Kleven v. Geigy Agr. Chemicals

• Decision Date: 21 March 1975
• Docket Number: No. 44467,44467
• Parties: , 16 UCC Rep.Serv. 718 George KLEVEN et al., Appellants, v. GEIGY AGRICULTURAL CHEMICALS, a.k.a. Ciba-Geigy Corporation, Respondent.
• Court: Minnesota Supreme Court

Page 566

227 N.W.2d 566

303 Minn. 320, 16 UCC Rep.Serv. 718

George KLEVEN et al., Appellants, v. GEIGY AGRICULTURAL CHEMICALS, a.k.a. Ciba-Geigy Corporation Respondent.

No. 44467.

Supreme Court of Minnesota.

March 21, 1975.

Syllabus by the Court

1. Where credible evidence was introduced at trial that fields treated by herbicide manufactured at defendant's Alabama plant displayed good weed control while fields treated by herbicide manufactured at defendant's Louisiana plant displayed poor weed control, the conditions and amount of herbicide application being similar, the determination of a breach of warranty was properly left for the jury.

2. In an action for breach of an express warranty of fitness and merchantability of a herbicide, where the warrant expressly excluded consequential damages, crop losses occurring as a result of the herbicide's failure to control weeds were consequential damages.

3. A clause in an express warranty exculpating the seller from liability for consequential damages was not unconscionable on the facts of this case dealing with a commercial transaction.

Prindle, Maland & Ward and W. D. Prindle, Montevideo, for appellants.

Nelson, Oyen & Torvik and John P. Nelson, Montevideo, for respondent.

Heard before OTIS, PETERSON, and SCOTT, JJ., and considered and decided by the court en banc.

PETERSON, Justice.

Plaintiffs, George and James Kleven, purchased herbicide from defendant, Ciba-Geigy Corporation, for use on their farmland near Milan, Minnesota. Plaintiffs sued defendant for breach of an express warranty of fitness and merchantability because the herbicide did not effectively provide weed control. The jury, by special verdict, found that defendant had breached an express warranty and found that, as a direct result of this breach, plaintiffs sustained damages of $2,146.20 for the reasonable cost of the herbicide and for the expenses incurred in applying the product. The trial court ordered judgment for plaintiffs in that sum.

Plaintiffs offered evidence to establish that the difference between the reasonable value of the corn actually in the field and the fair and reasonable value the corn would have had if the herbicide had been effective was $14,515. The jury, by special interrogatory, fixed this element of asserted damage, together with damages representing the cost of additional tilling, at $7,257.50. The jury, by an additional special interrogatory, found that consequential damages were excluded from defendant's express warranty. The trial court ruled that any crop losses and tilling costs sustained by plaintiff constituted consequential damages and therefore declined to order judgment for such losses. Plaintiffs for that reason appeal from the judgment. Defendant has filed a notice of review of several orders and the judgment.

The product in issue in a chemical herbicide, manufactured by defendant, known as AAtrex 80W. The bags in which the herbicide is contained are imprinted with this written warranty:

'The Directions For Use of this product reflect the opinion of experts based on field use and tests. The directions are believed to be reliable and should be followed carefully. However, it is impossible to eliminate all risks inherently associated with use of this product. Crop injury, ineffectiveness or other unintended consequences may result because of such factors as weather conditions, presence of other materials, or the manner of use or application all of which are beyond the control of Geigy or the Seller. All such risks shall be assumed by the Buyer.

'Geigy warrants that this product conforms to the chemical description on the label and is reasonably fit for the purposes referred to in the Directions For Use, subject to the inherent risks referred to above. Geigy makes no other express or implied warranty of Fitness or Merchantability or any other express or implied warranty. In no case shall Geigy or the Seller be liable for consequential, special or indirect damages resulting from the use or handling of this product. Geigy and the Seller offer this product, and the Buyer and user accept it, subject to the foregoing Conditions Of Sale And Warranty which may be varied only by agreement in writing signed by a duly authorized representative of Geigy.'

1. The trial court properly denied defendant's motion for judgment notwithstanding the verdict. The motion necessarily requires the movant to accept the view of the entire evidence most favorable to the prevailing party and is to be granted only if reasonable minds could reach but one conclusion against the verdict. Brown v. Arthur Schuster, Inc., Minn., 217 N.W.2d 850 (1974). We conclude that there is competent evidence on this record to sustain the verdict and the judgment.

Plaintiffs introduced evidence that there were two different types of AAtrex 80W used on three different plots of corn land. Some of the AAtrex 80W was produced at defendant's McIntosh, Alabama, plant, with the remainder produced at its St. Gabriel, Louisiana, plant. All of the AAtrex used on a 12-acre tract of corn planted by plaintiffs was manufactured at the Alabama plant, and weed control was good on that acreage. The great majority of the AAtrex used on the balance of plaintiffs' corn land, as well as the AAtrex used on a tract belonging to another local corn farmer, came from the Louisiana plant. Weed control was poor on the acreage sprayed with the Louisiana-produced herbicide. The conditions and amount of AAtrex application were essentially similar on each of the tracts. We are not persuaded that reasonable men on a jury could not explain these facts by positing an inadequate or defective manufacture of the AAtrex coming from the Louisiana plant.

2. The trial court properly denied recovery to plaintiffs for their claimed crop damages and tilling expense on the ground that they were consequential damages excluded by the express terms of defendant's warranty. Stating that the product is 'reasonably fit for the purposes referred to in the Directions For Use,' the warranty specifies that '(i)n no case shall Geigy or the Seller be liable for consequential, special or indirect damages resulting from the use or handling of this product.'

The basic scheme for damages arising from a breach of warranty is set out in the Minnesota Uniform Commercial Code, Article 2 (Minn.St. c. 336, Art. 2). Section 336.2--714(1) states the general rule--the buyer may recover any damages 'resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.' Section 336.2--714(2) states the time-honored formula to determine the measure of direct damages, namely, that the buyer gets the difference at the time of acceptance between 'the value of the goods accepted and the value they would have had if they had been as warranted * * *.'

Section 336.2--714(3) provides for the awarding of consequential damages, which are defined in § 336.2--715:

'(2) Consequential damages resulting from the seller's breach include

(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.'

In distinguishing between direct and consequential damages, we have consistently relied on the rule expressed in Despatch Oven Co. v. Rauenhorst, 229 Minn. 436, 40 N.W.2d 73 (1949), which involved a contract exculpating the seller from consequential damages. Consequential damages, as opposed to direct damages, were defined by the court to be those that 'do not arise directly according to the usual course of things from the breach of the contract itself, but are rather those which are the consequence of special circumstances known to or reasonably supposed to have been contemplated by the parties when the contract was made.' 229 Minn. 445, 40 N.W.2d 79. Direct damages were held to arise out of the breach itself; consequential damages were damages foreseeably resulting from the breach. We held in that case that, under a contract for the sale of a seed corn dryer, the loss of profits of sales of seed corn and feed corn caused by the breach of warranty as to the dryer's capabilities were consequential damages and therefore were not recoverable where the contract exculpated the seller from consequential damages.

Long before Despatch, we held in Frohreich v. Gammon, 28 Minn. 476, 11 N.W. 88 (1881), that loss of crops caused by the inability to harvest with a defective harvesting machine constituted consequential damages. We said there:

'* * * The rule laid down in Hadley v. Baxendale, 9 Exch. 341, now generally accepted as correct, and sanctioned by this court in Paine v. Sherwood, 21 Minn. 225, is that the damages which one party to a contract ought to receive, in respect of a breach of it by the other, are such as either arise naturally--that is, in the usual course of things--from the breach itself, or such as may reasonably be supposed to have been contemplated by the parties when making the contract as the probable result of the breach. Under the first branch of this rule fall the damages arising from the fact that a thing sold and warranted is of less value than it would have been if the warranty were true. These damages arise, in the usual course of things, From the breach itself; that is to say, from the breach purely, and irrespective of consequential damages. Their measure is the difference in values before indicated. An instance falling under the second branch of the rule is where one sells and warrants a thing for a particular use, upon reasonable ground for believing that, if put to such use, a certain loss to the...