Eichel v. Goode, Inc., 7254

CourtCourt of Appeals of New Mexico
Citation101 N.M. 246,1984 NMCA 35,680 P.2d 627
Docket NumberNo. 7254,7254
PartiesJerry Lee EICHEL, Jr., Plaintiff-Appellee, v. GOODE, INC., Defendant-Appellee, and Winn-Dixie, Texas, Inc., Defendant-Appellant, and KIMBELL, INC., Defendant and Third-Party Plaintiff-Appellee, v. SMITH'S FOOD KING PROPERTIES, dba Smith's Food King, Inc., Third-Party Defendant-Appellee. Jerry Lee EICHEL, Jr., Plaintiff-Appellee, v. SMITH'S FOOD KING, INC., and Protective Insurance, Defendants-Appellees.
Decision Date03 April 1984

Page 627

680 P.2d 627
101 N.M. 246
Jerry Lee EICHEL, Jr., Plaintiff-Appellee,
v.
GOODE, INC., Defendant-Appellee,
and
Winn-Dixie, Texas, Inc., Defendant-Appellant,
and
KIMBELL, INC., Defendant and Third-Party Plaintiff-Appellee,
v.
SMITH'S FOOD KING PROPERTIES, dba Smith's Food King, Inc.,
Third-Party Defendant-Appellee.
Jerry Lee EICHEL, Jr., Plaintiff-Appellee,
v.
SMITH'S FOOD KING, INC., and Protective Insurance,
Defendants-Appellees.
No. 7254.
Court of Appeals of New Mexico.
April 3, 1984.

[101 N.M. 247]

Page 628

Terry M. Word, P.C., Albuquerque, for plaintiff-appellee.

Carolyn N. Merchant, Margo J. McCormick, Miller, Stratvert, Torgerson & Brandt, P.A., Albuquerque, for third-party defendant-appellee.

James C. Ritchie, Edward W. Shepherd, Henry M. Bohnhoff, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, for defendant and third-party plaintiff-appellee.

[101 N.M. 248]

Page 629

Robert A. Martin, Sager, Curran, Sturges & Tepper, P.C., Albuquerque, for defendant-appellant.
OPINION

ALARID, Judge.

This case arose out of a supermarket machine accident in which a young boy's hand and arm were crushed by the ram-plate of a cardboard box baler or compactor. After a jury verdict the court entered judgment against the supermarket and its predecessors in interest. We consider whether the trial court erred in instructing the jury that appellant (Winn-Dixie, Texas, Inc.) was a "supplier" of chattels; whether New Mexico and Florida substantive laws should have been applied in construing two distinct indemnification clauses; and whether the cost award was appropriate.

FACTS

Jerry Lee Eichel (plaintiff), who was sixteen years old and employed by Smith's Food King, Inc. (third-party defendant Smith's) at the time of the July 26, 1979 accident, sued five defendants for personal injuries sustained. The baler/compactor was manufactured by Goode, Inc. (defendant Goode) with a safety switch which prevented the dangerous operation of the product with its door open. The evidence indicates the safety device was removed by the baler's original owner, Kimbell, Inc. (defendant and third-party plaintiff Kimbell), thus allowing the machine to be operated with its door folded down in an open position. Once in an open position, the door obstructed safety signs affixed by the manufacturer which warned that the door be kept closed while operating the machine. Plaintiff was injured as he was operating the modified machine with its door open.

Plaintiff sued Goode, the manufacturer of the baler/compactor; Kimbell, the first owner-operator of the supermarket; Winn-Dixie, the second owner-operator of the supermarket; and Foodway Stores, Inc. Plaintiff also sued his employer, Smith's, for workman's compensation and that action was consolidated with this case.

Jury trial on the liability issues began March 7, 1983. At the close of evidence the court directed a verdict in favor of Goode.

The court before trial granted Kimbell's summary judgment motion against Winn-Dixie based on indemnity arising from an indemnity clause contained in the parties' August 28, 1976 sale of assets agreement. The indemnity agreement made Winn-Dixie, as the buyer of the supermarket under the agreement, liable to indemnify and hold harmless Kimbell "against all actions, suits, demands, damages, losses or expenses which may be threatened or incurred at any time * * * by reason of any claim, lien or tax arising out of the business purchased and conducted by Winn-Dixie, subsequent to August 28, 1976."

The court, sitting without a jury, denied Winn-Dixie's third party claim against Smith's which alleged indemnity based on the parties' August 8, 1978 sale of assets agreement.

Foodway Stores, Inc. was a solely-owned subsidiary of Kimbell, Inc., and was merged with Kimbell in early 1973. Consequently, independent claims against Foodway were not pursued.

Smith's as plaintiff's employer, was entitled to protection of the New Mexico Workmen's Compensation Act, which does not permit plaintiff recourse against his employer beyond those exclusive remedies provided under the Act. The compensation issues were settled before trial.

The trial court gave instructions that Kimbell and Winn-Dixie, in their sale of supermarket assets and equipment, were "suppliers" of chattels under Section 388 of the Restatement (Second) of Torts (1965). The court denied Winn-Dixie's requested instruction on sale of the equipment (of which the baler/compactor was a part) "as is."

The jury found plaintiff suffered $150,000 total damages. The jury apportioned negligence as 55% for Kimbell, 25% for Winn-Dixie, 19% for Smith's, and 1% for plaintiff. The court calculated the resulting[101 N.M. 249]

Page 630

award as $120,000 for plaintiff ($82,500 from Kimbell, and $37,500 from Winn-Dixie). Pursuant to the earlier summary judgment order, Winn-Dixie was held liable for Kimbell's liability, plus necessary and reasonable attorney's fees, expenses, and costs.
DISCUSSION

I. WHETHER WINN-DIXIE WAS A "SUPPLIER" OF CHATTELS UNDER RESTATEMENT (SECOND) OF TORTS SECTION 388

Appellant Winn-Dixie challenges the instruction that it was a "supplier" of chattels, which would under Section 388 invoke seller's duty to warn buyer of a dangerous condition of the product sold. See Fabian v. E.W. Bliss Co., 582 F.2d 1257 (10th Cir.1978); Richards v. Upjohn Co., 95 N.M. 675, 625 P.2d 1192 (Ct.App.1980). Section 388 provides as follows:

Sec. 388. Chattel Known to be Dangerous for Intended Use

One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier

(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and

(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and

(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.

Comment c. points out that Section 388 applies to sellers, lessors, donors, or lenders, irrespective of whether the chattel is made by them or by a third party. Thus, a "supplier" for Section 388 purposes is "any person who for any purpose or in any manner gives possession of a chattel for another's use * * * without disclosing his knowledge that the chattel is dangerous for the use for which it is supplied * * * *" Restatement, supra, at 302.

Under the foregoing description, Winn-Dixie qualifies as a supplier of the baler/compactor. Winn-Dixie asserts that even if it was a supplier, Section 388 does not apply. Winn-Dixie argues that Section 388 was inapplicable as a matter of law because, under the evidence, Smith's had notice as to the condition of the baler, and used the baler for over a year before the accident occurred. We do not agree with this matter of law argument; there was a factual issue, properly submitted to the jury, concerning Section 388.

Winn-Dixie further argues that Section 388 should not have been applied to it because it sold the business and equipment to Smith's "as is." Authorities upon which appellant relies are inapposite because they relate to disclaimer of warranties, not to liability premised on negligence for failure to warn of a known danger. See Fabian v. E.W. Bliss Co.; Jones v. Minnesota Mining and Manufacturing Co., 100 N.M. 268, 669...

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