Goldmann, Freund and Conford. The opinion of the court was delivered by Conford, J.A.D.
[39 NJSuper Page 352] This is an appeal by leave of the Appellate Division, granted pursuant to R.R. 2:2-3(b). We have here to determine whether an order granting a new trial as to both liability and damages in an action for breach of warranty in relation to a contract of sale of goods should be disturbed, in whole or in part. The action under review followed the rendition by a jury of a verdict for the plaintiff in the sum of $25,000.
Plaintiff (hereinafter designated "Somerville Container"), a dealer in and reconditioner of drums and barrels, purchased from the defendant (hereinafter designated "General Metal"), a scrap metal dealer, some 1614 stainless steel barrels in the spring of 1953 at the price of $8 per barrel. These had formerly been used in the since defunct business of the Trommer Brewery and had been disposed of for $1 each to General Metal by Piel's Brewery, successor to Trommer, as "scrap," being regarded by Piel's as unfit for storage and transportation of beer. Under the agreement of purchase from Piel's the barrels were not to be resold to any brewery for use as beer containers. Though controverted, there was evidence sufficient in our opinion to permit a finding of fact that the barrels were expressly warranted by General Metal to the plaintiff to be "perfect, in excellent condition." The seller knew from the buyer that it contemplated reselling them for use by a European brewery. Somerville Container took delivery of the barrels in Elizabeth on April 2 and April 3, 1953. Its representative signed receipts for the barrels on delivery on which there was written, "AS, IS, WHERE IS," but there was proof that the purchaser nevertheless accepted the merchandise in reliance upon the subsistence of the warranty of condition previously given. Cf. R.E. Brooks Co. v. Storr , 111 N.J.L. 316, 318 (E. & A. 1933). Prior to taking delivery, however, Trager, president of Somerville Container, went to Europe with one of the barrels as a sample and sold them to Heineken's Brewery in Rotterdam, Holland, for $15.75 each. This sale was "as per sample and subject to their inspection and approval upon arrival."
Upon the arrival of the barrels at the Heineken's plant, some three weeks after shipment, they were cleaned, brushed and inspected, both visually and by pressure-testing. This consisted of submerging the barrels in water and subjecting them to air pressure to detect leaks. Of the 1614 barrels received, 923 passed Heineken's inspection and were accepted and paid for. Of those rejected by Heineken's, plaintiff sold 220 to other European brewers at $4 each and retained the remainder. Heineken's at once began to use the new acquisitions,
a few at a time, in its export trade to the United States. Some of them were found to leak and others to produce deterioration in the beer contents. A Heineken's representative testified at the trial that subsequent investigation revealed corrosion, rust and pitting on the interior surface of some of the barrels, to which the spoilage was partially attributed, while previous defective repair welding was accounted a cause of both leaks and spoilage in other cases. The barrels were retired from use by Heineken's and it has demanded reimbursement for its losses from plaintiff. It has brought no legal action, however, being "convinced the company [Somerville Container] will refund the loss."
Before putting the barrels into use, Heineken's had the name, "Trommer's Brewery," which was embossed on the top end of each of them, removed by mechanical means, and it caused metal plates to be welded thereon, bearing the Heineken's Brewery initials. Defendant produced a metallurgist, who had examined some of the barrels. He testified that the treatment of the barrels, as described, may have produced a deterioration of the metal, evidenced by its magnetism on the tops of the barrels thus processed (stainless steel being described as ordinarily non-magnetic) and of progressive corrosion of the metal.
Heineken's losses arising out of its purchase and use of the ill-fated barrels were represented at the trial to amount to $18,846.78, consisting of the $14,553 paid for the barrels less their acknowledged scrap value of $1 each, or a net direct loss of $13,629, plus consequential damages such as freight, storage, duties, spoiled beer, etc., amounting in the aggregate to $5,217.78. Supporting proof for each of these items is to be found in the record. It does not appear, however, that Heineken's has ever demanded this or any other specific amount from Somerville Container in satisfaction of its claim.
Exclusive of the claim over against it by its subvendee, plaintiff estimates its own net losses flowing from the alleged breach of warranty by defendant to amount to $9,047.50.
The trial court filed a comprehensive opinion in explanation of its decision to grant a new trial on the whole case. It
arrived at these conclusions: (a) statements by the defendant's representatives to the plaintiff warranted a finding by the jury that there was an express warranty as to the fitness of the barrels; (b) defendant is not responsible for the amount of any claim by Heineken's against plaintiff because the resale was unattended by any warranty from plaintiff to its subvendee -- there was no express warranty in that transaction and an implied warranty is negated by Heineken's reservation of the right of inspection of the barrels and the fact of such inspection, the indication therefrom being that the subvendee was purchasing not in reliance upon the sample shown to it but upon its own inspection and testing of the barrels. There being no showing of a judgment upon, or of any payment by plaintiff to Heineken in settlement of the alleged liability over, the jury was unwarranted in including the Heineken claim in its assessment of damages, as it obviously must have done in arriving at a verdict so substantially in excess of plaintiff's damages in chief. The opinion concluded:
"The amount of the verdict being greatly in excess of any sum to which the plaintiff is lawfully entitled as damages under the proofs and law of this case, I feel constrained to hold that the excessive verdict is the product of mistake or partiality and should be set aside.
Accordingly, the verdict will be set aside and a new trial granted on the whole case."
The main thrust of the argument of appellant is that the trial court ought not to have granted a new trial in toto; that, at the least, the issue of liability was fairly determined by the jury free from any influence of the dispute with respect to damages and that the error by the jury, if any, as to damages, was the consequence of the charge of the court to the jury and in nowise so reflective of mistake or prejudice as to vitiate the verdict as to liability. Plaintiff contends, in the first instance, that the verdict was unexceptionable ...