and our opinion in No. 72, June Term. 1919, which is filed herewith, 36 M. L. R. 195.

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

Court of Quarter Sessions of Montgomery County

Commonwealth v. Olivadotti.

Defendant was convicted for selling liquor to a minor, selling on Sunday and selling without a license. A motion was made for an arrest of judgment alleging that the Brooks High License Law had been suspended by the Federal Amendment.

Brooks High License Law was passed to restrain and regulate the sale of all vinous, spirituous, malt or brewed liquors or admixture thereof while the Federal Amendment was to prohibit the manufacture and sale of intoxicating liquors, unless two acts are entirely in conflict with each other they will stand in the absence of an expressed repealer. Therefore the Brooks High License Law and the Federal Amendment are not in conflict with each other and the motion for an arrest of judgment must be over ruled.

Nos. 4 and 5, April Term, 1920.

Motion in Arrest of Judgment.

F. X, Renninger, Attorney for Commonwealth.

H. G. Knight, Attorney for Defendant.

Opinion by Miller, J., June 16, 1920.

The defendant was convicted at the April Sessions of the three separate offences of selling liquor to a minor, on Sunday and without a license. The time when the sale was made was Sunday, February 15th, 1920, and its subject matter was Italian wine which was shown to have contained 14 per centum of alcohol by volume and been sold for beverage purposes. Her

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Commonwealth v. Olivadotti

motion in arrest of judgment raises the single question of jurisdiction and she has been admitted to bail pending its disposition. The eighteenth amendment to the Constitution of the United States reads as follows:

"Section 1. The manufacture, sale or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States, and all territory subject to the jurisdiction thereof, for beverage purposes, is hereby prohibited.

Section 2. The Congress and the several states shall have concurrent power to enforce this article by appropriate legislation."

It went into effect on January 16, 1920 and, so recently as June 7th, the Supreme Court of the United States decided that its provisions are constitutional, that it was lawfully adopted and that its first section, of its own force, invalidated any legis lative act-whether by Congress, by a state legislature or by a territorial assembly-which authorizes or sanctions what it prohibits. While it is, therefore, the supreme law of the land, much of the difficulty in the case now before us is overcome when it is remembered that its prohibition extends only to intoxicating liquors for beverage purposes.

The State of Pennsylvania has enacted no appropriate legislation to enforce the amendment, but the Congress, on October 28th, 1919, adopted such an act which is entitled the "National Prohibition Act" and is also popularly known as the "Volstead Act." Amongst other things, it defines the term "intoxicating liquors" as used in the amendment to the Constitution, absolutely prohibits the sale, at any time on or after January 16, 1920, of liquors for beverage purposes that contain one half of one per centum or more of alcohol by volume and imposes penalties for its violation and its validity was, on June 7th, also upheld by the Supreme Court of the United States. It is therefore argued by her counsel that as the defendant, in selling wine containing 14 per centum of alcohol by volume on February 15th, 1920, clearly violated its provisions, is subject to its penalty, and is triable for the offence in the District Court of the United States of this district, that court has exclusive jurisdiction in the premises; that the Brooks High License Law has been entirely superseded or suspended by the amendment to the federal con

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