Council Brothers, Inc. v. Ray Burner Company
| Decision Date | 05 February 1973 |
| Docket Number | No. 71-3585.,71-3585. |
| Citation | 473 F.2d 400 |
| Parties | COUNCIL BROTHERS, INC., Plaintiff, v. RAY BURNER COMPANY, Defendant-Third Party Plaintiff-Appellant-Cross-Appellee, v. BURNHAM CORPORATION, Third Party Defendant-Appellee-Cross-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
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H. O. Pemberton, Tallahassee, Fla., for appellant, Ray Burner Co.
Gerard A. Weiss, Irvington, N. Y., Truett & Watkins, Tallahassee, Fla., for appellee, Burnham Corp.
Dexter Douglass, Tallahassee, Fla., for Council Brothers, Inc.
Before JOHN R. BROWN, Chief Judge, TUTTLE and INGRAHAM, Circuit Judges.
This case involves primarily a question as to the proper measure of damages for breach of an express written warranty relative to the sale of goods. We are of the view that the district court, in entering judgment for appellant Ray Burner Company, failed to take into account various items of incidental damages to which the appellant, under the provisions of the Uniform Commercial Code, was entitled and, therefore, we remand the case to the district court for a hearing on the limited question of damages.
The operative facts of this case are as follows: Burnham Corporation, appellee and cross-appellant herein, maintains a steel fabricating plant in Lancaster, Pennsylvania. Ray Burner Company, the appellant, is a manufacturer of oil and gas burners and controls. Early in 1967 Ray Burner ordered from Burnham a steel boiler, commonly known as a pressure vessel, which was to be built in accordance with Ray Burner's design and specifications. Subsequently, in July, Burnham delivered the completed boiler to Ray Burner for a purchase price of $2299. Ray Burner then mounted a burner and various fittings and controls on the boiler and sold the assembled package to Council Brothers, Inc., a mechanical contractor engaged in the installation of heating and cooling systems, for $5,859.73. In the fall of 1967 Council Brothers installed the unit in a school in Tallahassee, Florida.
Shortly thereafter the boiler was found to be leaking and Council Brothers approached Ray Burner with a request that this defect be remedied.1 Ray Burner in turn advised Burnham of the leakage and asked that Burnham inspect the unit. In March, 1968 a representative of Burnham undertook such an inspection and concluded that the leakage was caused by the build-up of sludge on the rear tube sheet of the boiler. He advised that the boiler be thoroughly cleaned. Ray Burner conveyed this advice to Council Brothers which, in accordance therewith, attempted to remedy the situation, but despite these efforts, the boiler continued to leak.
In July, 1969, Council Brothers brought an action against Ray Burner for breach of warranty.2 The nexus of the complaint was that Ray Burner had sold to Council Brothers a hot water boiler which proved to be defective, that the boiler had been sold under an implied warranty, and that by reason of the defect Council Brothers had sustained considerable damages. Pursuant to the provisions of Rule 14(a) of the Federal Rules of Civil Procedure, Ray Burner impleaded Burnham Corporation, the manufacturer of the boiler, as third party defendant.
In its third party complaint Ray Burner alleged that the leakage in the boiler, if caused by inherent defects, constituted a breach of Burnham's implied warranty of fitness for a particular purpose and demanded that Burnham idemnify it for the full amount of the judgment, if any, which might be entered in favor of Council Brothers and against Ray Burner. By its third party answer Burnham denied that the boiler was defective and as a separate defense alleged that the boiler was sold to Ray Burner subject to an express written warranty3 which guaranteed the boiler for a period of one year from date of shipment and that Ray Burner had failed to present its claim within this one year period.
Trial of the action was set for June 1, 1970. However, prior to the submission of evidence the following colloquy between the court and counsel for Ray Burner took place:
On the basis of that understanding the trial (hereafter the "original action") was limited to the issues raised by Council Brothers against Ray Burner, which included the question whether the boiler itself was defective. Though counsel for Burnham did not actively participate, he was at all times present during these proceedings.
At the conclusion of the trial the court entered these findings of fact:
Upon these findings and upon the conclusion that Ray Burner had breached its implied warranty to Council Brothers, the court entered judgment in favor of Council Brothers and against Ray Burner in the amount of $13,455.21 plus interest, which figure included each of the items of damage listed in the court's findings of fact.
Subsequently the court undertook to consider the issues raised by Ray Burner's third party claim against Burnham.4 This third party action initially came on for trial on September 15, 1970. However, the case was continued when it became apparent that Ray Burner, over Burnham's objection, intended to rely upon the court's findings of fact in the original action, in particular, the finding that the boiler was inherently defective. As to the question thus raised the court held, in an order dated October 16, 1970, that Burnham was bound by the earlier judgment and thus could not thereafter dispute the factual determination that the boiler was defective. On cross-appeal Burnham here attacks the propriety of that order.
Trial of the remaining issues was held on February 26, 1971. At the close of the evidence Burnham moved to dismiss the third party complaint (which motion the court treated as if it were one for a directed verdict) on the grounds that there was no cause of action stated by Ray Burner for breach of an implied warranty and for the further reason that Ray Burner's claim was barred by the one year limitation contained in the express written warranty. The court held that while there was no implied warranty under the particular circumstances of this case upon which Ray Burner might recover, nonetheless Burnham had breached its express warranty to Ray Burner and was therefore liable in damages to Ray Burner as a result of the breach. The court subsequently entered judgment in favor of Ray Burner for a total of $2,752.60 plus interest. Ray Burner moved to amend this judgment to include the incremental amount for which it was liable to Council Brothers, but the motion was denied. Ray Burner now appeals.
We consider first Burnham's cross appeal. Burnham urges that it was error for the trial court to hold that Burnham was bound by the findings of fact rendered in the original action between Council Brothers and Ray Burner. It is argued that since Council Brothers had failed to amend its complaint to include Burnham as a party defendant to the original action and since Burnham had not filed an answer to Council Brothers' complaint against Ray Burner, Burnham had been neither a party to nor a participant in the original action. This contention, it is asserted, is further supported by the fact that counsel for Ray Burner, at the commencement of the original trial, had specifically stated that there was no necessity to try the third party claim at that time, and the trial court thereupon agreed, in effect, to try the third party claim separately.
We do not agree. Of course, we might be disposed to treat of the issue differently were we satisfied that Burnham was only tangentially connected to the original action. However, such evidence as there is indicates that Burnham was in fact directly involved in the trial between Council Brothers and Ray Burner, though perhaps as a silent partner to the original defendant.
Of particular significance is the fact that Burnham was at all times during the trial represented by counsel, though counsel did not actively "participate" (in the sense that he did not examine and cross-examine witnesses nor present independent evidence). However, since Ray Burner's third party claim against Burnham was essentially a claim for indemnity of any sum which might be assessed against Ray Burner in favor of Council Brothers, it must be assumed that the presence of Burnham's counsel was for the purpose of protecting Burnham's interests. For that reason and for the additional reasons stated in the trial court's order, portions of which are reprinted in the margin,5 we are of the view that the court properly held that Burnham was bound by the judgment in the original action.
We turn then to the issue raised by Ray Burner in its appeal, to wit, that the trial court erred in failing to award to Ray Burner damages from Burnham in the full amount for which Ray Burner was held liable to Council Brothers. To the contrary, Burnham urges that the court's award of damages, in the amount of $2,752.60, was the maximum to which Ray Burner was entitled under the terms of the written...
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