Herman v. General Irrigation Co.

• Decision Date: 30 November 1976
• Docket Number: No. 9227,9227
• Citation: 247 N.W.2d 472
• Court: North Dakota Supreme Court
• Parties: Delton HERMAN, Plaintiff, Appellee, v. GENERAL IRRIGATION CO., a fictitious named company of Carthage, Missouri, Defendant, Appellant, and Ford Motor Company, a corporation, Defendant, Appellee. Civ.

Page 472

247 N.W.2d 472

Delton HERMAN, Plaintiff, Appellee, v. GENERAL IRRIGATION CO., a fictitious named company of Carthage, Missouri, Defendant, Appellant and Ford Motor Company, a corporation, Defendant, Appellee.

Civ. No. 9227.

Supreme Court of North Dakota.

Nov. 30, 1976.

Syllabus by the Court

1. Liability cannot be found under either breach of warranty or strict liability in tort without proof of a defect in the product.

2. A product causing damage under circumstances constituting breach of warranty may be, and probably is also defective under the strict liability theory.

3. Findings of fact by the trial court must be adhered to unless clearly erroneous. A finding is clearly erroneous only when, though there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made.

4. A defect in the product need not be conclusively proved, but can be shown by circumstantial evidence.

5. The nature of a defect, especially if a complex product is involved, need not be precisely established.

6. If it is shown that a product was defective, that the defect existed when the product left the manufacturer, and that the defect was the cause of the damages alleged, the manufacturer will be held liable.

7. In an action for breach of warranty or strict liability in tort, a retailer or other seller who is held liable but did no active wrong and did not alter the product before it was sold is entitled to indemnity against the manufacturer whose defective product was the actual cause of the injury.

8. Where dealer of an irrigation system was found liable for breach of warranty and strict liability for damages occurring when irrigation system failed due to a defect in an engine provided by a manufacturer and not substantially changed by the dealer, dealer was entitled to full indemnity against the manufacturer, even though dealer failed to discover the defect.

Pearce, Anderson, Pearce, Thames & Pearce, Bismarck, for defendant and appellant General Irrigation Co.; argued by Harry J. Pearce, Bismarck.

Sperry & Schultz, Bismarck, for plaintiff and appellee; argued by Floyd B. Sperry, Bismarck.

Conmy, Rosenberg & Lucas, Bismarck, for defendant and appellee Ford Motor Co.; argued by A. William Lucas, Bismarck.

SAND, Justice.

Plaintiff Delton Herman, a Mercer County farmer, brought an action against General Irrigation Company and Ford Motor Company when his irrigation system failed shortly after its purchase. Herman alleged a defect in the diesel 401 Ford engine which powered the system. General Irrigation system, incorporating as a component part sysem, incorporating as a component part the 401 diesel engine manufactured by Ford. Herman bought the system from James Cook, an independent dealer of General Irrigation products, but who was not joined as a party defendant. The Mercer County district court rendered judgment in favor of the plaintiff and against General Irrigation in the amount of $14,109.91; dismissed General Irrigation's cross-claim for indemnity against Ford, but held Ford liable to General Irrigation on warranty grounds for replacement or repair costs of the diesel engine. From that judgment defendant General Irrigation appeals.

A brief background will be helpful.

Prior to purchasing the irrigation system, Herman had his land soil-tested and examined for irrigation suitability. It was found to be well adapted to irrigation. Some of the 3,000 acres had been irrigated in the past. Herman entered into a purchase contract with James Cook, d.b.a. Cook Irrigation Company, for a center-pivot irrigation system similar to the one used by Cook himself at his Hazen, North Dakota, ranch. Cook ordered the system from General Irrigation Company, a sole proprietorship owned and operated by Rowland Diggs. General Irrigation added approximately 300 parts to the Ford engine, but without altering the basic engine unit itself. Application of those parts and use of the engine in the system was approved by Ford application engineers who examined a prototype unit identical to the one purchased by Mr. Herman.

The unit was shipped in a partially disassembled state from General Irrigation's plant in Missouri to Herman's ranch. Some extra pipe included in the original purchase contract was returned, so the actual cost of the system was $16,648.92, which Herman paid in cash. Cook worked with Herman and his hired man, Clarence Upsahl, in assembling the system. The three followed all operating procedures before starting the engine. The system ran for roughly one-half hour without problem, but then issued black smoke, became sizzling hot, and locked up tight. A hose on the suction side of the water pump had become detached from the heat exchanger, evacuating the coolant from the engine. Cook and Herman waited until the engine cooled down, then reconnected the hose, replaced the coolant, and restarted the engine. It ran for forty-five minutes before stopping in a manner similar to the first failure. They checked the heat exchanger, the water pump, and the radiator, which were all found to be in good order. They then removed and examined the head in the field. Promptly thereafter, upon Ford's recommendation, the Ford engine was taken to Bis-Man Ford tractor dealership and examined, where the head was found to be warped and three cylinders badly scored. Ford refused to authorize a complete overhaul, in spite of the fact that the service manager at Bis-Man Ford, Ervin Mantz, said the engine would have to be dismantled and rebored and the pistons replaced in order to repair it. Ford authorized only replaning of the head and replacement of the head gasket. This was done, but Mantz refused to guarantee the engine out the door because of the severe internal damage that had been done to it.

The engine was returned to the Herman ranch where Cook and Herman again readied it for operation. The unit was activated and ran for about twelve hours before the pistons locked up and the engine stopped under circumstances paralleling those of the first two failures. The engine was hot and the same hose again had become disconnected from the heat exchanger. Exasperated with the engine and his inability to see it put in working order, Herman placed it in storage in a Quonset on his farm.

He then purchased an International V--8 engine at his own expense to replace the Ford engine, installing it into the original General Irrigation system with no change, except for the substitution of a radiator for the heat exchanger on the new engine. The heat exchanger used with the 401 Ford engine was taken to the General Irrigation plant, where it was tested and found to be in perfect working order, in spite of the fact that it was damaged in transit. Herman used the system for the following crop season. It has been functioning properly since then with no difficulties.

The trial court's findings of fact in part and in substance were: that Cook and Herman followed all operating procedures before starting the engine each time; that the engine was in excellent operating condition when it left the Ford plant; that the engine was tested at General Irrigation's plant where it passed all tests perfectly; that from the completion of successful testing until the engine was delivered to Herman it was under the control of General Irrigation; and that General Irrigation's claim for indemnity against Ford must be denied because the engine was not defective when put on the market by Ford.

Upon these findings, the trial court made its conclusions of law, that General Irrigation was liable to Herman in the amount of $14,109.91 on grounds of express or implied warranty and strict liability in tort for crop damages and losses, loss of time, telephone calls, trips, a replacement engine, and miscellaneous items of damages; that General Irrigation could not enforce its indemnity claim against Ford; that Ford was liable to General Irrigation only for repairs and replacement on warranty grounds; and that Herman should deliver the engine to Cook or General Irrigation so that the defendants could arrange for overhaul of the engine.

On appeal, General Irrigation argued that the conclusions of law are inconsistent with each other and with the findings of fact. More specifically, General Irrigation contends that dismissal of its cross-claim for indemnity against Ford constituted error, or in the alternative that imposition of liability on General Irrigation was error. General Irrigation asserted that from the evidence in the record, two alternatives were available to the trial court. Under one it could have concluded that evidence was sufficient to establish an internal defect in the Ford engine, in which case Herman would have been entitled to judgment against both Ford, as manufacturer, and General Irrigation, as intermediate seller. Such a conclusion also would have entitled General Irrigation to indemnity against Ford. Under the other, the trial court could have found the evidence insufficient to establish a defect in the engine when it left Ford's control. Such a conclusion should have resulted in dismissal of the action against both defendants, in view of the fact that it was conceded at trial that General Irrigation had not modified the Ford engine unit itself in any way, nor damaged it, and that the only defect in the system alleged by any party was a defect in the engine. The trial court arrived at neither of these alternative conclusions. Rather, it found Ford liable on warranty grounds but only for the replacement or repair cost of the engine; it found no defect in the engine when it left Ford; it found General Irrigation liable for all damages and losses resulting from failure of the irrigation system; and it dismissed the indemnity claim by General Irrigation against Ford.

After having reviewed the record and the evidence in its entirety, we are convinced that a mistake has been...