G.R. No. 19009 ; September 26, 1922
E.C. MCCULLOUGH & CO., plaintiff-appellee, vs. S. M. BERGER, defendant-appellant.

FACTS

In February 1918, defendant S.M. Berger sold 501 bales of tobacco to plaintiff E.C. McCullough & Co. The defendant guaranteed in writing that the tobacco would arrive in New York in good condition, subject only to contingencies covered by insurance. Upon this guarantee, the plaintiff honored the defendant’s draft for the purchase price. Upon arrival in New York, the tobacco was found to be musty and not in good condition, causing buyers to reject it. The plaintiff promptly notified the defendant of the problem. The defendant later offered to repurchase the tobacco at the original price, but the plaintiff refused, having already sold some bales at a loss. The plaintiff sued for damages representing the difference in value between the tobacco as guaranteed and its actual condition.

ISSUE

1. Whether the tobacco was in good condition upon arrival as guaranteed.
2. Whether the plaintiff’s action for breach of contract is barred due to an alleged agreement to rescind the contract.
3. Whether the plaintiff, after notifying the defendant of the defect, can affirm the contract and sue for breach of warranty.
4. Whether the claim for breach of warranty was made within the statutory period under the Code of Commerce.

RULING

1. Yes, the trial court’s finding that the tobacco was not in good condition upon arrival is sustained by the evidence. The tobacco was musty, leading buyers to reject it.
2. No, there was no valid rescission or agreement to rescind. The defendant’s offer to repurchase was not accepted by the plaintiff. The plaintiff’s actions were aimed at minimizing losses, not rescinding the contract.
3. Yes, the plaintiff can affirm the contract and sue for damages. The prompt notification to the defendant about the defective condition did not constitute an election to rescind but was a claim for breach of warranty.
4. Yes, the claim was made within the statutory period. The plaintiff cabled the defendant about the unsatisfactory condition within days of the tobacco’s arrival and discovery of the defect, complying with the requirement for prompt notice under the Code of Commerce.

The judgment of the lower court awarding damages to the plaintiff is affirmed.