Eggl v. Letvin Equipment Co.

• Decision Date: 29 August 2001
• Docket Number: No. 20000318.,20000318.
• Citation: 2001 ND 144,632 N.W.2d 435
• Parties: Garth EGGL, Plaintiff, Appellee and Cross-Appellant, v. LETVIN EQUIPMENT COMPANY, Defendant, Appellant and Cross-Appellee.
• Court: North Dakota Supreme Court

632 N.W.2d 435

2001 ND 144

Garth EGGL, Plaintiff, Appellee and Cross-Appellant, v. LETVIN EQUIPMENT COMPANY, Defendant, Appellant and Cross-Appellee.

No. 20000318.

Supreme Court of North Dakota.

August 29, 2001.

George M. Ackre, Ackre Law Firm, Cando, ND, for plaintiff, appellee, and cross-appellant. Appearance by Shawn D. Ackre.

David F. Senn, Senn Law Office, Dickinson, ND, for defendant, appellant, and cross-appellee.

MARING, Justice.

[¶ 1] Letvin Equipment Company ("Letvin") has appealed a judgment in favor of Garth Eggl in Eggl's suit for damages arising out of Eggl's purchase of a used tractor. Eggl cross-appealed. We affirm.

I

[¶ 2] In November 1996, Eggl purchased from Letvin a 1985 John Deere 4850 tractor for $47,500. Letvin represented the tractor was in good working condition, and warranted it for "100 hrs or June 1, 1997 whichever is 1st." A December 13, 1996, Letvin checklist indicated the tractor had 4046 hours on it. The tractor was delivered to Eggl, and he first used it in the spring of 1997. The tractor stalled in the field in the fall of 1997, and Eggl brought it to Devils Lake Equipment Company for repair. An October 7, 1997, Devils Lake Equipment Company invoice indicated the tractor had 4207 hours on it. Eggl next used the tractor in 1998. The tractor stalled again, and it was returned to Devils Lake Equipment Company for more extensive inspection and repair of the power shift transmission.

[¶ 3] Eggl sued Letvin for breach of express and implied warranties, fraud, misrepresentation, and deceit, seeking damages of at least $16,000. After a trial on May 24, 2000, the trial court made the following findings of fact:

10. Upon inspection in 1998 by Devils Lake Equipment Company it was found that the wrong sized o-rings were placed in the tractor prior to plaintiff's acquisition of the tractor. The defective o-rings caused undue wear and tear on the hydraulic system rendering the tractor to not be fit for the purpose for which it was purchased.

11. That as a result of the above-mentioned problems, the tractor was not reasonably fit for purpose for which it was purchased and was not of merchantable quality at the time of the sale, being not fit for use as a tractor for farming purposes, and accordingly in a state of breach of the implied warranties of merchantability and fitness for purpose of use intended.

The trial court issued the following conclusions of law:

5.

The fact that it took a portion of two farming seasons to establish by Plaintiff that the tractor was not reasonably fit for the purpose intended as outlined in § 51-07-01[sic] of the North Dakota Century Code under these circumstances would be within a reasonable time limit for discovery.

6.

That the o-rings as referred to above were defective and were the primary cause of the tractor's failure. It makes no difference whether o-rings were defective because of replacement by Letvin Equipment or because of the original installation by a manufacturer.

7.

That case law has established that a buyer subject to the circumstances occurring herein is not limited to a remedy of [rescission] but instead may seek recovery of damages resulting from that defect ... That the court finds the Defendant is not responsible for damages with regard to the first instance of repair in 1997 but ... finds that the Defendant is responsible for the second and successful attempt to repair said tractor in 1998. Said damages being established in the total of $11,925.78.

[¶ 4] Judgment was entered for Eggl against Letvin for $11,925.78 and costs of $2,044.92 on September 14, 2000. Letvin appealed, and Eggl cross-appealed.

II

[¶ 5] Letvin contends (1) the finding it breached an implied warranty of merchantability is clearly erroneous; (2) the findings the wrong sized o-rings were placed in the tractor and caused Eggl's problems are clearly erroneous; (3) using the tractor for more than 160 hours and six months was not a reasonable time within which to detect any defects existing at the time of sale; and (4) the court erred in concluding the o-rings caused the tractor's failure and it makes no difference whether they were installed by Letvin or the manufacturer. In his cross-appeal, Eggl contends the trial court erred in failing to award damages for the first repair attempt.

[¶ 6] Findings of fact are subject to a clearly erroneous standard of review under N.D.R.Civ.P. 52(a). Schroeder v. Buchholz, 2001 ND 36, ¶ 7, 622 N.W.2d 202. "A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, although there is some evidence to support it, on the entire evidence we are left with a definite and firm conviction a mistake has been made." Schmitz v. Schmitz, 2001 ND 19, ¶ 7, 622 N.W.2d 176. Conclusions of law are fully reviewable. Pfeifle v. Tanabe, 2000 ND 219, ¶ 7, 620 N.W.2d 167.

III

[¶ 7] Letvin contends the finding it breached an implied warranty of merchantability is clearly erroneous.

[¶ 8] Section 41-02-31, N.D.C.C. (U.C.C. § 2-314) provides, in part:

1. Unless excluded or modified (section 41-02-33), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.

...

2. Goods to be merchantable must be at least such as:

....

c. Are fit for the ordinary purposes for which such goods are used....

A trial court's determinations on questions of breach of warranty are treated as findings of fact subject to the clearly erroneous standard of N.D.R.Civ.P. 52(a). Korol v. Aronson, 360 N.W.2d 684, 685 (N.D. 1985). Whether a product's non-conformity substantially impairs its value to the buyer is a question of fact. Erling v. Homera, Inc., 298 N.W.2d 478, 481 (N.D. 1980). "A party alleging a breach of warranty has the burden of establishing the existence of a warranty, a breach of warranty, and that the breach of warranty proximately caused the damages alleged." Hagert v. Hatton Commodities, Inc., 384 N.W.2d 654, 657 (N.D.1986). It has been held a new car's "inoperability establishe[s] its failure to conform to the contract of sale," and the overheating of an engine "is of such significance as to constitute a nonconformity without evidence as to the specific technical cause thereof."Capitol Dodge Sales, Inc. v. Northern Concrete Pipe, Inc., 131 Mich.App. 149, 346 N.W.2d 535, 539 n. 11 (1983). A farm tractor which cannot be used to pull an implement because the tractor's transmission is inoperable is not fit for the ordinary purposes for which such goods are used.¹ See Gimbel v. Kuntz, 286 N.W.2d 501 (N.D.1979);Hoffman Motors, Inc. v. Enockson, 240 N.W.2d 353 (N.D.1976); Bratberg v. Advance-Rumely Thresher Co., 61 N.D. 452, 238 N.W. 552 (1931); Dwinnell v. Boehmer, 60 N.D. 302, 234 N.W. 655 (1931).

[¶ 9] Eggl testified he has two tractors; before this tractor needed repair, he used it only for pulling a 26½ foot cultivator with 7-inch sweeps, which is the same cultivator he pulled with his other tractor, which is ten years older, and has 50 fewer horsepower; the tractor "just kept quitting in the field"; after the tractor was repaired he bought and has been using a 32 foot cultivator on the tractor; in his opinion, the tractor could not do the work it was designed for when he bought it, was not fit for the purpose for which he purchased it, and was defective when he purchased it; and since being repaired, "the tractor now is being used for the type of work it was designed for." Kelly Follman, a mechanic, testified the tractor should "actually play with" a 26 ½ foot cultivator, which it should pull "real easy," and the "tractor is designed to do that type of work and much more." Other evidence that the tractor was not merchantable when Eggl purchased it is hereinafter set forth in ¶¶ 11 and 12. We conclude the trial court's finding the tractor breached the implied warrant of merchantability is not clearly erroneous.

IV

[¶ 10] Letvin contends the trial court's findings the wrong sized o-rings were placed in the tractor and they caused Eggl's problems are clearly erroneous. The trial court found the wrong sized o-rings were installed in the tractor before Eggl acquired it and the defective o-rings caused the tractor to be unfit for the purpose for which it was purchased. There was evidence the o-rings, regardless of their size, were cut and the defective o-rings caused the tractor to fail.

[¶ 11] Kelly Follman, a mechanic with Devils Lake Equipment Company, testified he has worked on the hydraulic and transmission systems of many John Deere 4850 tractors; if the hydraulic system is "malfunctioning the tractor doesn't function"; he worked on the tractor in the summer of 1998; "two packings [o-rings] that go between the clutch housing and transmission" were cut, which "[a]fter a period of time" would cause the tractor to "stop or stall"; "[t]he transmission was shot, period"; and, because of the condition of the o-rings, "it was losing lube pressure ... and it wasn't engaging the [clutch] packs ... so something had to slip someplace ... it got warm and started taking some of the facings off because it wasn't engaged all the way." Follman further testified:

Q Would the o-rings naturally wear out that way, in your opinion?

A No, that's clean cut, it's sliced. I don't think so.

Q Do you have an opinion how the o-rings would have gotten that way?

A Oh, I don't know. They could've been put in wrong. It could be old ones. It could be someone sliced them or they weren't all the way lined up in the hole when they put the transmission case back on and sliced it and they pushed them out. It could be just about anything.

...

He only had the tractor a little bit over 200 hours and I think the problem existed well before that.

... the reason it wouldn't work is because among other things there were defective o-rings ... That caused the problem ... That had occurred prior to Garth Eggl acquiring or

...