Kesner v. Lancaster

Citation378 S.E.2d 649,180 W.Va. 607
Decision Date17 February 1989
Docket NumberNo. 18246,18246
Parties, 9 UCC Rep.Serv.2d 122 Donald KESNER v. James LANCASTER.
CourtSupreme Court of West Virginia
Syllabus by the Court

1. W.Va.Code, 46-2-608, requires several conditions to be met before a buyer may revoke his acceptance of goods for nonconformity to a contract of sale: (1) the nonconformity must have substantially impaired the value of the goods to the buyer; (2) the goods must have been accepted on the reasonable assumption that the nonconformity would be cured, and it was not, or accepted without discovery of the nonconformity, either because of the difficulty of discovery or because of the seller's assurances; (3) the revocation must have occurred within a reasonable time after discovery of the defect and before any substantial change in the condition of the goods; and (4) the revocation is not effective until the buyer has notified the seller. A buyer making a revocation after acceptance on these terms has the same rights and duties under the Uniform Commercial Code as one who had rejected the goods originally.

2. The sales provisions of the Uniform Commercial Code apply to isolated sales of goods by persons who are not merchants.

3. There are both subjective and objective aspects to the determination of whether a defect "substantially impairs" the value of goods so as to enable a buyer to revoke his acceptance of them under W.Va.Code, 46-2-608. The subjective component of the test takes into consideration the particular buyer's needs and expectations. The objective element focuses on the actual defects, which must be not be trivial or insubstantial.

4. Unless a defect is reasonably apparent or the buyer has some special expertise, a buyer who has made a reasonable inspection of goods and failed to find the defect has satisfied the "difficulty of discovery" test of W.Va.Code, 46-2-608(1)(b).

David H. Webb, Staggers & Webb, Keyser, for James Lancaster.

Nelson Michael, Keyser, for Kesner.

MILLER, Justice:

This is an appeal from an order of the Circuit Court of Mineral County which entered a judgment in favor of Donald Kesner (buyer), the plaintiff in a civil action to recover the purchase price of earth-moving equipment he had purchased from James Lancaster (seller). The buyer alleged that he had timely revoked his acceptance of the equipment pursuant to W.Va.Code, 46-2-608, of the Uniform Commercial Code (UCC). 1 The seller argues that the jury verdict was erroneous because: (1) W.Va.Code, 46-2-608, does not apply to sales transactions in which neither party is a "merchant," and (2) the buyer failed to present prima facie evidence that the defect substantially impaired the machine or was difficult to discover prior to acceptance. We find that the trial court committed no error, and we affirm the jury verdict.

I.

On or about September 13, 1985, the seller advertised a 1974 John Deere tractor-loader for sale in a local newspaper. The buyer responded to the advertisement and arranged to see the machine the following day at the seller's home near Keyser, Mineral County.

The buyer inspected the two-track loader and noted that it was freshly painted and that the undercarriage was in good condition. The seller started the motor, and the buyer observed that the engine ran well. When the buyer told the seller that he needed to use the loader immediately to dig a ditch for a septic system and inquired about its condition, the seller assured him that the equipment was in fine shape. The buyer asked to operate the machine, but was discouraged from doing so by the seller because attachments would have to be changed.

On Monday, September 16, 1985, the buyer arranged to consummate the sale at the seller's residence. The parties again discussed the condition of the loader, and, according to the buyer, the seller again assured him that there was nothing wrong with the machine. The buyer paid for the loader with a personal check of $9,000, drove the machine onto a low-boy trailer, and hauled it away. There was no written contract.

The next day the buyer transported the loader to Reese Mill Road, where he was going to install the septic system. At the work site, the buyer drove the loader from the trailer and began removing the topsoil. Within minutes, the machine stopped and would not move. The buyer testified he could tell from the way the machine was operating that one of the steering clutches was defective.

The buyer decided to fix the steering clutch himself. He removed the seats to obtain access to the clutch and noticed that the transmission had pulled away from its housing. When the buyer removed the floorboards to get a closer look, he noticed that the bolts securing the transmission in its housing were rusted and stripped. Upon further investigation, the buyer discovered that the bolts at the bottom of the housing were also rusted and stripped. Further investigation revealed that the transmission and frame rails had cracked and been welded together and that several bolts to the A-frame were missing.

A mechanic for the buyer estimated that repairs to the transmission mounting bolts, the frame rails, and the steering clutch would take a minimum of thirty-six hours at $20.00 per hour, or $720. The mechanic also stated, however, that he would have to disassemble the transmission to see if there was any internal damage and could not estimate the cost of any additional repairs.

Convinced that major repairs were necessary, the buyer called the seller and told him that he wanted to return the loader and get his money back. The seller refused. Although the buyer called the seller numerous times and had his attorney write the seller a letter, the seller did not respond. Finally, the buyer filed suit in the Circuit Court of Mineral County to recover the purchase price. The jury found that the buyer had justifiably revoked his acceptance of the loader and was, therefore, entitled to the return of his $9,000.

I.

The right of the buyer to rescind a contract for the purchase of goods is long established. In Syllabus Point 2 of J.W. Ellison, Son & Co. v. Flat Top Grocery Co., 69 W.Va. 380, 71 S.E. 391 (1911), the Court stated: "Where a purchaser of chattels has right to rescind the contract, for breach of it, the breach must be in a material matter." In addition to a material breach, our case law required a buyer who sought rescission or revocation 2 of a sales contract to provide "[c]lear and unambiguous notice" of that fact to the seller "promptly or within a reasonable time after the purchase or sale." Syllabus Points 3 and 4, in part, Shreve v. Casto Trailer Sales, Inc., 150 W.Va. 669, 149 S.E.2d 238 (1966). 3

These principles are now drawn together in W.Va.Code, 46-2-608, permitting the buyer to revoke acceptance of goods for nonconformity to the contract of sale. 4 In general, this section requires several conditions to be met before the buyer may revoke his acceptance: (1) the nonconformity must have substantially impaired the value of the goods to the buyer; (2) the goods must have been accepted on the reasonable assumption that the nonconformity would be cured, and it was not, 5 or accepted without discovery of the nonconformity, either because of the difficulty of discovery or because of the seller's assurances; (3) the revocation must have occurred within a reasonable time after discovery of the defect and before any substantial change in the condition of the goods; and (4) the revocation is not effective until the buyer has notified the seller. A buyer making a revocation after acceptance on these terms has the same rights and duties under the UCC as one who had rejected the goods originally. 6

In this case, the parties raise the issues of whether the loader was substantially impaired and whether the defects should have been reasonably discovered. An additional and more fundamental issue is whether the UCC applies to an isolated sale. We address this issue first.

II.

The UCC applies to the sale of any goods. 7 It makes a distinction between the general term "seller" and the more specific term "merchant." Under W.Va.Code, 46-2-103, a seller is "a person who sells or contracts to sell goods." A "merchant" is defined as one "having knowledge or skill peculiar to the practices or goods involved in the transaction[.]" W.Va.Code, 46-2-104(1). 8 The official commentary to the latter section indicates that casual sellers are covered, 9 and this has led courts to conclude that the sales provisions of the UCC apply to isolated sales of goods by persons who are not merchants. See, e.g. Bevard v. Ajax Mfg. Co., 473 F.Supp. 35 (E.D.Mich.1979); Lawson v. Turner, 404 So.2d 424 (Fla.App.1981); Smith v. Stewart, 233 Kan. 904, 667 P.2d 358 (1983); Nelson v. International Harvester Corp., 394 N.W.2d 578 (Minn.App.1986); McGregor v. Dimou, 101 Misc.2d 756, 422 N.Y.S.2d 806 (1979). Thus, the sale in the present case is within the ambit of the UCC. 10

III.

Even though this transaction is subject to the revocation provision of the UCC, W.Va.Code, 46-2-608, the seller argues that the buyer did not present a prima facie case. He contends that since the cost of repairs was much less than the purchase price, the value of the loader was not substantially impaired by the defects, a requisite of W.Va.Code, 46-2-608(1). 11

This Court has not spoken in any detail to the substantial impairment language contained in W.Va.Code, 46-2-608(1). 12 The official commentary to this provision explains that in assessing substantial impairment, "the question is whether the non-conformity is such as will in fact cause a substantial impairment of value to the buyer though the seller had no advance knowledge as to the buyer's particular circumstances." Official Comment, Note 2, W.Va.Code, 46-2-608.

Most commentators and courts agree that there are both subjective and objective aspects to the determination of whether a defect "substantially impairs" the value...

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