Beneficial Commercial Corp. v. Cottrell
| Decision Date | 12 October 1984 |
| Docket Number | No. 83-343,83-343 |
| Citation | 212 Mont. 493,688 P.2d 1254 |
| Parties | , 39 UCC Rep.Serv. 1308 BENEFICIAL COMMERCIAL CORPORATION, Plaintiff and Respondent, v. James E. COTTRELL and Madeline Cottrell, Defendants and Appellants. |
| Court | Montana Supreme Court |
Smith Law Firm, Charles A. Smith, Helena, for defendants and appellants.
Hull & Sherlock, Helena, for plaintiff and respondent.
Defendants, James and Madeline Cottrell, who leased from plaintiff, Beneficial Commercial Corporation, a large offset printing press, appeal a summary judgment entered against them in Lewis and Clark County District Court, the effect of which made them liable for a lump-sum lease payment in the amount of $9,351.60. We reverse on the ground that the transaction involved was actually a sales agreement and that a genuine issue of fact exists under sections 30-2-601 and -602, MCA (the Uniform Commercial Code) as to whether the printing press was properly and timely rejected because it was alleged to be defective.
In contending that the summary judgment was improperly granted the lessees raise three issues, but none of them addresses the dispositive issue of why, under Rule 56, M.R.Civ.P., a material question of fact remains for trial determination. They contend first that they properly rejected the goods after delivery and therefore are not liable for the full lease payment. Second, they contend that the transaction was a bailment and therefore that the warranty provisions of section 70-8-101, MCA, are applicable. Third, they contend that the warranty disclaimer clause in the agreement (paragraph 5) is unconscionable, and therefore that the agreement is unenforceable. As we have stated, we reverse and remand for trial on the question of whether the lessees properly and timely rejected the printing press.
The Cottrells leased the printing press from Parliament Leasing and Parliament in turn assigned its interest in the lease to Beneficial Commercial Corporation. The lessees were required to make 59 monthly payments of $177.00 each and at the end of that term, upon payment of a small sum, they could obtain title to the printing press. They made two monthly payments, but then stopped, allegedly because they believed the printing press to be defective. They contend that they notified the lessor immediately and more than once that the press was defective. The lessor has neither admitted nor denied this contention. It appears that the press remains in the possession of the lessees, in the condition it was in when leased.
In moving for summary judgment, the lessors contended that section 5 of the lease agreement waived all implied warranties, that the law permitted such a waiver, and therefore that the lessees had no right to assert a breach of warranty defense. One trial court denied the motion for summary judgment, but later another trial court assumed jurisdiction and the lessors renewed their motion for summary judgment before the new judge. The second judge granted the motion for summary judgment, and in doing so, erroneously relied on All-States Leasing Co. v. Top Hat Lounge, Inc. (Mont.1982), 649 P.2d 1250, 39 St.Rep. 425, which upheld a lease provision disclaiming warranties as long as the disclaimer clause was not unconscionable. But All-States Leasing has no application to this case.
In All-States Leasing, the lessors sued for lease payments owed on an automated liquor dispenser. The case was decided in part on the ground that the warranty disclaimer provisions in the lease agreement were not unconscionable. Although this Court analogized to the Uniform Commercial Code in determining the issue of conscionability, the question of whether the lease was in fact a contract of sale was not involved. Nor did the lessees ever attempt to reject the equipment on the ground that it was defective or for any other reason. In fact, because of a failure to comply with requests to admit, the lessees were deemed to have admitted under Rule 36, M.R.Civ.P., that the dispenser was not defective. By analogy, we held that the validity of the warranty disclaimer clause would be determined by the unconscionability test set forth in section 30-2-302, MCA, modeled after section 2-302 of the Uniform Commercial Code.
The lease agreement here contained an option to purchase for a small sum at the end of the lease agreement, and so it...
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