Isenberg v. Lemon, 6376

• Decision Date: 15 July 1958
• Docket Number: No. 6376,6376
• Citation: 84 Ariz. 340,327 P.2d 1016
• Parties: William ISENBERG et al., Appellants, v. Walter LEMON, dba Red Lemon Colors, Appellee.
• Court: Arizona Supreme Court

Page 1016

327 P.2d 1016

84 Ariz. 340

William ISENBERG et al., Appellants, v. Walter LEMON, dba Red Lemon Colors, Appellee.

No. 6376.

Supreme Court of Arizona.

July 15, 1958.

As Amended on Rehearing Sept. 24, 1958.

See 329 P.2d 882.

Burton Lewkowitz, and John B. Marron, Phoenix, for appellants.

Hughes & Vinson, Phoenix, for appellee.

PHELPS, Justice.

This appeal was filed by William Isenberg and wife and Lionel Isenberg and wife dba Prudential Chemicals Manufacturers, from a judgment against them in favor of Walter Lemon dba Red Lemon Colors in the sum of $31,800. The appellants will hereinafter be designated as Isenbergs or the Isenbergs and the appellee as Lemon.

In December 1953 and early in 1954 Lemon entered into verbal agreements with a number of paint contractors in Phoenix including John F. Long, Carroll Smith, Ernie Sauer, Paul Nemsky, George Haner, Douglas Horne and Harry Kessler, to furnish a rubber base paint for use by them in painting houses in certain subdivisions to the City of Phoenix in 1953 and 1954. The process by which an agreement was reached between Lemon and the contractors was that Lemon would furnish the paint for use by the contractors in painting sample or model homes which he agreed to sell to the contractors at a specified price. The paint was what is known as a rubberized or a rubber base paint.

Lemon, during the negotiations, would prepare and deliver to said contractors what was known to the trade as a color card which, we understand to be a card showing all the different shades of color he would be able to furnish to the contractor for use in the particular subdivision in which the contractor was interested. If the price was right and the quality of the paint and the colors shown on the color card met the approval of the paint contractor, he would then accept Lemon's offer to furnish the paint for the houses in that particular subdivision. Both Lemon and the contractors testified in substance that it was contemplated that each would carry out his part of the contract because failure to do so would not only cause a material delay in the painting operations but would require new negotiations concerning price, color and quality of another paint with another paint dealer, and the approval of a new color card matching as nearly as possible the one prepared by Lemon and accepted by the paint contractors. Such a change would necessarily require the touching-up of paint jobs already done in that subdivision because of the inability to exactly match the original colors used by Lemon and would entail a heavy expense to the contractor, and two weeks to one month's delay on the job.

All of the sample or model houses were painted with what was known as Tempolite, a Synkoloid Company rubberized paint for which Isenbergs were the exclusive distributor in the Phoenix area. Lemon purchased said Tempolite from Isenbergs whose business was located in Los Angeles. In addition to being distributor for the Synkoloid products the Isenbergs were and had been a manufacturer of paint for many years.

Although Lemon had been a customer of Isengergs for more than a year he purchased his first rubberized paint (Tempolite) from Isengergs in December 1953, which was largely used by him as above stated, in painging model or sample houses in different subdivisions as a part of the process of negotiating with paint contractors for the job of painting the houses to be built therein. Considerable demand had apparently been created for the use of rubberized paint in Phoenix and Lemon was one of Isenbergs' largest customers.

Isenbergs decided in late 1953 to manufacture a rubber base point for sale similar in quality to Tempolite which was to be sold under the name of Irolite. They proposed to Lemon that he use their paint instead of Tempolite. Upon the representation of Isenbergs to Lemon that they guaranteed their new rubberized paint to be equal in quality in every particular to the Tempolite rubberized paint theretofore purchased by Lemon from Isenbergs, and upon the further representation that they would sell it to him at the same price he had been paying them for Tempolite, Lemon agreed to purchase Isenbergs' paint instead of Tempolite for use by said paint contractors, and for sale generally. It was agreed between Lemon and the Isenbergs that Lemon was to use his 'Red Lemon Colors' label on the cans and that said cans would further carry the designation 'Paqua' or 'Paka'. No explanation appears in the record as to the significance of the words 'Paqua' or 'Paka' and it appears to be immaterial here. However, Lemon was doing business under the name of 'red Lemon Colors' which did have significance as a trade name. The Isenberge produced their first batch of rubberized paint in early 1954 and Lemon purchased 150 gallons of said paint from Isenbergs in late February 1954, and 150 or 200 gallons of Tempolite.

The contractors were satisfied with the quality of the Tempolite paint and had approved the colors to be used in their respective subdividions, and had agreed to purchase said rubberized paint therefor from Lemon. He then began to deliver to said contractors the rubberized paint manufactured by Isenbergs. The contractors began to use it in painting houses then being completed on their respective jobs and each of them who testified stated they found said paint to be so inferior that they could not use it. Specifically it gummed the brushes so badly in only a few minutes that the brush could not be used without being cleaned. The paint would not spread properly and it faded sometimes within a few hours. Lemon testified the other contractors complained of the same difficulties. After ascertaining the unfitness of said paint all of the contractors refused to accept further shipments thereof.

Upon complaint to Lemon by said contractors he called Isenbergs over the phone and reported the trouble. He was advised by Isenbergs to use soap in the water with which the paint was mixed and was guaranteed that the next shipment would be equal in quality to Tempolite. The use of soap as directed did not correct the difficulty and the next shipment was no improvement over the first. The Isenbergs each time again guaranteed that the next batch would equal Tempolite in quality. After the contractors refused to further use the Isenbergs' paint Lemon tried to purchase Tempolite from them but they refused to furnish it saying they were unable to get it in stock and continued to ship him their Irolite paint instead.

During the period from February 24, 1954 to April 2 following, they shipped to Lemon approximately 2000 gallons of Irolite paint after being informed that it was unfit for use for the purpose for which it was purchased. The contractors had all cancelled their agreements with Lemon. Those who testified stated they would have continued to purchase their paint from Lemon if the paint had been like that used on their sample or model houses. Isenbergs refused to either furnish Tempolite to Lemon or to furnish a paint of equal quality as they warranted they would do. The Synkoloid Company refused to sell Tempolite to Lemon upon the ground that the Isenbergs were their distributor for the Phoenix area. Isenbergs also refused to adjust the matter of damages that Lemon claims to have suffered as a result of their breach of warranty to furnish a rubberized paint equal in quality to Tempolite. Thereafter Lemon instituted this action against Isenbergs with the results above stated.

Before considering the assignments of error let us examine the complaint to ascertain the nature and extent of the relief sought by Lemon. From a careful examination of that instrument it will be observed that he has limited his recovery of damages for the alleged breach of warranty 'as a result of the defects in the paint furnished him by defendant (Isenbergs)' to: (1) the discredit of his trade name (Red Lemon Colors), (2) great and continuing harm in his business relations, and (3) recovery of damages for the worthless paint purchased from Isenbergs which he then had on hand. There is no allegation in the complaint upon which to base damages for loss of profits, yet, most of his evidence was apparently intended to establish a loss of profit.

It is the general rule as argued by counsel for Isenbergs that the measure of damages for breach of warranty in the absence of special circumstances showing proximate damages of a greater amount, is the difference between the value of the goods at the time of the delivery and the value they would have had if they had been as warranted. A.R.S. § 44-269(G), Stott v. Johnston, 36 Cal.2d 864, 229 P.2d 348, 28 A.L.R.2d 580.

Although the pleadings allege that the paint was purchased by Lemon for resale in the plaintiff's business, it is clear, from the evidence, that the primary purpose of the purchase of Isenbergs' Irolite rubberized paint was to comply with agreements Lemon had with a number of large paint contractors to whom he had agreed to furnish paint for use in painting several hundred houses in different subdivisions in and around Phoenix and that it was to be used as a substitute for Tempolite paint, a Synkoloid product. The allegation is that the rubberized paint was being manufactured by the Isenbergs for Lemon and the inference is clear from the evidence that Isenbergs knew of the demand for that kind of paint in Phoenix from their business with Lemon, and the source from which this demand was coming. Lemon had furnished the Isenbergs the color card which said paint contractors had approved and accepted in order that the Isenbergs could match the colors of their Irolite paint with it. It was therefore in the contemplation of the parties at the time Lemon agreed to buy the...