Erling v. Homera, Inc., 9777

• Citation: 298 N.W.2d 478
• Decision Date: 27 October 1980
• Docket Number: No. 9777,9777
• Parties: 30 UCC Rep.Serv. 181 W. M. ERLING and Leanor M. Erling, Plaintiffs and Appellees, v. HOMERA, INC., Defendant and Appellant, and Jerry Carlson, dba J & J Trailer Sales, Defendant. Civ.
• Court: United States State Supreme Court of North Dakota

Page 478

298 N.W.2d 478

30 UCC Rep.Serv. 181

W. M. ERLING and Leanor M. Erling, Plaintiffs and Appellees, v. HOMERA, INC., Defendant and Appellant and Jerry Carlson, dba J & J Trailer Sales, Defendant.

Civ. No. 9777.

Supreme Court of North Dakota.

Oct. 27, 1980.

Gilje, Greenwood & Dalsted, Jamestown, for plaintiffs and appellees; argued by Charles J. Gilje, Jamestown.

Sproul, Lenaburg, Fitzner & Walker, Valley City, for defendant and appellant; argued by David E. Walker, Valley City.

Georgia M. Pope, Pope & Stites, Jamestown, for defendant; no appearance.

ERICKSTAD, Chief Justice.

Defendant, Homera, Inc., appeals from a judgment which allowed the plaintiffs, Mr. and Mrs. William Erling, to revoke their acceptance of a mobile home and required Homera and the co-defendant, Jerry Carlson, to return the plaintiffs' purchase price. The case was tried to the court without a jury. The judgment allowing revocation is affirmed, but the determination of set off is remanded with directions.

In August of 1976, the Erlings purchased a mobile home from Jerry Carlson, who was doing business as J & J Trailer Sales in Jamestown, North Dakota. The home had been manufactured by Homera, a Minnesota corporation. The purchase price was $13,936. That fall, the Erlings noticed what they believed to be leakage along the inside of the mobile home. They notified Carlson. Moisture was noticed again in March of 1977. In addition, the Erlings noticed that the siding was warping and that the windows collected water when it rained, which then ran into the interior of the trailer. In response to the window complaint, Homera flew an employee into Jamestown, where the trailer was located, to examine the problem, but no repair was attempted. Erling then made the repairs to the windows himself and Homera reimbursed him for his time and for the materials. In response to the moisture problem, Carlson cool-sealed the roof twice in the spring of 1977. In addition, Mr. Erling also cool-sealed the roof.

Moisture was again noticed in the fall of 1977, which at various times required that pots and pans be placed to catch the dripping water. In December of 1977, the moisture was finally diagnosed as being condensation which was forming on the inside of the roof which would alternately freeze and melt with the varying temperatures of the spring and fall. At the request of Homera, a humidity gauge was placed in the home over the winter of 1977-78. This revealed no excessively high humidity in the home. The problem was believed to be due to inadequate air space above the insulation. In an attempt to correct this problem, a wind-powered ventilator was installed at Homera's expense in February of 1978, but this still did not solve the moisture problem.

The problem with the siding was referred by Homera to Masonite Corporation, the manufacturer of the siding. Masonite agreed to replace several panels of the warped siding if the moisture problem was corrected. The moisture problem persisted, even after installation of the wind-powered ventilator. The Erlings gave notice of revocation in April of 1978. In their notice of revocation, the Erlings offered the return of the mobile home upon receiving shipping instructions. They also demanded their entire purchase price plus interest at six percent. Suit was filed in June of 1978. The Erlings refused further attempts at repair by Homera. A court trial was held November 7, 1979, to determine the issue of revocation of acceptance. After trial, the court allowed the revocation of acceptance and ordered the return of the Erlings' purchase price of $13,936 without interest. It was apparently thought that the value of the use of the home and interest on the purchase price would offset each other.

Homera appeals on four grounds:

1. The finding that the appellees' mobile home was defectively designed is not supported by the evidence.

2. The condition of the appellees' mobile home did not substantially impair its value.

3. The district judge should have set off the fair and reasonable value of the appellees' use from the judgment awarding return of the purchase price.

4. The plaintiffs waived the right to rescind the contract by continuing to make full use of the mobile home.

Section 41-02-71 of the North Dakota Century Code provides for revocation of acceptance. ¹ The relevant part of this section requires a non-conformity which substantially impairs the value to the buyer. Homera's first contention is that the finding that the mobile home was defective or non-conforming is not supported by the evidence.

I. NON-CONFORMITY OF TRAILER

The Erlings purchased the mobile home for the purpose of using it as their residence. The evidence revealed that there was a condensation problem with the mobile home. Homera argues that it has complied with the government regulations concerning construction and design and, therefore, it was "inappropriate and unjustified" to determine that the home was defective or non-conforming. Simply meeting minimum standards, however, is not determinative of the issue. Kirton v. Williams Elec. Co-op., Inc., 265 N.W.2d 702 (N.D.1978). In Kirton, we reversed entry of a summary judgment stating:

"It cannot be said that reasonable men could not differ on the inferences that could be drawn from the undisputed facts in this case. For example, it has not been disputed that the power line in question was in compliance with the provisions of the National Electrical Safety Code. The provisions in the National Electrical Safety Code only give the minimum allowable standards, however, and compliance with those provisions is considered only evidence tending to show due care and thus compliance is not determinative of the question of negligence." 265 N.W.2d at 707.

In Kirton, we were discussing negligence, but it is applicable to the present case to show that standards are only minimums, and compliance does not prove whether or not such actions are negligent or that products are conforming. This determination is left to the trier of fact. Compliance with standards may be used as evidence to show that a product is not defectively designed, but such evidence does not conclusively resolve the issue.

Homera also asserts that the court should not invade the province of an administrative agency. In this case, however, no administrative agency has made any determination of the facts. The determination whether or not the trailer was defective and therefore non-conforming was for the trier of fact. The court, as trier of fact, determined that the trailer did not conform to the contract. § 41-02-06, N.D.C.C. Under the Uniform Commercial Code there are implied warranties. § 41-02-31, N.D.C.C. (U.C.C. § 2-314). One of these implied warranties is that the goods are fit for the ordinary purposes for which such goods are used. § 41-02-31(2)(c), N.D.C.C. It is for the trier of fact to determine whether or not the mobile home conformed to the contract including the implied warranties.

The trial court's findings of fact may be set aside only when they are determined to be clearly erroneous. Rule 52(a), N.D.R.Civ.P.

"A finding is 'clearly erroneous' only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948)." In re Estate of Elmer, 210 N.W.2d 815, 820 (N.D.1973).

Simple compliance with standards does not prove that a product is conforming. This would be especially true here where the standards did not specifically cover the apparent source of the problem, namely, inadequate air space between the insulation and the roof. The trial court based its findings upon evidence that the condensation was due to inadequate ventilation. Under the circumstances of this case, we do not find that the trial court's determination that the mobile home was defective and hence non-conforming is clearly erroneous.

II. SUBSTANTIALLY IMPAIRED VALUE TO THE BUYER

Homera's second contention is that the condition did not substantially impair the mobile home's value. Section 41-02-71, N.D.C.C., provides that the buyer may revoke when the product's non-conformity "substantially impairs its value to him." This is a factual determination to be made by the trier of fact. Schumaker v. Ivers, 90 S.D. 75, 238 N.W.2d 284, 287 (1976).

Homera argues that the determination of substantial impairment is a legal conclusion. It relies on Durfee v. Rod Baxter Imports, Inc., 262 N.W.2d 349 (Minn.1977). Minnesota appears to be among a minority of jurisdictions which deem substantial impairment to be a conclusion of law. We believe that the better view is that substantial impairment is a question of fact for the trier of fact. Graulich Caterer, Inc. v. Hans Holterbosch, Inc., 101 N.J.Super. 61, 243 A.2d 253, 262 (1968) (what amounts to substantial impairment presents a question of fact); McGilbray v. Scholfield Winnebago, Inc., 221 Kan. 605, 561 P.2d 832, 837 (1977) (substantial impairment is a factual determination to be made by the trier of fact); Dehahn v. Innes, 356 A.2d 711, 720 (Me.1976) (substantial impairment is a question of fact); Countryside Mobile Homes, Etc. v. Schade, 204 Neb. 209, 281 N.W.2d 756 (1979); Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 265 N.W.2d 513, 521 (1978); Schumaker v. Ivers, supra, 238 N.W.2d at 287.

In this case, the Erlings purchased their trailer home as their sole residence. The record shows that the defects in the home were not discoverable prior to their acceptance of the home. These defects were not cured by the seller. Mr. Erling had to repair the windows himself. He was reimbursed, however, for his labor and materials. The siding panels became so warped that Masonite Corporation agreed to replace at least three of the panels if the moisture problem was remedied. After one and one-half years of...