Haverlah v. Memphis Aviation, Inc.

• Decision Date: 29 February 1984
• Citation: 674 S.W.2d 297,40 UCCRep.Serv. 1263
• Parties: 40 UCC Rep.Serv. 1263 Gene V. HAVERLAH, Plaintiff-Appellee, v. MEMPHIS AVIATION, INC. and Herbert Grubb, Defendants-Appellants.
• Court: Tennessee Court of Appeals

Page 297

674 S.W.2d 297

40 UCC Rep.Serv. 1263

Gene V. HAVERLAH, Plaintiff-Appellee, v. MEMPHIS AVIATION, INC. and Herbert Grubb, Defendants-Appellants.

Court of Appeals of Tennessee,

Western Section, at Jackson.

Feb. 29, 1984.

Application for Permission to Appeal

Denied May 29, 1984.

Dewitt M. Shy, Jr., Memphis, for plaintiff-appellee.

Duncan Ragsdale, Memphis, for defendants-appellants.

CRAWFORD, Judge.

In this nonjury case the defendants, Memphis Aviation, d/b/a Hi-Air, and Herbert Grubb, appeal from the decree of the Chancery Court in favor of the plaintiff, Gene V. Haverlah.

The plaintiff's Second Amended Complaint alleges in substance that plaintiff is a resident of Texas and defendant, Hi-Air, sells and services aircrafts in Memphis, Tennessee; that, in the early part of November, 1978, plaintiff purchased from defendant, Hi-Air, a 1978 Cessna 172 aircraft for the price of $25,033.00; in negotiations leading up to the purchase of the aircraft defendant, Grubb, employee and agent of Hi-Air, represented and warranted to plaintiff that the aircraft was new, had never sustained any damage and was not affected by any directives from the FAA regarding its airworthiness; in reliance on the representations plaintiff came to Memphis on November 2, 1978, to take delivery, which he did after considerable delay, and on the return flight to Texas the aircraft failed to function properly in several respects; on November 3, 1978, plaintiff was contacted by defendant Grubb and informed that the said aircraft was in fact subject to an airworthiness directive of the FAA requiring repairs and/or replacement of the crank shaft gears; upon learning this, the plaintiff stated to Grubb that this was not in conformity with the representations, and he desired to cancel the purchase and return the aircraft to defendants, but Grubb refused to accept the return of the aircraft stating that the replacement work was minor and could be performed within ten days; because of the refusal of defendants to voluntarily accept return of the aircraft and in reliance upon defendant's assertions and representations regarding the replacement and general engine work to be performed, the aircraft was returned to the defendants, but defendants failed to repair and return the aircraft in the manner which they represented, and plaintiff refused to accept delivery of same; the complaint further avers that defendants, Hi-Air and Grubb, fraudulently and/or negligently represented to plaintiff that there were no airworthiness directives regarding the aircraft and these representations were relied upon by plaintiff to his detriment; that the engine was in a defective condition and caused economic, pecuniary and property damage to the plaintiff; plaintiff further avers that defendants breached express and implied warranties pertaining to the condition, merchantability and fitness of the said aircraft, and specifically breached the express and implied warranties provided for in Tenn.Code Ann. Sec. 47-2-313, 314 and 315. As an additional cause of action plaintiff alleges that the conduct of the defendant constituted unfair and/or deceptive acts or practices in violation of Tennessee Consumer Protection Act of 1977. The relief sought by plaintiff was rescision and return of purchase price, prejudgment interest incidental damages and attorneys fees.

Defendants, Hi-Air and Grubb, filed a joint answer admitting that Grubb was the agent and employee of Hi-Air and joining issue on the remaining material allegations of the complaint. The answer specifically avers that there was no misrepresentation, but in fact the sole inducement for the contract to purchase was the price of the aircraft. The defendants further aver that the plaintiff is guilty of laches asserting that plaintiff did not revoke the purchase promptly but dealt with the aircraft after learning of the alleged misrepresentation so as to indicate a willingness to be bound by the contract. In addition, it is averred that the delay in unconditionally revoking the contract caused defendants to change their position regarding the aircraft to their detriment.

Although there were no written findings of fact the trial court found that defendant Grubb as the employee and agent of Hi-Air made material misrepresentations of fact to plaintiff which induced plaintiff to purchase the aircraft and accordingly rescinded the contract of purchase and entered judgment for plaintiff against both defendants in the total amount of $55,630.85 which was composed of $25,048.00 for the original purchase price paid, $10,135.85 for 10% prejudgment interest from November 2, 1978, to entry of judgment, $2,808.00 storage expense, $1,963.00 maintenance work, $2,765.00 for insurance, $168.00 for airline tickets for plaintiff and pilot to take original delivery, $11,272.00 for attorney fees and expenses in the litigation, and $1,526.00 for fees and expenses of expert witnesses.

Defendants have presented several "issues" for review by the court but we perceive only two real issues which we will now consider.

ISSUE NO. I

Whether the evidence preponderates against the finding of the trial court that a material misrepresentation induced plaintiff to enter into the contract and whether plaintiff was entitled to rescission of the contract if misrepresentation is found.

Defendants assert (1) that defendant Grubb did not make material misrepresentations, (2) that plaintiff was not induced to purchase the airplane by any such representations but the sole inducement was the price of the airplane, and (3) that even if there were material misrepresentations plaintiff is not entitled to rescission because of his actions upon learning of such alleged misrepresentation.

Since this case was tried by the court sitting without a jury, we review the case de novo upon the record with a presumption of correctness of the findings of fact by the trial court. Unless the evidence preponderates against the findings, we must affirm, absent error of law. T.R.A.P. 13(d).

The evidence before the court concerning this issue is primarily the testimony of plaintiff and the testimony of defendant Grubb. Plaintiff testified that after seeing advertisements he contacted Hi-Air by telephone on or about October 30, 1978, and talked to Mr. Grubb. On the first telephone contact they discussed in general Skyhawk Aircraft and the prices. He called Mr. Grubb a second time and asked him if the planes were new, if they had ever been damaged, or if they had had any airworthiness directives (A.D.) against them. He stated that Grubb's response was, "Yes, they were new. They had not been damaged. These planes have no A.D.'s against them." The conversation then proceeded about the description of the particular airplane in question, the options available and the price. All of these negotiations took place by long distance telephone and he relied on Mr. Grubb's representations concerning the plane. In the last telephone conversation they agreed upon putting the radio in and including it in the purchase price and that $5,000.00 was a suitable deposit to be wired to Grubb. Arrangements were made to take delivery on November 2, and accordingly plaintiff, along with Mr. Wall, a pilot, arrived to pick up the plane as scheduled. The purchase price previously agreed upon was $25,048.00 and he signed a purchase order confirming this although he understood that it was a receipt for the monies given for the plane. The installation of the radio equipment was not completed and while waiting for the plane he had further discussions with Grubb and again Grubb was asked if there were any A.D.'s on the plane or if the plane had ever been damaged. He was furnished the log books, none of which contained any information concerning A.D.'s or damages. He and his pilot left Memphis to fly the plane back to his home in Texas and noticed that the plane did not perform properly, that it was acting in a rather sluggish manner and various other parts of the equipment did not work properly. The next morning after arriving from Memphis he received a long-distance telephone call from Grubb and was then advised that there was in fact an A.D. on the plane rendering the plane unairworthy and that it should not have been flown from Memphis to Texas in its present condition. When he received this information from Grubb he responded that this was not in accord with the representation made to him by Grubb and that he therefore wanted his money back. Grubb explained to him that the plane needed to be repaired and wanted to arrange for the plane to be picked up for repair to which he agreed, but not for him to retake possession of the plane after the repairs. He stated that he still maintained that he wanted his money back, but, "I let him pick up the plane because it had to be repaired or complied with to make it airworthy. I did not want the plane, but whoever would have the plane would have to have it airworthy to keep it. That is the reason I let them pick it up." He further testified that during this period of time he talked by long distance telephone with a Mr. Quackenbush of Cessna Aircraft who advised him that the crankshaft repair would make the plane as good as new. At that time he asked Quackenbush why he could not have a new engine put in the plane. He was not advised by defendant when the aircraft was returned to the airport in Texas, but learned from someone at the airport that the plane had been left there. Shortly before he learned this, he talked again by telephone to Grubb and again told Grubb that he wanted his money back and Grubb's response was that he would get back in touch with him. He did not hear further from Grubb, and then turned the airplane over to Victor Teach at You Dee Aviation, Beeville, Texas, to keep it in storage and do what maintenance was necessary to prevent deterioration while it was in storage. He never licensed the plane with FAA nor did he fly it again. This...