Massey Harris Co. v. Skelding, [1934] SCR 431

Supreme Court of Canada

Massey Harris Co. v. Skelding, [1934] S.C.R. 431

Date: 1934-03-28

Massey Harris Company Limited (Plaintiff) Appellant;

and

A. E. Skelding (Defendant) Respondent

1934: February; 1934: March 28.

Present:—Duff C.J. and Rinfret, Lamont, Crocket and Hughes JJ.

ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF ALBERTA

Sale of goods—Farm machinery—Tractor—Damages for breach of warranty—Measure of damages—Onus.

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In determining the damages to the purchaser of a tractor against the vendor, for what was held to be a complete failure of the tractor in respect of the fulfilment of certain warranties as to its performance, it was held that, prima facie, the loss incurred by the purchaser amounted to the full purchase price; and that it was incumbent upon the vendor to adduce evidence in support of its contention that the damages so measured should be reduced by reason of the possession of the tractor of some merchantable value (establishment of the amount of that merchantable value not being upon the purchaser). The judgment of the Appellate Division, Alta., [1933] 2 W.W.R. 567; [1933] 4 D.L.R. 303, holding that the purchaser by his use of the tractor had lost his right to return it, but allowing him damages for the amount of the full purchase price, was affirmed in the result.

The judgment of this Court in Nolan v. Emerson-Branting ham Implement Co. ([1921] 2 W.W.R. 416; 60 Can. S.C.R. 662) explained (this Court not agreeing with the interpretation of it by the Appellate Division in the present case).

APPEAL by the plaintiff, and cross-appeal by the defendant, from certain parts respectively of the judgment of the Appellate Division of the Supreme Court of Alberta[1].

The plaintiff sued the defendant upon two lien notes, amounting together to $1,740, covering the purchase price of a tractor, price $1,400, and a disc, price $340, for the sale and purchase of which there was a written agreement between the parties.

The defendant, besides denying the allegations of the statement of claim and alleging failure of consideration, counterclaimed, alleging (inter alia) that the plaintiff's agent made certain representations as to the tractor's performance, that "upon said conditions" defendant agreed to purchase it and to try it out, that it failed to fulfil the conditions, that defendant did not accept it and returned it. Defendant was prepared to pay for the disc but pleaded tender before action. He asked for an order cancelling the

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notes, and alternatively, "if the said conditions are to be treated as warranties," he claimed damages to the extent of the price of the tractor, and for the use of extra fuel and oil and for loss of time. Plaintiff denied defendant's said allegations.

The action was tried before Tweedie J., who found that the tractor did not comply with the representations made by the plaintiff's agent on the sale, and further it was not reasonably fit for the purpose for which it was intended; that, notwithstanding a clause of the agreement limiting the representations to those in the agreement, the plaintiff was bound by the verbal representations (not expressed in the agreement) of its agent (The Farm Machinery Act, R.S.A. 1922, c. 152, s. 4); that, while defendant did not strictly comply with the provisions of the clause of the agreement as to testing and giving notice, plaintiff was not prejudiced thereby as it had actual notice and waived strict compliance; that the retention of the machine for 16 months was not, under all the circumstances, unreasonable, and plaintiff acquiesced in such retention in its endeavours to so adjust it that it would operate in the manner and do the work that it was represented that it would; that, the tractor not fulfilling the representation made concerning it, and that provided by statute, defendant was justified in not accepting it, other than for the purpose of testing it, and acted within his rights in returning it to plaintiff in whom the title still remained; that there was no legal tender of payment for the disc. He held that, there being a total failure of consideration as to the tractor, the plaintiff was not entitled to recover for it and, to the extent of its price, $1,400, the plaintiff's claim should be dismissed. He gave judgment to plaintiff for the price of the disc, $340, and interest.

On appeal to the Appellate Division of the Supreme Court of Alberta, Harvey C.J.A., in delivering the judgment of the majority of the court, said:

With all respect I find myself unable to accept the conclusion of the learned trial Judge that the defendant did not accept the tractor and was entitled to return it. The time that he retained at is not of so much importance as the work he made it perform. He was not merely testing it after each effort by plaintiff's expert to make it perform satisfactorily to see if it would perform satisfactorily but he was actually continuing to do his work on hundreds of acres of land though it did not do it satisfactorily.

* * *

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I think, therefore, the defendant's remedy is by way of damages and not by way of rescission or rejection of the tractor. And I do not think he is barred by the clause of the agreement which says that "The purchaser agrees not to bring any suit for breach of warranty or plead any alleged breach of warranty as a defence or by way of set off after one year from the date of delivery of the machine to him." He is not setting up a breach of warranty but is claiming damages for breach of a condition, it being too late to resort to it for other remedy, and it does not make it a warranty because he relies on it as on a warranty. If it were not so it would be necessary to consider whether under the facts in evidence the Court would hold the clause reasonable under the authority of The Farm Machinery Act.

The situation then becomes the same as it was in the case in this Court of Nolan v. Emerson-Brantingham Implement Co.

In that case the trial Judge, Stuart J., held that it was too late for rescission which was claimed but held that "the tractors were practically [i.e., for practical purposes on a large farm] valueless", and he awarded damages in the full purchase price of the tractors though they still remained in the possession of the purchaser.

On appeal[2], this Division reduced the damages, being of opinion that the tractors could not be said to be valueless and were still the property of the purchaser.

On appeal to the Supreme Court of Canada[3], the judgment of the trial Judge was restored. Anglin J. (as he then was) at p. 419 says: "No doubt the 'L' tractors did some useful work while operated by the appellant. But it sufficiently appeared that they could not be profitably used for the purposes for which he purchased them upon evidence accepted by the learned trial Judge as worthy of credence".

In the present case the learned trial Judge has found that there was a total failure of consideration, in other words, that the tractor was valueless to the defendant. There is undoubtedly evidence to support his finding and in view of the decision in the Nolan case, I do not see how we can reverse it and as the tractor is in the possession of the plaintiffs and no claim is made by the defendant in respect of it we are not met with the difficulty presented in this respect in that case.

I feel myself bound, therefore, to accept his conclusion in substance.

I think in form, however, there should be judgment for the plaintiffs for the amount claimed and that there should be judgment on the counterclaim for so much of the amount of the claim as relates to the price of the tractor. The plaintiffs should have the costs of the claim with only the nominal costs of the trial since the only ground of controversy in which they succeed is on the question of tender. The defendant should have the costs of the counterclaim including costs of discovery and the general costs of the trial.

I see no reason for differing from the learned trial Judge in dismissing the defendant's other claim for damages. He certainly had enough value from the use of the tractor to offset any extra expense and loss of time occasioned.

As substantial success is with the respondent I would give him the costs of the appeal.

McGillivray J.A., dissenting, held that the Appellate Division might not now assess the defendant's damages, for

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breach of condition, in the full amount of the purchase price. In discussing the judgment at trial, he observed that, while the trial judge did find that there was a total failure of consideration as alleged in the defence, yet an examination of the judgment as a whole showed that the trial judge did not find as a fact that the tractor was valueless either to the defendant or to anyone else; the trial judge's judgment turned upon non-acceptance and could not in any sense be construed as an assessment of damages; it followed that the Nolan case, supra, in which damages were fully assessed, had no application. After discussing the Nolan case, and distinguishing it from the present case, he said:

I make these observations concerning the Nolan case because that case was so much discussed in the course of argument, but whether I be right or wrong in the view I take of the Nolan case, it is enough to say that the learned trial Judge has found that there has been breach of conditions of purchase and that the defendant is therefore entitled to such damages as he may establish that he is lawfully entitled to, before a trial Judge, and that the learned trial Judge in this case, not having directed his mind to damages, it is impossible to say what evidence he would have believed with respect thereto, and so in my view the proper course for this Court to pursue is to set aside the judgment dismissing the counterclaim and to direct an assessment of damages, * * *

The formal judgment of the Appellate Division adjudged that the plaintiff recover the sums claimed and interest (amounting in all to $2,061.07), and that the defendant recover damages on his counterclaim for $1,400 (the amount of the price of the tractor) and interest (amounting in all to $1,670.10); that plaintiff recover the costs of the claim with only the nominal costs of the trial, and that defendant recover the costs of the counterclaim, including costs of discovery and the general costs of the trial; and that defendant recover his costs in the appeal.

The plaintiff appealed to the Supreme Court of Canada from that part of the judgment of the Appellate Division by which it was adjudged that defendant recover as damages on his counterclaim the sum of $1,670.10 (and the costs awarded him) and from the assessment only of the said damages. The defendant cross-appealed, asking, in the event that the Supreme Court of Canada varied or disallowed the judgment for damages awarded him by the Appellate Division, that that part of the judgment of the Appellate Division which held that he had accepted the tractor be reversed and set aside and that the finding

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of the trial judge be restored, and plaintiff's claim (as to the tractor) be dismissed. Each party obtained leave, to appeal and cross-appeal respectively, from the Appellate Division.

W. H. McLaws for the appellant.

M. E. Moscovich for the respondent.

The judgment of the Court was delivered by

DUFF C.J.—We do not differ from the conclusion of the Appellate Division that the respondent had by his use of the machinery lost his right to return it. It is unnecessary to discuss the reasons for this view, as counsel for the respondent in this Court was content to accept the judgment below.

The sole question, therefore, concerns the amount of damages to which the respondent is entitled. The learned trial judge found that

the tractor delivered by the plaintiffs to the defendant did not comply with the representations * * * as alleged in the statement of claim, and further it was not reasonably fit for the purpose for which it was intended.

The "representations as alleged in the statement of claim" are the representations set forth in paragraph one of the counterclaim which is in these words:

The defendant says that on or about the 25th day of April the plaintiff's agent came and represented to him that he had a Wallace tractor "which will put a 8½ ft. plough in high gear and also a 3 Bottom Breaking Plough, that it would burn distillate, that the tractor would function better than the defendant's Hart Parr tractor and would save the defendant $250 on the year's use and run.

There is some evidence that the tractor, although useless for the purposes for which it was purchased, had some merchantable value, and the appellants contend that it was incumbent upon the respondent to establish that value in order to determine the amount of the damages to which he was entitled.

We cannot accept this view. Having regard to the nature of the warranties and the complete failure of the tractor in respect of the fulfilment of the warranties, which, the evidence, accepted by the learned trial judge, discloses, we think that, prima facie, the loss incurred by the respondent amounted to the full purchase price; and that it was incumbent upon the appellants to adduce evidence in support of their contention that the damages so measured

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should be reduced by reason of the possession of the tractor of some merchantable value.

We cannot agree with the interpretation by the Appellate Division of the decision in this Court in Nolan v. Emerson-Brantingham Implement Co.(1). There the trial judge held that in respect of the tractors (model "L") which he found had no value for the purposes for which they were bought, and had also no merchantable value, no diminution of damages could be allowed. A critical examination of the judgments shews that a majority of this Court accepted the view that on this ground the learned trial judge was right in assessing the damages in respect of these tractors at the amounts paid for them. This was really the basis of the decision in this Court.

The appeal should be dismissed with costs.

Appeal dismissed with costs.