Liberty Mut. Ins. Co. v. J. R. Clark Co.

• Decision Date: 03 July 1953
• Docket Number: No. 35859,35859
• Citation: 59 N.W.2d 899,239 Minn. 511
• Parties: LIBERTY MUT. INS. CO. v. J.R. CLARK CO.
• Court: Minnesota Supreme Court

Page 899

59 N.W.2d 899

239 Minn. 511

LIBERTY MUT. INS. CO. v. J.R. CLARK CO.

No. 35859.

Supreme Court of Minnesota.

July 3, 1953.

Syllabus by the Court.

1. Where personal property is purchased for resale and subsequently resold by purchaser with warranties identical to those made by his seller, damages recovered against purchaser by his subpurchaser for breach of such warranties may be recovered from the original seller by the purchaser, provided they may reasonably have been expected to follow breach of the warranties.

2. In such situations, liability of original seller is concluded by the judgment against his purchaser, provided seller was notified of commencement of the prior action and was tendered defense thereof.

3. To establish right of recovery under such judgment purchaser, in subsequent action against seller, must prove article involved was purchased by him from seller; that warranties under which it was sold to him were identical to those under which it was resold; that in the prior action it was determined that such warranties had been breached in the resale of the article; and that the breach had resulted in damages to the subpurchaser, who had obtained a judgment therefor against purchaser which the latter had paid. Purchaser also would be required to prove that notice of commencement of prior action had been given seller and that tender of defense thereof had been declined by the latter.

4. In instant case record discloses that plaintiff, as subrogee of original purchaser, established its right of recovery, by proof of facts outlined above and that defendant did not establish any defense thereto but sought only to relitigate issue of breach of the warranties identified, upon which issue it was bound by the previous adjudication.

5. Submission of evidence by plaintiff to again establish breach of the warranties was surplusage, but would not constitute waiver of plaintiff's right to rely upon the prior adjudication of this issue.

6. Under Mo.Laws 1943, General Code for Civil Procedure, § 116, p. 388, as interpreted by the supreme court of Missouri, verdict rendered in legal proceedings there is equivalent to judgment. Document here submitted in evidence, while in form a verdict, in its caption is designated 'Judgment' and under Missouri statute quoted must be held evidence of a prior final adjudication, binding upon the parties in the present action on the issue of breach of warranty.

7. Court did not err in receiving certified copy of 'Judgment' and other documents of the circuit court of the city of St. Louis, submitted by plaintiff, although not authenticated as required by M.S.A. § 599.11, where defendant's counsel specifically waived objection thereto because of such lack of authentication.

Freeman, Larson & Peterson and Harry H. Peterson, Minneapolis, for appellant.

Robb, Robb & Van Eps, Minneapolis, for respondent.

THOMAS GALLAGHER, Justice.

Action over against defendant for breach of warranties in the sale of a stepladder manufactured by it and prior to August 1943 sold to Central Hardware Company of St. Louis, Missouri, which, in turn, sold it to one Ferdinand F. Kayser on August 3, 1943.

On September 4, 1946, Kayser instituted an action against Central Hardware in the circuit court of the city of St. Louis, Missouri, for injuries sustained as a result of the ladder's collapse while he was using it September 17, 1944. On September 4, 1946, Central Hardward notified defendant of the commencement of that action and demanded that it take over the defense thereof. This defendant refused to do.

On December 12, 1947, the jury in the Missouri court returned a verdict against Central Hardware in Kayser's favor in the sum of $5,000. Central Hardware thereupon demanded that defendant pay and discharge the verdict. This was refused, and the verdict then paid by Central Hardware. Plaintiff, Liberty Mutual Insurance Company, as insurer of Central Hardware thereupon reimbursed the latter for the amount of the verdict and expenses incurred in defense of the action and as subrogee of Central Hardware instituted these proceedings against defendant to recover the sums thus paid.

The records of the Kayser action in Missouri, submitted in evidence in the present proceedings, establish that it was based upon Central Hardware's alleged breach of express warranties to Kayser at the time of the sale that the ladder was safe, strong, and durable; made of sound, selected, and thoroughly seasoned lumber; of good workmanship; and of sufficient strength to sustain Kayser's weight.

In the Missouri action, the trial court instructed the jury that:

'* * * if you * * * find * * * that defendant represented and warranted to plaintiff that such ladder was fit and suitable for the purpose for which plaintiff intended to use same, and that it was constructed from a good and sound quality of lumber and of sufficient strength to sustain the weight of plaintiff's person in the course of normal and reasonable use thereof; and if you further find that plaintiff relied upon such representations * * * and * * * that while plaintiff was upon said ladder and while he was using the same in a normal and reasonable manner and for the purpose intended, * * * said ladder broke under the weight of plaintiff's person * * *; and * * * said ladder was not of sufficient strength to sustain the weight of plaintiff's person in the normal and reasonable use thereof and that it was not constructed from a good and sound quality of lumber and that it was not fit and suitable for the purpose which plaintiff intended to use the same; and * * * that plaintiff's injuries * * * directly resulted from said conditions, * * * and that plaintiff was at all times in the exercise of ordinary care for his own safety, then your verdict should be in favor of the plaintiff * * *.'

In the present proceedings, the complaint set forth an action based upon the 'negligent' breach of warranties identical to those involved in the Missouri proceedings. It alleged in detail the facts with reference to the action in Missouri, the demand that defendant take over its defense and the latter's, refusal, the results thereof, and the subsequent demand that defendant satisfy the verdict or judgment therein and its refusal in this respect also.

Defendant answered, admitting the manufacture of the ladder and the sale to Central Hardware under the warranties described. It further admitted its refusal to take over the defense of the Missuri action after tender thereof and to pay the verdict rendered therein. It denied a breach of its warranties to Central Hardware and affirmatively alleged that, if the ladder were defective at the time of its sale to Central Hardware, its sale by the latter without an inspection revealing such defects constituted the sole negligence bringing about the injuries sustained by Kayser.

At the trial plaintiff's counsel stated: '* * * this case is not based upon negligence as to this defendant. It's based upon a definite warranty, and the question of inspection * * * on the part of the manufacturer is not a defense, * * *.'

In establishing its prima facie case here, plaintiff submitted in evidence the record of the proceedings in the Missouri action, including the pleadings, the court's charge to the jury, and the verdict returned. It established Central Hardware's payment of this verdict, plus the costs and expenses in defending the action, and its reimbursement of Central Hardware therefor with resulting subrogation to the latter's claims in the present action.

In addition, plaintiff submitted evidence identifying defendant as the manufacturer of the ladder and establishing the sale thereof by defendant to Central Hardware under the identical warranties involved in the Missouri proceedings as to quality, design, strength, durability, workmanship, and kind of lumber used. It then presented evidence showing defects in the lumber together with the testimony of an expert that such defects were the cause of the subsequent breakage of the ladder.

Defendant conceded that the ladder was sold with warranties identical to those involved in the Missouri proceedings and that it had been notified of the institution of the action in Missouri and had declined a tender of the defense thereof. It submitted evidence that all lumber used by it in the manufacture of its ladders, including that sold to Central Hardware, was of the finest quality and carefully selected and that the design of the ladder and workmanship in its construction were not defective in any respect.

An expert employed by defendant testified that after the accident he had examined the ladder here in issue and, based thereon, expressed the opinion that its collapse had been caused, not by any defect in the wood or workmanship used in its manufacture, but rather because of a sharp blow thereto which had caused the wood to break or fracture. He further testified that upon his examination of the ladder he also had discovered that someone had twisted it 'out of line.' On cross-examination it was disclosed that this witness had testified for defendant in the Missouri proceedings. An offer of proof was made and rejected to show that in his testimony in the Missouri proceedings he had expressed this same opinion as to the cause of the ladder's collapse.

At the close of the testimony, the case was not submitted on the issue of negligence but, as the court stated, 'On warranty, breach of warranty.' In the charge to the jury the court instructed that:

'Plaintiff claims that the particular ladder * * * was warranted by the defendant company, and that by reason of defects which were found in the ladder there is a breach of this warranty which resulted in injury with a consequent loss * * *.

'* * * that they relied upon the representations and descriptions of the warranty of the defendant with respect to the ladder.

'* * * that the ladder in question was not as represented and...