Dickerson v. Mountain View Equipment Co.

• Decision Date: 20 November 1985
• Docket Number: No. 15696,15696
• Citation: 710 P.2d 621,109 Idaho 711
• Parties: , 42 UCC Rep.Serv. 114 Dan C. DICKERSON, Plaintiff-Respondent, v. MOUNTAIN VIEW EQUIPMENT COMPANY, Defendant-Appellant.
• Court: Idaho Court of Appeals

Page 621

710 P.2d 621

109 Idaho 711, 42 UCC Rep.Serv. 114

Dan C. DICKERSON, Plaintiff-Respondent, v. MOUNTAIN VIEW EQUIPMENT COMPANY, Defendant-Appellant.

No. 15696.

Court of Appeals of Idaho.

Nov. 20, 1985.

Kenneth O. Kreis, Boise, for defendant-appellant.

Gerald Weston (Gigray, Miller, Downen & Weston), Caldwell, for plaintiff-respondent.

WALTERS, Chief Judge.

Dan Dickerson brought a small claims action against Mountain View Equipment Company for the cost of repairing a used tractor previously purchased from the company. The magistrate in the small claims department entered judgment for Dickerson and Mountain View appealed to the district court. After a de novo trial, the district court found that Mountain View had breached two warranties: an implied warranty of merchantability and an implied warranty of fitness for a particular purpose, I.C. §§ 28-2-314, -315. The district court awarded judgment to Dickerson and denied a motion by Mountain View for a new trial. On appeal to this Court, Mountain View argues that no implied warranties existed; that there was insufficient evidence to establish breach of the implied warranties; and an expressed warranty between the parties superceded any implied warranty of merchantability. For the reasons stated below, we affirm the judgment of the district court.

The events which led to this action are undisputed. In the spring of 1982, Dickerson advised Mountain View that he needed to purchase a tractor for the spring planting season which was from April 1 to May 15. He was shown two tractors with their engines, transmissions, and axles completely disassembled in the company's shop. The company assured Dickerson the tractors would be totally rebuilt. Dickerson paid $13,850 for one of the rebuilt tractors. He received a trade-in credit of $6,725 on his old tractor and paid the balance of $7,125. When he purchased the tractor, Dickerson received a "Used Equipment Warranty." This warranty indicated the tractor was sold under a "Mountain View Warranty." The Mountain View Warranty stated:

Machinery sold in this category will include a warranty of operation, service work and parts performance ... for 30 days from use date and all repairs will be based 50-50 (customer to pay 50% of repair bill and Mountain View Equipment to pay 50% of repair bill). If the machine has a completely rebuilt engine or gearbox, the warranty will be 100% on these specified components for 90 days from use date.

Dickerson and the company agreed to modify the warranty. The modified warranty provided: "Transmission & Differential to have a 90 day full warranty. MVE to put a 100% full warranty for 30 days from date of delivery on major problems."

Mountain View delivered the tractor to Dickerson's farm on May 7, 1982. After Dickerson started the tractor and drove less than 200 feet, the tractor "jumped out of gear." Dickerson called the company and Mountain View returned the tractor to the shop on the same day. The company loaned Dickerson another tractor but he testified it was too small to pull any of his heavy planting equipment. He borrowed and rented tractors during the week his tractor was being repaired. Using the borrowed and rented tractors, Dickerson completed his spring planting. After Mountain View had repaired a gear in the transmission, the tractor was returned to Dickerson. Dickerson fueled the tractor and attached a piece of field equipment, but the tractor's hydraulic power director would not function. Mountain View attempted to fix the tractor in the field but eventually had to take it back to the shop. The tractor was again repaired and returned to Dickerson. He operated the tractor for approximately ten hours following the spring season. After the tractor had been repaired the second time, Dickerson noted several problems in the tractor's steering, throttle, right brake, and door. The engine was also leaking oil. While still within the warranty period, Mountain View and Dickerson agreed that the company would complete the necessary repairs after the fall harvesting season. Dickerson used the tractor for approximately 190 hours in the fall. He used the tractor in fifth and sixth gear (light load situations) to pull a light twelve-foot disc. The agreed warranty work was accomplished in January of 1983.

Dickerson next used the tractor during spring planting in late April 1983. The spring work was the most demanding on the tractor. Dickerson used the tractor's third and fourth gears (heavy load situations) to pull a twenty-four foot cultivator. He made two passes pulling the cultivator, and the tractor broke down. Again, Mountain View picked up the tractor and discovered that two teeth were sheared off from the third gear wheel. Although the previous repairs had been done by Mountain View under warranty, this time the company charged Dickerson $1,732.29 before releasing the tractor. He paid the charge and then instituted the small claims action to recover this amount.

The district court found Mountain View's "Used Equipment Warranty" was an express warranty which attempted to disclaim any implied warranties. The court determined the disclaimer was ineffective. ¹ The court held the tractor was not merchantable; thus, Mountain View had breached an implied warranty of merchantability, I.C. § 28-2-314. The district court found that the gear was "more probably than not" defective at the time of sale and the string of breakdowns amply supported the finding that the company had breached its implied warranty of merchantability. ²

In a warranty cause of action, the burden is on the plaintiff to show the existence of a particular warranty, that the warranty was breached, and that damage was proximately caused by the alleged breach. See Verbillis v. Dependable Appliance Co., 107 Idaho 335, 689 P.2d 227 (Ct.App.1984); Duff v. Bonner Building Supply, Inc., 103 Idaho 432, 649 P.2d 391 (Ct.App.1982), aff'd, 105 Idaho 123, 666 P.2d 650 (1983); I.C. § 28-2-314, Official Comment 12. More specifically, to recover for the breach of an implied warranty of merchantability, the plaintiff must prove: (1) the goods purchased were subject to an implied warranty of merchantability; (2) the goods did not comply with the warranty at the time of delivery; (3) the purchaser's damages were due to the unmerchantable nature of the goods; and (4) damages were suffered as a result of the breach of the warranty. Cockerham v. Ward, 44 N.C.App. 615, 262 S.E.2d 651 (1980); Duff, 103 Idaho at 434-35, 649 P.2d at 393-94. Mountain View asserts the tractor was not subject to an implied warranty of merchantability for two reasons. First, the company suggests that any implied warranty of merchantability was limited or nonexistent because the tractor was sold as used equipment. Second, any warranty of merchantability had been superceded by the company's express warranty. Finally, the company asserts that if an implied warranty did exist, Dickerson failed to show the tractor was unmerchantable at the time of delivery. We will address these issues in turn.

I

Idaho Code section 28-2-314 provides that, unless excluded or modified, a warranty of merchantability is implied in a sale of goods if the seller is a merchant in that kind of goods. Duff, 103 Idaho at 434, 649 P.2d at 393. As we have indicated, the disclaimer was ineffective in excluding any implied warranties. An implied warranty of merchantability does not arise from any agreement between the parties, but is imposed by operation of law. It is independent of any express warranty. Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 675 P.2d 887 (1984); Ontai v. Straub Clinic and Hospital, Inc., 66 Haw. 237, 659 P.2d 734 (1983); Perfetti v. McGhan Medical, 99 N.M. 645, 662 P.2d 646, cert. denied, 99 N.M. 644, 662 P.2d 645 (1983). Although the Commercial Code does not define merchantability, section 28-2-314 sets minimum standards for merchantability. "Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and ... (c) are fit for the ordinary purposes for which such goods are used." I.C. § 28-2-314 (emphasis added); Duff, 103 Idaho at 434, 649 P.2d at 393; Consolidated Supply Co. v. Babbitt, 96 Idaho 636, 534 P.2d 466 (1975). The implied warranty of merchantability is not intended to guarantee that the goods be the best or of the highest quality--the standard is measured by the generally acceptable quality under the description used in the contract. American Fertilizer Specialists, Inc. v. Wood, 635 P.2d 592 (Okla.1981); I.C. § 28-2-314, Official Comment 2.

Mountain View suggests that an implied warranty of merchantability was limited or nonexistent because the tractor was a used piece of equipment. Although at least one jurisdiction does not extend the implied warranty of merchantability to used goods, Southerland v. Northeast Datsun, Inc., 659 S.W.2d 889 (Tex.App.1983), we note the majority of jurisdictions extend the warranty to used goods. Perry v. Lawson Ford Tractor Co., 613 P.2d 458, 462 nn. 5, 6 (Okla.1980) and cases cited therein; Note, Sales: Extensions of Implied Warranty of Merchantability to Used Goods, 46 Mo.L.Rev. 249, 250 (1981); Stasney, UCC Implied Warranty of Merchantability and Used Goods, 26 Baylor L.Rev. 630, 637 (1974). The Code does not limit the merchantability warranty to new goods. Crandell v. Larkin and Jones Appliance Co., 334 N.W.2d 31 (S.D.1983); International Petroleum Services, Inc. v. S & N Well Service, Inc., 230 Kan. 452, 639 P.2d 29 (1982). " 'Goods' means all things (including specially manufactured goods) which are moveable at the time of identification to the contract for sale." I.C. § 28-2-105(1) (emphasis added). Official Comment 3 to section 28-2-314 indicates that the sale of second-hand goods is encompassed by the implied warranty of merchantability. We hold that the implied warranty of merchantability recognized in section 28-2-314...