Kawin v. Chrysler Corp.

• Citation: 636 S.W.2d 40
• Decision Date: 06 July 1982
• Docket Number: No. 62863,62863
• Parties: Warren H. KAWIN, et al., Appellants-Respondents, v. CHRYSLER CORPORATION, et al., Respondents-Appellants.
• Court: Missouri Supreme Court

Page 40

636 S.W.2d 40

Warren H. KAWIN, et al., Appellants-Respondents, v. CHRYSLER CORPORATION, et al., Respondents-Appellants.

No. 62863.

Supreme Court of Missouri, En Banc.

July 6, 1982.

Rehearing Denied Aug. 2, 1982.

Leonard Komen, Warren H. Kawin, Clayton, for appellants-respondents.

Stuart Oelbaum, St. Louis, for respondents-appellants.

RENDLEN, Judge.

Warren and Alice Kawin brought their action against the manufacturer Chrysler Corporation (Chrysler) and Robert G. Spellbrink, Chrysler's St. Louis area field service engineer, for breach of warranty and fraudulent merchandising practices in their sale to plaintiffs of a Chrysler Airtemp central air conditioner. ¹ At the close of the evidence, plaintiffs dismissed as to Spellbrink and the court granted Chrysler's motion for directed verdict on Kawins' fraud claim. The breach of warranty claim was submitted to the jury which found for Chrysler and judgment was entered on that verdict. Chrysler's motion for attorney's fees under § 407.025, RSMo 1978, was denied by the trial court and plaintiffs and defendant Chrysler each sought review in the Court of Appeals, Eastern District, where the judgment was affirmed. Transferred here, the cause is reviewed as though on original appeal. Art. V, § 10, Mo.Const., Rule 83.09.

Plaintiffs contend the trial court erred: (1) in overruling plaintiffs' motion for directed verdict on Count I (breach of warranty) and rejecting instruction "A" proffered by plaintiffs, which would have declared as a matter of law that Chrysler's warranty for replacement of a defective compressor required replacement with a new rather than a rebuilt compressor, (2) by granting defendant-Chrysler's motion for directed verdict as to Count II (fraud) because the uncontroverted evidence established a fraudulent concealment by defendant of a material limitation of the warranty on its air conditioner, and (3) in refusing to take judicial notice of certain Federal Trade Commission regulations and rejecting their admission into evidence.

Chrysler asserts the trial court erred in denying its motion for attorney's fees to which it was entitled as a prevailing party under § 407.025, RSMo 1978, the Missouri Merchandising Practices Act.

On September 3, 1968, plaintiffs contracted with American Allied Air Conditioning Company for the purchase of a Chrysler Airtemp air conditioner for their home. Shopping for an air conditioner backed by a reputable company which gave the most favorable warranty terms, Mr. Kawin investigated several other brands and before purchasing the Chrysler unit, obtained a specimen warranty from the American Allied representative, relevant portions of which are as follows:

Airtemp Division of Chrysler Corporation warrants its Packaged Air Conditioning or Heating Product identified below to be free of defects in workmanship and material under normal use and service. Airtemp's obligation under this warranty is limited solely to repairing or replacing parts F.O.B. Dayton, Ohio, which in its judgment are defective in workmanship or material and which are returned, freight prepaid, to its Dayton, Ohio plant or other designated point.

The above warranty applies for a period of one year from date of original installation.

The Hermetic Compressor ... is warranted for a period of five (5) years from date of original installation.

GENERAL PROVISIONS

Airtemp makes this warranty in lieu of all other warranties, express or implied. In no event shall Airtemp be liable for special or consequential damages.... (Emphasis added).

Installation was completed in October, 1968, and plaintiffs operated the air conditioner that fall for about one week. The unit, next operated in June and July, 1969, functioned poorly, and required six service calls during that period. The problems ended when the unit's air compressor was replaced in July of that year.

The air conditioner functioned properly until the end of July, 1972, when it again began running poorly. Plaintiffs were then informed by George Gilbert, in the Chrysler parts department, that a rebuilt compressor was available. Mr. Kawin called Mr. Spellbrink, Chrysler's field service engineer in St. Louis, advising that he was willing to pay the installation cost as required in the warranty, but he wanted a new, not a rebuilt compressor. Spellbrink responded that under the warranty Chrysler could furnish new or remanufactured compressors, and it was their policy to furnish the latter. Mr. Kawin refused the offer of a rebuilt compressor and purchased another air conditioner.

At trial, Mr. Kawin admitted neither the specimen warranty he examined before purchase nor the warranty received from Spellbrink contained representations that Chrysler would replace defective parts with new parts. In addition, Spellbrink testified he was not aware of any Chrysler literature, advertisement, or specification that replacement would be with a new, vis-a-vis a rebuilt part. Further it was Chrysler's policy to replace, rather than repair, as the cost and quality of work in remanufacturing plants was superior to those of servicemen in the field.

I.

Plaintiffs first contend the trial court erred in overruling their motion for directed verdict as to Count I, the breach of warranty claim, and in refusing their proffered Instruction A which declared as a matter of law that Chrysler's warranty provision for replacement meant replacement with new rather than rebuilt parts. ²

The contested portion of the warranty provided that "Airtemp's obligation ... is limited solely to repairing or replacing parts ...". Plaintiffs seek to extrapolate the phrase by inserting the words "with new", so the challenged phrase would read "Airtemps obligation ... is limited solely to repairing or replacing (with new) parts ...". The term "replace", given its plain and ordinary construction, means to supplant with a substitute or equivalent. Olenick v. Government Employees Insurance Co., 42 A.D.2d 760, 346 N.Y.S.2d 320, 321 (1973); Black's Law Dictionary 1168 (5th ed. 1979). Clearly, a remanufactured part in good condition is the equivalent of a part employed in a unit for a period of time as here. Because a new part is more than equivalent to a used part, plaintiffs are alleging an interpretation of "replacing" beyond its ordinary meaning. ³

A party asserting a special meaning of an unambiguous commonly used term bears the burden of establishing that such a construction was intended. Rhoden Investment Company, Inc. v. Sears, Roebuck and Company, 499 S.W.2d 375 (Mo.1973); Landau Grocery Co. v. Hart, 223 S.W. 793 (Mo.App.1920). In this regard plaintiffs adduced no evidence other than their personal interpretation of the term "replacing". They offered nothing such as business or trade usage or course of dealing between the parties, to demonstrate that under the circumstances, replacement was intended to be accomplished with new rather than rebuilt parts. On plaintiffs' failure to meet their burden, the trial court would have been justified in directing a verdict for defendant, but instead submitted construction of the warranty phrase for the jury's determination. The jury appropriately held for defendant, and plaintiffs may not be heard to complain of error (if error it was) committed in their favor.

II.

Plaintiffs next allege the trial court erred in directing a verdict against their claim of fraud under Count II. They assert it was Chrysler's legal duty to disclose the material limitation of the warranty, that replacement of a defective air conditioner compressor meant with a rebuilt rather than new part, and Chrysler's failure to disclose this limitation constituted actionable fraud.

To make a submissible claim of fraud, plaintiffs must prove defendant intended to deceive. "It is well established in our law that there must be scienter, either actual or constructive, to support an action at law for fraud and deceit. Scienter implies guilty knowledge by the tort feasor or a guilty lack of knowledge .... The misrepresentation must be made with intent to deceive, 'or with what is recognized as the legal equivalent to a deliberately fraudulent intent to deceive.' " Dudley v. Dumont, 526 S.W.2d 839, 847 (Mo.App.1975).

In the case at bar, plaintiffs failed to establish Chrysler intended to deceive plaintiffs by not disclosing in its warranty or elsewhere that replacement occurred with rebuilt and not new parts. Indeed, as discussed above, the ordinary meaning of the word "replace" in the circumstance here does not require satisfaction with new parts, which negates the claim of intent to deceive. Chrysler offered evidence that it had long been the company's policy to replace defective compressors with remanufactured units. Plaintiffs introduced nothing in rebuttal. For example, no evidence was offered of the air conditioning industry's practice concerning replacement of parts and whether Chrysler's practice was contrary, or similar evidence which might support an inference of knowledge by Chrysler that its warranty limitation was deceptive. Absent a showing of scienter, there could be no finding of fraud, hence, the court properly directed a verdict for defendant on Count II.

III.

Plaintiffs next charge the trial court erred in refusing to take judicial notice of the Federal Trade Commission regulations 16 C.F.R. §§ 26.2 and 26.12 (1968), and in sustaining defendant's objection to the introduction of the regulations into evidence. By congressional authority, the Federal Trade Commission is empowered to promulgate regulations implementing the provisions of 15 U.S.C.A. § 45(a)(1), which proscribes unfair methods of competition and unfair or deceptive acts and practices in or affecting commerce. 16 C.F.R. §§ 26.2 and 26.12, two such regulations, established standards for the air conditioning industry.

Section 26.2 provided:

In the sale, offering for sale, or installation of industry products, it is an unfair trade practice to use, or cause...