Canon, U.S.A. v. Carson Map Co., Inc., 1977

• Decision Date: 29 November 1982
• Docket Number: No. 1977,1977
• Citation: 647 S.W.2d 321
• Parties: CANON, U.S.A., A Corporation, Appellant, v. CARSON MAP COMPANY, INC., Appellee. CV.
• Court: Texas Court of Appeals

Page 321

647 S.W.2d 321

CANON, U.S.A., A Corporation, Appellant, v. CARSON MAP COMPANY, INC., Appellee.

No. 1977 CV.

Court of Appeals of Texas Corpus Christi.

Nov. 29, 1982.

Rehearing Denied Jan. 13, 1983.

H. Clay McGuffey, Royston, Rayzor, Vickery & Williams, Brownsville, for appellant.

William L. Hubbard, Adams, Graham, Jenkins, Graham & Hamby, Harlingen, for appellee.

Before NYE, C.J., and YOUNG and GONZALEZ, JJ.

OPINION

YOUNG, Justice.

This is an appeal from a judgment awarding the plaintiff damages in a suit brought under Section 17.50 of the Deceptive Trade Practices-Consumer Protection Act (DTPA). ¹

The case involves the purchase of a Canon NP 5000 copying machine by Carson Map Company, Inc. (Carson) from Walk Office Equipment Company (Walk). These machines are made in Japan and distributed by Canon U.S.A., Inc. (Canon) to United States dealerships for sale to the public.

Carson's principal business is publishing plat books. In the summer of 1978, it was engaged in a project to publish a plat book for the City of San Antonio. This book contained 2300 pages assembled in three volumes. Looking for a method to reduce the cost of mass producing the book, Carson answered a newspaper advertisement in a national newspaper about the Canon NP 5000 copier. A salesman of Walk, Ken Sorensen, called upon Carson and talks began concerning purchase of the machine. Since Walk did not have an NP 5000 in stock, Carson's president, Prescott Lloyd Carson, went to the Canon U.S.A. showroom in Dallas where a representative of Canon demonstrated the machine. In the conversations that led to the purchase of the machine, Carson's president told both Sorensen and the Canon representative how he planned to use the machine. He told them that he needed a machine that would permit printing on both sides of the paper and that would make 40,000 image impressions per month on paper twelve inches wide. According to Carson's president, both representatives represented that the NP 5000 could meet these performance requirements. Induced by these representations, Carson bought the machine.

The machine did not perform as expected. When using it to copy on both sides of the paper, the quality of the copy deteriorated rapidly with the increase in the number of copies made. Carson found the machine could not mass produce its book and as a consequence it was compelled to abandon the San Antonio project. Expert witnesses testified that Carson's experience was predictable because the machine was not designed to copy on both sides of the paper. While the machine is capable of copying on both sides of the paper, the regular use of it in this manner inevitably leads to poor copy quality and machine break down.

Carson sued Walk and Canon alleging that they represented the machine to have characteristics and uses it did not have, ² that it relied on those representations in making the purchase, and that as a result of the purchase it suffered monetary losses.

Walk did not appeal. Appellant Canon, in five points of error, complains of jury misconduct and challenges the actual and exemplary damage findings of the jury.

In its first point of error, appellant contends there is no evidence that the statements alleged to have been made by a Canon representative were authorized or ratified by the corporation; therefore, the trial court erred in awarding exemplary damages against the corporation. One circumstance under which a corporation may be held liable for exemplary damages is when its agent, at the time of the wrongful act, was employed in a managerial capacity and was acting within the scope of his employment. Fisher v. Carrousel Motor Hotel, Inc., 424 S.W.2d 627, 630 (Tex.1967).

Carson's president testified that the Canon representative who conducted the copy machine demonstration in Dallas was the "regional service manager." There was also testimony that while "service managers" in the Dallas office normally did not do demonstrations they were authorized to perform this task. We hold that this testimony was sufficient to support a finding that the offending representative was acting in a managerial capacity and within the scope of his employment. In reaching this holding we have viewed the evidence in its most favorable light in support of the finding considering only the evidence and the inferences which support the finding and rejecting the evidence and the inferences which are contrary to the finding. Burnett v. Motyka, 610 S.W.2d 735 (Tex.1980). Appellant's first point is overruled.

In its third point, the appellant urges the following:

"The trial court erred in failing to sustain Appellant's Motion for Judgment Non Obstante Verdicto asserted against Appellee for the amount of damages found by the jury in response to Special Issue No. 25 because the award of punitive damages ($25,000.00) by the jury is against the overwhelming weight and preponderance of the evidence."

Even though the appellant seems to be complaining of the factual insufficiency of the evidence ("against the overwhelming weight"), we will review this third point as a legal insufficiency of the evidence ("no evidence") complaint. See Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Texas L.Rev. 361 (1960). In fact, in the trial court the appellant couched its motion for judgment non obstante verdicto in "no evidence" terms.

As we have noted, appellee's suit arose, in part, from the representation by the appellant that the copier that appellee bought would make two-sided copies. The copier, according to the evidence, failed to satisfactorily perform the two-sided copying function. As a result appellee sought, and the jury awarded in its verdict, exemplary damages against the appellant. We also note that appellee elected to attempt to recover exemplary damage instead of three times the actual damages under the DTPA as it existed at the time the suit arose.

We will be guided, therefore, by rules developed by case law, instead of the statutory rules regarding exemplary damages in the DTPA. In A.L. Carter Lumber Co. v. Saide, 140 Tex. 523, 168 S.W.2d 629 (Tex.1943), our Supreme Court held that exemplary damages cannot be recovered for a simple breach of contract, unaccompanied by a tort, though brought about capriciously and with malice. See William B. Roberts, Inc. v. McDrilling Company, Inc., 579 S.W.2d 335, 340 (Tex.Civ.App.--Corpus Christi 1979, no writ). The result of the actions of the appellant here is more like a breach of warranty than a breach of contract, but...