Atlanta Tallow Co. v. John W. Eshelman & Sons, Inc., s. 40722

• Decision Date: 12 November 1964
• Docket Number: No. 1,40723,Nos. 40722,s. 40722,1
• Citation: Atlanta Tallow Co. v. John W. Eshelman & Sons, Inc., 140 S.E.2d 118, 110 Ga.App. 737 (Ga. App. 1964)
• Parties: ATLANTA TALLOW COMPANY, Inc. v. JOHN W. ESHELMAN & SONS, INC. JOHN W. ESHELMAN & SONS, INC. v. ATLANTA TALLOW COMPANY, Inc
• Court: Georgia Court of Appeals

Page 118

140 S.E.2d 118

110 Ga.App. 737

ATLANTA TALLOW COMPANY, Inc. v.JOHN W. ESHELMAN & SONS, INC.

JOHN W. ESHELMAN & SONS, INC. v.ATLANTA TALLOW COMPANY, Inc.

Nos. 40722, 40723.

Court of Appeals of Georgia, Division No. 1.

Nov. 12, 1964.

Rehearing Denied Dec. 1, 1964.

Syllabus by the Court

The trial court did not err in overruling the demurrers to counts 1 and 2 of the petition, nor did it err in sustaining the general demurrers to counts 5 and 6.The court erred in overruling the demurrers to counts 3 and 4.

John W. Eshelman & Sons, Inc. brought this suit for damages against Atlanta Tallow Company, Inc.The petition is in six counts.The basic facts alleged and relied on in each count are the same, the only difference between the various counts being the legal theory upon which recovery is sought.The defendant filed general and special demurrers to each count.The trial court overruled all demurrers to the first four counts, and that judgment, with respect to certain enumerated grounds of demurrer, is assigned as error in the main bill of exceptions.The court sustained the general demurrers to counts 5 and 6, and that judgment is assigned as error in the cross bill of exceptions.

Insofar as material to an understanding of the errors assigned and the rulings made herein, the petition alleged the following facts: Atlanta Tallow Company, Inc. has injured and damaged petitioner in the sum of $353,240.12 (as to counts 1 and 3; and $348,795.59 as to counts 2, 4, 5 and 6), by reason of the facts set forth in the petition.'5.At all times hereinafter mentioned, defendant was engaged in the business of manufacturing, processing and selling animal fat (or tallow as the same is also known) for use, among other things, as an ingredient in poultry feed and poultry feed concentrates.6.At all times hereinafter mentioned, plaintiff was and is now engaged in the business of manufacturing and selling poultry feed and poultry feed concentrates.7.Poultry feed concentrates manufactured by plaintiff consist of several substances including added animal fat, which provide nutrients and vitamins that aid the healthy and rapid growth of poultry.8.Such concentrates are sold by plaintiff to poultry dealers and hatchers who prepare a poultry feed by adding grain to the concentrate and feed such mixture to their poultry.8A.The poultry feeds manufactured by plaintiff contain approximately the same ingredients as plaintiff's poultry feed concentrates but also contain grain which is added by plaintiff during the manufacture of the feeds.Poultry feeds containing grain as above described are known as 'complete poultry feeds.'9.Poultry feed prepared by adding grain to such concentrate as well as complete poultry feed are highly injurious to poultry if the tallow used in the manufacture of such concentrate or complete poultry feed is impure or toxic.10.During September 1957, plaintiff made known to defendant that plaintiff used tallow as an ingredient in its poultry feed and poultry feed concentrates.11.At such time plaintiff further informed defendant that it was necessary that the tallow used in its poultry feed and poultry feed concentrates be pure and non-toxic because impure or toxic tallow would be highly injurious to poultry.12.On August 18, 1960, plaintiff placed an order with the defendant for 9,000 gallons of animal fat known as 'No. 1 Tallow,' to be equally divided into two deliveries to plaintiff's plant in Chamblee, Georgia.13.Pursuant to said order, defendant, through its agents and servants, delivered approximately 4,000 gallons of tallow to plaintiff's plant in Chamblee, Georgia, on August 29, 1960.14.Said tallow was purchased from defendant by plaintiff upon the warranty implied by law that the same was reasonably suited to the use intended.15.Prior to and at the time defendant delivered the tallow above described to plaintiff, defendant knew that said tallow was being purchased by plaintiff for use as an ingredient in its poultry feeds and poultry feed concentrates.At said time defendant had the further knowledge that if such tallow was impure or toxic, complete poultry feed manufactured by plaintiff containing such impure or toxic tallow, as well as poultry feed prepared by plaintiff's customers with poultry feed concentrates containing such impure or toxic tallow, would either be fatal to poultry, or would cause unhealthy birds, the market value of which would be substantially reduced.16.The tallow above described delivered by defendant to plaintiff on August 29, 1960, was in fact unwholesome, impure and toxic, and such that it was highly injurious to poultry.The condition of said tallow constituted a latent defect which was unknown to plaintiff and not discoverable by plaintiff in the exercise of ordinary care.17.By virtue of the aforesaid condition of said tallow at the time of said sale, defendant breached the warranty implied by law that the goods were reasonably suited to the use intended.'

Plaintiff further alleges that on August 29 and 30, 1960, it prepared a quantity of complete poultry feed and a quantity of its poultry feed concentrate, using as an ingredient therein the tallow delivered by the defendant on August 29, 1960; that the supplement or concentrate prepared by plaintiff was sold to five enumerated customers in quantities and amounts set forth therein; that the customers added grain to the concentrate and fed it to their poultry, and because of the impure and toxic condition of the tallow the poultry developed a disease or condition commonly called edema, which resulted in specified losses as to each of plaintiff's customers for which the plaintiff, because of an implied warranty of fitness which it made as immediate vendor to its customers became liable in damages in the amounts described; that plaintiff's customers presented plaintiff their claims for breach of such implied warranties and that plaintiff investigated said claims, and, after considerable negotiations, paid its customers the total sum of $348,795.59, in order to protect its goodwill, preserve its business, and fulfill its legal and moral obligations to said customers.'Said payments were made by plaintiff in good faith and were fair, reasonable, and just.'In addition to the aforesaid amounts plaintiff alleges that it incurred expenses for laboratory fees, feed and concentrate consumed in analysis, transportation, losses because of feed returned by customers and other unsold feeds disposed of as salvage, expenses for retaking the feed, and losses to poultry owned by plaintiff which the toxic feed was fed in other specified amounts, totaling $4,444.53, which, when added to the amounts paid its customers, totaled $353,240.12, the amounts sued for in counts 1 and 3.Counts 2, 4, 5, and 6 therefore seek recovery only for the amounts plaintiff allegedly paid its customers in order to protect its goodwill, preserve its business, and fulfill its legal and moral obligations to them.

James M. Embry, Joseph Lefkoff, William G. Grant, Newell Edenfield, Atlanta, for plaintiff in error.

Hansell, Post, Brandon & Dorsey, Albert G. Norman, Jr., John H. Boone, Atlanta, for defendant in error.

FRANKUM, Judge.

Counsel for the parties have argued this case before this court upon the broad general principles involved and without specific reference to the ruling of the court with respect to the particular grounds of demurrer.In the view which we take, a discussion of these general principles will dispose of the assignments of error, and it will be unnecessary to make specific reference to rulings on particular grounds of the demurrer.At the outset it may be well to note in passing that this case arose prior to the effective date of the Uniform Commercial Code, and that, insofar as they may be applicable, the provisions of Code Ch. 96-3, as the same existed at the time of the transaction under consideration, and cases decided thereunder are controlling here, rather than the provisions of Code Ch. 109A-2.

The defendant tallow company, plaintiff in error in the main bill, contends with respect to counts 1 and 2 of the petition that they fail to allege a breach of any implied warranty, because the warranty relied on in those counts is that the seller 'knows of no latent defects undisclosed.'Code§ 96-301(3).It is true that if the warranty relied on is that embodied in paragraph 3 of Code § 96-301, then knowledge by the seller of the latent defect which caused the damage must be alleged and proved in order for the plaintiff to recover.Snowden v. Waterman & Co., 100 Ga. 588, 591(4), 28 S.E. 121.However, the petition alleges in paragraph 14 that 'said tallow was purchased from defendant by plaintiff upon the warranty implied by law that the same was reasonably suited to the use intended.'This allegation plainly places the plaintiff's case within the purview of paragraph 2 of Code § 96-301, and shows that the plaintiff is relying upon the warranty implied by law that '[t]he article sold is merchantable, and reasonably suited to the use intended.'The plaintiff alleges that the defect existing in the tallow, to wit, its impure and toxic condition, was a defect which could not, in the exercise of ordinary care, be detected by the plaintiff, and it is unnecessary for the plaintiff to allege that the defendant had knowledge of the existence of the defect.Snowden v. Waterman & Co., supra(headnote 1).

The defendant next contends that the allegations as to the unsuitableness of the tallow amounts to no more than an allegation that the tallow sold by the defendant to the plaintiff was not reasonably suited to the particular use intended to be made of it by the plaintiff, and that, therefore, the petition does not set forth a cause of action with respect to this element.As was said by Judge Sutton, in Love v. Nixon, 82 Ga.App. 445, 453(2), 61 S.E.2d 423, 428, after reviewing a number of cases, it is clear...