Kuhlman, Inc. v. G. Heileman Brewing Co., Inc.

• Decision Date: 06 June 1978
• Docket Number: No. 75-770,75-770
• Citation: Kuhlman, Inc. v. G. Heileman Brewing Co., Inc., 83 Wis.2d 749, 266 N.W.2d 382 (Wis. 1978)
• Parties: KUHLMAN, INC., Plaintiff-Respondent, v. G. HEILEMAN BREWING COMPANY, INC., Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 382

266 N.W.2d 382

83 Wis.2d 749

KUHLMAN, INC., Plaintiff-Respondent, v. G. HEILEMAN BREWING COMPANY, INC., Defendant-Appellant.

No. 75-770.

Supreme Court of Wisconsin.

Submitted on Briefs Feb. 8, 1978.

Decided June 6, 1978.

Randy J. Smith, La Crosse, on brief, for defendant-appellant.

Robert D. Johns, Jr., and Johns, Flaherty & Gillette, S. C., La Crosse, on brief, for plaintiff-respondent.

ABRAHAMSON, Justice.

This action was instituted by Kuhlman, Inc. (Kuhlman), a corporation engaged in the manufacture, installation, and servicing of industrial refrigeration equipment, to recover from the G. Heileman Brewing Company, Inc. (Heileman) a $6,850.00 unpaid balance on four construction contracts. The parties stipulated that Heileman owed $6,850.00 to Kuhlman on the contracts, subject to Heileman's counterclaims for damages caused by alleged breach of the contracts by Kuhlman.

Three issues were pursued at trial: (1) whether Kuhlman breached two of the contracts by defectively installing equipment at Heileman's Sheboygan plant; (2) if Kuhlman breached the contracts what sum of money would compensate Heileman for the reasonable cost of repairing the defective installations; and (3) what amount listed as "state taxes" in bid tenders submitted by Kuhlman and incorporated by reference into two of the contracts included Wisconsin sales taxes for which Heileman was entitled to reimbursement.

The jury determined that Kuhlman breached the contracts by performing work in a faulty manner, and it awarded Heileman $114.00 as the reasonable cost of correcting the defects. The jury further determined that no amount of the state taxes set forth in the bid tenders constituted sales taxes. Judgment was entered on the verdict, and Heileman appealed. We reverse and remand the cause for a new trial on the issue of damages at the Sheboygan plant as a result of Kuhlman's breach of contract.

I.

By its counterclaim, Heileman sought damages for Kuhlman's breach of contract. The measure of the damages sought was the cost incurred by Heileman in repairing Kuhlman's defective installations. Stevens Construction Corp. v. Carolina Corp., 63 Wis.2d 342, 360, 217 N.W.2d 291 (1974). Heileman challenges on appeal the trial court's instructions with regard to Heileman's duty to mitigate these repair costs.

An injured party has a duty to mitigate damages, that is, to use reasonable means under the circumstances to avoid or minimize the damages. An injured party cannot recover any item of damage which could have been avoided. The burden of proof is on the delinquent party to show that the injured party could have mitigated its damages. If the effort, risk, sacrifice or expense which the injured person must incur to avoid or minimize the loss or injury is such that a reasonable person under the circumstances might decline to incur it, the injured party's failure to act will not bar recovery of full damages. Byrnes v. Metz, 53 Wis.2d 627, 631, 632, 193 N.W.2d 675 (1972); O'Brien v. Isaacs, 17 Wis.2d 261, 266, 116 N.W.2d 246 (1962); Monroe County Finance Co. v. Thomas, 243 Wis. 568, 571, 11 N.W.2d 190 (1943); 11 Williston on Contracts, sec. 1354 (Jaeger 3d ed. 1968); McCormick, Law of Damages, sec. 33 et seq. (1935).

Whether Heileman exercised reasonable care to mitigate or lessen its costs of repair centers around Heileman's use of its own employees and third-party contractors to make the repairs rather than requesting Kuhlman to make repairs.

There was conflicting testimony as to whether Heileman advised Kuhlman of the defective installations or requested Kuhlman to make repairs. Ronald Kuhlman, Kuhlman's vice-president, testified that had Kuhlman been given the opportunity to make repairs, Heileman would not have been charged for any repairs made necessary by Kuhlman's defective materials or workmanship. Kuhlman would have borne the cost of such repairs, stated the vice-president, because of Kuhlman's warranty of "parts, labor or material supplied." The warranty in the contract provided that:

"We (Kuhlman) will guarantee the Work of the Contract against, and agree to make good, any and all faulty materials and/or workmanship for a minimum period of one year from the date of acceptance by the Engineer."

The contract does not state that Kuhlman will "make good" its warranty by correcting defects. The contract is silent as to whether Heileman was obligated to resort to Kuhlman's services before undertaking other measures to repair defects covered by the warranty. ¹ Neither party asked the trial court to interpret the contract to require Heileman to ask that Kuhlman make the repairs before Kuhlman incurred liability. Whether Heileman had to notify Kuhlman of alleged defects and afford Kuhlman the first opportunity to correct the defects was viewed by the parties and the trial court as an aspect of Kuhlman's affirmative defense that Heileman failed to mitigate damages.

In its instructions to the jury, the trial court characterized as follows Heileman's duty to mitigate its repair costs:

". . . You are further instructed it was the duty of Heileman's to exercise ordinary care to mitigate or lessen its damages. By ordinary care, as that term is here used, is meant that care usually exercised by a person of ordinary intelligence and prudence, under the same or similar circumstances. Heileman's is entitled to avoid loss, to avoid undue risks and to safeguard its product. (Heileman) must ask Kuhlman, Inc. to comply with its warranty unless you are satisfied Kuhlman, Inc., ignored requests of Heileman and that it would be useless to call on them.

"In fixing damages you will keep in mind this duty of Heileman's to exercise ordinary care to mitigate its damages; and, if you find they did not do so, you should not include in your answer to this question any amount which could have been avoided by the exercise of such care." (Emphasis added.)

Heileman claims that the trial court erred in instructing the jury that "(Heileman) must ask Kuhlman . . . to comply with its warranty unless . . . Kuhlman . . . ignored requests of Heileman and . . . it would be useless to call on them." (Emphasis added.) The jury should have been instructed, argues Heileman, that Heileman's affording (or failure to afford) Kuhlman an opportunity to correct the defects was one of the factors to be considered in determining whether Heileman exercised ordinary care in seeking to mitigate its damages. The instruction given, asserts Heileman, erroneously placed upon the injured party, as a matter of law, the duty to ask the breaching party to make repairs. Thus, instead of allowing the jury to determine the reasonable conduct of the injured party under the circumstances, the trial court, in effect, instructed the jury that the only reasonable course of conduct was to seek out Kuhlman to make repairs. Arguing that the trial court's instruction was clearly prejudicial, Heileman points out in its brief that the $114 awarded by the jury, an amount constituting only a small portion of the damages claimed, represented the cost to Heileman of repairing an installation for which there was evidence that Heileman notified Kuhlman of the defects.

Neither party on appeal argues that Heileman was required, as a matter of law, to afford Kuhlman the first opportunity to repair the defective installations. We agree with the parties that Heileman was not required, as a matter of law, to afford Kuhlman the first opportunity to repair the defective installations. We have long applied the rule that the injured party's attempt to mitigate damages must only be "reasonable." Byrnes v. Metz, 53 Wis.2d 627, 632, 193 N.W.2d 675 (1972). Because the duty to mitigate damages imposes a standard of reasonable conduct under which a wide latitude of discretion must be given the injured party, McCormick, Law of Damages, sec. 35 (1935), the question whether Heileman afforded or failed to afford Kuhlman the opportunity to make the repairs was a factor for the jury to consider in determining whether Heileman exercised ordinary care to mitigate its damages.

Kuhlman argues on appeal that the trial court's mitigation instruction did not, as Heileman contends, place upon Heileman an absolute duty to ask Kuhlman to make repairs, since Heileman need not have done so if its requests were "ignored" and would be "useless." Kuhlman contends that the phrase "(Heileman) must ask Kuhlman, Inc. to comply with its warranty," viewed in the context of the sentence in which it was used and in the context of the entire instruction, placed upon Heileman only the duty to exercise ordinary care in seeking to mitigate its damages. As Kuhlman points out, "instructions must be judged as a whole and in connection with the questions in the verdict, and unless it can be reasonably said that instructions would probably, not possibly, mislead the jury, prejudicial error should not be found." Savina v. Wisconsin Gas Co., 36 Wis.2d 694, 703, 154 N.W.2d 237, 241 (1967). See also Menge v. State Farm Mut. Auto. Ins. Co., 41 Wis.2d 578, 584, 164 N.W.2d 495 (1969).

Kuhlman claims that the instructions, viewed as a whole, did not mislead the jury. We believe they did. Some errors in an instruction are of such nature that they are not cured by a correct statement of the law elsewhere in the instructions. Savina v. Wisconsin Gas Co., supra, 36 Wis.2d at 703, 154 N.W.2d 237. The trial court's statement that Heileman "must ask Kuhlman, Inc. to comply with its warranty" was, as Kuhlman contends, modified by the clause "unless you are satisfied Kuhlman, Inc. ignored requests of Heileman and that it would be useless to call on (Kuhlman)," as well as by preceding and subsequent statements that Heileman was under the duty to exercise ordinary care to mitigate or lessen its damages. Nonetheless, these instructions, read together, suggest that while the jury could weigh other conduct to determine its reasonableness, affording Kuhlman first...