Daughtrey v. Ashe

• Decision Date: 10 January 1992
• Docket Number: No. 910054,910054
• Court: Virginia Supreme Court
• Parties: , 16 UCC Rep.Serv.2d 294 W. Hayes DAUGHTREY, et al. v. Sidney ASHE, et al. Record

Page 336

413 S.E.2d 336

243 Va. 73, 16 UCC Rep.Serv.2d 294

W. Hayes DAUGHTREY, et al. v. Sidney ASHE, et al.

Record No. 910054.

Supreme Court of Virginia.

Jan. 10, 1992.

Walter D. Kelley, Jr. (Kevin L. Keller, Willcox & Savage, on briefs), for appellants.

Michael I. Ashe (Ashe and Weinstein, on brief), for appellees.

Present: All the Justices.

WHITING, Justice.

In this dispute between the buyers and the sellers of a diamond bracelet, the principal issues arise under the Uniform Commercial Code--Sales. Code §§ 8.2-101 through 8.2-725. Specifically, they are: (1) whether the sellers' appraisal statement of the grade of diamonds on the bracelet is a description of the goods under Code § 8.2-313(1)(b), and therefore an express warranty; and (2) whether such a statement made the description "a part of the basis of the bargain" under Code § 8.2-313(1)(b), and therefore an express warranty, when the buyers did not know of the warranty until some time after the purchase price was paid and the bracelet was delivered.

In conformity with familiar appellate principles, we state the evidence in the light most favorable to the sellers, who prevailed in the trial court.

In October 1985, W. Hayes Daughtrey consulted Sidney Ashe (Ashe), a jeweler about the purchase of a diamond bracelet as a Christmas gift for his wife, Fenton C. Daughtrey. Ashe exhibited, and offered to sell, a diamond bracelet to Daughtrey for $15,000. Although Ashe "knew" and "classified" the bracelet diamonds as v.v.s. grade (v.v.s. is one of the highest ratings in a quality classification system employed by gemologists and jewelers), he merely described the diamonds as "nice" in his conversation with Daughtrey. Ashe told Daughtrey that if he was later dissatisfied with the bracelet, he would refund the purchase price upon its return.

When Daughtrey later telephoned Ashe and told him he would buy the bracelet, Ashe had Adele Ashe, his business associate, complete an appraisal form which he signed. The form contained the following pertinent language:

The following represents our estimate for insurance purposes only, of the

present retail replacement cost of identical items, and not necessarily the

amounts that might be obtained if the articles were offered for sale . . . .

. . . .

DESCRIPTION APPRAISED VALUE

platinum diamond bracelet, set with 28 brilliant $25,000.00

full ct diamonds weighing a total of 10 carats.

H color and v.v.s. quality.

(Emphasis added.)

When Daughtrey came with his daughter to close the sale, he showed the bracelet to his daughter and then paid Ashe for it. As Ashe was counting the money, Daughtrey handed the bracelet to Adele Ashe, who put it in a box together with the appraisal and delivered the box to Daughtrey. Daughtrey later gave the bracelet to his wife as a Christmas present.

In February 1989, Daughtrey discovered that the diamonds were not of v.v.s. quality when another jeweler looked at the bracelet. Shortly thereafter, Daughtrey complained to Ashe, who refused to replace the bracelet with one mounted with diamonds of v.v.s. quality but offered to refund the purchase price upon return of the bracelet. Because the value of diamonds generally had increased in the meantime, Daughtrey declined Ashe's offer.

On May 8, 1989, Daughtrey and his wife filed this specific performance suit against Sidney Ashe and Adele Ashe t/a Ashe Jewelers (the Ashes) to compel them to replace the bracelet with one mounted with v.v.s. diamonds or pay appropriate damages. After hearing the evidence, the trial court found that the diamonds "were of substantially lesser grade" than v.v.s. Nevertheless, because it concluded that the Daughtreys had not proven that "the appraisal was a term or condition of the sale nor a warranty upon which [they] relied in the purchase of the bracelet," the court denied relief for breach of warranty. ^* The Daughtreys appeal.

First, we consider whether Ashe's statement of the grade of the diamonds was an express warranty. Code § 8.2-313 provides in pertinent part:

(1) Express warranties by the seller are created as follows:

....

(b) any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

The Ashes argue that the statement in the appraisal form is not an express warranty for two reasons.

First, they say the "appraisal on its face stated that it was 'for insurance purposes only.' " However, we think that the balance of the emphasized language in the appraisal form demonstrates that the limiting language relates only to the statement of the appraised value. Therefore, Ashe's description of the grade of the diamonds should be treated as any other statement he may have made about them.

Second, the Ashes contend that Ashe's statement of the grade of the diamonds is a mere opinion and, thus, cannot qualify as an express warranty under Code § 8.2-313(2). Code § 8.2-313(2) provides:

It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

The Ashes rely principally upon a North Carolina case construing the identical code section from the North Carolina Uniform Commercial Code. Hall v. T.L. Kemp Jewelry, Inc., 71 N.C.App. 101, 104, 322 S.E.2d 7, 10 (1984) (jeweler's assurance of value of jewels mere opinion under N.C.Gen.Stat. § 25-2-313, not warranty). However, here, Ashe did more than give a mere opinion of the value of the goods; he specifically described them as diamonds of "H color and v.v.s. quality."

Ashe did not qualify his statement as a mere opinion. And, if one who has superior knowledge makes a statement about the goods sold and does not qualify the statement as his opinion, the statement will be treated as a statement of fact. See Fensom v. Rabb, 190 Va. 788, 797, 58 S.E.2d 18, 22 (1950); Restatement (Second) of Torts § 542 cmt. f (1977).

Nor does it matter that the opinions of other jewelers varied in minor respects. All of them said, and the trial judge found, that the diamonds were of a grade substantially less than v.v.s.

Clearly, Ashe intended to sell Daughtrey v.v.s. diamonds. He testified that he used only the term "nice" diamonds but "[n]ever mentioned vvs because [Daughtrey] didn't know anything about vvs." Later, Ashe testified that "I know when I sold the bracelet and I classified it as vvs, I knew it was vvs."

Given these considerations, we conclude that Ashe's description of the goods was more than his opinion; rather, he intended it to be a statement of a fact. Therefore, the court erred in holding that the description was not an express warranty under Code § 8.2-313(2).

Next, the Ashes maintain that because the description of the diamonds as v.v.s. quality was not discussed, Daughtrey could not have relied upon Ashe's warranty and, thus, it cannot be treated as "a part of the basis of the bargain."

In our opinion, the "part of the basis of the bargain" language of Code § 8.2-313(1)(b) does not establish a buyer's reliance requirement. Instead, this language makes a seller's description of the goods that is not his mere opinion a representation that defines his obligation. Thomas W. Coffey, Creating Express warranties under the UCC: Basis of the Bargain--Don't Rely on It, 20 UCC L.J. 115, 126 (1987); see John E. Murray, Jr., "Basis of the Bargain": Transcending Classical Concepts, 66 Minn.L.Rev. 283, 318 (1982); Charles A. Heckman, "Reliance" or "Common Honesty of Speech": The History and Interpretation of Section 2-313 of the Uniform Commercial Code, 38 Case W.Res.L.Rev. 1, 36 (1987); Douglas Whitman, Reliance as an Element in Product Misrepresentation Suits: A Reconsideration, 35 Sw.L.J. 741, 749-50 (1981).

Our construction of Code § 8.2-313, containing language identical to § 2-313 of the Uniform Commercial Code, is supported by a consideration of the following pertinent portions of the Official Comment to the Uniform Commercial Code section:

The present section deals with affirmations of fact by the...