Dutton v. International Harvester Co.
| Decision Date | 25 February 1987 |
| Docket Number | No. 28A04-8601-CV-16,28A04-8601-CV-16 |
| Parties | 3 UCC Rep.Serv.2d 1777, Prod.Liab.Rep. (CCH) P 11,300 Charles R. DUTTON, Appellant (Plaintiff Below), v. INTERNATIONAL HARVESTER COMPANY and Hoefling Truck and Tractor, Inc., Appellees (Defendants Below). |
| Court | Indiana Appellate Court |
Keith L. Johnson, Mann, Chaney, Johnson, Goodwin & Williams, Terre Haute, Vosloh & Vosloh, Bloomfield, for appellant.
Michael R. Conner, Richard A. Cohen, Barnes & Thornburg, Indianapolis, for appellee Intern. Harvester Co.
Plaintiff-Appellant Charles R. Dutton (Dutton) appeals the trial court's summary judgment ruling in favor of International Harvester Company (Harvester) in an action for breach of warranty, strict liability and fraud.
We affirm.
1. whether Hoefling Truck and Tractor, Inc. (Hoefling) is an agent of Harvester;
2. whether Harvester breached implied warranties entitling Dutton to incidental and consequential damages;
3. whether Dutton incurred property damage as a result of a defective planter so as to entitle him to invoke strict liability against Harvester;
4. whether the trial court erred in dismissing Dutton's fraud complaint and amended fraud complaint for failure to state with particularity the alleged fraud as required by Trial Rule 9(B).
The facts most favorable to appellant are:
Dutton purchased a Model 800 planter from Hoefling on April 1, 1981. Hoefling is a franchise dealer for Harvester pursuant to a Dealer Sales Agreement for Agricultural Equipment (Agreement). Hoefling purchases equipment from Harvester for resale to purchasers. The Agreement specifically provides Hoefling is not an agent of Harvester.
After purchase, the planter did not work properly and various warranty work was performed by Hoefling. Subsequently, Harvester extended its warranty for an additional year to cover two full planting seasons.
After continuing problems with the planter, Dutton rescinded his contract with Harvester and Hoefling and returned the planter to Hoefling. Dutton then filed suit to recover for damages caused by the planter. Dutton claimed damages for rental of a replacement planter, lost profits from a 33 percent reduced corn yield and other expenses for lost time and wasted fertilizer.
Harvester filed a motion for summary judgment. The court granted the motion and also dismissed Dutton's fraud complaint for lack of specificity. Within ten days Dutton filed an amended complaint for fraud. This complaint was also dismissed.
Dutton appeals.
Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Creighton v. Caylor-Nickel Hospital, Inc. (1985), Ind.App., 484 N.E.2d 1303, 1305-1306. The burden is upon the moving party in a summary judgment motion to establish the lack of a genuine issue of material fact. Ancich v. Mobil Oil Corp. (1981), Ind.App., 422 N.E.2d 1320, 1322.
When reviewing the grant of a motion for summary judgment, we stand in the shoes of the trial court. Lafary v. Lafary (1985), Ind.App., 476 N.E.2d 155, 158. We must liberally construe all evidence in favor of the nonmovant and resolve any doubts as to the existence of a genuine issue against the proponent of the motion. Kahf v. Charleston South Apartments (1984), Ind.App., 461 N.E.2d 723, 729. Even if the facts are not in dispute, summary judgment is not appropriate if conflicting inferences arise from the facts. Board of Aviation Commissioners of St Joseph County v. Hestor (1985), Ind.App., 473 N.E.2d 151, 153.
Summary judgment may not be used as a substitute for trial to resolve factual disputes. Even if the trial court believes the nonmoving party will not be successful at trial, summary judgment should not be entered where material facts conflict or conflicting inferences are possible from undisputed facts. Grimm v. Borkholder (1983), Ind.App., 454 N.E.2d 84, 86.
Dutton contends he is entitled to incidental and consequential damages as a result of Harvester's breach of warranty. We disagree.
The amount recoverable for breach of warranty is usually the difference between the value of the goods accepted and the value of the goods had they been conforming. IC 26-1-2-715. Dutton does not claim this type of damage. Instead, Dutton requests only incidental and consequential damages.
Incidental and consequential damages may be recovered only in certain defined circumstances:
(2) Consequential damages resulting from the seller's breach include
(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty.
First, Dutton relies on section 2(a) for the basis of his recovery for incidental and consequential damages. An essential element for the recovery of incidental and consequential damages due to breach of warranty is privity of contract. Lane v. Barringer (1980), Ind.App., 407 N.E.2d 1173, 1175.
The rule in Indiana is
Implied warranties of merchantability and fitness for a particular use, as they relate to economic loss from the bargain, cannot then ordinarily be sustained between the buyer and a remote manufacturer. Gregory v. White Truck & Equipment Co., Inc. (1975), Ind.App., 323 N.E.2d 280.
Richards v. Goerg Boat & Motors, Inc. (1979), 179 Ind.App. 102, 384 N.E.2d 1084, 1092.
Judge Hoffman states the reason for the rule in Richards, supra, 384 N.E.2d at 1092
Generally privity extends to the parties to the contract of sale. It relates to the bargained for expectations of the buyer and seller. Dagley v. Armstrong Rubber Company (7th Cir.1965), 344 F.2d 245. Accordingly, when the cause of action arises out of economic loss related to the loss of the bargain or profits and consequential damages related thereto, the bargained for expectations of buyer and seller are relevant and privity between them is still required.
Dutton claims Hoefling is an agent of Harvester and therefore there is privity between Dutton and Harvester.
Ordinarily agency is a question of fact. Department of Treasury v. Ice Service, Inc. (1942), 220 Ind. 64, 41 N.E.2d 201, 202. The agency relationship arises from the consent of the parties but it is not necessary for the contract or authority of the agent to be in writing. Id.
Dutton cites the agreement between Harvester and Hoefling as the only proof of the agency relationship. 1 Thus, in this situation whether an agency relationship exists turns on the interpretation of the agreement.
Judge Shields succinctly stated the standard for reviewing whether summary judgment is appropriate in the interpretation of contracts in Midwestern Indemnity Co. v Leffler Const. Co. (1984), Ind.App., 463 N.E.2d 1130, 1133:
The construction of a written contract is generally a question of law for the trial court, not a question of fact. Kleen Leen, Inc. v. Mylcraine, (1977), 174 Ind.App. 579, 369 N.E.2d 638 (). However, if the terms of a written contract are ambiguous, it is the responsibility of the trier of fact to ascertain the facts necessary to construe the contract. R.R. Donnelley & Sons, Co. v. Henry-Williams, Inc., (1981) Ind.App., 422 N.E.2d 353; Kleen Leen, Inc. v. Mylcraine. A contract is ambiguous when reasonable persons would find its terms subject to more than one interpretation. Fort Wayne Cablevision v. Indiana & Michigan Electric, (1983) Ind.App., 443 N.E.2d 863; Ethyl Corp. v. Forcum-Lannom Associates, (1982) Ind.App., 433 N.E.2d 1214; Indiana Industries.
Thus, whenever summary judgment is granted based upon the construction of a contract, the trial court has either determined as a matter of law that the contract is not ambiguous or uncertain, Ancich v. Mobil Oil Corp., (1981) Ind.App., 422 N.E.2d 1320; Kleen Leen, Inc. v. Mylcraine, or that the contract ambiguity, if one exists, can be resolved without the aid of factual determinations. Ancich; Indiana Broadcasting Corp. v. Star Stations, (1979) 180 Ind.App. 207, 388 N.E.2d 568.
Here, the contract specifies the duties and obligations of the two parties. The contract states Hoefling is not an agent of Harvester and Hoefling has no power to bind Harvester. 2
Reviewing the agreement between Hoefling and Harvester, the court correctly found no agency relationship was created in this case as a matter of law.
The parts of the franchise agreement cited by Dutton as evidencing an agency relationship do not intrude upon Hoefling's operations so as to create an agency. The agreement calls for financial records to be exchanged to protect Harvester's investments and property in Hoefling's custody. Also, advertising, parts, and service matters are mentioned.
The contract is not so intrusive as to interfere with Hoefling's independent operations. Further, the agreement is unambiguous. The trial court correctly interpreted the contract as not creating an agency relationship as a matter of law. Because Hoefling is not an agent of Harvester, no privity of contract existed between Harvester and Dutton. For this reason Dutton's claims for economic loss cannot be sustained.
Dutton then claims under IC 26-1-2-715(2)(b) he suffered property damage in the form of reduced crop yields due to the malfunctioning planter. The issue raised by Dutton's claims is whether damage was done to "property."
Crops are...
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