Dynamic Recycling Services, Inc. v. Shred Pax Corp.

• Decision Date: 18 March 1991
• Docket Number: No. 2-90-0565,2-90-0565
• Citation: 210 Ill.App.3d 602,569 N.E.2d 570,155 Ill.Dec. 389
• Parties: , 155 Ill.Dec. 389 DYNAMIC RECYCLING SERVICES, INC., Counterplaintiff-Appellee and Cross-Appellant, v. SHRED PAX CORPORATION, Counterdefendant-Appellant and Cross-Appellee.
• Court: United States Appellate Court of Illinois

Page 570

569 N.E.2d 570

210 Ill.App.3d 602, 155 Ill.Dec. 389

DYNAMIC RECYCLING SERVICES, INC., Counterplaintiff-Appellee and Cross-Appellant, v. SHRED PAX CORPORATION, Counterdefendant-Appellant and Cross-Appellee.

No. 2-90-0565.

Appellate Court of Illinois Second District.

March 18, 1991.

Wildman, Harrold, Allen & Dixon, Michael R. Dockterman, Chicago, Aaron T. Shepley (argued), for Shred Pax Corp.

Rathje, Woodward, Dyer & Burt, Gary L. Taylor (argued), Wheaton, for Dynamic Recycling Services.

Justice BOWMAN delivered the opinion of the court:

Dynamic Recycling Services, Inc., brought this cause as a counterclaim against Shred Pax Corporation in an underlying action where the parties were codefendants. The underlying action has no relevance to the present case. Therefore, in order to avoid any confusion which might result from referring to the parties as counterplaintiff and counterdefendant, we shall designate them only as plaintiff and defendant. Shred Pax (defendant) appeals from a judgment entered against it on one count of Dynamic's counterclaim, and Dynamic (plaintiff) cross-appeals from the trial court's denial of its prayer for consequential damages. We affirm.

The facts of this case may be distilled from the evidence presented at trial. In the spring of 1984, Charles Bendig and Thomas Duffy decided to go into the business of disposing of used auto and truck tires. They formed Dynamic, with Bendig as the company's president. After investigating various methods of disposal, Bendig and Duffy decided that the most financially feasible alternative was to shred used auto tires and discard the shreddings at a landfill. However, they lacked experience and expertise in regard to the mechanics involved in a shredding operation. Accordingly, they contacted Shred Pax and inquired whether any Shred Pax machines were capable of shredding tires. They received an affirmative answer and discussed the matter further with Shred Pax.

Subsequently, after receiving a referral from Shred Pax, Bendig and Duffy traveled to New York to see Shred Pax shredders in operation at a facility owned by Ernie Force. Force, who had been in the tire recycling business for 14 years, had used several different models of Shred Pax machines to shred tires. Bendig and Duffy discussed with Force the daily operation of his business, and Bendig's brother, Ronald, later spent a week at Force's facility observing and learning the business.

On July 24, 1984, Dynamic received a written proposal from Shred Pax for the sale of a new model AZ-45 shredder at a price of $64,895. On September 6, 1984, Dynamic received another written proposal from Shred Pax, this time for the sale of a remanufactured AZ-45 shredder, at a cost of $49,500. Both of the Shred Pax proposals included warranty provisions with virtually identical language. The September proposal was accompanied by a letter which stated that the remanufactured unit carried "the same 90-day unconditional guarantee as a new machine." Dynamic ultimately purchased the remanufactured machine, and Ronald Bendig picked it up from Shred Pax late in February 1985.

Before putting the AZ-45 into operation, Dynamic bolted metal I beams to the bottom of the shredder. The I beams enabled Dynamic to lift the shredder and set it atop a dumpster so that during operation the shredded tire particles would fall into the dumpster. However, Dynamic was unable to use the shredder immediately because of an electrical problem in the company's facility. On March 8 Dynamic rented an appropriate generator and began to operate the shredder but noticed problems almost right away. While the machine shredded the tires fed into it with no apparent difficulty, the shredded material would not properly fall away from the machine into the dumpster even though there was approximately eight feet between the bottom of the shredder and the floor of the dumpster. It appeared that the shreddings were somehow being drawn back into the cutting area, and after 40 or 50 tires were shredded the machine would become clogged and bound with shreddings. Dynamic employees would then have to clear it manually. As a result, Dynamic was able to shred only 200 to 250 tires per day. There was testimony that the AZ-45, when working properly, was capable of shredding one tire every seven seconds, or about 500 an hour.

Charles Bendig phoned Shred Pax and requested help in determining what was wrong. Bendig testified that Al Kaczmarek, president of Shred Pax, came to Dynamic and investigated the problem. On Kaczmarek's recommendation, according to Bendig, Dynamic removed one set of "side fingers" from the shredder, but the machine continued to clog.

Bendig called Kaczmarek, who again went to Dynamic's site. This time, according to Bendig, Kaczmarek recommended that a conveyor belt be attached to the machine to carry the shreddings away. Kaczmarek denied that he or Shred Pax ever made such a recommendation. He did, however, testify that the clogging of Dynamic's machine occurred because the shredded tires were not being cleared away from the cutting surface of the machine quickly enough, thereby causing a "bridging" problem and backup of the shreddings into the hopper of the shredder. Dynamic installed a conveyor belt, but, according to Kaczmarek's testimony, he later told Bendig that the belt was not mounted properly in that there was not sufficient clearance between the belt and the cutting knives. Dynamic presented evidence to show that it had installed the conveyor in accordance with Kaczmarek's specifications. Dynamic did not change or reinstall the conveyor belt.

As of mid-April 1985 the shredder was still not operating correctly even with the conveyor belt in place. Kaczmarek visited the site once more and, according to Bendig, recommended that a stream of water be installed to act as a lubricant for the shredded material. When asked by plaintiff's counsel if Shred Pax had recommended the addition of a water distribution system, Kaczmarek responded, "Possibly." The water was added by Dynamic but did not relieve the clogging problem. At this time Bendig told Kaczmarek that Dynamic could not keep operating if the shredder could not do its job and asked that Shred Pax take the machine back. Kaczmarek responded that he did not want to take it back but would try to sell it for Dynamic.

Early in May Shred Pax's chief engineer, Win Kaczmarek, went to check the shredder regarding a possible bad bearing. According to Bendig's testimony, Win Kaczmarek told him he was not surprised the shredder was not operating properly because it was not set up to shred auto tires but rather for truck tires. Bendig testified that when he told Al Kaczmarek about this, Kaczmarek responded that Dynamic could buy new knives and other parts to correct the problem and have the parts installed, at a total cost of about $14,000. Not long after this, Bendig told Al Kaczmarek that Dynamic was going out of business and asked that Shred Pax take back the AZ-45. Kaczmarek again refused but indicated he would try to sell the machine. Dynamic subsequently stopped all operations and stored the shredder, first in a semitrailer and later on its site but not sheltered. At the time of trial the shredder remained in Dynamic's possession.

Dynamic offered evidence to show that, as a result of the shredder's failure to function properly, it had lost its customers and future profits and had suffered a monetary loss in disposing of the tires it had not been able to shred. The total amount of losses claimed by Dynamic was $32,377, not including the cost of the shredder.

In May 1986 Dynamic's attorney wrote to Shred Pax indicating that Dynamic revoked its acceptance of the shredder, and in February 1987 Dynamic filed this counterclaim. Count I of the counterclaim alleged that Shred Pax had breached an express warranty. Counts II and III alleged breaches of the implied warranties of merchantability and fitness for a particular purpose. In count III Dynamic alleged that it had revoked its acceptance of the shredder, and count V alleged a third-party beneficiary claim. The trial court found in favor of Shred Pax on all counts except count II, which alleged a breach of the implied warranty of merchantability. On count II the court awarded Dynamic damages in the amount of $49,500, which was the amount Dynamic had originally paid for the shredder. After its post-trial motion was denied, Shred Pax timely filed this appeal, and Dynamic filed a cross-appeal from the trial court order denying it consequential damages.

Shred Pax urges initially that the finding of a breach of the implied warranty of merchantability cannot stand because it is inconsistent with the finding in its favor on the count for implied warranty of fitness for a particular purpose. Shred Pax takes the position that the trial court's decision on the fitness count implied that it had made a determination that the shredder was fit for its particular purpose. Defendant then argues that it is legally inconsistent for the court to have found that the shredder, even though it was fit for its particular purpose, was not merchantable, i.e., not fit for the ordinary purposes for which it is used. (Ill.Rev.Stat.1987, ch. 26, par. 2-314(2)(c).) Dynamic responds that the record does not support the assumption made by Shred Pax that the trial court had found the shredder to be fit for its particular purpose. We agree with Dynamic.

The trial court did not make findings of fact relative to either of the warranties under discussion. Shred Pax cites the rule that, when the judgment of the trial court is not supplemented by findings of fact, a presumption may be made that the trial court found all controverted facts in favor of the prevailing party. (Century 21 Castles By King, Ltd. v. First National Bank (1988), 170 Ill.App.3d 544, 549, 121 Ill.Dec. 174, 524 N.E.2d 1222.) This rule, however, assumes the court actually...