Delta Air Lines, Inc. v. Douglas Aircraft Co.

• Decision Date: 09 November 1965
• Citation: 238 Cal.App.2d 95,47 Cal.Rptr. 518
• Court: California Court of Appeals Court of Appeals
• Parties: DELTA AIR LINES, INC., Plaintiff and Respondent, v. DOUGLAS AIRCRAFT COMPANY, Inc., Defendant and Appellant. Civ. 28225.

Page 518

47 Cal.Rptr. 518

238 Cal.App.2d 95

DELTA AIR LINES, INC., Plaintiff and Respondent, v. DOUGLAS AIRCRAFT COMPANY, Inc., Defendant and Appellant.

Civ. 28225.

District Court of Appeal, Second District, Division 4, California.

Nov. 9, 1965.

As Modified on Denial of Rehearing Dec. 2, 1965.

Hearing Denied Jan. 6, 1966.

Belcher, Henzie & Biegenzahn, and Frank B. Belcher, Los Angeles, for defendant and appellant.

William G. Tucker, Richard T. Drukker, and Chase, Rotchford, Downen & Drukker, Los Angeles, for plaintiff and respondent.

KINGSLEY, Justice.

This is an action for breach of warranty in the sale of a commercial airplane. The buyer recovered judgment for damage to the airplane and the vendor has appealed. For reasons set out below, we conclude that the provisions of the contract of sale effectively insulated the vendor from the liability herein sought to be imposed on it and that the judgment against it must be reversed.

In October of 1955, Delta Air Lines, Inc. (Delta), the plaintiff herein, entered into a contract with defendant Douglas Aircraft Company, Inc. (Douglas) to purchase from the latter a new DC-7 airplane, at a price of $2,250,000. Delta received delivery of the airplane at Douglas' plant in Santa Monica, California, on November 25, 1957, and the plane was flown, by a Delta crew, to Atlanta, Georgia. Two days later, while a Delta crew was attempting to land the plane after a check flight, the nose wheel failed to function properly, causing the plane to veer off the runway with resultant damage to the craft. There were no personal injuries and, so far as this lawsuit is concerned, the only damages sought are the costs to Delta of repair of the airplane.

Delta sued for this damage, alleging breach of both express and implied warranties. Douglas defended, inter alia, on the basis of language in the sale contract which it claimed released it from any liability for the accident or its consequences. The trial court directed a verdict for Douglas on the express warranty count, ruled that the exculpatory clause relied on by Douglas was void as against public policy, and submitted the case to the jury on the issues of breach of implied warranty and of negligence. The jury returned a verdict for Delta in the amount of $233,881.35, and also answered four special interrogatories to the effect that (a) the damage to the airplane resulted from a breach of an implied warranty, (b) that proper notice of such breach had been given, (c) that Douglas was guilty of negligence which proximately caused the accident, and (d) that Delta was not guilty of contributory negligence.

In the view which we take of the meaning and effect of the exculpatory clause, we need not consider whether or not the special findings of breach of implied warranty, of negligence and of freedom from contributory negligence are supported by the evidence, nor do we consider whether or not, in light of Rose v. Chrysler Motors Corp. (1963) 212 Cal.App.2d 755, 28 Cal.Rptr 185, 99 A.L.R.2d 1411, the trial court correctly withdrew the express warranty count from the jury.

The clause relied on by defendant reads as follows:

'14. WARRANTY.

'(A) Seller warrants that the aircraft, accessories, equipment and parts manufactured by Seller shall be free from:

'(1) Defects in material and workmanship furnished by Seller and used in the fabrication thereof;

'(2) Defects arising from the selection of material or process of manufacture;

'(3) Defects inherent in the design thereof in view of the state of the art on the date hereof.

'The foregoing warranty shall apply also to accessories, equipment and parts manufactured to Seller's detailed design and specifications and supplied to Seller by other manufacturers.

'(B) In cases of defects in material and workmanship, or defects arising from the selection of material or process of manufacture, such defects must become apparent in the aircraft, accessory, equipment, or part within six (6) months or one thousand (1,000) flying hours, whichever shall first expire, after delivery of the aircraft to Buyer.

'The extent of Seller's liability under this warranty as to defect in material or workmanship, and defects arising from the selection of material or the process of manufacture, is limited to the repair of such defects in the aircraft or to the repair or replacement (with a similar item free from the defect in question) of any accessory, equipment or part which is defective in any of such respects.

'(C) The extent of Seller's liability under this warranty as to defects inherent in design is limited to the correction at its expense of all such defects becoming apparent in the aircraft, accessory, equipment, or part purchased hereunder, within one (1) year or one thousand (1,000) flying hours, whichever shall first expire, but not less than eight (8) months, after the delivery of said aircraft. Seller shall make all such repairs, replacements and corrections with reasonable care and dispatch in order that the aircraft involved may not be kept out of service longer than necessary.

'(D) Seller shall, as to each defect, be relieved of all obligations and liability under this warranty if:

'(1) The aircarft is operated with any accessory, equipment or part not specifically approved by Seller and not manufactured by Seller or to Seller's design and specifications unless Buyer furnishes reasonable evidence that such installation was not a cause of the defect; provided that this provision shall not apply to any accessory, equipment or part, the use of which does not affect the safety of the aircraft;

'(2) The aircraft shall not have been operated or maintained in accordance with Seller's instructions furnished under this agreement, unless Buyer furnishes reasonable evidence that such operation or maintenance, as the case may be, was not a cause of the defect;

'(3) The aircraft shall not have been operated under normal airline use, unless Buyer furnishes reasonable evidence that such operation was not a cause of the defect;

'(4) The aircraft shall have been repaired, altered or modified without Seller's approval or if the aircraft shall have been operated subsequent to its involvement in an accident, unless Buyer furnishes reasonable evidence that such repair, alteration, modification, operation or accident was not a cause of the defect, provided, however, that this limitation insofar as it relates to repairs and accidents shall not be applicable to routine repairs or replacements or minor accidents which normally occur in the operation of aircraft if such repairs or replacements are made with suitable material and according to standard practice and engineering;

'(5) Buyer does not, within the applicable period of time specified in paragraph (B) or paragraph (C) above, return the defective aircraft, accessory, equipment or part at its expense to Seller's factory at 3000 Ocean Park Boulevard, Santa Monica, California, or if return to Seller's factory is not feasible, to Buyer's base repair shop in the United States. Return to Buyer of the repaired, replaced, or corrected aircraft, accessory, equipment or part shall be at its expense. Disassembly of the aircraft to correct the defect, removal of the defective accessory, equipment or part and installation of the corrected accessory or new part and reassembly of the aircraft shall be at the Buyer's expense;

'(6) Buyer does not submit reasonable proof to Seller that the defect is due to a matter embraced within Seller's warranty hereunder.

'With respect to matters made the subject of Seller's approval under this paragraph (D), Seller's approval or disapproval thereof shall be made in writing to Buyer within thirty (30) days after Buyer's request for approval is received by Seller. In the event of disapproval, Seller shall set forth the reasons therefor in its statement of disapproval. Seller's failure to deliver to Buyer a written statement of approval or disapproval within such thirty (30) day period shall irrevocably and conclusively constitute approval by Seller of the subject matter of the particular request involved.

'(E) The warranty provided in this article and the obligations and liabilities of Seller thereunder are in lieu of and Buyer hereby waives all other warranties, guaranties, conditions or liabilities, express or implied, arising by law or otherwise (including without limitation any obligation of the Seller with respect to consequential damages) and whether or not occasioned by Seller's negligence and shall not be extended, altered or varied except by a written instrument signed by Seller and Buyer; provided, that in the event the provision relieving Seller from liability for its negligence should for any reason be held ineffective, the remainder of this paragraph (E) shall remain in full force and effect.'

I

The first issue raised herein pertains to the breadth of the exculpatory clause (Paragraph (E) of the above quoted warranty provision). It is argued by Delta that the clause does not disclaim liability for negligence as a tort concept but only disclaims liability for contractual liability--i. e., a negligent breach of an express or implied warranty. The general rule in California ¹ and in other states ² is that exculpatory or indemnity clauses which attempt to free an actor from liability for his own negligence are basically valid but must be strictly construed and that failure to state an attempted exculpation or indemnity in plain, unambiguous and clear terminology will result in an interpretation that the clause was not intended to exempt the actor from liability for his own negligence. ³ Notwithstanding this rule of strict interpretation, the contract must be interpreted by the court and the intent of the parties determined. (Cf. Harvey Mach. Co. v. Hatzel & Buehler, Inc. (1960) 54 Cal.2d 445, 447, 6 Cal.Rptr. 284, 353 P.2d 924.) The present clause includes within its provisions a statement that the buyer ...