Munson v. New York Seed Improvement Cooperative

Philip Munson (plaintiff) was a bean farmer. Munson entered into a contract to buy foundation seed from New York Seed Improvement Cooperative, Inc. (cooperative) (defendant) and paid a $5,000 deposit for his order. However, the cooperative later informed Munson that foundation seed was unavailable; Munson accepted the cooperative’s offer to buy registered seed instead for $14,500. Unfortunately, the foundation seed allegedly was defective, and Munson was unable to return the seeds to the cooperative. Munson sued the cooperative, claiming that the cooperative breached the sales contract and seeking damages. The cooperative counterclaimed for $9,500 (the amount Munson purportedly owed for the seeds after deducting Munson’s initial $5,000 deposit). Munson filed a general denial of the allegations in the cooperative’s counterclaim. After opening trial arguments, Munson made an offer of proof regarding the poor quality of the registered seeds and his effort to return them to the cooperative. Because Munson did not raise these issues in his complaint or in his reply to the cooperative’s counterclaim, the supreme court dismissed Munson’s complaint and directed a verdict for the cooperative on its counterclaim. The appellate division reversed the directed verdict for the cooperative but affirmed the dismissal of Munson’s complaint. Munson appealed. The cooperative defended the dismissal of Munson’s complaint on the ground that Munson waived any argument about the quality of the seeds because Munson did not plead the affirmative defense of breach of warranty in either his complaint or counterclaim reply.