Hanson v. Funk Seeds Intern.

• Decision Date: 14 August 1985
• Docket Number: Nos. 14395,14405,s. 14395
• Citation: 373 N.W.2d 30
• Parties: 41 UCC Rep.Serv. 1244, Prod.Liab.Rep.(CCH)P. 10,792 Larry HANSON, Plaintiff and Appellee, v. FUNK SEEDS INTERNATIONAL, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 30

373 N.W.2d 30

41 UCC Rep.Serv. 1244, Prod.Liab.Rep.(CCH)P. 10,792

Larry HANSON, Plaintiff and Appellee, v. FUNK SEEDS INTERNATIONAL, Defendant and Appellant.

Nos. 14395, 14405.

Supreme Court of South Dakota.

Argued May 23, 1984.

Decided Aug. 14, 1985.

Timothy J. Nimick of Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, for plaintiff and appellee.

Michael L. Luce of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellant.

HENDERSON, Justice (on reassignment).

ACTION

This is an appeal by Funk Seeds International, defendant-appellant herein, from a judgment entered on a jury verdict for $26,253 in favor of Larry Hanson, plaintiff-appellee. We affirm this verdict arising from a suit on breach of warranty on the sale of seed corn.

FACTS

Appellee Hanson farms approximately 2,500 acres in Turner County, South Dakota. In the early spring of 1980, appellee attended a Funk Seeds promotional meeting wherein Funk representatives depicted Funk's G-4507 to be a very high-yielding corn. Thereafter, and based on these representations, appellee switched his order from another Funk hybrid to G-4507.

The seed was delivered and accepted by an agent of appellee who signed the delivery receipt in appellee's name. Said delivery receipt stated in part:

LIMITATION OF WARRANTY AND REMEDY

Funk Seeds International warrants that the seeds are as described on the tag attached to the bag, subject to tolerances established by law. THE FOREGOING EXPRESS WARRANTY EXCLUDES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY. THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION THEREON.

By acceptance and use of the seed, Buyer agrees that the Company's liability and the Buyer's exclusive remedy for breach of any warranty except those expressly provided herein shall be limited in all events to a return of the purchase price of the seed. Claims for defects in the seeds must be presented within a reasonable time after discovery. Legal actions shall be commenced within one year after date of discovery of defects. Crop yields and quality are due to so many causes and conditions beyond the Company's control that neither the Company nor the distributor or the dealer can warrant yield or quality and unless accepted on these terms, the Buyer shall return the seed in the original unopened container within fifteen days of purchase for a refund of the purchase price. This Limitation of Warranty and Remedy does not apply if prohibited by law. Funk Seeds International is a Company of CIBA-GEIGY Corporation.

I have read and agreed that the LIMITATION OF WARRANTY AND REMEDY are a part of the terms of this sale.

The Limitation of Warranty and Remedy provisions, minus the last paragraph, were also contained on a tag attached to each of the 55 bags of G-4507 delivered.

On April 24, 1980, appellee began planting this seed in 130 acres designated as field No. 2. This process was completed on April 26, 1980. Field No. 1 had been planted two days prior to this time. Fields No. 3 and 4 were planted two days after. The seeds planted in these other fields were of the same hybrid (Missouri 17) but were from differing seed dealers. Each field was irrigated, of the same soil composition and fertility, all were within a two and one-half mile vicinity, and all received the same farming practices.

The fields germinated properly but after coming up, field No. 2 was hit by a slight frost which left a few ice crystals. Appellee and Jay Parsons (appellee's neighbor and the Funk dealer who sold the seed in question) testified, however, that in their opinions, the corn crop was not damaged.

Appellee began irrigating all four fields in mid-June of 1980. Thereafter, all the fields began pollinating and at the same time continued to pollinate. After pollination, appellee noticed that the Funk's field (No. 2) was much taller than the other fields, was spindly, and appeared to not produce any ears of corn on 40% to 60% of the stalks. Good ears of corn were grown in certain low areas of field No. 2 but many of the ears grown elsewhere in this field were either half barren or merely spotted with kernels.

Appellee contacted Jay Parsons who again examined the Funk's field and noted its uniform lack of ear development. Parsons contacted Funk Seeds who sent their agronomist, Gordon Johnson, to examine the field on August 20, 1980. This examination revealed no disease, insects, insecticide, herbicide, mechanical injury, or fertilizer problems. The soil, however, had high fertility and sufficient water and appellee's other fields (planted with the same hybrid, at about the same time, and farmed under the same farming practices) did not experience these problems. Other corn fields in this area planted with G-4507 also did not experience such problems.

On September 3, 1980, appellee began cutting the field for silage. During this process, the corn stalks turned white overnight and the few ears which were produced would fall off the stock.

At trial, no direct evidence was presented as to the cause of field No. 2's problems or the nature of any defect which might have caused the problems. Appellee's case rested on circumstantial evidence. Expert witnesses for appellant Funk Seeds stated appellee's crop failure was due to heat stress and inadequate moisture during pollination. Notwithstanding, the jury returned a verdict for appellee and assessed damages at $26,253. The trial court entered judgment on this jury verdict. From this judgment, appellant now appeals. Appellant has framed five issues, whereas appellee has presented four issues. We distill these into four issues and address them seriatim.

DECISION

I.

WAS THE TRIAL COURT CORRECT IN NOT GRANTING APPELLANT'S

MOTION FOR A DIRECTED VERDICT? WE HOLD THAT IT WAS.

On this issue, appellant Funk advances two arguments. First, appellant contends that appellee Hanson was required to prove the corn seed contained a specific defect, and since appellee failed to prove such a defect existed, appellant was entitled to a directed verdict. We disagree.

Although plaintiff's burden of proof requires him or her to show a defect existed when the product left defendant's hands, this Court has held that: "No specific defect need be shown if the evidence, direct or circumstantial, permits the inference that the problem was caused by a defect. A defect may be inferred from proof that the product did not perform as intended by the manufacturer ...." Drier v. Perfection, Inc., 259 N.W.2d 496, 504 (S.D.1977) (citations omitted). Identification of an existing defect is not essential to recovery upon express warranty. It is sufficient if, as here, the evidence demonstrates, either directly or by permissible inference, that the corn was defective in its performance or function or that it otherwise failed to conform to the warranty. Osburn v. Bendix Home Systems, Inc., 613 P.2d 445, 448 (Okla.1980). Osburn cites nine jurisdictions supporting this proposition, including Drier. See also, Community Television Services v. Dresser Industries, 586 F.2d 637, 641 (8th Cir.1978), cert. denied, 441 U.S. 932, 99 S.Ct. 2052, 60 L.Ed.2d 660 (1979); Fajardo v. Cammack, 322 N.W.2d 873, 876 (S.D.1982); Pearson v. Franklin Laboratories, Inc., 254 N.W.2d 133, 140 (S.D.1977); Shaffer v. Honeywell, Inc., 249 N.W.2d 251, 256 (S.D.1976); Swenson v. Chevron Chemical Co., 89 S.D. 497, 505, 234 N.W.2d 38, 42-43 (1975); Sweetman Constr. Co., Inc. v. Dakota Pump, 88 S.D. 650, 654, 226 N.W.2d 792, 794 (1975); and Valentine v. Ormsbee Exploration Corp., 665 P.2d 452, 462 (Wyo.1983), holding that "[a] product is defective when it fails to perform reasonably and safely the function for which it was intended[,]" quoting Drier, 259 N.W.2d at 504. There was no evidence that the seed purchased by appellee was tampered with or otherwise exposed to any elements that would alter its condition from the date it was purchased from appellant and the date it was planted by appellee. We extended our holding in Drier in Crandell v. Larkin & Jones Appliance Co., 334 N.W.2d 31, 34 (S.D.1983), expressing that a plaintiff does not have to show that a defendant "created the defect, but only that the defect existed when the product was distributed by and under [defendant's] control."

At trial, appellee Hanson presented testimony that the field planted with G-4507 (field No. 2) was planted at about the same time as his other fields, was subject to the same farming practices and weather conditions, but failed to produce a crop while his other fields--planted with the same hybrid--did grow corn. Testimony disclosed that field No. 2 did not experience disease, insects, insecticide, herbicide, mechanical injury, or fertilizer problems, but instead was highly fertile and sufficiently watered.

Appellant's expert did testify that appellee's problems might have resulted from other factors, i.e., slight frost, heat stress, and the application of a certain herbicide. However, in light of the complete evidence and testimony offered at trial, particularly that this plot of corn was properly planted and cultivated, and that all of appellee's plots of corn were subject to the same heat stress, the jury could reasonably have determined, without speculation or conjecture, that appellee's crop failure in field No. 2 of failing to produce ears was the result of defects in Funk's G-4507; and, thus, appellant's product did not comply with its warranty that it would produce corn. Swenson v. Chevron Chemical Co., 234 N.W.2d 38.

Second, appellant contends that a directed verdict should have been granted because there was no evidence of a breach of warranty. Appellant asserts that this case is controlled by the Federal Seed Act ¹ and the South Dakota Seed Act ² and that the only warranty that exists is that the seed complies with statutory requirements and specifications on the label. Appellant argues that the seed in question met the statutory and...