Art Hill Ford, Inc. v. Callender, 3-879A217

• Decision Date: 24 July 1981
• Docket Number: No. 3-879A217,3-879A217
• Citation: 423 N.E.2d 601
• Parties: ART HILL FORD, INC., Appellant (Defendant below), v. Kenneth CALLENDER and Jeannette Callender, Appellees (Plaintiffs below).
• Court: Indiana Supreme Court

Page 601

423 N.E.2d 601

ART HILL FORD, INC., Appellant (Defendant below), v. Kenneth CALLENDER and Jeannette Callender, Appellees (Plaintiffs below).

No. 3-879A217.

Supreme Court of Indiana.

July 24, 1981.

Joel C. Levy, Gregory R. Lyman, Singleton, Levy & Crist, Highland, for appellant.

William J. Cunningham, Robert M. Schwerd, Smith, Hilbrich, Cunningham & Schwerd, Highland, for appellees.

HUNTER, Justice.

This case is before this Court upon the petition to transfer of plaintiffs-appellees, Kenneth and Jeannette Callender. The Callenders prevailed at trial when the jury returned a verdict against the defendants Art Hill Ford, Inc. and Ford Motor Company on a complaint alleging breach of warranty and negligence. Compensatory damages were assessed against both defendants and punitive damages were assessed against Art Hill Ford. The compensatory damage awards were satisfied but Art Hill Ford appealed the award of punitive damages. The Court of Appeals, Third District, reversed the award of punitive damages on the basis that the evidence was insufficient to sustain the award. Art Hill Ford, Inc. v Callender, (1980) Ind.App., 406 N.E.2d 340 (Staton, J., dissenting).

We now grant transfer and reverse. The opinion and decision of the Court of Appeals are hereby vacated, and plaintiffs' petition to transfer is granted. The judgment of the trial court is affirmed.

Since this case deals with the question of the sufficiency of the evidence on the issue of punitive damages, we first note the well-settled law concerning our standard of review. Our function is not to sit as a trial court, but rather to review and correct errors of law and to accept the facts as they are presented so long as probative evidence supports them. Melloh v. Gladis, (1974) 261 Ind. 647, 309 N.E.2d 433. The reviewing court does not reweigh the evidence nor determine the credibility of witnesses, but will sustain a verdict if there is evidence of probative value to support it. Where there is a conflict in the evidence, the trier of fact in the court below must resolve that conflict. Brand v. Monumental Life Insurance Co., (1981) Ind., 417 N.E.2d 297.

Next, we consider the law governing the question of punitive damages in a contract action. This Court has clearly stated that while punitive damages are not generally recoverable in contract actions, there are certain exceptions to this rule. Where the conduct of a party, in breaching his contract, independently establishes the elements of a common law tort, punitive damages may be awarded for the tort. F. D. Borkholder Co., Inc. v. Sandock, (1980) Ind., 413 N.E.2d 567; Hibschman Pontiac v. Batchelor, (1977) 266 Ind. 310, 362 N.E.2d 845; Vernon Fire & Casualty Ins. Co. v. Sharp, (1976) 264 Ind. 599, 349 N.E.2d 173. Punitive damages may be awarded in addition to compensatory damages whenever the elements of fraud, malice, gross negligence or oppression mingle in the controversy, and it can be shown that the public interest will be served by the deterrent effect of the punitive damages. Hibschman Pontiac v. Batchelor, supra; Vernon Fire & Casualty Ins. Co. v. Sharp, supra.

The jury in this case awarded compensatory damages against Art Hill Ford in the amount of $2,411 and punitive damages in the amount of $7,000. They awarded compensatory damages against Ford Motor Company in the amount of $4,822; after a remittitur, judgment was entered against Ford Motor Company for $2,411. From the evidence in this case, the jury could have found separate tortious conduct which mingled with the breach and entitled plaintiffs to the punitive damage award.

The evidence from the record most favorable to the verdict was succinctly stated by the Court of Appeals:

"Kenneth Callender purchased a 1976 Ford four-wheel drive pickup truck designed for off-road use from Art Hill Ford on April 20, 1976. Two days later, while driving off the road, the front axle broke. Due to the nature of the damage, Art Hill Ford had the vehicle inspected by a Ford Motor Company representative so that repair could be authorized under the warranty before work began. The representative inspected the truck and authorized the repair in the last week of April. After the work was authorized, the Callenders were told that the parts had to be ordered and would take 10 days to two weeks to arrive. In Mid-May, Kenneth contacted Art Hill Ford and was told that the parts had not arrived and were on back order. Art Hill Ford was contacted on a regular basis thereafter and each time the Callenders were told that the parts were still on back order. Kenneth was told on several occasions that the truck would be ready the 'next week.' At the end of May, Mrs. Callender was told that the truck would definitely be repaired by the Fourth of July holiday weekend. On July 2, Kenneth was permitted to take the truck although the repair to the front axle was not yet completed since a part had not come in. Because the truck was not completely repaired, some restrictions were imposed on the use of the truck.

"Art Hill Ford blamed the delay in fixing the truck on the difficulty in obtaining the necessary parts. The parts manager testified that the part was not in stock in any Ford parts depot in the United States and that a front axle was not a part that a dealer would normally have in stock. Further compounding the difficulty was the fact that the incident occurred just prior to a new model year. The parts manager testified that he made numerous calls to Ford and other dealers around the country in order to locate the necessary parts." Art Hill Ford, Inc. v. Callender, supra, at 341-342.

As Judge Staton pointed out in his dissent, the evidence also shows that at one point before July 2, Callender's mother contacted the Ford dealer representative in Melrose Park, Illinois, regarding the necessary parts. The representative ran a computer check of inventory at Ford warehouses, finally located the parts, and had them shipped to Art Hill Ford. Even though the axle was fixed by July 2, Callender's problems with the truck were not over:

"Over the Fourth of July holiday, the Callenders went on a trip to Benton Harbour, Michigan in the truck. On the way, Kenneth noticed a strange noise he later determined to be a problem with the transfer case. He returned the truck to Art Hill Ford on July 19th and was told that the truck would be repaired.

"Kenneth, who had training in automotive repair,...