Circuit Court of Appeals, Second Circuit.
*644 *645 *646 *647 *648 *649 *650 *651 *652 *653 *654 Julian S. Bush, of New York City (Kenneth M. Spence and Soia Mentschikoff, both of New York City, and Thomas L. Howe, *655 of White Plains, N. Y., of counsel, for plaintiff-appellant.
Medina & Sherpick, of New York City (Harold R. Medina and William Gilbert, both of New York City, and William S. D. Woods, of Richmond, Va., of counsel), for defendant-appellee.
Before CHASE, CLARK, and FRANK, Circuit Judges.
FRANK, Circuit Judge.
Plaintiff complains that the judge erred in (1) denying its motion for a directed verdict, (2) in his charge to the jury, (3) in refusing some of plaintiff's requests to charge, and (4) in excluding certain documents. We shall consider these alleged errors in turn.
The first question is whether, on the indisputable record facts, plaintiff was entitled to a directed verdict based upon proof of facts creating an express warranty, pursuant to § 93 of the New York Personal Property Law, or an implied warranty, pursuant to § 96, subd. 1 of that statute.
We shall assume that the indisputable record facts demonstrate the following: (1) After negotiations between the parties, plaintiff made an offer, in the form of an order, on March 17, 1941, to purchase 100,000,000 boxes from defendant. (2) Defendant, by its letter of March 18 and the enclosed "formal acknowledgment," made a counter-offer. (3) Plaintiff's letter of April 7 was an acceptance, by conduct, of defendant's counter-offer. (In considering the motion, this must be taken as a fact, because a jury might reasonably so have found; accordingly, in this context, we disregard as irrelevant defendant's April 18 letter and the accompanying reports, but we will consider them in point 2, infra, dealing with the judge's charge.) (4) The negotiations prior to March 17 would have given rise to an implied warranty,[7] unless the counter-offer contained a disclaimer provision effectively precluding such warranties. Thus the question boils down to that of the legal effect of the so-called disclaimer clause.
The counter-offer was based upon, although it modified, plaintiff's order of March 17. On the face of that order, under the printed caption, "Purpose or Application of Product," were the typewritten words, "Pack dehydrated soups." Also on the face of the order, in printed type, was the statement that the order was subject to "the terms and conditions set forth on the reverse side of this page which are hereby expressly made a part hereof." On the reverse side, under the caption, "Terms and Conditions," item 6 stated, in printed type, "Seller undertakes that products sold hereunder shall correspond to the specifications on the front hereof; and Seller hereby expressly excludes all, any, or other warranties, guaranties, or representations whatsoever." Substantially that same item (the "disclaimer") was printed on the face of defendant's "formal acknowledgment" of March 18 which was enclosed with and referred to in defendant's March 18 letter; and that letter called specific attention to the conditions set forth in the enclosed "acknowledgment," although that letter also said that the boxes were to be used for the "packaging and merchandising of your dehydrated soups."
All the printed matter in these documents is easily readable, even to our aging eyes. We think the statement of "Purpose or Application" in the order was not part of the "specifications," and thus not within the sole named exception to the disclaimer clause. On the facts before us in connection with the directed-verdict-motion (i. e., omitting all consideration of defendant's April 18 letter and of the judge's charge and plaintiff's requests to charge), we think the disclaimer effectively "negatived" the asserted implied warranty, and that therefore the judge correctly denied that motion. Our reasons follow.
We shall assume that the facts, absent the disclaimer, would have given rise to an implied warranty of fitness for plaintiff's particular use, pursuant to § 96-1. *656 If so, it would have arisen "by implication of law." That is the phrase used in § 152. Pursuant to that section, businessmen are at liberty to contract away rights and obligations which would arise under such an implied warranty. Lumbrazo v. Woodruff, 256 N.Y. 92, 97, 175 N.E. 525, 75 A.L.R. 1017; Burntisland Shipbuilding Co. v. Barde Steel Products Corporation, D.C., 278 F. 552, 554; Sharples Separator Co. v. Domestic Electric Refrigerator Corporation, 3 Cir., 61 F.2d 499, 501; Minneapolis Threshing Machine Co. v. Hocking, 54 N. D. 559, 209 N.W. 996; Ford Motor Co. v. Cullum, 5 Cir., 96 F.2d 1, 3, certiorari denied 305 U.S. 627, 59 S. Ct. 89, 83 L. Ed. 401; cf. Advance-Rumely Thresher Co. v. Jackson, 287 U.S. 283, 288, 53 S. Ct. 133, 77 L. Ed. 306, 87 A.L.R. 285; Hopkinsville Motor Co. v. Massie, 228 Ky. 569, 15 S.W.2d 423, 424; 32 Illinois Law Review (1938) 938, 950; Corbin, The Parol Evidence Rule, 53 Yale Law Journal (1944) 603, 621.
Plaintiff argues that, although other kinds of implied warranties may be excluded by a general disclaimer, the implied warranty of fitness for use (§ 96-1) has such peculiar importance that it cannot be avoided by a general disclaimer not specifically brought to the buyer's attention. We doubt the soundness of that distinction.[8] It is noteworthy that Llewellyn, a distinguished commentator on the "law of sales," suggests a quite different classification.[9] He thinks the courts should accord special dignity to an implied warranty in a "sale by description" under § 14 of the Uniform Act, § 95 of the New York statute,[10] as distinguished from warranties which he considers of less dignity such as (1) implied warranties of "fitness for use" and "merchantability" under § 15(1) of the Uniform Act, § 96, subd. 1 of the New York statute, and (2) "express warranties" under § 12 of the Uniform Act, § 93 of the New York Act.[11] However that may be, plaintiff's contention lacks pertinence here: As previously noted, defendant's letter of March 18 specifically called plaintiff's attention to the "conditions" contained in the enclosed "acknowledgment," one of those "conditions" being the disclaimer.
Although it has withdrawn its claim of fraud and asserts no illegality, accident or mistake, plaintiff, citing Lumbrazo v. Woodruff, 256 N.Y. 92, 175 N.E. 525, 75 A.L.R. 1017, and Morris Run Coal Co. v. Carthage Sulphite Pulp & Paper Co., 210 A.D. 678, 206 N.Y.S. 676, affirmed 242 N.Y. 567, 152 N.E. 430, urges that the New York courts hold invalid a disclaimer where there is "unfair dealing" or where the disclaimer, if held effective, would produce a result "contrary to natural justice" or "good morals." Assuming that to be the New York rule, on the facts here considered, it is inapposite. Because we think the disclaimer provision not ambiguous, we *657 regard as not in point such cases as O'Neil Supply Co. v. Petroleum Heat & Power Co., 280 N.Y. 50, 55, 19 N.E.2d 676 and White v. Hoyt, 73 N.Y. 505, 511.
We find nothing in the undisputed evidence of what occurred, up to and including April 7, which constituted an express warranty.[12] Accordingly, since anything in the nature of an implied warranty was negatived by the disclaimer, plaintiff's motion for a directed verdict was properly denied.
Up to now, in considering the motion for directed verdict, we have discussed the case on the basis that as the jury might have found plaintiff on April 7 accepted defendant's counter-offer. We now turn to the judge's charge, which properly discussed events occurring after April 7 (including plaintiff's receipt of defendant's April 18 letter and the accompanying reports of tests made by defendant), ignored in the previous part of this opinion. In this connection, *658 our earlier discussion of warranties is irrelevant, as the judge's charge on that subject was correct, except as noted below.
Plaintiff in its complaint alleged that it had entered into the agreement with defendant in April.[13] In support of this allegation, plaintiff introduced testimony to the effect that the agreement was made shortly after plaintiff's receipt of, and in reliance upon, defendant's April 18 letter and the accompanying reports. In the closing argument of plaintiff's counsel to the jury, he took that position, saying that the agreement was made when Allen, the day or the day after he received the April 18 letter, told defendant to proceed to manufacture the boxes.
The judge instructed the jury, in effect, as follows: (1) If they found that such an agreement was made on or shortly after April 18, then they must ignore the disclaimer and must find for plaintiff (subject to determination of damages), if they also found the facts (described by the judge[14]) necessary to constitute an express or implied warranty. (2) If the jury found there was no such agreement at that time, then they must find that the March 18 counter-offer was accepted by plaintiff's conduct, with the consequence that the disclaimer was effective, and they must then find for the defendant.
Plaintiff now argues that that part of the charge summarized in (2) just above was erroneous for this reason: Even if (contrary to plaintiff's position at the trial) no agreement was made on or shortly after April 18, nevertheless the disclaimer would have been ineffective and plaintiff would have established a warranty, if the jury had found as they might have found under proper instructions that plaintiff accepted the counter-offer by conduct at any time after plaintiff's receipt of the April 18 letter and accompanying reports, and that plaintiff's relied thereon when it thus accepted that counter-offer.[15]
We agree that the charge was thus in error. But, on this appeal, we will not consider that error. Ordinarily, even a general exception to a charge is not sufficient. Palmer v. Hoffman, 318 U.S. 109, 119, 63 S. Ct. 477, 87 L. Ed. 645, 144 A.L.R. 719. Here there was not even a general exception: When the judge, at the close of his charge, explicitly invited counsel to state any exceptions, plaintiff's counsel maintained silence, contenting himself with an exception to the judge's refusal to allow certain of plaintiff's requests to charge.[16] This was the equivalent of saying to the judge: "Plaintiff has no suggestions for correction of your charge other than those contained in plaintiff's requests to charge." *659 Consequently, plaintiff is now barred from asserting the error in the charge (since it is not the egregious kind of error we may consider of our own motion[17]), unless the judge erred in refusing some of those requests or some of them served to call the judge's attention to that error in his charge.
The judge marked "`allowed" on plaintiff's requests to charge Nos. 1, 2, 4 and 5. We see no error in his refusal of the other requests, as they either had already been covered by the charge or contained defects which were slight and unimportant.
(a) As the judge offered to give plaintiff's requested charges Nos. 1 and 2, should plaintiff's counsel so desire, we must treat the case as if they had been given. They cover everything contained in denied requested charge No. 3 except for the statement in No. 3 that defendant's intent to assume responsibility was immaterial. That statement was clearly implied in requested charges Nos. 1 and 2 and in the judge's charge. (b) Plaintiff's requested charge No. 6 would have had the judge tell the jury specifically to consider Allen's testimony concerning his conversation with Gibbins just after Allen had received defendant's March 18 letter and the enclosed "acknowledgment."[18] In this segment of Allen's testimony, he did not (as plaintiff suggests in its brief)[19] state that he rejected defendant's counter-offer. He testified that he had then said to Gibbins that he could not understand defendant's "acknowledgment" of plaintiff's 100,000,000 order, as both he and Gibbins knew that that order was not bona fide but a collusive sham device, in obtaining priorities for aluminum, to deceive the national government. The judge in his charge had already sufficiently discussed that testimony and Gibbins' emphatically contrary testimony.[20] (c) Plaintiff's requested charge No. 7 would have told the jury the following: The jury must find that defendant, as a matter of law, was obligated to furnish boxes fit for plaintiff's use, if the jury were to find that plaintiff accepted the boxes after plaintiff received the April 18 letter and the accompanying reports, if the jury further found that defendant knew the purpose for which the boxes were to be used, and that plaintiff was relying upon defendant to supply boxes suitable for that purpose. Had the judge so charged, he would have committed error; for this suggested charge would have omitted to tell the jury that they must ignore the April 18 papers, if they found as a fact that plaintiff's April 7 letter was an acceptance by conduct of defendant's March 18 counter-offer. (d) The first five sentences of requested charge No. 9 were covered by the judge's charge. The last sentence presented a hypothetical situation at variance with the evidence. (e) Plaintiff's requested charges 8 and 10[21] were sufficiently covered by the judge's charge and by plaintiff's requested charges Nos. 1 and 2, which the judge allowed and said he was willing to state to the jury.
As nothing in the refused requests gave the judge a sufficiently clear indication of the error in his charge, cases like Sweeney v. United Feature Syndicate, 2 Cir., 129 F.2d 904, 905 and Alcaro v. Jean Jordeau, 3 Cir., 138 F.2d 767, 771, are not in point.
Plaintiff offered in evidence, but the judge refused to admit, some mimeographed *660 copies of "bulletins" found in defendant's files. These "bulletins" bearing the typed signature of defendant's general manager, and, from their wording, seemingly designed for the information of defendant's employees included statements about the elimination of "wick-action" by defendant's ply-metal containers. There was, however, no proof or offer of proof that these bulletins ever left defendant's files. For all that appears, they were drafts, never used at best, mere soliloquies of one of defendant's officers. We see no error in their exclusion.
Affirmed.
[7] Perhaps the indisputable facts do not justify that conclusion, but we assume its correctness arguendo.
[8] Cf. Bagley v. General Fire Ext. Co., 2 Cir., 150 F. 281; Lasher Co. v. La Berge, 125 Me. 475, 135 A. 31; Corbin, Parol Evidence Rules, 53 Yale L.J. (1944) 603, 621, but, see, perhaps, contra, Little v. G. E. Van Syckle & Co., 115 Mich. 480. 73 N.W. 554; Schuler v. Union News Co., 295 Mass. 350, 4 N.E.2d 465.
[9] Llewellyn, On Warranty of Quality, and Society, 37 Col.L.R. (1937) 341, 387.
[10] He calls it an "Iron Section" the legal consequences of which he thinks the courts should not permit the seller to avoid by a disclaimer.
[11] The parties to an agreement may validly provide that the entire agreement is to have no legal consequences; see Smith v. MacDonald, 37 Cal. App. 503, 174 P. 80; Rose and Frank Co. v. J. R. Crampton & Bros., Ltd., [1923] 2 K. B. 271 [1945] A. C. 445; cf. Kind v. Clark, 2 Cir., 161 F.2d 36, 46. Presumably, in most instances, parties can similarly agree as to a particular provision.
It may well be, however, that, recognizing that "adult persons of sound mind," dealing at arm's length, may ordinarily bargain away their rights, but fearing that it might possibly be argued that no obligations arising by "operation of law" could be contracted away, the draftsmen of § 152 felt it desirable to anticipate and dissipate that argument; cf. 32 Ill.L.R. (1938) 938, 949-950.
Of course, the courts do not allow a party to "contract out" of some kinds of rights created by statute; see e. g., Brooklyn Saving Bank v. O'Neil, 324 U.S. 697, 707, 65 S. Ct. 895, 89 L. Ed. 1296. But, in the light of § 152, there is no reason to place within that category the rights under the implied warranty asserted by plaintiff here.
[12] I differ from my colleagues as to the road to this conclusion. I think, but my colleagues do not, that, absent the disclaimer clause, the first and the last two sentences of defendant's March 18 letter would have been a promise to supply goods fit for plaintiff's use, and that this fact, plus plaintiff's purchase of the goods, would have constituted an express warranty pursuant to § 93 of the New York Statute.
I am thus brought face to face with plaintiff's sweeping contention that no sort of express warranty can validly be negatived, a contention the soundness of which I incline to doubt. For obligations under at least some types of express warranties probably arise by "implication of law". See Williston, Sales (2nd Ed.) s. 197; Williston, Contracts (Rev. Ed.) ss. 643, 673, 970, 1505, 1506; Sayeg v. Gloria Light Co., 236 A.D. 761, 259 N.J. Super. 492; Bowser & Co., Inc., v. McCormack, 1930, 230 A.D. 303, 305, 243 N.Y.S. 442; International Harvester Co. of America v. Jeffries, Mo.App., 4 S.W.2d 501; Miami Lime & Chemical Co., Inc., v. York Ice Machinery Corporation, 5 Cir., 104 F.2d 312; cf. O. S. Stapley Co. v. Newby, 57 Ariz. 24, 110 P.2d 547, 549; Valley Refrigerator Co. v. Lange Co., 242 Wis. 466, 8 N.W.2d 294, 297, 298; Corbin, The Parol Evidence Rule, 53 Yale Law Journal (1944) 603, 621.
If such obligations do arise by "implication of law", they can perhaps be negatived pursuant to § 152 of the New York Statute. To be sure, Llewellyn, chief architect of the draft of the proposed revised Sales Act, referring to one of its sections which reads, "If the agreement creates an express warranty, words disclaiming it are inoperative", indicates that it and related matter in the draft cover, inter alia, § 12 of the present Uniform Sales Act, i. e., 93 of the New York Act, "and the better case law thereunder". Uniform Revised Sales Act, Proposed Final Draft No. 1, 1944, § 41 (1) and comment, p. 142. But earlier, referring to the existing Act, he had said in 37 Col.L.Rev. at 387 that "the easiest of all warranties to negate are those labelled `express' * * * ". And a provision of the new proposed Act, not yet enacted by the New York Legislature, is scarcely authoritative in construing the present New York statute.
But plaintiff need not rely on its sweeping contention. For here, if there is an express warranty, it rests on a promise contained in and forming part of the contract; and, no matter what may perhaps be true of other kinds of express warranty, I think that obligations under such a warranty do not arise by "implication of law" and that, therefore, § 152 is here irrelevant.
However, whether there is such a promise is a matter of interpretation of all the language of the contract. The contract (as we must view it on this motion) contains not only the three sentences above mentioned but also the disclaimer clause; reading the contract as a whole, I conclude that defendant made no such promise. In other words, I believe, not that the disclaimer negatived an obligation, under an express warranty, which, absent the disclaimer, would have arisen by "implication of law," but that a correct interpretation of the entire contract shows that defendant did not promise to furnish goods fit for plaintiff's use.
To avoid any possible misunderstanding, I repeat that my colleagues do not associate themselves with what I have said in this footnote. Judge Chase thinks that, on the facts here, there is no need to consider the effects of disclaimers of express warranties of any sort. Judge Clark goes further. He disagrees with my suggestion that perhaps certain types of express warranty may be disclaimed. He does not accept my reading of the authorities cited in this footnote. He concludes, however, that, entirely without regard to the disclaimer clause, nothing in defendant's March 18 letter would have constituted an express warranty.
[13] The complaint alleged: "7. As a result of its reliance on said representations by Reynolds, Alaska in or about April, 1941, entered into an agreement with Reynolds whereby Alaska agreed to purchase 10 million of said laminated metal foil boxes at $5 per thousand boxes. Reynolds agreed to deliver said boxes and further agreed and stipulated that such boxes would be fit for the purpose of packaging the dehydrated soup mixtures manufactured by Alaska. * * * 10. Thereafter and pursuant to the agreement set forth in paragraph 7 hereof, Reynolds delivered and Alaska accepted a total of 11,557,450 boxes, for which Alaska paid the full invoice price of $57,767, and Alaska has otherwise duly performed all the conditions on its part to be performed under said agreement."
[14] See also discussion infra of plaintiff's requests to charge Nos. 1 and 2.
[15] On this appeal, plaintiff contends that the agreement was made not in April but on May 2, when plaintiff first accepted some of the boxes. The acceptance of the boxes, says plaintiff, constituted acceptance by conduct of the counter-offer supplemented by the April 18 letter and those reports.
In one sentence of the judge's charge, he said that plaintiff asserted that the parties, in April, entered into an "entirely new agreement." Presumably because the agreement asserted at the trial by plaintiff was not a "new" agreement, but the agreement, plaintiff now argues that the judge's remark was prejudicially erroneous. We think the argument captious.
[16] This silence may have been due to the position, noted above, which he took at the trial, i. e., that the contract was made in April, shortly after receipt of the April 18 letter.
[17] See, e. g., New York Central R. Co. v. Johnson, 279 U.S. 310, 318, 319, 49 S. Ct. 300, 73 L. Ed. 706; United States v. Haug, 2 Cir., 150 F.2d 911, 915.
[18] Although plaintiff in its brief insists that the judge erred in refusing this request relating to Allen's testimony, it also says that it "does not rely in any particular upon the testimony of Allen to establish the existence of a warranty."
[19] Plaintiff there says that the part of Allen's testimony was to the effect that he had then "orally rejected" the counter-offer.
[20] The verdict indicates that, on this issue, the jury disbelieved Allen. It may be that the jury's reaction to this disbelieved testimony, as to his willingness to cheat his government, had some effect on other aspects of the verdict.
[21] Plaintiff does not on this appeal urge as error the refusal to charge the last paragraph of request No. 10.
