First Acceptance Corp. v. Kennedy

• Citation: 95 F. Supp. 861
• Decision Date: 26 February 1951
• Docket Number: Civ. No. 446.
• Parties: FIRST ACCEPTANCE CORP. v. KENNEDY.
• Court: U.S. District Court — Northern District of Iowa

95 F. Supp. 861

FIRST ACCEPTANCE CORP. v. KENNEDY.

Civ. No. 446.

United States District Court N. D. Iowa, C. D.

February 26, 1951.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Louis Sachs, Minneapolis, Minn., George S. Marty and Harvey J. Bryant, Mason City, Iowa, for plaintiff.

Edward R. Boyle and Louis Schuler, Clear Lake, Iowa, Ray F. Clough, Mason City, Iowa, for defendant.

GRAVEN, District Judge.

On motion for judgment notwithstanding verdict or in the alternative for a new trial. The United States Air Conditioning Corporation was the conditional vendor and the defendant, Sam Kennedy, was the conditional vendee of certain air conditioning equipment; and the plaintiff, First Acceptance Corporation, is the assignee of the conditional sale contract. The United States Air Conditioning Corporation is a Delaware corporation with its principal place of business at Minneapolis, Minnesota. It has not been, and it is not now, subject to service of process in the state of Iowa. The plaintiff, First Acceptance Corporation, is a Minnesota corporation with its principal place of business at Minneapolis, Minnesota. The defendant, Sam Kennedy, was, and is, a resident and citizen of the state of Iowa. The plaintiff, First Acceptance Corporation, as the assignee of the conditional sale contract, brought this action at law in this court to recover a portion of the specified purchase price. The defendant, Sam Kennedy, among other defenses, raised the defense of fraud in the procurement. That defense was the only defense submitted to the jury. The jury returned a verdict in favor of the defendant, Sam Kennedy. The plaintiff thereupon filed the present motion for judgment notwithstanding the verdict or in the alternative for a new trial. The instructions given were not excepted to by either party. Under such circumstances they became and are, the law of the case. Carter Carburetor Corporation v. Riley, 8 Cir., 1951, 186 F.2d 148.

As to many of the matters hereafter factually stated the evidence was in sharp dispute. However, at this stage in the proceedings the evidence has to be considered by the Court from the point of view of what the jury could have found the facts to have been under the evidence. Carter Carburetor Corporation v. Riley, supra.

The defendant, Sam Kennedy, is a resident of the city of Clear Lake, Cerro Gordo County, Iowa. For more than forty years he has been engaged in the commercial growing of onions, potatoes, cabbage, sugar beets and other vegetables. He is the Chairman of the Board of Directors of the Iowa State Vegetable Growers' Association and Chairman of the Onion and Potato Committee of a similar national organization. In 1948 he owned approximately 1200 acres of land in the vicinity of Clear Lake, of which approximately 1000 acres were devoted to the growing of crops. The number of acres devoted to the growing of onions varied from 50 acres to 200 acres. In the year of 1948 approximately 75 acres was devoted to onions. The type of onion grown by him was of the storage variety. The harvest of his onion crop usually started in the latter part of August and was usually completed in the forepart of September. His onions, when harvested, were stored in warehouses until marketed. His onions were usually marketed in March of the year following their harvesting. It is essential that onions so stored be kept cool and dry. If not so kept they will deteriorate and thus be unmarketable. For a considerable period of time onions have been dug by mechanical means. The earlier machines used for this purpose merely dug the onions and left them on the ground to be topped and sacked by hand. By 1947, machines which would dig the onions, cut off their tops, run them into sacks and deposit the sacks on the ground were in fairly general use. Starting in 1947 the defendant, Sam Kennedy, used machines of this type. Onions are marketed in sacks containing one bushel, or sixty pounds. Prior to the year 1948 it was the general practice among onion growers to store the onions in sacks in their warehouses. The defendant, Sam Kennedy, in harvesting his onions in 1947, found that the harvesting of onions in sacks tended to slow up the harvesting and warehousing. Thereupon he decided to use pallets in connection with the handling and warehousing. Pallets are large sturdy crates open at the top with slatted sides and bottoms. Six pallets are placed on a truck, the truck then moves through the field with the harvester and the onions are run directly into the pallets. The pallets are then taken to the warehouse and stacked. In the Fall of 1947 and in the Winter of 1948 the defendant commenced the construction of pallets for use in harvesting his 1948 crop of onions. Prior to 1948 the defendant, Sam Kennedy, had used a ventilating system consisting of ducts and forms, known as the King system, in his main or principal warehouse to keep the onions cool and dry. That main or principal warehouse was built in 1940 and had double walls of hollow tile with insulated walls and ceiling.

In the early Spring of 1948 a salesman of the United States Air Conditioning Corporation called on the defendant at Clear Lake for the purpose of interesting him in the purchase of an air conditioning system for his main warehouse. The salesman informed the defendant that he was working under a Mr. F. A. Teigen of the United States Air Conditioning Corporation and asked for an appointment for Mr. Teigen. The salesman described Mr. Teigen as one of the top men in the country in the air conditioning field with long and extensive experience in that field. The request for the appointment was granted and on March 2d, 1948, Mr. Teigen came to Clear Lake and spent the day and the evening with the defendant in connection with the matter of the proposed sale. While there Mr. Teigen familiarized himself with the warehouse and the manner in which the defendant proposed to store his onions in it. At the time the defendant's employees were engaged in the construction of pallets and several hundred had already been completed. After Mr. Teigen had completed his investigation he made a tentative sketch or drawing of a proposed air conditioning system for the main warehouse. Mr. Teigen informed the defendant that he would study the situation further before making a final proposal, as he wanted to make sure he was right as to what was required to accomplish the purpose. Mr. Teigen informed the defendant that he had spent most of his adult life in the air conditioning field; that he had worked with a Mr. Moore, a pioneer in the air conditioning field, and had had to do with the air conditioning of warehouses all over the country. The defendant was without experience in the air conditioning field. He regarded Mr. Teigen as being an expert in that field.

The defendant and Mr. Teigen next met in the state of Wisconsin. The defendant had planned to go to Wisconsin to see about additional lumber for pallets and had planned on staying at the home of one Emory Owens, an onion grower residing at Dousman, Wisconsin. There was another onion grower, one William Burmeister, residing about twenty miles from Dousman, who had purchased an air conditioning unit for his onion warehouse from the United States Air Conditioning Corporation. Mr. Teigen had in mind selling an air conditioning unit to Emory Owens. Arrangements were made between Mr. Teigen and the defendant to meet at the Owens home. The defendant, a son of the defendant, and Mr. Teigen met at the Owens home and spent the greater part of an afternoon and evening discussing the matter of the proposed purchase. While at the Owens home the defendant and his son went to the Burmeister place and made a brief inspection of his air conditioning unit. Mr. Teigen had brought with him a preliminary blue print of the proposed air conditioning unit for the Kennedy warehouse. In connection with the discussion of the proposed installation Mr. Teigen informed the defendant that "they" had gone into the matter very thoroughly and that the proposed installation was efficient and "would do the job." Mr. Teigen later came to the defendant's home at Clear Lake on one or more occasions in connection with the proposed sale. The defendant on such occasion or occasions informed Mr. Teigen of the necessity of keeping onions dry and cool. Mr. Teigen informed the defendant that he had put a great deal of thought on the matter and that he "had the right answer."

On April 5th, 1948, the defendant drove to Minneapolis, Minnesota, to confer with Mr. Teigen in regard to the proposed purchase and, in connection therewith, to look over the plant of the United States Air Conditioning Corporation. He was accompanied to the plant by his son-in-law, Kenneth Pearson. They were shown through the plant by Mr. Teigen. While going through the plant Mr. Teigen showed them an air conditioning unit of the general type and kind he proposed to use in the defendant's warehouse. The defendant, his son-in-law, and Mr. Teigen then went to Mr. Teigen's office where the matter of the defendant signing a contract of purchase for the proposed installation was discussed. The defendant stated to Mr. Teigen that he did not wish to sign a purchase order unless he could be assured that the proposed installation would work. Mr. Teigen assured him that it "would do the job." Thereupon the defendant signed the purchase order. The purchase order is dated April 5th, 1948, and provided for the purchase by the defendant from the United States Air Conditioning Corporation of the following: "One (1) Only Type FFX Model 50-27 Style "A", Rotor Absorbent Dehumidifier, Refrig-o-Miser, complete with installation plans and specifications and supervision of installation at Clear Lake, Iowa." Under the provisions of the purchase order the defendant was to pay the sum of $8,300, of which $2,800 was to be paid upon the execution of the purchase order and the balance of $5,500 on May 1st,...