Frank R. Jelleff, Inc. v. Pollak Bros., Incorporated, Civ. No. 813.

• Decision Date: 31 December 1957
• Docket Number: Civ. No. 813.
• Citation: 171 F. Supp. 467
• Parties: FRANK R. JELLEFF, INC., to its own use and the Use of LIBERTY MUTUAL INSURANCE COMPANY, and Liberty Mutual Insurance Company v. POLLAK BROS., INCORPORATED.
• Court: U.S. District Court — Northern District of Indiana

171 F. Supp. 467

FRANK R. JELLEFF, INC., to its own use and the Use of LIBERTY MUTUAL INSURANCE COMPANY, and Liberty Mutual Insurance Company v. POLLAK BROS., INCORPORATED.

Civ. No. 813.

United States District Court N. D. Indiana, Fort Wayne Division.

December 31, 1957.

COPYRIGHT MATERIAL OMITTED

Hunt, Longfellow & Suedhoff, Ft. Wayne, Ind., Hogan & Hartson, Washington, D. C., for plaintiff.

Gilmore S. Haynie, Ft. Wayne, Ind., for defendant.

SWYGERT, Chief Judge.

This is an action for consequential damages resulting from a breach of an implied warranty of fitness in the sale of a "brunch coat" or smock by the defendant to the plaintiff Frank R. Jelleff, Inc. (hereinafter called Jelleff) on December 5, 1951.

Plaintiff Liberty Mutual Insurance Company, at all times material hereto, was the public liability insurer of Jelleff.

The defendant Pollak Bros., Inc. (hereinafter called Pollak) is a manufacturer of ladies' clothing. Its plant and principal offices are in Fort Wayne, Indiana. Jelleff owns and operates a retail store in the District of Columbia for the sale of women's apparel. Upon receipt of fifteen dozen smocks or "brunch coats" from the defendant, Jelleff offered them for sale to the public.

On January 10, 1952, Blanche K. Braden purchased one of these smocks. On March 6, 1952, Miss Braden, while wearing the smock in her kitchen, was severely burned when the coat burst into flames upon contact with a lighted burner on her electric stove.

On May 2, 1952, an action was instituted by Blanche K. Braden against Jelleff in the United States District Court for the District of Columbia seeking damages for breach of an implied warranty of fitness under the Uniform Sales Act, as adopted in the District of Columbia, D.C.Code (1951), § 28-1115. On May 21, 1952, plaintiffs notified defendant by mail of the institution of the Braden suit against Jelleff and requested defendant to either assume the defense of the action or to hold plaintiffs harmless. The defendant refused to undertake the defense.

Liberty Mutual Insurance Company being obligated to defend Jelleff by the terms of its insurance contract, employed counsel to defend the action. The Braden case was tried three times, the first two trials terminating with the jury in disagreement. At the third trial, the jury agreed upon a verdict, finding for Blanche K. Braden in the sum of $65,000.

Jelleff filed an appeal from this judgment and again wrote the defendant, advising it of the results of the trial, notifying it that an appeal had been filed, and requesting it to come forth and either settle the case or undertake the burden of an appeal. A response to this letter was requested from defendant but no answer was received.

The case was argued on appeal and the judgment of the trial court was affirmed by the United States Court of Appeals for the District of Columbia. See Frank R. Jelleff, Inc. v. Braden, 1956, 98 U.S. App.D.C. 180, 233 F.2d 671.

By this time, the judgment with interest and costs amounted to $70,001.47, trial expenses totaled $5,285.33. Counsel fees amounted to $17,803.82. Total expenses to plaintiffs arising out of the Braden case were $93,090.62.

This present action was filed by plaintiffs in this court on December 3, 1954, which date was between the second and third Braden trials. In the complaint, plaintiffs alleged the existence of the Braden litigation in Washington and prayed that, should judgment be awarded to Miss Braden, Pollak be found liable to Jelleff for the amount of the Washington judgment together with expenses incurred in defending the suit. After the Washington trial ended in a judgment for Miss Braden and that judgment was affirmed on appeal, the plaintiffs here amended their complaint alleging the judgment and praying for the amount required to satisfy the judgment and all costs incurred in conducting its defense including attorney fees. The present action is based on warranties identical to those on which the Braden suit was based, that is, breach of implied warranties of fitness and merchantability.

On January 25, 1957, plaintiffs filed their motion for summary judgment supported by affidavits with exhibits attached thereto. Defendant has filed opposing affidavits. Each side filed two briefs in support of their contentions. Arguments on the motion were heard. On the basis of the pleadings, affidavits and admissions relating to this matter, I feel that no triable issue of fact exists and that granting summary judgment for the plaintiffs is the proper relief.

In my opinion, the decision in Liberty Mutual Ins. Co. v. J. R. Clark Co., 1953, 239 Minn. 511, 59 N.W.2d 899, is applicable to the principal issue presented herein: whether a finding that certain goods were defective, made in an action brought by a consumer against a retailer, is effective as a determination that the retailer's supplier sold him defective goods, in an action brought by the retailer to recover from the supplier. This issue is founded on the premise that the retailer was found liable to the consumer for breach of warranties identical to those given to the retailer by his supplier.

The Clark case, supra, holds that a finding of the retailer's liability to the consumer is conclusive of the supplier's liability to the retailer in an action over for breach of identical warranties, provided that the retailer is able to establish certain essential facts and the supplier is unable to prove certain adequate defenses. Briefly, the facts of this case were as follows: J. R. Clark Co., defendant, sold a ladder to Central Hardware, plaintiff's insured, upon express warranties relating to the strength, durability and safety of the ladder, to the quality of the lumber used in the ladder, to the quality of the workmanship in the ladder, and to the weight it could sustain. Central Hardware sold the ladder to one Kayser with identical express warranties. Subsequently, the ladder collapsed, injuring Kayser and he brought an action based on breach of warranty against Central Hardware in Missouri. In this action, he was successful, recovering a verdict for $5,000.

Plaintiff then brought the present action. "The jury returned a verdict for defendant. Plaintiff then moved for judgment notwithstanding the verdict or for a new trial on the grounds that the court's charge was inconsistent in holding that defendant was bound by the Missouri judgment as to the amount and at the same time permitting the jury to speculate as to the basis of the judgment and that the court erred in charging the jury that it might determine as a question of fact whether the injuries sustained by Kayser were the result of a defect in the ladder. The motion for judgment was granted and an appeal taken by defendant from the judgment subsequently entered pursuant thereto." 59 N.W.2d 899, 903.

The Court stated the mechanics of an action over based on breach of warranty to be as follows:

"Where personal property is purchased for resale and subsequently resold by the purchaser with warranties identical to those given him by his seller, damages recovered against the purchaser by the subpurchaser for breach of the warranties may in turn be recovered by such purchaser from the original seller, provided the damages sustained reasonably may have been expected to follow a breach of such warranties. London Guarantee & Accident Co. Ltd. v. Strait Scale Co., 322 Mo. 502, 15 S.W.2d 766, 64 A.L.R. 936; 46 Am.Jur., Sales, § 748. The original seller's liability in relation thereto extends to damages sustained by his purchaser because of injuries to third persons to whom the property was resold proximately caused by breach of the warranties. (Citing numerous cases.)

"In such situations, the liability of the original seller is concluded by a judgment against his purchaser in an action against the latter for breach of the warranties, provided the seller was duly notified of the commencement of the prior action and was tendered the defense thereof. London Guarantee & Accident Co. Ltd. v. Strait Scale Co., supra; Annotation, 5 Ann.Cas. 589; Annotation, L.R.A.1915C, 337. The seller's liability under such circumstances extends to the amount of the judgment obtained against his purchaser and also the necessary expenses, including costs and attorney's fees, incurred by the purchaser in defense of the action. State Bank of New Prague v. American Surety Co., 206 Minn. 137, 288 N.W. 7; Inhabitants of Westfield v. Mayo, 122 Mass. 100, 23 Am.Rep. 292.

* * * * * *

"To establish his right to recover against the original seller under such a judgment the purchaser, in a subsequent action over against the seller, must prove that the article involved was purchased by him from such seller and that the warranties under which it was sold to him were identical to those under which he subsequently resold it. In addition, it would be incumbent upon him to establish that in the prior action it was determined that such warranties had been breached in the resale of the article; that the breach thereof had resulted in damages or injuries to the

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