Fundin v. Chicago Pneumatic Tool Co.

Citation199 Cal.Rptr. 789,152 Cal.App.3d 951
CourtCalifornia Court of Appeals
Decision Date22 February 1984
Parties, 38 UCC Rep.Serv. 55 Lyle FUNDIN, etc., Plaintiff and Appellant, v. CHICAGO PNEUMATIC TOOL COMPANY, et al., Defendants and Respondents. Civ. 29342.

McDANIEL, Associate Justice.

This is an appeal from a minute order sustaining defendant Chicago Pneumatic Tool Company's demurrer without leave to amend. The appeal should have been taken from the judgment of dismissal entered pursuant to the minute order. We construe the appeal to have been taken from the judgment (Zappas v. King Williams Press, Inc., 10 Cal.App.3d 768, 770, fn. 1, 89 Cal.Rptr. 307) and address the case on its merits.


Lyle Fundin (plaintiff) operated a well-drilling business. He entered into negotiations with Shepherd Machinery Company (Shepherd) and Chicago Pneumatic Tool Company (Chicago) for the purchase of a Chicago Pneumatic RT 1800 drill rig. These negotiations included Fundin's being flown to Chicago's factory to examine the rig. A written contract was executed, and plaintiff took delivery of the rig on November 28, 1977.

Plaintiff was displeased with the rig. It did not drill as deep, or pump out as much mud, as he thought they had represented it would. It also was missing some tools and had hoses of a lower capacity than he thought it should have had. On May 15, 1981, he sued both Shepherd and Chicago for breach of contract, breach of express warranty, intentional misrepresentation, negligent misrepresentation, and breach of contract for failure to deliver goods. He also sued Shepherd for breach of implied warranty and breach of implied warranty of fitness for a particular purpose. Chicago demurred, and its demurrer was sustained with 30 days leave to amend. Plaintiff then filed his first amended complaint, in which he dropped the causes of action based on negligent and intentional misrepresentation, and added Chicago to the causes of action based on breach of implied warranty and breach of implied warranty of fitness for a particular purpose.

Chicago again demurred, and the demurrer was once more sustained with 30 days leave to amend.

Plaintiff filed a second amended complaint and Chicago again demurred. This time Chicago's demurrer was sustained without leave to amend, on the grounds that Chicago was not a party to the written contract and because the complaint was not brought within the two-year statute of limitations applicable to oral contracts. (Code Civ.Proc., § 339.) Plaintiff then brought this appeal, arguing that the demurrer was improperly sustained.


The following, well-settled rules govern our review of a judgment sustaining a demurrer to a complaint. The allegations of the complaint must be regarded as true. It must be assumed that the plaintiff can prove all of the facts as alleged. The court must, at every stage of an action, disregard any defect in the pleadings that does not affect the substantial rights of the parties. Pleadings must be reasonably interpreted; they must be read as a whole and each part must be given the meaning that it derives from the context wherein it appears. All that is necessary as against a general demurrer is to plead facts showing that the plaintiff may be entitled to some relief. In passing upon the sufficiency of a pleading, its allegations must be liberally construed with a view to substantial justice between the parties. While allegations of the complaint are deemed to be true in ruling on the demurrers, where an allegation is contrary to law or to a fact of which a court may take judicial notice, it is to be treated as a nullity. Any allegations in the complaint which are inconsistent with facts set out in an unambiguous written instrument, incorporated by reference, may be stricken. (Nichols v. Canoga Industries, 83 Cal.App.3d 956, 965, 148 Cal.Rptr. 459; 3 Witkin, Cal.Procedure (2d ed. 1971), Pleadings, §§ 319, 320.) In other words, if there are inconsistencies between the complaint and the written instrument, the written instrument controls. (De Castro & Co. v. Liberty Steamship of Panama, 186 Cal.App.2d 628, 631, 9 Cal.Rptr. 107.) If, despite defects in form or substance, it is reasonably probable that the complaint can be cured by amendment, and if a fair, earlier opportunity to correct the substantive defect has not been given, a demurrer should not be sustained without leave to amend. (Cordonier v. Central Shopping Plaza Associates, 82 Cal.App.3d 991, 998-999, 147 Cal.Rptr. 558.)

Guided by the foregoing rules and principles, we now turn to whether plaintiff's complaint was adequate to withstand Chicago's demurrer, and, if not, whether a further opportunity to amend should have been afforded.

Four of plaintiff's five causes of action turn on the existence of a contract between plaintiff and Chicago: (1) breach of contract; (2) breach of implied warranty; (3) breach of implied warranty of fitness for a particular purpose; and (4) breach of contract for failure to deliver goods. 1 As to these four causes of action, Chicago's demurrer was properly sustained because there was no such contract.

The written sales contract attached to the complaint clearly shows that it is a contract between plaintiff and Shepherd, and not between plaintiff and Chicago. Plaintiff himself noted this fact in his memorandum of points and authorities in opposition to Chicago's demurrer, in which he stated that the sales contract was one "between Plaintiff and Shepherd Machinery Co. not involving Defendant Chicago Pneumatic." (Emphasis added.) Allegations to the contrary in plaintiff's complaint must fail in view of the contents of the contract itself, which was signed only by Shepherd and in which Chicago was mentioned only in the description of the rig. Although plaintiff also alleged facts to suggest that Shepherd signed the contract as Chicago's agent, and that therefore Chicago was bound by the contract executed by its purported agent, Civil Code section 2337 provides: "An instrument within the scope of his authority by which an agent intends to bind his principal, does bind him if such intent is plainly inferable from the instrument itself." (Emphasis added; Sunset Milling & Grain Co. v. Anderson, 39 Cal.2d 773, 778, 249 P.2d 24.) Despite plaintiff's attempts to develop an agency relationship out of the fact that a sales brochure states that the drills are distributed by Shepherd, there is nothing in the written contract itself from which one could infer that Shepherd purported to act as Chicago's agent or that Chicago was Shepherd's principal. (See Leonard v. Gallagher, 235 Cal.App.2d 362, 371, 45 Cal.Rptr. 211; Triple Interest, Inc. v. Motel 6, Inc., 414 F.Supp. 589, 593.) 2

However, plaintiff's cause of action based on breach of express warranty does not require privity of contract with Chicago; when a consumer relies on representations made by a manufacturer in labels or advertising material, recovery is allowable on the theory of express warranty without a showing of privity. (Burr v. Sherwin Williams Co., supra, 42 Cal.2d 682, 696, 268 P.2d 1041, and cases cited therein.)

In the case here, plaintiff alleged that Chicago and Shepherd had disseminated the sales brochure to the public and to him, and that it constituted a warranty. The brochure stated, in relevant part, "[The RT-1800] has a basic depth rating of 1800 ft. using 4 1/2"' dia. drill pipe with hole sizes ranging from 5 3/4"' to 8 3/4"' 3 diameter. The depth and hole sizes are dependent on suitable drilling conditions and can be exceeded under favorable conditions using specialized procedures." "HIGH PRESSURE MUD PUMP. The 5 X 6 duplex piston pump equipped for slush service is rated at 175 G.P.M. at 88 strokes per min. at 310 P.S.I." 4 On a page of the brochure entitled "Specifications" was the following information: "Rated Capacity: 1800 ft. ( [illegible]m) with 4 1/2"' (11.5 cm) dia. drill pipe. Rating based on favorable drilling conditions." 5 At the bottom of the specifications page was the following statement: "We reserve the right to amend these specifications at any time without notice. The only warranty applicable is our standard written warranty. We make no other warranty count expressed or implied and particularly make no warranty of suitability for any particular purpose."

Clearly, the above brochure warrants, under favorable conditions and using a 4 1/2"' diameter drill pipe, that the rig will drill to depths of 1800 feet. The next question is whether or not the paragraph excluding other warranties negates the effect of the specifications and other statements concerning the drill's capacities otherwise contained in the brochure as noted. Section 2316, subdivision (1) of the Commercial Code provides that: "(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this division on parol or extrinsic evidence (Section 2202) negation or limitation is inoperative to the extent that such construction is unreasonable."

The Uniform Commercial Code comment to section 2316 notes that: "1. This section is designed principally to deal with those frequent clauses in sales contracts which seek to exclude 'all warranties, express or implied.' It seeks to protect a buyer from unexpected and unbargained language of disclaimer by...

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