Black, Sivalls & Bryson v. Shondell

• Decision Date: 24 May 1949
• Docket Number: No. 13860.,13860.
• Citation: 174 F.2d 587
• Parties: BLACK, SIVALLS & BRYSON, Inc. v. SHONDELL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

174 F.2d 587 (1949)

BLACK, SIVALLS & BRYSON, Inc. v. SHONDELL et al.

No. 13860.

United States Court of Appeals Eighth Circuit.

April 29, 1949.

Rehearing Denied May 24, 1949.

Charles V. Garnett, of Kansas City, Mo. (George L. Gordon, Donald W. Johnson and Kem, Gordon & Gilmore, all of Kansas City, Mo., on the brief), for appellant.

Marcy K. Brown, Jr., of Kansas City, Mo., for appellees.

Before GARDNER, Chief Judge, and WOODROUGH and THOMAS, Circuit Judges.

WOODROUGH, Circuit Judge.

This action was brought in a Missouri state court and came within the federal jurisdiction on removal because there was diversity of citizenship and requisite amount involved. The plaintiffs sued for damages for breach of express and implied warranty in the sale of five oil storage tanks manufactured by defendant and sold to plaintiffs and upon the jury trial plaintiffs obtained a verdict and judgment against defendant in the sum of $9,332 from which the defendant appeals.

Statement.

It appears that the plaintiff Heathwood Oil Company, a Kansas corporation, was engaged in the business of selling gasoline and fuel oil as a jobber in Kansas City, Kansas. It succeeded to the same business formerly owned and carried on in his own name by Henry A. Shondell and Mr. Shondell is its managing officer. Both Shondell and the corporation are named as plaintiffs but for convenience here we identify the plaintiffs as Shondell as he was the person who carried on the transactions in controversy and had the conversations out of which the lawsuit arose. The defendant Black, Sivalls and Bryson, Inc., is a Delaware corporation engaged in the business of manufacturing various steel products and tanks, having a Division plant in Kansas City, Missouri.

It was alleged in the petition that Shondell ordered five 20,920 gallon underground storage tanks 10' 6" in diameter and 32' 3" long with the necessary fittings therefor, for the price of $938 each, making the total $4,690, from Midwest Equipment Company, a retailer and dealer in tanks manufactured by defendant, and that thereafter Midwest Equipment Company ordered said tanks from defendant. That in ordering the tanks from defendant Midwest advised defendant that the tanks were to be manufactured for the special purpose of underground storage of oil and oil products at Shondell's distributing station in Kansas City, Kansas. That thereafter defendant contacted Shondell for the purpose of ascertaining the use to which the tanks would be put and the manner in which they would be installed to comply with the laws of the State of Kansas which required them to be set three feet under ground, and it was given all information therefor by plaintiff. "That at the time of the sale and manufacture of said tanks by defendant defendant expressly warranted that said tanks were to be constructed according to defendant's own plans and specifications for a known purpose and that the same would be sufficiently strong to store the capacity of said tanks with oil and oil products in the State of Kansas in conformity with the laws thereof three feet under ground, and that said tanks were fully adapted to the use for which they were intended." "That at the time of the sale and manufacture of said tanks by defendant, defendant impliedly warranted that said tanks were fit and proper for their intended use and adapted to the particular use intended by plaintiffs." That the tanks were manufactured and delivered to plaintiffs and plaintiffs paid Midwest the sum of $4,690 therefor but they contained inherent defects and were not suitable and useful for the special purpose for which they were manufactured; that such purpose was fully known by defendant and it manufactured the tanks under its own plans and specifications for which it received a sound price; that said tanks were installed and used by plaintiffs relying on the fact that said tanks were suitable for the purpose for which they were intended; that said defects were not known to plaintiffs and were not discoverable by an ordinary inspection of said tanks; that plaintiffs had no opportunity of inspection of said tanks prior to the delivery thereof to plaintiff. That the tanks collapsed when put to the intended use by reason of their defects and unfitness and were useless and plaintiffs suffered specific damages for which they prayed judgment against defendant.

The defendant filed answer to the petition in which it admitted its corporate organization and that it was engaged in the manufacturing of various steel products and tanks; that plaintiff placed the order with Midwest Equipment Company as alleged in the petition, but denied that Midwest advised it that the tanks were to be used in Kansas or were manufactured for any special purpose at plaintiffs' station in Kansas City, Kansas. It admitted that it manufactured the tanks in question and billed them to Midwest but denied knowledge of the special purpose for which Shondell bought and intended to use them and denied that it had warranted them to be fit for such purpose. The answer contained only admissions and denials and no affirmative allegations of facts relied upon for defense. Judgment of dismissal with costs was prayed for.

The defendant demanded a jury and the case went to jury trial on the petition, answer and evidence. Defendant did not move against the petition for failure to state a claim and at the conclusion of the evidence it did not move for directed verdict. On the trial the court instructed the jury in effect that if it found that Shondell ordered the tanks in the course of and as the result of negotiations carried on orally at a certain interview at the Midwest Equipment Company's office between plaintiff Shondell, a Mr. Williams, managing officer of Midwest, and one Traylor, a sales agent of defendant, and that defendant through its agent Traylor was fully informed of the particular use for which Shondell was buying the tanks and to which he intended to put them, namely, to set them three feet under ground and store oil products in them, and that Traylor stated that defendant would manufacture them in its own way with certain reenforcement described by him and that they would be strong enough and fit for such use and that Shondell believed and relied on what Traylor said and in reliance thereon installed the tanks three feet underground and that they were in fact unfit and of no value for such use and soon collapsed under the pressure and that as a direct result plaintiff suffered the losses shown, then plaintiff would be entitled to a recovery. Defendant took no exception to the instructions given by the court. It preserved exceptions to oral testimony received over its objections during the trial and made timely request to the court to give certain instructions which were refused, and it excepted to each refusal. After the verdict had been returned and judgment entered thereon it moved for judgment notwithstanding the verdict or in the alternative for new trial and the motion was denied.

Opinion.

It is contended on this appeal that the plaintiffs' petition did not state a cause of action and that when the facts alleged in it are considered in the light of the evidence it affirmatively appears that no right of recovery against the defendant existed. The contention is grounded upon the assertion that under the law of Missouri the right to maintain an action ex contractu for breach of warranty depends upon privity of contract and that a sub-purchaser who is not in privity with the seller cannot maintain an action for the seller's breach of warranty. It is contended that as plaintiff assumed no obligation to the defendant manufacturer but bought the tanks from and agreed to and did pay the independent dealer Midwest therefor, and Midwest ordered them from and agreed to and did pay defendant for them, there was no privity of contract between plaintiff and defendant and that Missouri law denies plaintiff any right to recover from defendant manufacturer for breach of any warranty it may have made in respect to the tanks. It cites Finks v. Viking...