American Can Company v. Horlamus Corporation

• Decision Date: 23 February 1965
• Docket Number: No. 21573.,21573.
• Citation: American Can Company v. Horlamus Corporation, 341 F.2d 730 (5th Cir. 1965)
• Parties: AMERICAN CAN COMPANY, Appellant, v. HORLAMUS CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

341 F.2d 730 (1965)

AMERICAN CAN COMPANY, Appellant, v. HORLAMUS CORPORATION, Appellee.

No. 21573.

United States Court of Appeals Fifth Circuit.

February 23, 1965.

C. Clyde Atkins, Walton, Lantaff, Schroeder, Atkins, Carson & Wahl, Miami, Fla., for appellant, American Can Co.

Kenneth L. Ryskamp, Fuller & Brumer, Miami, Fla., for appellee.

Before TUTTLE, Chief Judge, RIVES, Circuit Judge, and DYER, District Judge.

DYER, District Judge.

Appellee, Plaintiff below, HORLAMUS CORPORATION, was engaged in the bakery business and, among other things, produced canned bread which could be stocked for some time by grocery stores.

HORLAMUS entered into a contract with CANNED BREAD COMPANY, pursuant to which the former agreed to sell to the latter its entire canned product. CANNED BREAD thereafter purchased a quantity of cans from AMERICAN CAN COMPANY which were delivered (at the direction of CANNED BREAD) to HORLAMUS and, after having been packed by it, were shipped to CANNED BREAD.

A second quantity of 54,096 cans (which are those involved in this action) were similarly purchased by CANNED BREAD and shipped by AMERICAN to HORLAMUS. When HORLAMUS commenced packing this shipment, it was discovered that an unusually high percentage of the cans were defective. HORLAMUS notified CANNED BREAD of this, who in turn notified AMERICAN.

AMERICAN subsequently advised CANNED BREAD that AMERICAN would accept the responsibility for this shipment of cans because they were not manufactured according to specifications. AMERICAN offered to replace the entire shipment but CANNED BREAD declined. Finally, CANNED BREAD agreed that AMERICAN should take back the unused cans for a full credit to CANNED BREAD of the cost of this shipment, together with a refund of freight paid, with the understanding that AMERICAN would be released from all claims. This was accomplished.

HORLAMUS, claiming a plant operating expense loss and production profit loss because of the defective cans, brought this action against AMERICAN for breach of implied warranty.

At the trial, AMERICAN offered in evidence the sales contract between it and CANNED BREAD, which contained a warranty and limitation of liability clause reading in pertinent part:

"* * * All containers sold under this agreement are warranted by the supplier against faulty workmanship and defective materials, but such containers are covered by no other warranties, either express or implied. The supplier shall be liable to the buyer for breach of the express warranty set forth in this paragraph, but the supplier shall not otherwise be liable to any claimant, either in tort or in contract, or any claim relating to the containers sold under this agreement. In no event shall the supplier\'s liability exceed the cost to buyer of the defective containers and any materials packed in them * * *"

An objection of HORLAMUS to this portion of the contract was sustained by the District Court on the theory that the warranty and contractual limitation of liability was not available to AMERICAN in a suit by the ultimate consumer because of an implied warranty which the Florida law reads into all manufactured products.

The complaint alleged privity between HORLAMUS and AMERICAN, as did an Affidavit by the President of HORLAMUS filed in opposition to a Motion for Summary Judgment. Counsel for HORLAMUS stated that HORLAMUS was virtually a subsidiary of CANNED BREAD. The District Court, at the close of the evidence and over the objection of AMERICAN, permitted HORLAMUS to amend its Complaint to state a claim for implied warranty of fitness without privity, and thereafter instructed the jury that there was liability as a matter of law, leaving the amount of damages for ascertainment.

The jury returned a verdict in favor of HORLAMUS in the amount of $11,860.20, which was subsequently reduced...