day at a cost not exceeding 34 cents per pound for granulated sugar had been demonstrated and the warranty in that particular satisfied, the plaintiff in error, with great deliberation and in the most specific manner, pointed out in writing a large number of alleged minor defects or alleged departures from the highest standard of workmanship and machinery in the mechanism and appliances furnished, and declined to pay the balance of $28,000 then due, until these defects were remedied. Twice thereafter, and while the defendant in error was engaged in remedying certain of the matters complained of, this list of defects was amended and enlarged. The claim that in one of the earlier communications specifying certain defects there was a general statement that there were others not mentioned, by reason of which an estoppel is obviated, has been considered. If that had been the last notice or negotiation, the contention would be of weight. But it was not. It was followed by a later communication, which amended the former list by the addition of nine other claims, making, with the former list, forty-five in all. These were all taken up and remedied until only four, or possibly five, remained unadjusted, and because the contractors would not remedy these remaining claims this suit became necessary. The defendant denied the averment that the contract had been performed, and gave notice that it would claim damages not only in respect of the four disputed items of which it had complained, but that it would claim many other defects not theretofore claimed, and upon the trial it offered to prove various other defects not claimed before suit, averring that these defects were unknown to the defendant until after suit brought. This offer of evidence was unaccompanied by any offer to prove that these new claims were latent in character and undiscoverable by such inspection as the owner could give before suit. The contract provided that 15 per cent. of the total price might be withheld until 60 days after the starting of the factory. The demand for this balance was not made until after the factory had been operated through a whole season under the direction of the contractor and with its own skilled labor. From the beginning of the work and through the test operations the contractor was under obligation to give to the owner every reasonable opportunity for inspection, and no complaint is made that any obstacle to a full and complete inspection was interposed by the contractor. Neither is it contended that the purchaser would have waived the right to sue for a breach of the warranty by acceptance of the factory, or the right to set off the balance of purchase money when sued for same by the damages resulting from any breach of a warranty as to quality of machinery and workmanship. The objection made to the presentation of claims for defects which had not been presented before suit is predicated upon the fact that, when the balance due under the contract was demanded, the owner based the refusal to pay upon specified grounds, which did not include the objections now urged. The claim was that the contractor agreed that all materials, tools, appliances, machinery, and workmanship should be first class, and that all machinery and appliances should be of the latest and best pattern and design. This warranty it was claimed had been breached in the particulars pointed out, and the purchaser refused to pay the balance of the purchase price until these specified defects were remedied. The question is whether, under such circumstances, the purchasers are not precluded from advancing new claims of defects without offering to show that these new claims were for latent defects not discoverable by any reasonable inspection at the time the original or amended lists of defects were presented. Under the circumstances, we have stated, we are of opinion that the learned trial judge did not err in excluding the evidence offered of defects not claimed when the purchaser particularized the matters in which it regarded the contract as not performed. True, the plaintiff in error offered to show that these new claims for defects were in respect of defects not known to it before suit brought. But it did not offer to show that the defects were latent, and that there had been no negligence in failing to discover them when undertaking to point out the changes and alterations necessary to comply with the contract. The contention that it was for the contractor to show that these new claims were not founded upon latent defects is based upon an entire misapprehension of the ground upon which the ruling was rested. The purchaser undertook to point out specifically just what changes and alterations were necessary to satisfy the warranty as to the quality of workmanship, machinery, and appliances, and refused to make further payment until these things were done. The contractor, in effect, said: "Very well. There are four items in your list which I dispute. The remainder I concede. I will go forward and make the changes you demand except as to the items I dispute. These we will submit to the arbitrament of the courts. If I am right, you will pay me the entire balance I claim. If you are right, the sum awarded me will be diminished by the damages incident to the defects which you claim and I deny." The contractor did accordingly make all the changes and alterations demanded except in respect to four disputed items, and has submitted to the court the question as to whether he was bound to do the disputed things. Upon the items thus disputed the jury has found for the contractor. To permit the purchaser under such circumstances to change the issues and propound new defenses, presumably waived, without offering to show that it had been misled by the conduct of the contractors or that the defects since discovered were latent, would be contrary to well-settled principles of estoppel. Littlejohn v. Shaw, 159 N. Y. 188, 53 N. E. 810; Railway Co. v. McCarthy, 96 U. S. 258, 24 L. Ed. 693; Carleton v. Jenks, 26 C. C. A. 265, 80 Fed. 937; Davis v. Wakelee, 156 U. S. 680-690, 15 Sup. Ct. 555, 39 L. Ed. 578; Gingrass v. Iron Cliffs Co., 48 Mich. 413, 12 N. W. 633; Gould v. Banks, 8 Wend. 562, 24 Am. Dec. 90; Manufacturing Co. v. Allen, 53 N. Y. 515, 519. In Railway Co. v. McCarthy, cited above, Mr. Justice Swayne, speaking for the court, thus stated the principle upon which the ruling of the court below was predicated: "Where a party gives a reason for his conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is èstopped from doing it by a settled principle of law." Gould v. Banks, 8 Wend. 562, 24 Am. Dec. 90; Holbrook v. Wight, 24 Wend. 169, 35 Am. Dec. 607; Everett v. Saltus, 15 Wend. 474; Wright v. Reed, 3 Term R. 554; Duffy v. O'Donovan, 46 N. Y. 223; Winter v. Coit, 7 N. Y. 288, 57 Am. Dec. 522. In Carleton v. Jenks it was sought to hold a contractor liable for the damages sustained by a lake steamer by the moving of her boilers, alleged to be due to insecure fastenings. After the boilers had been. put in place it was shown that the contractor had called upon the officers of the steamer to examine and inspect the work. This they did, and no fault was found, and the boiler was accepted. Speaking for this court, Judge Severens said: "After this inspection, made for the purpose of determining the question of their acceptance, and the taking the machinery away without any further requirements, we think the appellants were properly held to have been concluded from afterwards raising the question of the nonperformance of the contract. Beverly v. Coke Co., 6 Adol. & E. 829; Parker v. Palmer, 4 Barn. & Ald. 387; Bianchi v. Nash, 1 Mees. & W. 545; Norton v. Dreyfuss, 106 N. Y. 90, 12 N. E. 428; Iron Co. v. Pope, 108 N. Y. 232, 15 N. E. 335; Pierson v. Crooks, 115 N. Y. 539, 22 N. E. 349, 12 Am. St. Rep. 831; Studer v. Bleistein, 115 N. Y. 316, 22 N. E. 243, 5 L. R. A. 702; Hirshhorn v. Stewart, 49 Iowa, 418. The two cases in 115 N. Y. and 22 N. E. contain very full and elaborate discussions of the law on the subject. A suggestion is made in behalf of the appellants that the appellees were skilled in their work, and that for that reason they (the appellants) were entitled to rely upon representations made by the manufacturers, that the fastening was sufficient, and that, their acceptance being founded upon a representation which turned out to be untrue, the appellants are not bound by such acceptance. We are unable, however, to find much force in this suggestion. It might have significance if the question related to the construction of the boiler itself and applied to inherent defects, or those which were not as readily observable to the other party as to the manufacturers; but the matter of the fastenings to the boat was open, and as much exposed to the inspection and judgment of the appellants as to the manufacturers, and the requirements would seem to be as much within the knowledge of the manager, the captain of the boat, and more especially the chief engineer, who had immediate charge of the machinery, as to any one. In these circumstances the doctrine which the appellants invoke would not have application. Dounce v. Dow, 57 N. Y. 16; Gurney v. Railway Co., 58 N. Y. 359; Dounce v. Dow, 64 N. Y. 411; Benj. Sales, p. 701." In Littlejohn v. Shaw, cited above, the action was upon a contract of sale of gambier. The defendant had rejected the article delivered. upon two specific grounds. The contention was that it was a condition precedent to recovery that the plaintiff should affirmatively prove that all the terms of the contract had been fulfilled on his part, and that a failure in any point was fatal to the action. After observing that the general rule was that it devolved upon a plaintiff to show performance of all essential stipulations of a contract sued upon, the New York court of appeals said: "But in this case the defendants placed their rejection of the gambier upon two specific grounds, viz., that it was not of good merchantable quality, and that it was not in good merchantable condition. By thus formally stating their objections, they must be held to have waived all other objections. The principle is plain, and needs no argument in support of it, that if a particular objection is taken to the performance, and the party is silent as to all others, they are deemed to be waived. This waiver of all other objections is not only justly inferable generally, but is especially so when as under the circumstances present in this case the deliberateness with which the objec tions are stated leaves it to be implied that there has been a consideration of the matter of acceptance of the goods and a result reached upon particular grounds. The defendants, therefore, were not in a position to insist upon any other proof of the plaintiffs, to enable them to recover upon their cause of action, than that the gambier was of good merchantable quality and in good merchantable condition." The errors assigned upon the exclusion of evidence of defects not claimed before suit, and not accompanied by an offer to show that the defects were latent, and all exceptions to the charge as delivered and to the refusal of the court to deliver special charges bearing on this matter, are overruled. There are a number of exceptions to the competency of evidence, for the most part not of material character, which we do not pass upon, as they are not likely to arise upon another trial, in view of the matter already decided. The judgment, for the reasons already stated, will be remanded, with directions to award a new trial. SCHMERTZ v. UNITED STATES LIFE INS. CO. IN CITY OF NEW YORK. (Circuit Court of Appeals, Third Circuit. No. 36. September 24, 1902.) 1. INSURANCE-POLICY-NONCONTESTABLE CLAUSE-CONSTRUCTION. A policy provided that it should take effect on payment of the first premium, and that failure to make payment of any subsequent premiums, which were payable annually, when due, should render the contract null and void, and that, if the policy should become void, all payments made thereunder should be forfeited. Held, that in view of such provision, declaring the forfeiture for nonpayment of "any subsequent" premium, a provision that after two years from the date of the policy, if the premiums are duly paid as stipulated, the liability of the company should not be disputed, could not be construed to preclude the company from disputing liability or from forfeiting the policy for nonpayment of the third annual premium. 2 SAME-PREMIUMS-TIME OF PAYMENT-EXTENSION-FORFEITURE-ACTIONS— EVIDENCE-INSTRUCTIONS. Where in an action on a policy there was no evidence that the company extended the time for payment of premiums in a certain year beyond the day on which they were payable, according to the terms of the policy, including the 30 days' grace allowed, an instruction that any agreement, declaration, or course of action on the part of the company leading insured to believe that by conforming thereto a forfeiture of his policy would not be incurred would estop the company from insisting on a forfeiture of the policy, etc., was properly refused. 8. SAME. The fact that an insurance company in a certain year or years granted to the insured an indulgence in the payment of his premiums, and accepted payment after the time within which they could be paid had expired, did not bind the company to grant such an indulgence in a subsequent year, or estop it from enforcing a forfeiture for nonpayment of premiums on the date required according to its notices. In Error to the Circuit Court of the United States for the Western District of Pennsylvania. 13. See Insurance, vol. 28, Cent. Dig. § 1057. D. T. Watson, for plaintiff in error. Before ACHESON and GRAY, Circuit Judges, and BRADFORD, District Judge. BRADFORD, District Judge. This case is before us on a writ of error to the circuit court of the United States for the western district of Pennsylvania. Amelia E. Schmertz, the plaintiff in error, brought an action of assumpsit in the court of common pleas No. I of Allegheny County, Pennsylvania, to recover against The United States Life Insurance Company in the City of New York, a corporation of New York, the defendant in error, on two policies of life insurance, each for the sum of $10,000, issued to her husband Edmund C. Schmertz in the fall of 1896. After the filing of the statement and affidavit of claim, and before further pleadings were had, the action was, on the application of the defendant, removed to the circuit court for the western district of Pennsylvania, and, thereafter coming to trial, judgment was by direction of the court entered for the defendant November 16, 1901. To reverse this judgment the present writ was. taken. Each of the policies is in the same words, letters and figures as the other, save that one of them is numbered 87,280 and the other 87,281, and, aside from the application therefor, is in the following form: "No. 87,280. Amount, $10,000. The Life Insurance Company, Copy of the application for this policy attached hereto. Premium, $183.50. In Consideration of the statements and agreements in the Application for this Policy on the life of Edmund C. Schmertz (hereinafter called the Insured) which are made part of this contract; and in Further Consideration of the payment of the annual premium of One hundred and eighty-three Dollars and fifty cents on or before the seventeenth day of September in every year during the continuance of this contract: Does Hereby Promise to Pay, at its office in New York City, to Amelia E. Schmertz (hereinafter called the Assured) if living; if not living then to the Executors, Administrators or Assigns of the Insured, the sum of Ten Thousand Dollars (less the balance of the year's premium, if any, and any other indebtedness to the Company), within 60 days after receipt at its said office of satisfactory proofs, upon the Company's blanks, of the death of the Insured, within the period of Ten years ending on the 17th day of September, nineteen hundred and six at noon; upon the conditions and agreements on the back hereof, which are made part of this contract. In Witness Whereof, The said company has, by its president and secretary, signed this policy at its office in New York City, the seventeenth day of September, eighteen hundred and ninety-six. Geo. H. Burford, A. Wheelwright, Assistant Secretary. (Wife's Continuable Term.) Edition 294-A, Checked by H. President. Examined by E. N. H. |