D. H. WATJEN & CO. v. LOUISVILLE TOBACCO WAREHOUSE CO., 240 F. 919

SATER, District Judge (after stating the facts as above). The trial court, in denying plaintiffs’ right to relief, held that the transaction in question is governed by the by-laws of the defendant.

The view was expressed that De Ridder & Griffith, plaintiffs’ agents, being members of the defendant, and having had a voice in the selection of inspectors for settling by samples the condition and quality of the hogsheads of tobacco, are bound by the acts of such inspectors as regards the inspection and sampling of such hogsheads, and that plaintiffs, as undisclosed principals, are in no better position than their agents; that the defendant cannot be said to have sold the tobacco by samples in the ordinary sense of that phrase, but to have sold it by samples to which De Ridder & Griffith had consented as between themselves and the defendant; that the sariiples were guaranteed by the inspectors only, although De Ridder & Griffith might.be regarded in a way as buying by sample as between themselves and the inspectors; and that the defendant did not guarantee or intend to guarantee the samples, and that De Ridder & Griffith so understood.

The sale made to plaintiffs was private and not at public auction. If the rules of the defendant are applicable to private sales, the parties could, nevertheless, conduct their transaction, if they so desired, in disregard of them, and make the sale the subject of a special contract. The plaintiffs’ evidence tends to show that they did this. The uncontradicted evidence is that the sale was by samples, and, being so, the law implied a warranty that the bulk of the goods were equal in quality to such samples. Dickinson v. Gay, 7 Allen, 29, 31, 83 Am. Dec. 656; The Monte Allegre, 9 Wheat. 616, 644, 6 R.

Ed. 174; 35 Cyc. 405. The contention of the defendant, which was adopted by the trial court, is that the sale was made under its rules (which were put in evidence), and that the warranty was by the inspectors only, the defendant’s manager denying that he warranted either the samples or the tobacco.

There is, however, substantial evidence that plaintiffs did not contract with reference to the defendant’s rules or rely on the samples as indicating the kind and quality of the tobacco in the packages from which it is alleged they were respectively drawn, but solicited and relied on the express warranty by defendant’s agent of both the samples and the correspondence of the tobacco sold with such samples. But a warranty by the seller is inconsistent with defendant’s rules.

If such rules are applicable to private sales, then, in view of the defendant’s evidence that it acted under them, there was presented a question of fact as to whether it gave a warranty and as to whether its rules controlled the transaction under consideration, and, as the evidence was conflicting, the determination of both those questions was for the jury. The court’s instruction, thereford, that the defendant gave no warranty to the plaintiffs and that, as a matter of law, the sale was governed by defendant’s rules, was error.

A more cogent reason for holding such instruction erroneous rests on the obvious fact that defendant’s rules are restricted in their operation to sales at public auction and have no application to those privately conducted. The importance of the evidence touching a warranty by the defendant thus becomes apparent.

The record, it may be noted, does not show the prevalence, among defendant’s members, of a custom of applying its rules to private sales, or of submitting, in the making of them, to the judgment of defendant’s inspectors, as regards samples, or that the plaintiffs had knowledge of such special or local custom, if it existed. Had proof of such a custom been offered, questions not presented would be for consideration. The evidence as to an express warranty is made competent by the concluding sentence of the second paragraph of the reply, which is in avoidance of the defense made in the answer.

Technically, the breach of warranty should have been affirmatively pleaded in the petition, but no' attack was made on the plaintiffs’ pleading. There was, moreover, no objection made to the introduction of such evidence'. If the question of variance should be raised at a rehearing, an amendment to meet the proofs would doubtless be permitted. The evidence offered by the plaintiffs to show that the defendant’s representative, who effected the sale of the tobacco, was, as part owner, personally interested in a portion of the tobacco sold, is competent and should have been admitted.

It reflects on his interest as a witness, on the probabilities of his giving a guaranty, on the question of whether the parties understood the defendant’s rules to govern, and as to whether he actually knew about the quality of the packing. Other questions presented by the record need not now be decided. It is, of course, understood that the present opinion is based on the record admitted. . Should a rehearing develop new evidence, the court and counsel, it is believed, will be able to meet the new situation thus arising. The judgment is reversed, and the cause remanded for further action by the trial court.