upon discovery of their falsity, refused to make further payments under the contract and (in their answer to the complaint) offered to make restitution as a condition of rescission. The defendants also set up counterclaims based upon the alleged nonperformance breach of warranty and fraud. The contract, bearing date December 31, 1919, and executed on February 10, 1920, provided in substance as follows: (1) The seller assigns to the purchasers all the stock of egg products of the seller described in schedule A annexed to the contract. (2) The seller assigns to the purchasers all unfilled contracts and sales of egg products made to customers of the seller on and subsequent to date, "but without any guaranty as to said contracts or sales, except as hereinafter provided." (3) Purchasers accept the merchandise and "assume all obligations imposed by said existing sales contracts and unfilled sales orders of the seller, except as hereinafter provided." (4) Purchasers agree to pay as follows: $1,000, the receipt whereof is acknowledged; $911,202.20, being the balance of the purchase price at the rates per pound set forth in schedule A, to be paid$100,000 upon signing of the agreement and applied to the final payment of the price, one sixth of the balance to be paid monthly thereafter. "Should there be any surplus of powdered albumen or powdered whole egg after the completion by the seller of material to be delivered under existing sales contracts as hereinafter provided, the purchasers agree to pay for said surplus at the rate of $1.30 per pound for powdered albumen and 75 cents per pound for powdered whole egg. "It is agreed that the quantities of merchandise as set forth in schedule A are approximate only, although the seller believes them to be substantially accurate, but for any surplus in the amount of any of said products up to 10 per cent thereof the purchasers agree to pay the seller at the rate stipulated in schedule A." Beyond this 10 per cent, prices to be subject to future agreement, (5) The seller agrees to deliver, on receipt of the $100,000 deposit in advance, without prejudice, all contracts which it has with customers for the delivery of completed egg products. The seller further agrees to complete the preparation of the egg products for delivery under the contracts, to provide containers, complete all mixtures, and to comply with regulations of the Department of Agriculture. (6) All the products are to be at the risk of the buyers, except products which seller is to prepare for delivery under sales contracts. The products are to be stored by the seller in the name of the purchasers under negotiable warehouse receipts. (7) Goods not of regular grade are to be returned and credited. (8) "It is understood and agreed that this memorandum contains all the terms of the sale herein involved and that there is no warranty, expressed or implied, incident to the sale or other conditions not herein specifically stipulated." The plaintiff put in its case. Thereupon the defendant offered evidence that certain representations were made by plaintiff's agents prior to the execution and delivery of the foregoing contract, of which the following were the most important: (a) The plaintiff had firm sales contracts for 397,846 pounds; the undelivered quantities stated in the first division of schedule A of the contract were not approximate, but accurate, and the buyers under such contracts were legally bound to purchase such quantities, and had no price reduction privileges, and neither the plaintiff nor any of the buyers under the contracts were behind in any of their obligations (20 F. (2d) 364.) thereunder, or had any disputes as to the same. (b) The sales contracts were with houses that the plaintiff had dealt with for a number of years, and these were good, reputable concerns, financially able. Now the sales contracts were an important element of the main agreement, because the egg products covered by them were at substantially higher prices than the surplus products to be purchased by the defendants. The court assumed that the foregoing representations as to these contracts, which the defendants' witness Reilly testified had been made, were false, and said at page 500 of the record on appeal: Where a witness testifies to certain representations, and the point is made that those representations are not material, because they do not involve fraud, it must be assumed that those representations are false. I am assuming that everything he has said is false; and I take it that, at least by the great weight of law, false representations, in order to constitute fraud, must be in regard to things of such a character as are not clearly contemplated and provided for by the contract. Now, then, Mr. Reilly testified that there were many matters-that all these matters and things were the subjects of lengthy correspondence and lengthy conference, and following upon all that there is, in the first place, a letter from Mr. Reilly or his firm to the plaintiff, which is silent upon all these matters, except the matter of credit; and then, all of these matters having been discussed, a contract is prepared, which is not alone silent upon the matters that Mr. Reilly speaks about, but in many places and by its specific terms it excludes them. In the first place, there is the specific provision in the second clause of the contract that seller assigns and sets over unto the purchasers all unfilled contracts and sales of egg products made to customers of the seller on and subse quent to this date, but without any guaranty as to said contracts or sales except as hereinafter provided. "Now, then, you go over to paragraph or clause 4 of the contract, wherein it is specifically agreed that the quantities of merchandise as set forth in schedule A are approximate only, although the parties believe them to be substantially correct. Now, schedule A contains the number of pounds, by various subdivisions, of this product which are to be delivered against sales contracts; but it goes on still farther and provides that, for any surplus in the amount of said products up to 10 per cent, the purchasers agree to pay the sellers at the rates stipulated in schedule A; but, if the surplus is in excess of 10 per cent, they were to endeavor to agree, if they could, and, if not, the deal was off as to them. Now, they were not content even with that, and they provide again in the eighth clause of the contract: 'It is understood and agreed that this memorandum contains all the terms of the sale herein involved, and that there is no warranty, expressed or implied, incident to the sale, or other conditions not herein specifically stipulated.' "I am satisfied, gentlemen, that all of the representations testified to by Mr. Reilly-and I have examined each one of them them carefullyamount to no more than would constitute in law a warranty in regard to those contracts, and that that warranty is specifically excluded." 66 Mr. Steuer, the defendants' counsel, thereafter said, at page 503: I wish to specifically request that this case be submitted to the jury upon the issue as to whether or not the representations testified to by Mr. Reilly were made, and as to whether those representations were false; and also we wish to be permitted to submit evidence as to the damages sustained by us by reason of the falsity of these representations. I am not overlooking the element of knowledge on the part of the plaintiff of their falsity, or that they relied upon them, and that it was in reliance upon them that we executed the contract. We ask that all of the issues in the case as framed by the pleadings be submitted to the jury for determination, and we ask for leave to call our witnesses in order to substantiate the allegations of the answer. But we want to be fair with the court, and we reiterate our statement that as to the making of the representations we have furnished the court all the evidence that we have." Thereupon the court denied leave to go to the jury and directed a verdict for the plaintiff for the unpaid balance due under the contract in the sum of $398,834.10. In respect to the defense of nonperformance there was no sufficient proof. There was apparently a failure to store 47,850 pounds of the egg products in the warehouse of Griswold & Walker in Chicago in the purchaser's name, but plaintiff's exhibit 47 indicates that direction was given by the seller to its Chicago office to do this, goods were placed there to that amount, the purchasers paid insurance and warehouse charges thereon, and there was no difficulty in securing delivery whenever desired. Such a trifling irregularity as to only 5 per cent of the subject-matter of the contract could constitute no breach. There was no proof or offer to prove the defense of breach of warranty. It is contended by the defendants that there was a warranty of the sales contracts in respect of the quantities set forth in schedule A. This contention is made in spite of the omission in the final agreement of the parties of any guaranty of certain quantities applicable to sales contracts such as was proposed in a tentative agreement of December 29, 1919. The contention also disregards the provisions of the final agreement that the sales contracts were assigned, "without any guaranty as to said contracts or sales, except as hereinafter provided;" that the seller was to deliver all contracts to the purchasers "without prejudice," and that the agreement "contains all the terms of the sale, . . . and that there is no warranty, express or implied, incident to the sale, or other conditions not herein stipulated." No warranty of the quantities to be delivered under the sales contracts appears anywhere in the agreement. The words "except as hereinafter provided" related to the duty of this seller to complete the preparation of egg products to be delivered under sales contracts as provided in clause fifth of the agreement. The provision of clause fourth that "the quantities of merchandise as set forth in schedule A are approximate only, though the seller believes them to be substantially accurate," does not relate to the egg products to be delivered against sales contracts, but to the totals of the various products. This is clear, because the prices of surplus products of powdered albumen and powdered whole egg mentioned in clause fourth are fixed upon the assumption that these products may exceed the amounts thereof set forth in the first part of schedule A as deliverable under the sales contracts. Such products are not mentioned in the second part of the schedule under "surplus materials," and could only become "surplus materials" if the sales contracts in these products failed in part. Moreover, absence of any guaranty as to the approximate amount required to fulfill sales contracts is one of the marked differences between the final agreement of the parties and the arrangement proposed by the purchasers in their letter to the seller of December 29, 1919 (defendant's exhibit D-47), where it was said that the amounts stated "represent fairly accurately the amounts you have sold and still have to deliver." In support of the defense of fraud there was some proof on cross-examination of the plaintiffs' witnesses and in defendant's case that the Wagner and Noggle sales contracts were short about 20,000 pounds, and that the Ferris contract for 2,200 (20 F. (2d) 364.) pounds had expired, and there was Co. 169 C. C. A. 441, 258 Fed. 425; an offer to prove that the Kuhnle and Schaefer contracts for 34,000 pounds had been canceled. These formed a considerable percentage of the total amount of sales contracts. There was proof that the LooseWiles Biscuit Company's contract contained a price reduction clause, and by the refusal of the court to allow the defendants to offer further evidence there was in effect a denial to them of the right to show that numerous sales contracts itemized in the bill of particulars were with concerns of poor credit and bad financial condition. The defendants were not allowed to have a list of the contracts or know their terms until the agreement between the parties actually went into effect. Argued before Manton and L. Hand, Circuit Judges, and Augustus N. Hand, District Judge. Messrs. Evarts, Choate, Sherman, & Leon, Joseph H. Choate, Jr., Herbert J. Bickford, and Max D. Steuer, for plaintiffs in error: The trial court erred in striking out the evidence of defendant's misrepresentations, and in directing a verdict in favor of plaintiff. 5 Wigmore, Ev. 2d ed. § 2439; Adams v. Gillig, 199 N. Y. 314, 32 L.R.A. (N.S.) 127, 92 N. E. 670, 20 Ann. Cas. 910; Bridger v. Goldsmith, 143 N. Y. 424, 38 N. E. 458; 26 C. J. 1145; Martin v. Shoub, 62 Ind. App. 586, 113 N. E. 384; Passaic Valley Sewerage Comrs. v. Holbrook, C. & R. Corp. (C. C. A. 3d) 6 F. (2d) 721; Universal Fashion Co. v. Skinner, 64 Hun, 293, 19 N. Y. Supp. 62. The proof clearly shows that plaintiff had not, in several vital respects, performed the obligations imposed upon it by the contract. Therefore, the court erred in denying defendants' motions to dismiss the first cause of action, for direction of a verdict in their favor, to permit them to go to the jury, and to set aside the verdict, and in directing a verdict for the plaintiff. American Cotton Oil Co. v. Kirk, 15 C. C. A. 540, 34 U. S. App. 60; 68 Fed. 791; Williston, Contr. § 1474, p. 2624; Foeller v. Heintz, 137 Wis. 169, 24 L.R.A. (N.S.) 327, 118 N. W. 543; Snare & Triest Co. v. St. Paul F. & M. Ins. Crouch v. Gutmann, 134 N. Y. 45, 30 Am. St. Rep. 608, 31 N. E. 271; Pitcairn v. Philip Hiss Co. 51 C. C. A. 323, 113 Fed. 492; Jacob & Youngs v. Kent, 230 N. Y. 239, 23 A.L.R. 1429, 129 N. E. 889; Glacius v. Black, 50 N. Y. 145, 10 Am. Rep. 449; Phillip v. Gallant, 62 N. Y. 256; Nolan v. Whitney, 88 N. Y. 648; Miller v. Benjamin, 142 N. Y. 613, 37 N. E. 631; Collins v. Ramish, 182 Cal. 360, 188 Pac. 550; Morgan v. Gamble, 230 Pa. 165, 79 Atl. 410; Fauble v. Davis, 48 Iowa, 462; Reed v. Randall, 29 N. Y. 358, 86 Am. Dec. 305; Wallis v. Pratt [1911] A. C. 394-H. L.; Morris Run Coal Co. v. Carthage Sulphite Pulp & Paper Co. 210 App. Div. 678, 206 N. Y. Supp. 676. Messrs. Francis H. McAdoo, Isidor J. Kresel, and Bernard Hershkopf, for defendant in error: The trial court did not err in excluding evidence of alleged warranties claimed to have been made by the plaintiff during the negotiation of the contract in suit, since the contract expressly negatived such warranties; and that evidence was not rendered admissible by the defendant's claim that the same matters were also misrepresentations. Mitchell Motor Co. v. Chandler, 169 App. Div. 245, 154 N. Y. Supp. 502; Burntisland Shipbuilding Co. v. Barde Steel Products Corp. (D. C.) 278 Fed. 552; Marmet Coal Co. v. People's Coal Co. 141 C. C. A. 402, 226 Fed. 646; Hamilton Iron & Steel Co. v. Groveland Min. Co. 147 C. C. A. 324, 233 Fed. 388; Eighmie v. Taylor, 98 N. Y. 288; Mitchell Motor Co. v. Chandler, 169 App. Div. 245, 154 N. Y. Supp. 502; Leary v. Geller, 224 N. Y. 56, 120 N. E. 31; Hyde v. United States, 225 U. S. 347, 56 L. ed. 1114, 32 Sup. Ct. Rep. 793, Ann. Cas. 1914A, 614; D'Utassy v. Barrett, 219 N. Y. 420, 5 A.L.R. 979, 114 N. E. 786; Georgia, F. & A. R. Co. v. Blish Mill. Co. 241 U. S. 190, 60 L. ed. 948, 36 Sup. Ct. Rep. 541; American R. Exp. Co. v. Levee, 263 U. S. 19, 21, 68 L. ed. 140, 143, 44 Sup. Ct. Rep. 11; Ettlinger v. Weil, 94 App. Div. 291, 87 N. Y. Supp. 1049 (reversed in 184 N. Y. 179, 77 N. E. 31); Cannon v. Burrell, 193 Mass. 534, 79 N. E. 780; Colonial Development Corp. v. Bragdon, 219 Mass. 170, 106 N. E. 633; International Textbook Co. v. Martin, 221 Mass. 1, 108 N. E. 469; O'Meara v. Smyth, 243 Mass. 188. 137 N. E. 294; Equitable Mfg. Co. v. Biggers, 121 Ga. 381, 49 S. E. 271; Washington & L. R. Co. v. Southern Iron & Equipment Co. 28 Ga. App. 684, 112 S. E. 905; J. I. Case Threshing Mach. Co. v. Broach, 137 Ga. 602, 73 S. E. 1063; Arthur E. Guth Piano Co. v. Adams, 114 Me. 390, 96 Atl. 722; A. J. Anderson Electric Co. v. Cleburne Water, Ice & L. Co. Tex. Civ. App. 44 S. W. 929; Geo. J. Birkel Co. v. Curtet, 36 Cal. App. 391, 172 Pac. 165; Yuba Mfg. Co. v. Stone, 39 Cal. App. 440, 179 Pac. 418; Bates Tractor Co. v. Gregory, 199 Mich. 8, 165 N. W. 612; Rock Island Implement Co. v. Wally, Mo. App. —, 268 S. W. 904; Passaic Valley Sewerage Comrs. v. Holbrook, C. & R. Corp. (C. C. A. 3d) 6 F. (2d) 721. The plaintiff performed the contract in suit. John F. Trainor Co. v. G. Amsinck & Co. 236 N. Y. 392, 140 N. E. 931; Georgia Ref. Co. v. Augusta Oil Co. 74 Ga. 497; White v. Schweitzer, 221 N. Y. 461, 117 N. E. 941; Desmond-Dunne Co. v. Friedman-Doscher Co. 162 N. Y. 486, 56 N. E. 995; Reed v. Randall, 29 N. Y. 358, 86 Am. Dec. 305; Coplay Iron Co. v. Pope, 108 N. Y. 232, 15 N. E. 335. Augustus N. Hand, Dist. J., delivered the opinion of the court: The assumption of the court that the representations were false makes it impossible to determine how material was the falsity of the representations, or what loss the defendants incurred by taking over sales contracts which may not have been anything like what on their face they seemed. It may be that the situation, if it had been properly developed, was such that no question of fraud could have been properly submitted to a jury. But the court assumed that the representations said to have been made as an inducement to the execution of the contract were false. If false to a substantial extent, there might arise the inference that they were made with the intention to deceive. The defendants were cut off from proving all that had or might have occurred, upon the theory that they were precluded from so doing by the provisions in the second article of the contract that the unfilled contracts were assigned "without any guaranty as to said contracts or sales" in the fifth article, that all sales contracts were delivered "without prejudice," and by the eighth article that "this memorandum contains all the terms of the sale herein involved and . . . there is no warranty, expressed or implied, incident to the sale or other conditions not herein specifically stipulated." In the proposal of December 29, 1919, the defendants said that the stated amounts of the sales contracts, though approximate, represented "fairly accurately the amounts you have sold and have still to deliver." and also that. though the plaintiff assumed no responsibility for the fulfillment of the sales contracts, yet it assured the defendants "that the concerns whose names appear in these contracts are all firms of good repute and satisfactory standing." These provisions were omitted in the final contract, and the careful provisions guaranteeing nothing were substituted. But the evidence leaves the case in a position, not only where there is proof, or offer of proof, of cancellation of some of the sales contracts before the main contract was executed, and of a provision for price reduction in another. There is also an indefinite field for proof that the sales contracts were with concerns of weak credit. The court, by declining to hear evidence as to whether the representations testified to by Reilly were false, assumed (as the judge said) that they were so. Consequently, no limit can be set to how bad was the financial standing or condition of concerns with which the plaintiff had sales contracts. If in fact a great proportion of the sales contracts were with concerns of bad financial rating, and the plaintiff had represented that their rating was excellent and their credit good, then the question would arise whether these representations were not made to deceive, and were not an inducement to the making of the contract between the parties. All the evidence bearing on the |