Appeal from the District Court of the United States for the District of Delaware; John P. Nields, Judge.
Before BUFFINGTON and THOMPSON Circuit Judges, and THOMSON, District Judge.
This is an appeal from a judgment of the District Court of Delaware entered on a verdict for $32,784.79 in favor of the Massasoit Manufacturing Company, hereinafter referred to as the vendee, and against the Permutit Company, hereinafter referred to as the vendor. The vendee is engaged in manufacturing cotton yarns, commonly called cotton linters. The vendor manufactures and sells apparatus for the filtration, purification, and softening of water. The parties entered into a written contract for the purchase and installation of a water filtering plant. It appeared that, following the use of the Permutitfiltration system, thousands of pounds of cotton manufactured by the vendee were off color. The vendee brought suit for damages for an alleged breach of an express warranty contained in the written contract. Shortly thereafter the vendor brought suit to recover the part of the purchase price of the filtration plant still unpaid, as well as additional sums expended by it in making changes in the filtration plant after it had been installed. These suits were consolidated on trial by agreement. The jury returned a verdict in favor of the vendee.
The main question involved in this case is: Where the guaranty in a contract expressly provides what liability the guarantor assumesthereunder, is the remedy thus provided for binding on the parties and exclusive? A second and possibly subordinate question is: Where the evidence shows that the vendor had no knowledge of the vendee's manufacturing processes, may the vendee recover, as special damages, losses sustained by it in the use of the machinery it purchased under a warranty not including fitness for the manufacturing in question?
he contract provided as follows:
"We guarantee that the Permutit Filtering Plant herein offered, when connected up and operated in accordance with our instructions and under the conditions set forth in this proposal, will be capable of filtering its specified amount of water at the specified rate of flow.
"We further guarantee that the water thus filtered will be clear, bright and practically free from turbidity and suspended matter.
"We agree to make good at our expense, within a period of one year after date of deivery, any defects due to faulty design, workmanship or material, in such a manner as we may deem necessary to the satisfactory operation of the plant.
"We guarantee that the Permutit Water Clarifying plant herein offered, when operated in accordance with out instructions and under the conditions set forth in this proposal, will deliver a water that will not have a color in excess of 2 measured in accordance with the Standards as set forth by the American Public Health Association.
"That the filtered water will contain no iron.
"It is the intent of this proposal that the Permutit Company will furnish to the Massasoit Manufacturing Company a complete water purification plant erected on the grounds of the Massasoit Manufacturing Company at Oakdale, Conn.
"The Permutit Company supplies all equipment foundations and building including construction of pipe line from flume, near present intake, to clarification plant and to make connections into existing service lines in present mill.
"It is the intent of this contract for the Permutit Company to furnish to the Massasoit Manufacturing Company a ...