Park Circle Motor Co. v. Willis

Delaplaine, J., delivered the opinion of the Court. This suit was brought in the Superior Court of Baltimore City by George C. Willis against Park Circle Motor Company for breach of warranty of title to a Cadillac sedan sold by defendant to plaintiff and subsequently found to be stolen property. Defendant, who had purchased the automobile from a licensed used car dealer in New York City, sold it to plaintiff on July 25, 1950, for $3,195. On March 8, 1951, agents of the Federal Bureau of Investigation and city police discovered that the car had been stolen in Elizabeth, New Jersey, from Milton Serota, and thereupon seized it for the true owner, Firemen’s Fund Insurance Company, to whom Serota had assigned the title on July 18, 1950.

Two days after the law enforcement officers seized the car from plaintiff, defendant tendered it back to plaintiff, as the insurance company had assigned the title to defendant. Plaintiff, however, refused to accept it and brought suit to recover $3,195, the purchase price, plus $63.90, the Maryland title tax, and $24.25, the cost of the title and the license tags, and in addition $122.64, the amount he spent for repairs to the car. Defendant claimed the right to deduct the value of plaintiff’s use of the automobile. The Court, rejecting that claim, rendered judgment in favor of plaintiff for $3,283.15, which was the price of the car plus the tax, and the cost of the title and tags.

Defendant appealed from that judgment. The Uniform Sales Act, adopted by the Maryland Legislature in 1910, provides that where there is a ¹⁰⁷ breach of warranty by the seller, the buyer may, at his election, refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for the breach of warranty; or rescind the contract to sell or the sale and refuse to receive the goods; or, if the goods have already been received, return them or offer to return them to the seller and recover the price, or any part thereof, which has been paid. Laws 1910, ch. 346, Code 1951, art. 83, sec. 87(1)(c)(d). It is not clear from the declaration and the briefs in this case whether the action is for damages for breach of warranty or for recovery of the purchase price based upon a rescission.

The Sales Act provides that where the goods have been delivered to the buyer, he cannot rescind the sale if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were in at the time the property was transferred to the buyer. Sec. 87(3). In 5 Williston on Contracts, Rev. Ed., sec. 1463, it is pointed out that the buyer must put the seller in statu quo, but that temporary possession of the buyer is negligible if the goods are still uninjured when tendered back. Some of the courts have gone rather far in allowing rescission without making any allowance for use.

In several cases rescission of the sale of an automobile was permitted without allowance for use, although such use was rather considerable. Conner v. Borland-Grannis Co., 294 Ill. 58 , 128 N. E. 317 ; Parkhouse v. Hodge, 221 Mich. 308 , 191 N. W. 13 ; Brooke v. Perfection Tire Co., 110 Or. 567 , 223 P. 939 ; Noel v. Garford Motor Truck Co., 111 Wash. 650 , 191 P. 828 . On the other hand, in Burnley v. Shinn, 80 Wash. 240 , 141 P. 326 , where an automobile, while in the possession of the buyer, had been damaged to such an extent that the parties could not be placed in statu quo, a rescission was not permitted. The Sales Act provides that the measure of damages for breach of warranty is the loss directly and naturally ¹⁰⁸ resulting, in the ordinary course of events, from the breach of warranty.

Sec. 87(6). The rule laid down by the majority of decisions in the United States is that the measure of damages for breach of warranty of title to personal property is the purchase price of the property with interest. Morgan v. Hendrie Bros., 34 Colo. 25 , 81 P. 700 ; Smith v. Williams, 117 Ga. 782 , 45 S. E. 394 ; Knoerzer v. Meyer, 251 Ill. App. 139 ; Moorehead v. Davis, 92 Ind. 303 ; Ellis v. Gosney’s Heirs, 7 J. J. Marshall, Ky., 109; Noel v. Wheatly, 30 Miss. 181 ; Caproon v. Mitchell, 77 Neb. 562 , 110 N. W. 378 ; Weideman v. Estate of Peterson, 129 Neb. 74 , 261 N. W. 150 ; Kingsbury v. Smith, 13 N. H. 109; Pine-Brownell Co. v. Coleman, 63 Ohio App. 259 , 26 N. E. 2d 216 ; Balte v. Bedemiller, 37 Or. 27 , 60 P. 601 ; Mauldin v. Milford, 127 S. C. 508, 121 S. E. 547 ; Gessler v. Winton, 24 Tenn.

App. 411 , 145 S. W. 2d 789 ; Hall v. Ellwood, Tex. Civ. App., 34 S. W. 2d 892 ; Duecker v. Goeres, 104 Wis. 29 , 80 N. W. 91 . The same result has been reached in many cases by allowing recovery of at least the purchase price for a total failure of consideration.

Under the Sales Act, the buyer can elect to seek recovery either by restitution or far failure of consideration. We see no reason to change the general rule. In Myers v. Smith, 27 Md. 91, 110, 111 , this Court held that the seller of personal property is bound to protect the buyer from all evictions arising from circumstances anterior to the sale, of which the cause or germ existed at the time of sale; and if the property is lawfully seized to pay the seller’s debt, the buyer is entitled to recover for breach of implied warranty, and the measure of damages is “the value of the property so taken, with interest thereon,” of the amount the buyer is compelled to pay in order to emancipate it from the claim of the creditor. The writer of this opinion believes, however, that where the buyer has had possession of the property for a considerable period of time and as a result there ¹⁰⁹ of it has substantially decreased in value, he should not be allowed more than his actual loss.

That qualification has been adopted in Hendrickson v. Back, 74 Minn. 90 , 76 N. W. 1019 , Peregrine v. West Seattle State Bank, 120 Wash. 653 , 208 P. 35 , and other cases. In this case plaintiff drove the car more than 5,000 miles between July, 1950, and March, 1951, and when it was sold it brought $2,300. It seems unjust to allow plaintiff more than $2,300.00, with interest from March 8, 1951. However, the majority of the Court is of the opinion that plaintiff should be allowed the entire sum of $3,283.15, its value at the time of purchase plus the title tax and the amount paid for the title and license tags.

The judgment will therefore be affirmed. Judgment affirmed, with costs. Per Curiam Opinion on Motion for Reargument or Clarification. The motion for reargument, or in the alternative, for clarification of the Court’s opinion, is based on the allegations: 1, that the authorities cited in the Court’s opinion are inconsistent with the Court’s conclusion; 2, that the Court’s opinion and judgment ignores the appellant’s right of set-off as assignee of the true owner of the vehicle; 3, that the Court’s opinion allows a vendee to realize a profit from an innocent vendor’s breach of warranty.

The motion for reargument is denied; the motion for clarification is granted. The opinion of the majority of the Court held that the Sales Act gives a buyer the absolute right to rescind for breach of warranty of title, if he chooses to elect that relief. As the Court pointed out in Hamlin Machine Co. v. Holtite Mfg. Co., 197 Md. 148, 152 , 78 A. 2d 450 -452, under Art. 83, Sec. 87(1) of the 1951 Code, “where there is a breach of warranty by the seller, the buyer at his election has four alternative remedies”.

He may (a) accept, or keep, the goods and set up the breach ¹¹⁰ by way of recoupment, (b) accept, or keep, the goods and maintain an action for damages for breach of warranty, (c) refuse to accept the goods if property has not passed, and sue the seller for damages for breach of warranty, or (d) rescind the contract and refuse to receive the goods or, if he has received them, return them “and recover the price, or any part thereof, which has been paid”. These remedies are mutually exclusive. In the Hamlin case, this Court decided that an election was not irrevocable until final judgment, and that the defendant below could amend its counter claim from one for damages for breach to one for recission and the return of the amount paid under the contract. In the case at bar, the Court decided that the declaration filed by the plaintiff below, the appellee here, alleged facts justifying the relief of rescission, and that the stipulation which was filed in lieu of other pleadings and evidence, showed that the facts supported the allegations of the declaration.

This being so, we held that the action was for rescission and that the plaintiff properly prevailed and properly was allowed the return of the price paid for the stolen automobile and the expenses he had been put to, as allowed by the trial court. Where rescission is recognized, the restitution of the purchase price is not to be reduced by the value of the use or the difference between the purchase price and value at the time of the return. As the opinion in the case points out,