Austin's of Monroe, Inc. v. Brown

• Decision Date: 21 August 1985
• Docket Number: No. 17153-CA,17153-CA
• Citation: 474 So.2d 1383
• Court: Court of Appeal of Louisiana — District of US
• Parties: AUSTIN'S OF MONROE, INC. dba Austin's Restaurant, Plaintiff-Appellant, v. Bill BROWN, dba Bastrop-Monroe Cash Register Sales and Service, et al., Defendants-Appellees.

Page 1383

474 So.2d 1383

AUSTIN'S OF MONROE, INC. dba Austin's Restaurant, Plaintiff-Appellant, v. Bill BROWN, dba Bastrop-Monroe Cash Register Sales and Service, et al., Defendants-Appellees.

No. 17153-CA.

Court of Appeal of Louisiana Second Circuit.

Aug. 21, 1985.

Blackwell, Chambliss, Hobbs & Henry by Douglas C. Caldwell, for plaintiff-appellant.

Farrar and Jefferson by Stephen A. Jefferson, for defendant-appellee, Brown, dba Bastrop-Monroe Cash Reg. Sales.

Shotwell, Brown & Sperry by George Wear, Jr., for defendant-appellee, Commodore Business Machines, Inc.

Boles & Mounger by Charles H. Ryan, for defendants-appellees, Pruden & Whatley.

Before HALL, MARVIN and SEXTON, JJ.

MARVIN, Judge.

In this action arising out of a contract to furnish a restaurant with computer hardware, software, and programming to control and monitor cash drawers, sales, inventory, and accounting, the restaurant appeals a judgment which decreed a reduction in the purchase price against the seller, and which rejected the restaurant's demands for damages in solido against the seller and the manufacturer of the computer software.

The trial court treated the agreement as a sale subject either to redhibition or quanti minoris and not as a "making of a work." Compare CC Arts. 2439 and 2756.

In this appeal the restaurant contends it should have judgment in solido against both the seller and the manufacturer for damages totaling $350,000 for such things as loss of profits, inconvenience, and overtime expense, and for either specific performance or rescission of the contract.

We agree with the trial court that the agreement should be treated as a sale and find that the trial court did not abuse its discretion to decree reduction in price instead of rescission (CC Art. 2543) or specific performance (CC Art. 1986). We also affirm the award of attorney fees to the restaurant and deny appellees' demands for damages for frivolous appeal, made in answer to the appeal. We amend the judgment, however, from $6,980 to $4,980 in favor of the seller to allow the buyer credit for $2,000 paid as a down payment.

FACTS

After incorporation, the restaurant planned to open for business in September 1980. Its principal officer and sole shareholder, Simmons, inquired to Brown, who sold and serviced cash registers, about cash registers for the restaurant in March 1980.

Brown proposed instead to furnish a computerized cash register system that would perform, as well, other functions useful to the restaurant. The restaurant agreed and eventually Brown prepared a letter agreement and an invoice in March 1980 containing provisions to this effect:

ITEMS SOLD:

                2 Commodore 2002 "Pet" Computers     $ 3,390
                3 Commodore printers                   3,285
                1 disk drive                           1,395
                Programming (software) and training    2,830
                                                     ---------
                Subtotal                             $10,900.
                10 percent discount                   (1,090.)
                                                     ---------
                TOTAL                                $ 9,810.
                

The system was to perform

1. All cash register functions to process different forms of payment (cash, check, credit card);

2. Menu list with prices;

3. Current inventory level with "buy signals" to indicate reorder points:

4. Payroll management, including timekeeping and payroll deductions;

5. Mailing list for customer promotions.

and to report on command

1. Daily cash shortage or overage;

2. Sales for each item or waitress, by table, with "tip control" for each;

3. Daily, weekly, monthly, and yearly sales, with separate reporting of state and local taxes;

4. Percentage of total sales attributable to each item.

The agreement provided for payments of "20% down, 20% when installed, 50% of balance in 30 days, remainder in 60 days ... 90 day full refund on equipment if not fully satisfied." Simmons paid $2,000 down and Brown's programmers, Whatley and Pruden, installed the system and began training Simmons' wife who was to supervise the system's operation. The system did not perform as expected by the restaurant or by Brown. The cash register function was substantially operational and the restaurant opened as scheduled on September 15, 1980.

Plans to perfect the programming and operation of the system after the opening did not succeed. Operator error sometimes caused the system to lose vital data. Power fluctuations or interruptions caused the system to fail and created delays in processing customer orders and checks. The cash drawers and computer terminal which were in the upstairs barroom continuously malfunctioned and were soon replaced by a conventional cash register.

One of the computer printers was removed and was replaced with a printer of another manufacturer that would print on conventional size paper used for customer checks. The discarded printer would not accommodate the narrower paper desired for customer checks.

Brown's programmers, Whatley and Pruden, continued their attempts to make the system perform as contemplated but without noticeable success.

Before Brown contracted with the restaurant, his employee, Whatley, succeeded in programming Commodore computers to perform cash register, inventory, accounting and reporting functions for several retail stores in the Monroe area in 1979. Brown was then purchasing Commodore hardware from a wholesaler in Texas. Commodore negotiated to acquire Brown's application of its hardware and Brown's programming for retail stores. In a written agreement in October 1980 Brown sold these programs to Commodore for a consulting fee and a small percentage or royalty on sales in which Brown, Whatley, and Pruden would share for a limited time. Commodore hired Whatley and Pruden to work on this system in Commodore's Dallas offices.

Brown hired another programmer, Rainbolt, to work on the system for the restaurant about the time that Whatley and Pruden left Brown to work for Commodore in Dallas some six weeks after the restaurant opened. Rainbolt's effort, and those of other programmers from Monroe area universities, did not succeed in making the restaurant system perform as expected. Mrs. Simmons manually maintained inventory and payroll records for the restaurant. Brown's system generated some sales reports, but only by shift, and did not produce or report data for inventory and cost control.

The restaurant sued Brown, Whatley, Pruden, and Commodore in February 1981, about five months after opening. Brown reconvened to demand the purchase price. Through the trial in April 1984, the restaurant continued to use the cash register function of the system. Some of the contemplated reporting functions of the system were never perfected or used.

THE TRIAL COURT'S REASONS AND JUDGMENT

The trial court dismissed all claims against Commodore, specifically finding no redhibitory vice in the Commodore hardware and that Commodore was not otherwise liable under any dealership agreement with Brown, or under the October 1980 agreement with Brown to promote and market a computerized cash register system for retailers. The court found that specific performance by Brown of the original agreement was "impossible" and that damages stemming from the system's failure to perform as represented by Brown were either not proved or were offset by the restaurant's use of the system.

The trial court treated the agreement as a sale subject to a reduction in price. Brown, however, was found to have sold "defective software" [a redhibitory vice] and the entire system price ($9,810) was reduced to $6,980, by the amount of the "software and training" charge in the original agreement ($2,830). The restaurant had paid only the $2,000 down payment which is not reflected in the judgment. Judgment was rendered in favor of Brown on his reconventional demand for the reduced purchase price ($6,980) and the restaurant was awarded $1,500 attorney fees.

The trial court dismissed the restaurant's demands against Pruden and Whatley, finding that they were not individually liable. The restaurant does not appeal this portion of the judgment. All appellees answered the restaurant's appeal seeking damages for frivolous appeal. CCP Art. 2164.

The trial court was impressed that Brown and his employees were "always willing and ready" to attempt to resolve problems with the system and on "short notice." The record supports the trial court's conclusion that the Commodore computer hardware was not defective and that the vices in the system arose out of the failure of Brown to provide adequate programming, software, and training.

The trial court also emphasized that Brown often offered either to refund the $2,000 down payment or to replace the system with a more conventional cash register system. The trial court declined to order rescission because the restaurant "persisted" or seemed content to use the system through the date of the trial and did not accept Brown's offer to refund or replace the system.

The court also noted that the restaurant, on the one hand, admitted the system is probably better than any system used in restaurants which have been observed by the corporate owner, while on the other hand, Brown admitted that the system could not be perfected to perform all of the functions contemplated in 1980.

The court declined to award damages for the additional reason that the restaurant enjoyed considerable benefits from the system for almost four years and full depreciation for tax purposes while paying only the $2,000 down payment. We note that after the upstairs barroom hardware was removed and some programming changes were made, the basic cash register feature of the system has apparently functioned as contemplated since early 1981.

Under this record we cannot determine what price a reasonably minded buyer and seller would have agreed on solely for the cash register function of the system had they known that the other functions of the system were defective. There is simply no...