Atlas Mut. Ins. Co. v. Moore Dry Kiln Co., A7611-15509

• Decision Date: 29 January 1979
• Docket Number: No. A7611-15509,A7611-15509
• Citation: 589 P.2d 1134,38 Or.App. 111
• Parties: , 25 UCC Rep.Serv. 1360 ATLAS MUTUAL INSURANCE COMPANY, a Missouri Corporation, and North American Company for Property and Casualty Insurance, a New York Corporation, Appellants, v. MOORE DRY KILN COMPANY of Oregon, an Oregon Corporation, Defendant-Respondent and Third Party Plaintiff, v. The PARTLOW CORPORATION, a New York Corporation, and Pacific Scientific Company, a California Corporation, Third Party Defendants. ; CA 11119.
• Court: Oregon Court of Appeals

Page 1134

589 P.2d 1134

38 Or.App. 111, 25 UCC Rep.Serv. 1360

ATLAS MUTUAL INSURANCE COMPANY, a Missouri Corporation, and

North American Company for Property and Casualty

Insurance, a New York Corporation, Appellants, v. MOORE DRY KILN COMPANY of Oregon, an Oregon Corporation, Defendant-Respondent and Third Party Plaintiff, v. The PARTLOW CORPORATION, a New York Corporation, and Pacific

Scientific Company, a California Corporation,

Third Party Defendants.

No. A7611-15509; CA 11119.

Court of Appeals of Oregon.

Argued and Submitted Dec. 20, 1978.

Decided Jan. 29, 1979.

Thomas S. Moore, Portland, argued the cause for appellants. With him on the briefs was Morrison, Dunn, Cohen, Miller & Carney, Portland.

Gary V. Abbott, Portland, argued the cause for defendant-respondent and third party plaintiff. With him on the brief was Jones, Lang, Klein, Wolf & Smith, Portland.

No appearance for third party defendants.

Before SCHWAB, C. J., and RICHARDSON and JOSEPH, JJ.

SCHWAB, Chief Judge.

The issue here is whether a provision in a sales contract limiting the seller's liabilities operated as a bar to a tort action based on both strict liability and negligence.

Plaintiffs' insured, Seneca Sawmill, sustained fire damage to a dry kiln purchased from defendant. Plaintiffs compensated Seneca for its losses and sought to recover as subrogees against defendant. They alleged that the fire was caused by a defect in one of the kiln's component parts and that they were entitled to relief on either a strict liability or negligence theory. Defendant interposed as an affirmative defense a limitation-of-liability provision contained in the written contract of sale of the allegedly defective kiln. The provision states:

"THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY, EXCEPT AS SPECIFICALLY SET FORTH HEREIN. All new material furnished hereunder is warranted against any defect in materials or workmanship, providing claim therefor is made in writing within 1 year after installation of such equipment. Our obligation on any claims is limited to replacement or repair of the defective part or material, f. o. b. North Portland, Oregon. Except as above stated, we will not be liable for any loss, injury or damages to persons or property resulting from failure or defective operation of any material or equipment furnished hereunder or delay in performance of this agreement, nor will we be liable for direct, indirect, special or consequential damages of any kind sustained by you from any cause. This writing expresses the entire agreement between us and no other agreement, statement or representation shall be binding unless reduced to writing, signed by an officer of this Company and attached hereto."

At the conclusion of a separate trial to the court on defendant's affirmative defense, ¹ the court found that although no representative of Seneca recalled reading the provision and defendant's salesman could not remember discussing it with any of the mill company personnel prior to the execution of the contract, the provision was conspicuous. Seneca was charged with notice of the provision and held to be bound by its terms. Plaintiffs contend that the trial court erred in concluding that the provision was enforceable, and that, in any event, the provision did not preclude maintaining an action for negligence.

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