Drier v. Perfection, Inc.

Decision Date02 December 1977
Docket NumberNos. 11905,11907 and 12078,s. 11905
Parties23 UCC Rep.Serv. 323 Calvin C. DRIER, d/b/a Rural Press, Plaintiff and Respondent, v. PERFECTION, INC., a corporation, Defendant and Appellant, and American Type Founders, a corporation, and Whitin Machine Works, Inc., a corporation, Defendants and Appellants. Calvin C. DRIER, d/b/a Rural Press, Plaintiff, v. PERFECTION, INC., a corporation, Defendant and Respondent, and American Type Founders, a corporation, and Whitin Machine Works, a corporation, Defendants and Appellants.
CourtSouth Dakota Supreme Court

Gale E. Fisher of May, Johnson & Burke, Sioux Falls, for plaintiff and respondent.

Robert Heege of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendants and appellants American Type Founders and Whitin Machine Works, Inc.

A. D. Sommervold of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant and appellant and respondent Perfection, Inc.

DUNN, Chief Justice.

This is an action for breach of implied and express warranties made in the sale of a printing press in which a jury in the Second Judicial Circuit Court returned a verdict of $14,200 against Perfection, Inc. and American Type Founders, a division of Whitin Machine Works (Whitin). 1 At a later date, the trial court granted indemnity to Perfection for any sums due to the plaintiff and awarded it the amount of $11,047 (the price Perfection had paid for the press) plus 6% interest, payable on return of the title to the press to Whitin. Whitin and Perfection have appealed these judgments. We affirm the judgment of the jury verdict, but reverse the judgment as to the granting of indemnity and the return of the press.

Calvin Drier, the plaintiff herein, had been involved in the printing business most of his life and owned a print shop in Tea, South Dakota. In the fall of 1973, he sent two employees to Perfection, Inc. in Minneapolis to look at a Profiteer 25-1 press, manufactured by Whitin, which Drier had read ads for in printing trade journals. The two were not able to observe the press actually printing, but they observed it as paper was fed into the machine. They also observed a Royal Zenith press in full operation.

After the employees returned, Gale Libby, Perfection's president (Libby), visited Drier's shop and observed his printing needs. Libby advised Drier that the Profiteer 25-1 would be more suitable for his purposes than the Royal Zenith. Based on his study of the material supplied by Whitin on the press, Drier bought the Profiteer and traded in two of his smaller presses, leaving him with only one press other than the Profiteer.

The press was shipped directly from the manufacturer in Whitinsville, Massachusetts, and arrived in Tea about March 18, 1974. Perfection dispatched Dick Synsteby to erect the press and get it running, but he ran into trouble in his efforts. Nine defects were found immediately and Drier wrote to the president of Whitin informing him of them. These specific defects were corrected by Synsteby with the assistance of a conference call from Whitin's quality control people, but the press was still not printing properly when he left.

Drier continued to have "toning" problems, and finally on April 29, 1974, he demanded that Perfection remove the machine. Libby suggested that Jim Elder look at the press to see what could be done. Elder was a former Whitin employee who had helped design the Profiteer. When Drier agreed, Elder was hired by Whitin and Perfection to look at the press. On initial examination, Elder, in a moment of excitement and frustration, said the machine was "junk" and would have to be rebuilt or replaced. Elder later met with Libby and changed his opinion, stating that replacement of some soft cams would remedy the problems with the press. Elder did not testify at the trial.

After Elder had done what he could, Libby and Drier met and Libby promised he would "make it print and * * * stand behind that one hundred percent." In return, he wanted Drier to sign a security agreement since Perfection had received no money for the press. The agreement contained the following disclaimer in bold, black capital letters:

"SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED AND NO REPRESENTATIONS, PROMISES OR STATEMENTS TO BUYER WITH REFERENCE TO THE PROPERTY UNLESS EXPRESSLY SET FORTH HEREIN, AND SELLER EXPRESSLY EXCLUDES ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS."

Drier signed the agreement and made seven monthly payments of $359.21 before stopping payment.

After the agreement was signed, Drier continued to have trouble with the press and was attempting to get Libby to have it repaired. Synsteby, the erector, returned several times but did not succeed in getting it to work properly. He stated to Drier's employees that he had to re-do so many things that were normally done at the factory that he could not assume anything had been done right by Whitin. Synsteby did not testify at the trial either.

About two weeks after the agreement was signed, Whitin sent Bruce Cooper, a "troubleshooter," to replace some cams in the press. After he left, a spring broke and the press would not work for awhile.

Drier finally "covered" by buying a $2,800 press to do some of his printing work. He testified that he had paid overtime wages of $4,798.70 to get the work done, and he spent 100 hours of his own time trying to fix the press. He also testified that he had lost profits of $2,588.14 on jobs he had to "job out" to other printers.

He sued Perfection and Whitin, asking for $46,358.22 in damages. Perfection counterclaimed for Drier's alleged default in his installment payments and cross claimed, denying that any of its acts or omissions resulted in the defects, if any existed, and asked for indemnity from Whitin for any recovery had against it and such other relief as the court might deem advisable. Whitin claimed that the court had no jurisdiction over it and that no facts on which relief could be granted had been alleged. It also made a general denial to the amended complaint and the cross claim.

At trial, the plaintiff presented evidence to the jury of damages totaling $19,965.56, which consisted of his cash down payment, his trade-in presses, seven installment payments, freight and erection costs, his "cover" purchase of another press, his overtime payments, and his loss of earnings. The jury in response to interrogatories found as follows:

(1) Perfection made and breached an express warranty to the plaintiff;

(2) Whitin made and breached an express warranty to plaintiff;

(3) Whitin breached an implied warranty of merchantability; and

(4) Perfection did not breach any implied warranties.

Judgment in the amount of $14,200 was entered December 12, 1975.

In findings of fact and conclusions of law filed September 29, 1976, the court found the defendants had agreed to allow it to determine the cross claim. Judgment was entered granting Perfection indemnity for The first question to be answered in resolving these appeals is whether appellant Whitin is subject to this court's jurisdiction. At issue is South Dakota's "long-arm" statute, SDCL 15-7-2, which provides in part:

any sums due plaintiff from Whitin and also awarding Perfection $11,047 (the price it had paid Whitin for the press) plus 6% interest against Whitin. Title to the press was ordered transferred to Whitin when the money was paid. Whitin and Perfection appeal from the judgment on the jury verdict, and Whitin appeals from the judgment of the trial court in favor of Perfection.

"Any person is subject to the jurisdiction of the courts of this state as to any cause of action arising from the doing * * * of any of the following acts:

(1) The transaction of any business within the state * * *."

That statute was discussed extensively by this court in Ventling v. Kraft, 1968, 83 S.D. 465, 161 N.W.2d 29, and the court ruled that the legislature, by enacting this "long-arm" statute, "intended to provide South Dakota residents with maximum protection of South Dakota courts" from injury by nonresidents "when that nonresident has had the necessary minimal contacts with the state to comply with federal due process." 161 N.W.2d at 34.

It is not necessary to reiterate the detailed history of the statute that was laid out in Ventling ; it is sufficient to state that the court examined the line of United States Supreme Court cases beginning with International Shoe Co. v. State of Washington, 1945, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, and extracted three rules for guidance in future litigation. These rules are:

"(1) The nonresident defendant must purposefully do some act or consummate some transaction in the forum state. * * * (2) The cause of action must be one which arises out of, or results from, the activities of the defendant within the forum. * * * (3) The assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice. In the determination of the latter, consideration should be given to the quality, nature and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded to the respective parties, and the basic equities of the situation." 83 S.D. at 471, 161 N.W.2d at 32.

The court stated that these were not strict rules of application and that the problem is "essentially * * * a question of fundamental fairness."

The record reveals that Whitin had the following contacts with South Dakota:

(1) A distribution agreement with Perfection, Inc. to market its products in this state;

(2) The press was sent directly from Whitin to plaintiff's plant in Tea, South Dakota;

(3) Whitin paid half of the cost of sending expert Jim Elder to South Dakota to examine the press for defects;

(4) Whitin advertised its press in trade journals which came to South Dakota;

(5) A brochure...

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