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Action on sales contract. Before Judge Forehand. Tift Superior Court. May 15, 1954.
A purchaser of personal property, in which defects have been fraudulently concealed by the seller, will be held to have waived his right to plead a partial failure of consideration resulting from the fraud as a defense to a suit for the balance of the price, if, after learning of the existence of the defects, the purchaser continues to treat the contract as a valid obligation by paying the notes given as part of the price, and also retains and uses the defective machine, although the sales contract provides that the machine is to be returned to the seller if rejected for cause.
R. K. Haskew & Company, Inc., brought suit against A. M. Garrison and K. N. Moseley, trading as "Builders Supply Company," on a conditional-sale contract and a series of ten notes for $218.75 each, executed in the same transaction. The contract was for the sale to the defendants of a Yates-American A-21 planer and matcher, a moulder, and an electric motor. It recited that the machines had been inspected by Moseley, and that a Yates-American A-4 planer and matcher was to be taken by the seller in trade, in addition to which the buyers were to pay $2,500 cash with the order, and $3,500 in sixteen equal monthly payments, evidenced by the notes sued on. The contract provided that title to the property sold was to remain in the seller until the full price was paid, and further provided: "That in case of the rejection for good and sufficient cause of the property above mentioned, the buyer. will promptly re-deliver the same in good order to the seller, F.O.B. original shipping point, and the buyer waives all claims for damages; that this contract is not modified or added to by any agreement not expressly stated herein; that it is stipulated, without prejudice to any rights of the seller under the other terms of this contract, that a retention of the property forwarded, after thirty days from date of shipment, shall constitute an acceptance, be a conclusive admission of the truth of all representations made by or for the seller, and void all its contracts of warranty express or implied."
The defendants amended their answer by alleging that the plaintiff seller knew of the defects and fraudulently concealed them from the defendants, by having the machine painted, with the intended effect of hiding the defects, which could not be discovered by the defendants in the exercise of reasonable care.
The plaintiff demurred generally and specially to the amended answer, and its demurrers were overruled. A further amendment of the answer on the trial of the case added that "the frame of such machine so purchased was out of line and bent at time of purchase, and were latent and unknown to defendants."
The jury returned a verdict for the defendants, in the amount of the unpaid notes and interest. The plaintiff's motion for a new trial was denied, and it excepts to that judgment and to the judgment overruling its demurrers to the answer.
The plea of partial failure of consideration by reason of latent defects in the machinery fraudulently concealed by the seller, should have been stricken on demurrer, since the plea affirmatively shows that the defendants waived their right to insist upon this equitable defense against their indebtedness on the notes and sales contract. The plea shows that the defects in the machine sold were discovered in sixty days from its delivery, but that the defendants nevertheless continued to treat the contract and notes as valid and subsisting obligations by making payments thereon for three or four months afterwards. Any fraud in the procurement of the contract was thereby condoned. Tuttle v. Stovall, 134 Ga. 325 (67 S. E. 806, 20 Ann. Cas. 168); King v. Dobbs, 30 Ga. App. 441 (4) (118 S. E. 428).
Likewise, their continued use of the planer-matcher after the discovery of the defects shows a waiver of their right to maintain the plea of fraud. Jackson Discount Co. v. Pitts, 45 Ga. App. 608 (165 S. E. 453). Rescission of the contract is not sought in this defense; the plea affirms the contract, which provides that the property is to be returned to the seller if rejected for good and sufficient cause. Discovery of material defects fraudulently concealed is reason enough for rejection, and the provision that retention of the property after thirty days shall constitute an acceptance would not prevent the buyers from rejecting the property as provided if the defects were discovered after the thirty-day period. Tinsley v. Gullett Gin Co., 21 Ga. App. 512 (94 S. E. 892); Beasley v. Huyett & Smith Mfg. Co., 92 Ga. 273 (18 S. E. 420); Morton v. W. T. Tharpe & Co., 41 Ga. App. 788 (4) (154 S. E. 716). (In the last two cases cited, the buyer either gave notice of the defects or offered to return the property to the seller, as required by the contract sued on, and this was done promptly upon discovery of the defects.) But the defendant buyers in the present case, after discovering the defects neither returned nor offered to return the defective machine. Having failed to reject the planer-matcher upon discovery of its defects, the defendants must be said to have accepted it with its defects and used it, and they cannot assert thereafter that its price should be abated.
The court erred in overruling the general demurrers to the plea, and the further proceedings in the case were nugatory.
Judgment reversed. Felton, C. J., and Quillian, J., concur.
R. D. Smith, John T. Ferguson, contra.
Robert R. Forrester, A. L. Kelley, Jr., for plaintiff in error.
Saturday May 23 03:47 EDT

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