Clark Equipment Co. v. Wheat

• Decision Date: 01 May 1979
• Citation: 92 Cal.App.3d 503,154 Cal.Rptr. 874
• Court: California Court of Appeals Court of Appeals
• Parties: CLARK EQUIPMENT COMPANY and Clark Leasing Corporation, a Delaware Corporation, Plaintiffs, Cross-Defendants and Appellants, v. William J. WHEAT and Ernest R. Wheat, Defendants, Cross-Complainants and Respondents. Civ. 41692.

Page 874

154 Cal.Rptr. 874

92 Cal.App.3d 503

CLARK EQUIPMENT COMPANY and Clark Leasing Corporation, a Delaware Corporation, Plaintiffs, Cross-Defendants and Appellants, v. William J. WHEAT and Ernest R. Wheat, Defendants, Cross-Complainants and Respondents.

Civ. 41692.

Court of Appeal, First District, Division 2, California.

May 1, 1979.

As Amended on Denial of Rehearing May 31, 1979.

Bronson, Bronson & McKinnon, San Francisco, for appellants.

Varni, Fraser, Hartwell & Van Blois, Hayward, for respondents.

TAYLOR, Presiding Justice.

Clark Equipment Company (Equipment) and Clark Leasing Corporation (Leasing) appeal from adverse judgments on separate jury verdicts in favor of William J. Wheat and Ernest R. Wheat (Wheat) for $4,500 and $5,000, respectively, for compensatory damages against Equipment, and for $500 each, in compensatory and $5,000 each, in punitive damages against Leasing on Wheat's cross-complaint for fraud, misrepresentation, breach of contract and abuse of process. Leasing argues that the evidence did not support the adverse judgment as to either compensatory or punitive damages; or, alternatively, that there was no basis for the award of punitive damages. Equipment argues that the adverse judgments erroneously based the award of damages on alternative and mutually inconsistent theories and, in any event, that Wheat had been awarded damages for the breach of a contract which was not enforceable, as it violated the statute of frauds (Civ.Code, § 1624). For the reasons set forth below, we have concluded that the judgments on the verdicts against Leasing and Equipment must be affirmed.

Although there are some contentions concerning the sufficiency of the evidence to support the verdict and judgment, a brief review of the pertinent facts will suffice.

Viewing the record in favor of the judgment, as we must, the following appears: For over 20 years, Wheat had operated an auto dismantling yard in Hayward, California, dba E & J Auto Wreckers, in which forklift trucks are an essential tool. The forklifts are used to lift and load crushed automobiles onto a flatbed truck and to carry automobiles and automobile parts around the yard.

Equipment, a Delaware corporation, is a large manufacturer and sells forklifts; Leasing, also a Delaware corporation, is Equipment's wholly controlled domestic subsidiary which finances retail time sales of new and used trucks and other similar products to the consumer. Leasing (now called Clark Equipment Credit Corporation) has a net worth of $88,345,000.

In February of 1973, Wheat owned a 10,000 pound TY 100 forklift which had been purchased from Equipment four years before. As the volume of Wheat's business had increased, Wheat decided to purchase a second, smaller and more maneuverable lift. Ernest Wheat went to Equipment's outlet in Oakland and talked to Mr. Baptista, the salesman from whom he had purchased the TY 100. He advised Baptista that he needed a second smaller forklift to dismantle, lift, load and carry automobile and automobile parts in his wrecking yard; he specifically indicated to Baptista that Wheat's business required a lift that would hoist at least 7,000 pounds 11 feet in the air.

Baptista indicated that he had a fully reconditioned York forklift which would meet these requirements and specifications. Wheat had owned a York TM 80 in 1970 and used it satisfactorily. Accordingly, on March 1, 1973, Wheat signed a $7,500 purchase order for the York forklift; the purchase order referred to an 11-foot upright standard, which meant that it would hoist 11 feet into the air. On March 7, 1973, Equipment wrote to Eldon Risser of Leasing to obtain approval of the transaction. On March 19, 1973, Risser replied to Mr. Coffee, Equipment's credit manager in Oakland, and approved the transaction. On Wheat's March 30, 1970 conditional sales contract for the York forklift, the words "Clark Leasing Corporation" appeared at the top of the printed agreement. The last pages of the printed agreement stated that it would be assigned to Leasing. However, in its body, Wheat's March 30, 1970 conditional sales contract stated that the seller was Equipment; the document purported to be signed by the branch manager of Equipment.

Uncontroverted evidence adduced at the trial indicated that Baptista made the representations to Wheat about the York forklift on March 1. However, Equipment did not purchase the used York TM 70 from Nevada Forklifts until March 28. The sales order for the York TM 70 signed by Wheat on March 1, 1973, and the invoice both stated that the York lift would be "reconditioned" and "be able to lift 7,000 pounds 11 feet in the air." The used TM 70 arrived in the Equipment yard on March 30, 1973; no work was done on it until April 2, 1973. The TM 70 was delivered to Wheat on April 6, 1973. Thus, Equipment and Leasing's business records established that their agent Baptista had made representations regarding the capabilities and qualities of the York lift which at that time Equipment and Leasing had never seen and did not yet own.

The TM 70 was generally defective, including its engine, brakes and a rusted hoist. A new tire was required immediately and the engine stopped running after three days. In addition, it could hoist only about 4,000 pounds and could not lift anything above 8 feet in the air. After a car was hoisted and nearly dropped on someone working underneath because of the TM 70's defective ram, Wheat ceased using it. Before this time, Wheat expended $600 in repairing the lift and had complained to Baptista who promised to send a repairman. However, the private repairman who arrived would not repair it as the hoist was worn out and indicated that a repair job would cost $750.

After Wheat's futile attempts to repair the TM 70 had failed, and after numerous complaints to Leasing in May and June of 1973, Equipment sent Buck Worthley, who explained that Baptista was no longer with the company. Wheat explained to Worthley that their auto wrecking business was losing money because the TM 70 would not operate and reiterated that Wheat's requirement for a forklift was one that would perform in accord with their prior specifications of hoisting at least 7,000 pounds 11 feet into the air. Worthley then advised Wheat to buy a more expensive forklift, a CHY 140, and agreed to take back the TM 70 that Equipment sold to Wheat. By this time, Wheat had made a $1,000 downpayment and two monthly payments of $542.58 each, and, therefore, asked Worthley whether or not the TM 70 could be a trade-in on the new CHY 140. Worthley advised Wheat that the TM 70 was not worth what Wheat had paid for it, and that Equipment would not accept it as a trade-in, but would relieve Wheat from any further payments on the TM 70 if Wheat agreed to purchase the more expensive CHY 140. As Wheat had no more cash, they were forced to trade in their only other operating forklift, the TY 100, in order to purchase the CHY 140. On the $10,750 purchase price of the CHY 140, Wheat was credited with $3,850 for the trade-in of the TY 100.

Based on Worthley's above mentioned representations as to the TM 70, Wheat signed a second conditional sales contract with Leasing on July 19, 1973, for the purchase of the CHY 140. As part of this transaction, Wheat returned the defective used TM 70 to Equipment, which accepted it. Equipment's log sheet indicated that it received the TM 70 on June 19, 1973. Wheat would not have purchased the second and more expensive CHY 140 forklift if they had not been released from liability on the conditional sales contract on the TM 70. Wheat expected to receive credit on the CHY 140 for its equity on the used York, which was then over $2,000 ($1,000 downpayment and two payments of $542 each).

The conditional sales contract for the purchase of the CHY 140 was on an Equipment form. The form, however, mentioned Leasing on every page and indicated that the contract was to be assigned to Leasing. The invoice for the CHY 140 stated that the forklift is "sold to Clark Leasing Corporation in care of E & J Auto Wreckers." About this time, Wheat received and signed a document assigning the TM 70 and gave it to Worthley; subsequently, Leasing approved the assignment and forwarded the papers to AAA Auto Wrecking.

After Wheat had purchased the CHY 140 and returned the defective TM 70, Worthley called to indicate that he had sold the used TM 70 to AAA Auto Wreckers in Hayward owned by Merrill Brown. Worthley's deposition indicated that Brown had told him that he needed the York TM 70 for a job in northern California. Brown then commenced to make payments to Leasing, but stopped after the TM 70 forklift would not function.

After Brown stopped making payments on the York TM 70, Equipment was notified by Bill Hickey of Leasing's headquarters in Michigan that Wheat's conditional contract for the York TM 70 was in default. Leasing then talked with Wheat. Wheat received several telephone calls from Hickey who requested that Wheat make payments on the TM 70. Hickey explained that there was now a delinquency on the conditional sales contract signed by Wheat. At first, Wheat believed that Hickey was referring to the CHY 140 contract and assured Hickey that the payments were current and that Leasing's records were wrong. After several conversations, Wheat ascertained that, in fact, Hickey was referring to the contract for the TM 70. After Wheat explained the matter, Hickey indicated that he would straighten it out.

In addition to the telephone calls from Hickey, Wheat received numerous telephone calls from Coffee. On September 27, 1973, Coffee had received a teletype from Hickey asking Coffee to follow up on Wheat's delinquency on the TM 70 payments. In response to one of Coffee's telephone calls, Wheat offered to assist Equipment and went to AAA Auto Wrecking. At Wheat's request, Brown of AAA wrote a check in the amount of one monthly payment on the TM 70, which Wheat...