Durfee v. Rod Baxter Imports, Inc.

• Decision Date: 10 November 1977
• Docket Number: No. 46988,46988
• Citation: 262 N.W.2d 349,22 U.C.C.Rep. 945
• Parties: , 22 UCC Rep.Serv. 945 John D. DURFEE, Appellant, v. ROD BAXTER IMPORTS, INC., formerly Horvath Imports, Inc., Respondent, Saab-Scania of America, Inc., Respondent.
• Court: Minnesota Supreme Court

Page 349

262 N.W.2d 349

98 A.L.R.3d 1170, 22 UCC Rep.Serv. 945

John D. DURFEE, Appellant, v. ROD BAXTER IMPORTS, INC., formerly Horvath Imports, Inc., Respondent, Saab-Scania of America, Inc., Respondent.

No. 46988.

Supreme Court of Minnesota.

Nov. 10, 1977.

Rehearing Denied March 6, 1978.

Syllabus by the Court

1. Defects in plaintiff's new automobile substantially impaired its value to him and justified revocation of acceptance.

2. The provision in the owner's manual, which purports to limit plaintiff's remedies to repair and replacement of defective parts, failed of its essential purpose, and plaintiff is entitled to recover the purchase price upon tender of the automobile to defendants. In addition, plaintiff is entitled to recover as incidental damages repair and maintenance expenses reasonably incurred in caring for the automobile, despite a clause in the owner's manual excluding recovery of incidental damages. Such a clause is ineffective where it is coupled with an exclusive remedy that fails of its essential purpose and where the buyer has justifiably revoked acceptance.

3. In the circumstances of this case, lack of privity between the buyer and the distributor of an automobile does not relieve the distributor of liability.

Courtney, Gruesen & Petersen and Thomas W. Gruesen, Duluth, for appellant.

Oberg & Robins, Wayzata, for Rod Baxter Imports.

Doherty, Rumble & Butler and Bruce E. Hanson and Jeffrey B. Oberman, St. Paul, for Saab-Scania.

Considered and decided by the court en banc.

KELLY, Justice.

Plaintiff appeals from an order ¹ of the district court awarding him $600 damages for breach of warranty resulting from defects in his new Saab automobile which defendants failed to correct. Defendant also seeks review of the judgment. We reverse.

On June 15, 1974, plaintiff purchased a Saab automobile at Horvath Motors (Horvath), a Saab dealer in St. Paul to which defendant Rod Baxter Imports, Inc. (Rod Baxter) succeeded. He selected a 1974 Saab Sonett coupe after a test drive and after being told by a salesman of its advantages, including availability of parts. Plaintiff paid $100 down and signed an automobile order slip.

Plaintiff returned 1 week later to pick up the Saab and paid the balance of the total price of $5,651. Within a few blocks of Horvath the seatbelt light and buzzer activated. He returned to Horvath, and the salesman quieted the warning devices. On his renewed journey to his home in Duluth, the knob on the shift lever came off in plaintiff's hand, a rattle developed under the dashboard, and the seatbelt warning system again activated. He called the salesman who informed him he could return immediately for repairs or wait until the 1,000-mile maintenance inspection. Plaintiff decided on the latter course.

On July 16, 1974, plaintiff returned the Saab to Horvath for its 1,000-mile maintenance inspection. In addition to his previous complaints, he complained of the ineffectiveness of the windshield-washer system and the air vents. Plaintiff's difficulties with the Saab did not end after this maintenance inspection. Thereafter, the right muffler became defective and, because parts were unavailable at Horvath plaintiff had to fix it at his own expense. On September 25, 1974, he returned the car to Horvath for repair of the rear-window defroster, a squeal in the brakes, the continuing rattle under the dashboard, and the sticking of the accelerator and the choke. In an effort to solve the problem with the seatbelt warning system, the front passenger seat was removed for repairs, and a used seat was temporarily installed. On November 6, 1974, plaintiff returned the car for the 6,000-mile maintenance inspection. At that time, his complaints included a defective left muffler and center pipes (which were not corrected because of the unavailability of parts), a sticking accelerator, a prolongation of fast idle, and the continuing rattle under the dashboard.

After the 6,000-mile maintenance inspection, in plaintiff's opinion, "the problems became more pronounced." The seatbelt warning system continued to activate without apparent cause, the engine in one instance continued to run after the key was removed, and the car stalled on numerous occasions. Plaintiff had the car towed to a Saab dealer in Duluth in early December and did not receive the car until January 1975. The Saab was again towed to the Duluth dealer in late February, where it was worked on and road tested by the Saab district service manager. The car was picked up March 6, 1975, and it stalled five times within a short distance of the dealership, the engine temperature gauge indicated "hot," and finally it stalled again and would not restart. On March 17, plaintiff picked up the car from the Duluth dealer, and it again stalled several times. Upon being informed of this, the Duluth Saab dealer told plaintiff it preferred to have Rod Baxter work on the car.

In a letter dated March 18, 1975, plaintiff informed counsel for defendant Saab-Scania of America, Inc. (Saab-Scania), the distributor of Saabs in the United States, that he would not submit the Saab for further repairs and listed six defects in the car: (1) the passenger seat had not been reinstalled; (2) the automobile continued to stall; (3) the seatbelt warning system continued to activate without apparent cause; (4) the "ungodly" rattle persisted; (5) the temperature gauge registered "hot"; and (6) shortly after starting the motor, the heating unit malfunctioned. Plaintiff has not driven the car since writing the letter and has kept it in a garage. Plaintiff testified he had driven the Saab for 6,300 miles in a conservative manner. The only damage to the car is to the radio aerial which was broken off by vandals.

Plaintiff commenced the instant action against Rod Baxter and Saab-Scania on December 12, 1974. The matter was tried before the court sitting without a jury on February 5, 1976. The court found for plaintiff, awarding him $600 in damages for breach of warranty but concluded that the defects in the automobile did not justify rescission ² of the sales contract. Plaintiff appeals, arguing that revocation of acceptance and cancellation of the contract was the appropriate remedy. Both defendants seek review of the judgment insofar as it awarded damages to plaintiff; however, Rod Baxter does not appear by brief or argument in this court.

This appeal presents three issues:

(1) Did the defects in the automobile substantially impair its value to plaintiff and thus entitle him to revoke his acceptance?

(2) Did a provision in the owner's manual limit plaintiff's remedies to repair or replacement of defective parts?

(3) Does lack of privity between plaintiff and defendant Saab-Scania relieve Saab-Scania of liability?

1. The instant transaction is a sale of goods governed by Article 2 of the Uniform Commercial Code. Plaintiff seeks to revoke his acceptance of the Saab pursuant to Minn.St. 336.2-608, which provides in part:

"(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it

"(a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; * * *

"(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

"(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them." (Italics supplied.)

Minn.St. 336.2-608(3) gives the buyer the same rights he would have had if he had rejected the goods, and Minn.St. 336.2-711(1) authorizes recovery of so much of the price as has been paid, if a buyer justifiably revokes acceptance.

Section 336.2-608 prescribes the following requirements for an effective revocation of acceptance: (1) the goods must be nonconforming; ³ (2) the nonconformity must substantially impair the value of the goods to the buyer; (3) the buyer must have accepted the goods on the reasonable assumption that the nonconformity would be cured; (4) the nonconformity must not have been seasonably cured; (5) the buyer must notify the seller of his revocation; (6) revocation must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects; ⁴ and (7) the buyer must take reasonable care of the goods for which he has revoked acceptance. Defendant Saab-Scania contends that the defects in the Saab did not substantially impair its value to plaintiff, in part, because the defects already had been repaired or were easily repairable.

This court has not yet interpreted the substantial-impairment test of § 336.2-608. The impact of the substantial impairment is measured by the goods' loss of value to the buyer, ⁵ but in other respects, the language of the statute hardly provides a sensitive gauge to test the justification for any particular revocation. Indeed, two respected commentators suggest that the test ultimately rests on a commonsense perception of substantial impairment, akin to the determination of a material breach under traditional contract law. White & Summers, Uniform Commercial Code, § 8-3, p. 257. The cases that involve revocation of acceptance of defective new automobiles are amenable to classification by this practical criterion. Minor defects not substantially interfering with the automobile's operation or with the comfort and security it affords passengers do not constitute grounds for revocation. ⁶ On the other hand, if the defect substantially interferes with operation of the vehicle or a purpose for which it was purchased, a court may find grounds for revocation. ⁷ Indeed,...