Little v. Grizzly Mfg.
| Decision Date | 25 November 1981 |
| Docket Number | No. 81-100,81-100 |
| Citation | 38 St.Rep. 1994,195 Mont. 419,636 P.2d 839,32 UCC Rep. 1087 |
| Parties | , 32 UCC Rep.Serv. 1087 Timothy LITTLE and Sharon Little, Plaintiff and Respondent, v. GRIZZLY MANUFACTURING, Fred J. Bernatz, Boliver Realty and Don Crosley, Defendant and Appellant. |
| Court | Montana Supreme Court |
Schultz Law Firm, Hamilton, Jeffrey H. Langton argued, Hamilton, for defendant and appellant.
John L. Hamner argued, Butte, for plaintiff and respondent.
The Littles brought this action in the District Court, Silver Bow County, to recover damages for the alleged negligence, breach of contract and breach of general warranties (sections 30-11-214 to 30-11-216, MCA), arising from the sale of a modular home by Grizzly Manufacturing to the Littles. The jury returned a verdict for the plaintiffs in the amount of $9,000. A crossclaim involving Don Crosley of Bolever Realty was also tried, but there is no appeal from this portion of the case.
In August, 1977, the Littles entered into a purchase order for a home manufactured by Grizzly Manufacturing of Hamilton, Montana. The Littles had visited the manufacturing plant and participated in the design of the home. The house purchased by the Littles was a modular house which was constructed at the plant in two sections and shipped to the Littles' homesite in Butte, Montana. According to specifications furnished by Grizzly, the Littles constructed a foundation for the house which was approved by Grizzly representatives.
In November, 1977, Grizzly employees delivered the house to the site and the two halves were placed on the Littles' foundation, one section at a time. Timothy Little testified that two steel rails were laid across the foundation to support the sections as they were pulled across the foundation. The installers experienced difficulty with the first section due to the weight of a stone fireplace which had been built into the section at the factory. As this section was pulled across it bowed because there was no support in the middle. Only two rails were used to roll the house across. Grizzly employees told Tim Little that three rails should have been used due to the fireplace, and that the fireplace should have been installed after delivery. Once the house was on the foundation it was "stitched" together and support beams were set up in the basement.
On her first inspection of the home, Mrs. Little saw that the fireplace was about four inches from the ceiling and there were cracks in the wall. There were also defects in the linoleum, the countertops, the windows and the patio door. Apparently most of these defects were fixed after Mrs. Little complained to Fred Bernatz, president of Grizzly. Grizzly employees jacked up the house so that the fireplace met the ceiling. There were several defects which had not been cured at time of trial. The roof leaked, the fireplace mantel was warped, and there was a noticeable variation in height between the two halves of the house. The linen closet door was four inches short of the floor and the kitchen closet was defective and unfinished. Grizzly employees attempted to fix the leaking roof and the variation in the floor but the repairs were unsuccessful.
The purchase price of the home was $38,001. At time of trial the Littles had paid all but $397.24 of the purchase price and had lived in the home for almost three years. The Littles admitted removing two of the support posts in the basement in order to build a basement wall. Tim Little stated he informed a Grizzly representative of his plans to build the wall. Bernatz testified he did not authorize the removal of the support posts.
Testimony on damages was given by Robert Alden, the father of Sharon Little. Mr. Alden was a certified real estate appraiser. He testified that the value of the home with its defects was $5,000 lower than it would be without the defects in 1979, and that the discrepancy in values would be greater at present due to inflation. He further testified over objection that the hump in the floor could be repaired for $2,000, and the mantelpiece replaced by a carpenter and perf-a-taper working at approximately $100 per day for one week. Fred Bernatz testified that the mantel could be replaced for a couple hundred dollars. Mr. Alden testified the roof would have to be removed and replaced, but he gave no estimate of the cost. There was no further evidence on damages. The jury rendered a verdict in favor of the Littles for $9,000.
Appellants Fred Bernatz and Grizzly Manufacturing, Inc., raise the following issues:
1) Whether the District Court erred in denying Fred Bernatz's motion that he be dismissed as a party defendant because he was merely an agent for the corporation and therefore not personally liable;
2) Whether the District Court erred in refusing defendants' offered instructions based upon the Montana Uniform Commercial Code;
3) Whether the District Court erred in giving an instruction on the doctrine of res ipsa loquitur;
4) Whether there was sufficient evidence to support the damages awarded by the jury;
5) Whether the jury was properly allowed to consider the effects of inflation in assessing damages;
6) Whether a real estate appraiser was qualified to testify as to cost of curing the defects in the home.
On the basis of numerous errors committed by the trial court, we reverse and remand for a new trial.
Judgment was entered against Fred Bernatz, individually, and Grizzly Manufacturing, Inc. Appellants contend that Bernatz, who was president of Grizzly Manufacturing, should have been dismissed as a party.
The liability of an agent to a party dealing with the principal or corporation is covered by section 28-10-702, MCA, as follows:
There was no evidence that Fred Bernatz received personal credit or acted without authority or acted outside the scope of his agency. In order for Bernatz to be personally liable, therefore, there must be evidence to support a finding that he was personally negligent or that his actions or omissions were tortious in nature.
Mr. Bernatz was not present when the modular home was installed on the Littles' foundation. He testified, "There could have been bad handling or something in the process of the transfer from the trailer to the foundation, but nothing I am aware of or was reported by our people." He stated that he had been through the home with the Littles when it was being constructed at the plant. Mrs. Little called him on several occasions with complaints, and a Grizzly representative would make a service call. Bernatz personally did not know of any case where the company failed to respond to a complaint. There was no evidence that he was aware of any negligent construction, or that he participated in the actual construction process.
Application of the doctrine of "piercing the corporate veil" to avoid fraud or injustice is inappropriate here. In Montana, officers of a corporation have been held personally liable where it was shown that the corporation was merely an "alter ego" for a person using a shield for purposes of fraud. See Shaffer v. Buxbaum (1960), 137 Mont. 397, 352 P.2d 83; Wilson v. Milner Hotels, Inc. (1944), 116 Mont. 424, 154 P.2d 265. There is no evidence that the corporation was defectively formed or that it was formed with the intent to avoid personal liability. As a matter of public policy, the officers and agents of a corporation must be shielded from personal liability for acts taken on behalf of the corporation in furtherance of corporate goals, policies and business interests. Phillips v. Montana Ed. Ass'n (1980), Mont., 610 P.2d 154, 37 St.Rep. 821. The exception to this policy is where the officer personally committed a tort. There is no evidence to support a finding that Bernatz committed a tort. Therefore, the motion to dismiss him as a party defendant should have been granted.
The trial court, over appellants' objections, gave three jury instructions based on the general statutory warranties of sections 30-11-214, 30-11-215, and 30-11-216, MCA. Appellants argued that these instructions were inapplicable on the ground that the Uniform Commercial Code applied to the transaction and precluded the use of the general statutory warranties. Appellants contend the trial court erred in refusing their proposed instructions based on the U.C.C., sections 30-2-606, 30-2-607, 30-2-717, 30-2-714(2), 30-2-605 and 30-2-314, MCA. We agree.
Article 2 of the Uniform Commercial Code applies to sales of "goods." "Goods" is defined in section 30-2-105, MCA, as follows:
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