Transport Mfg. & Equip. Co. v. Fruehauf Trailer Co.

• Decision Date: 15 November 1961
• Docket Number: 16711.,No. 16710,16710
• Citation: 295 F.2d 223
• Parties: TRANSPORT MANUFACTURING & EQUIPMENT COMPANY, a Corporation, and Riss & Company, Inc., a Corporation, Appellants, v. FRUEHAUF TRAILER COMPANY, a Corporation, Appellee. FRUEHAUF TRAILER COMPANY, a Corporation, Appellant, v. TRANSPORT MANUFACTURING & EQUIPMENT COMPANY, a Corporation and Riss & Company, Inc., a Corporation, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

295 F.2d 223 (1961)

TRANSPORT MANUFACTURING & EQUIPMENT COMPANY, a Corporation, and Riss & Company, Inc., a Corporation, Appellants, v. FRUEHAUF TRAILER COMPANY, a Corporation, Appellee.

FRUEHAUF TRAILER COMPANY, a Corporation, Appellant, v. TRANSPORT MANUFACTURING & EQUIPMENT COMPANY, a Corporation and Riss & Company, Inc., a Corporation, Appellees.

Nos. 16710, 16711.

United States Court of Appeals Eighth Circuit.

October 18, 1961.

Rehearing Denied November 15, 1961.

COPYRIGHT MATERIAL OMITTED

Richard S. Righter and William M. Stapleton, Kansas City, Mo., for Transport Mfg. and Equipment Co.; Jack W. R. Headley, Kansas City, Mo., on the brief.

Michael Bogutski and Lawrence R. Brown, Kansas City, Mo., for Fruehauf Trailer Co.; Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, Mo., and Ernest L. Rushmer, Detroit, Mich., on the brief.

Before SANBORN, VOGEL and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

Defendants Transport Manufacturing & Equipment Company (Transport) and Riss & Company, Inc., (Riss) have appealed from certain portions of the final judgment entered against them. Plaintiff Fruehauf Trailer Company (Fruehauf) has filed a cross-appeal as to portions of the final judgment.

Jurisdiction, based upon diversity of citizenship and the requisite amount, is established.

The parties are in agreement that their rights and liabilities are governed by Missouri law.

The stock of both defendant corporations is owned wholly by the Riss family. By reason of the pleadings, pre-trial orders and the manner in which the case was tried, the trial court treated the two defendant corporations as having common rights and liabilities. Defendant Transport questioned the validity of such determination in its motion for new trial but such issue is not raised in these appeals and will be given no consideration.¹

This litigation is rather complicated. The pleadings are lengthy. A substantial dispute exists upon many fact issues. The printed record consists of 1,259 pages, all of which we have carefully considered. To set out the pleadings and the evidence in any detail would serve little purpose and unduly prolong this opinion. This case turns largely on fact issues. The parties are completely familiar with the facts. The trial court's memorandum opinion and statements made during the course of the trial reflect that the court has given full and careful consideration to all of the evidence.

Fruehauf is the world's largest manufacturer of truck trailers. Defendants operate large fleets of trailers and are among the largest operators in the country. This litigation arises out of trailer sales made by Fruehauf to defendants as follows:

1. A January 1957 contract for 250 reefers (refrigerated trailers), and 400 vans.

2. A July 1957 contract for 200 reefers.

3. A 1954 contract for 800 reefers and 400 dry vans.

Plaintiff's complaint contains six counts. Count I is a replevin count for possession of the 250 reefers covered by the January 1957 contract. Plaintiff holds a chattel mortgage given by defendants on the 250 reefers and certain other trailers as security for the purchase price. Plaintiff alleges defendants are in default upon their payments and that plaintiff is entitled to possession of the mortgaged property.

Count II seeks a deficiency judgment against the defendants for the difference between the unpaid balance of the purchase price of the reefers and the net amount received by plaintiff for the mortgaged equipment, plus interest and attorneys' fees.

Counts III and IV relate to issues as to which no appeal has been taken by either party.

Count V seeks damages for breach of the January 1957 contract for purchase of 400 vans, plaintiff claiming there was an anticipatory breach of this contract by defendants.

Count VI is for damages for alleged anticipatory breach of the July 1957 contract for the purchase of 200 reefers.

Defendants filed answers denying plaintiff was entitled to any relief and also filed a counterclaim in five counts. In Count I of the counterclaim defendants ask for rescission and cancellation of all security defendants had given plaintiff in connection with the 1957 purchases, being the security involved in Counts I and II of the complaint, and also ask for cancellation of the January 16, 1957 contract for the purchase of 250 reefers and 400 vans, and the July 16, 1957 contract for purchase of 250 reefers. Defendants alleged that they were entitled to such relief because of fraud and breach of warranty on the part of the plaintiff.

In Count II of the counterclaim, defendants alternately prayed for damages for breach of contract and breach of warranty for defects in the 250 reefers delivered in 1957.

Count III alternately sought damages for the same fraud alleged in Count I of the counterclaim.

Count IV is for the breach of implied warranty of fitness of reefers purchased in 1954.

Count V is for the value of tires defendants turned over to plaintiff for use on trailers which were not delivered.

The final judgment of the trial court upon the issues presented by the pleadings, so far as pertinent to these appeals, is thus summarized:

1. On Count I, the replevin count, the court found for plaintiff and found against defendants on Count I of their counterclaim, the rescission count. The court determined plaintiff was not guilty of fraud and that there was no breach of warranty sufficiently material to justify rescission, and that in any event the right to rescind for breach of warranty if it ever existed had been abandoned and waived, since rescission was not attempted within a reasonable time. The defendants have appealed from this portion of the judgment.

2. On Count II of the complaint, the final judgment provided for a deficiency judgment in the amount of $691,497.87 plus interest and $35,000 attorneys' fees. Both parties have appealed, defendants claiming the deficiency is excessive and plaintiff claiming it is inadequate.

(The portion of the judgment relating to Counts III and IV is not involved in these appeals.)

3. On Count V of the complaint, the court awarded plaintiff damages of $110,400 for defendants' breach of the January 1957 contract for the purchase of 400 vans. Defendants appeal from this portion of the judgment on the basis that no anticipatory breach has been proved, while plaintiff in its appeal contends the damages awarded are inadequate.

4. On Count VI of the complaint for breach of the July 1957 contract for 200 reefers, the court found for the defendants and plaintiff appeals.

Items 5 to 8 hereinafter relate to the judgment entered with respect to defendants' counterclaim. The relief claimed by way of rescission in Count I of the counterclaim was adjudicated in connection with the judgment entered on Count I of the complaint.

5. On Count II of the counterclaim, the court awarded defendants $50,000 damages for breach of contract and warranty as to 250 reefers purchased in January 1957. Plaintiff appeals on the basis that defendants are not entitled to any damages. Defendants appeal upon the ground that damages awarded are inadequate.

6. On Count III of the counterclaim, the court denied defendants relief for damages for fraud. This point is not briefed on this appeal.

7. On Count IV of the counterclaim, the court awarded defendants $50,000 for breach of implied warranty on the 1954 vans. Plaintiff appeals from this portion of the judgment, asserting defendants are entitled to no relief on this ground.

8. Count V of the counterclaim, the court allowed defendants $62,244, the award being based on the value of $31.50 on each of the tires delivered by defendants to plaintiff. Both sides have appealed, plaintiff claiming the court overvalued the tires and defendants claiming that they were undervalued.

Before considering the specific issues raised by these appeals, we will restate several principles governing all of such issues. The parties agree that Missouri law governs. We have frequently stated that on doubtful questions of local law in diversity cases, the question for review is whether the trial court reached a permissible conclusion upon the applicable state law and that "we go no further than to determine that the trial court reached a permissible conclusion upon the basis of the law of its state." Kern v. Prudential Ins. Co., 8 Cir., 293 F.2d 251, 255. In Homolla v. Gluck, 8 Cir., 248 F.2d 731, 734, we state:

"`We have repeatedly said that, in reviewing doubtful questions of local law, we would not adopt views contrary to those of the trial judge unless convinced of error, and that all that this Court reasonably can be expected to do in such cases is to see that the determination of the trial court is not induced by a clear misconception or misapplication of the local law. Russell v. Turner, 8 Cir., 148 F.2d 562, 564; Buder v. Becker, 8 Cir., 185 F.2d 311, 315, and cases cited. If a federal district judge has reached a permissible conclusion upon a question of local law, we will not reverse, even though we may think the law should be otherwise.\'"

We have also steadfastly adhered to the view that responsibility for deciding doubtful fact issues rests with the trial court. This court does not retry doubtful fact issues and substitute its judgment for that of the trial court. The trial court's findings can be set aside only if it is clearly demonstrated that they are without adequate evidentiary support or induced by an erroneous view of the law. The trial court's fact findings which are supported by substantial evidence cannot be upset. Gulf, Mobile & Ohio R. R. v. Thornton, 8 Cir., 294 F.2d 104 (decided August 30, 1961); Tyson v. State of Iowa, 8 Cir., 283 F.2d 802, 809; Coca Cola Bottling Co. v. Hubbard, 8 Cir., 203 F.2d 859; Pendergrass v. New York Life Ins. Co., 8 Cir., 181 F.2d 136.

We now reach the consideration of the errors asserted by the parties to the final judgment in the order in which they are...