Air Products & Chemicals, Inc. v. Fairbanks Morse, Inc.

• Decision Date: 20 April 1973
• Docket Number: No. 364,364
• Citation: 206 N.W.2d 414,58 Wis.2d 193
• Parties: , 78 A.L.R.3d 619, 12 UCC Rep.Serv. 794 AIR PRODUCTS AND CHEMICALS, INC., Plaintiff-Respondent, v. FAIRBANKS MORSE, INC., Defendant-Appellant, Hartford Steam Boiler Inspection and Insurance Co., Intervener-Respondent.
• Court: Wisconsin Supreme Court

Page 414

206 N.W.2d 414

58 Wis.2d 193, 78 A.L.R.3d 619, 12

UCC Rep.Serv. 794

AIR PRODUCTS AND CHEMICALS, INC., Plaintiff-Respondent, v. FAIRBANKS MORSE, INC., Defendant-Appellant,

Hartford Steam Boiler Inspection and Insurance Co.,

Intervener-Respondent.

No. 364.

Supreme Court of Wisconsin.

April 20, 1973.

Rehearing Denied June 29, 1973.

Foley & .lardner, David E. Beckwith, Maurice J. McSweeney, John R. Dawson, Milwaukee, for defendant-appellant.

Quarles, Harriott, Clemons, Teschner & Noelke, L. C. Hammond, Jr., Ross R. Kinney, Milwaukee, for respondents. HANLEY, Justice.

Four issues are presented on this appeal:

1. Is the four-year Pennsylvania Statute of Limitations a defense to any or all of Air Products' or Hartford's causes of action;

2. Can a contract which states that liquidated damages 'shall be in addition to any and all other remedies of buyer' be interpreted to mean that liquidated damages is the buyer's sole and exclusive remedy;

3. Under Pennsylvania law can limitation of liability provisions contained in the seller's 'acknowledgments of order' become terms in the contracts of sale when the buyer's purchase orders contained no such terms and the buyer never expressly agreed to such terms;

4. Under Pennsylvania law, is the tort doctrine of strict liability applicable to either economic losses caused by unreasonably defective products or products which are unreasonably dangerous to themselves which in fact injure themselves and cause economic losses?

Applicable Statute of Limitations

As an affirmative defense pleaded in its answer, Fairbanks set up Pennsylvania's four-year statute of limitations governing breaches of contract. The conflict arises because Wisconsin's statute of limitations in contract actions is six years. All parties agree that the remaining three issues must be resolved under Pennsylvania law.

In sustaining the demurrers of Air Products and Hartford to the statute of limitations affirmative defense of Fairbanks, the trial court concluded that each state must determine for itself the period of time in which a suit for a particular claim can be brought; and that the 'center of gravity' approach to conflicts questions which was originally adopted by this court in Wilcox v. Wilcox (1964), 26 Wis.2d 617, 133 N.W.2d 408 is too unpredictable to be used when the fundamental question of the appropriate statute of limitations is at issue. We agree with the trial court's ruling on the statute of limitations issue. However, we think the choice of law is a matter to be decided on the basis of the existing conflicts rules of this court.

In the case of Wilcox v. Wilcox, supra, this court broke new ground in the choice of law area by abandoning the very mechanical lex loci rule in matters involving the appropriate torts law to be applied when that of Wisconsin's is in conflict with one or more other interested jurisdictions. Following Wilcox, in the case of Heath v. Zellmer (1967), 35 Wis.2d 578, 151 N.W.2d 664, the rationale of Wilcox was refined such that when '. . . faced with a choice-of-law decision, this court should base its conclusions upon the following choice-influencing considerations . . .

'Predictability of results

'Maintenance of interestate and international order

'Simplification of the judicial task

'Advancement of the forum's governmental interests

'Application of the better rule of law.' Heath, supra, 35 Wis.2d at page 596, 151 N.W.2d at page 672.

Although the court put no limits on the scope of what had come to be known as the 'center-of-gravity' or 'grouping-of-contacts' approach, a few short years later in Urhammer v. Olson (1968), 39 Wis.2d 447, 159 N.W.2d 688, it specifically and again with very broad language, extended it to contract cases. At page 450, 159 N.W.2d at page 689, the court stated:

'We now adopt the grouping-of-contacts approach for the resolution of conflicts questions pertaining to the validity and rights created by the provisions of a disputed contract.'

Since the decision in Urhammer, the court has used the 'grouping-of-contracts' approach in Haines v. Mid -Century Ins. Co. (1970), 47 Wis.2d 442, 177 N.W.2d 328, another contracts case.

In the very recent case of Hunker v. Royal Indemnity Co. (1973), Wis., 204 N.W.2d 897, this court set forth with clarity the appraoch which we will follow in choice of law questions relating to tort and we reaffirm that approach in the case at bar.

Although the five choice considerations stated above should all be given due consideration in the ultimate outsome of any choice of law question, this court should not engage in a mere 'counting of these considerations' but rather look to the 'relevancy' of the particular consideration in terms of the policies which the forum deems important, vis-a-vis, other contact states. Wilcox, supra, 26 Wis.2d at page 633, 133 N.W.2d 408.

Regardless of the fact that it would be difficult to underestimate the importance of 'predictability' as it relates to this case, it appears that when the policy behind statutes of limitations is examined, the most important are the second and fourth considerations: 'Maintenance of Interestate and International Order; and Advancement of the Forum's Governmental Interests.'

There can be no question but that the underlying purpose in the enactment of a statute of limitations is to protect defendants and the courts from '. . . stale claims springing up at great distances of time and surprising the parties . . .' when all the evidence, once vivid, has since become obscure. Bowe v. La Buy (1934), 215 Wis. 1, 3, 253 N.W. 791, 792. The same essential policy considerations have guided the Pennsylvania courts as well. Schmucker v. Naugle (1967), 426 Pa. 203, 231 A.2d 121.

A determination that Wisconsin's six-year statute controls would in no way affect any legitimate interest of Pennsylvania since their statute, like ours, is designed to protect defendants and in this case, Air Products, the Pennsylvania resident, is the plaintiff--not the defendant. Likewise, Pennsylvania is in no position to in anyway influence what Wisconsin feels to be an appropriate period of protection for both itself and defendants from stale lawsuits. Wilcox v. Wilcox, supra, 26 Wis.2d at page 634, 133 N.W.2d 408.

Moreover, by the decision of the legislature to permit aggrieved parties six instead of four years to prosecute their claims, a decision contrary to the recommended period by drafters of the Uniform Commercial Code which was ultimately adopted in Pennsylvania, the legislature determined that the interests of Wisconsin are best advanced by a longer period. We affirm the order sustained demurrers to defendants' affirmative defenses based on the statute of limitations.

Liquidated Damages Provision of Air Products' Purchase Orders

The liquidated damages provisions of Air Products' purchase order provide as follows:

'Liquidated Damages:

'Delay in delivery

'Seller recognizes that failure to make delivery of drawings and other data of equipment conforming to the requirements of this purchase order in accordance with the delivery schedule contained in this purchase order will subject buyer to substantial damages due to delay and disruption of work schedules, inefficient use of manpower and other reasons, and that the amount of such damages will be difficult or impossible to ascertain with certainty. Seller, therefore, agrees that such damages shall be assessed and payable, as agreed and liquidated damages, and not as a penalty, in accordance with the schedule set forth at the end of this clause.

'Any other provision hereof to the contrary notwithstanding, no item required to be delivered hereunder shall be deemed delivered unless the same conforms to the requirements of the order and, (a) in the case of drawings and other data, is mailed or otherwise delivered to buyer's offices at Allentown, Pennsylvania (and any other specified receivers) on or before the date specified, and, (b) in the case of equipment, is placed in the hands of a carrier for delivery VIA the most direct route to the destination indicated on the purchase order, on or before the date specified. In any case of partial delivery of an item, if permitted hereunder, the items shall not be deemed as received for purposes of this provision, until delivery of the last item required for its use, or installation, and operation. Unless otherwise provided, all time shall be computed on the basis of calender days elapsing after the delivery date specified. Liquidated damages shall be computed for each item listed on the schedule separately.

'Buyers right to liqudiated damages provided for herein shall be in addition to any and all other remedies of buyer, including, without limitation, its rights under paragraph 9 of the terms and conditions of this purchase order for default. In the event of any termination for default, liquidated damages for delay shall be computed, up to the maximums provided herein, to the date buyer places a new purchase order for the items covered by this order.

'In the event buyer shall be prevented from making delivery for reasons defined in paragraph 10 of the terms and conditions of this purchase order, seller shall grant such extension of the delivery schedules as shall, in its opinion, be justified, not to exceed in any event, however, the actual number of days such conditions is determined to have existed.'

Readily apparent from a reading of the above provision is that it initially provides for the assessment of liquidated damages in case of failure by defendant to make delivery of equipment conforming to the specifications within the times set forth in the delivery schedule. The provision next provides this the right to recover liquidated damages as specified in an attached schedule 'shall be in addition to any and all other remedies of the buyer.'

The trial court concluded that the separate provisions were 'inconsistent and ambiguous' and that on their face it cannot...