McGhee v. GMC Truck & Coach Division

• Decision Date: 02 July 1980
• Docket Number: Docket No. 44814
• Citation: 98 Mich.App. 495,296 N.W.2d 286
• Parties: , 30 UCC Rep.Serv. 121 Robert L. McGHEE, Plaintiff-Appellant, v. GMC TRUCK & COACH DIVISION, a Division of General Motors, a ForeignCorporation, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 286

296 N.W.2d 286

98 Mich.App. 495, 30 UCC Rep.Serv. 121

Robert L. McGHEE, Plaintiff-Appellant, v. GMC TRUCK & COACH DIVISION, a Division of General Motors, a

ForeignCorporation, Defendant-Appellee.

Docket No. 44814.

Court of Appeals of Michigan.

July 2, 1980.

Released for Publication Sept. 24, 1980.

Richard W. Kochansky, Detroit, for plaintiff-appellant.

Albert A. Miller, Detroit, for defendant-appellee.

Before DANHOF, C. J., and CYNAR and MacKENZIE, JJ.

DANHOF, Chief Judge.

This action arose out of the plaintiff's 1974 purchase of a used 1969 model GMC truck tractor from the defendant. The defendant had summary judgment on all counts of the complaint.

The incident that precipitated suit occurred when the plaintiff, an experienced truck driver and mechanic, attempted to remove the tractor's transmission for repair shortly after the purchase. Using the tractor's mechanism designed for the purpose, he was tilting the cab forward when it toppled from the tractor frame onto the ground, sustaining substantial damage. Subsequent inspection revealed that the cab frame had broken and been repaired some time earlier. The repairs had apparently failed before the plaintiff purchased the unit. The tractor was eventually repossessed, repaired and sold by the defendant for $7,000, $2,000 less than the price the plaintiff had paid for it.

The plaintiff claimed that he was damaged in the following particulars:

"A. Plaintiff expended considerable time and money in attempting to repair the tractor.

"B. Plaintiff lost a lucrative hauling contract due to his inability to get a truck, and lost considerable profits.

"C. Plaintiff has been put out of the trucking business and will continue to sustain loss of profit.

"D. Plaintiff has lost the use of his down payment and is incurring interest expenses on the unpaid balance of the tractor.

"E. Plaintiff's truck sustained severe damages which has (sic) required and will further require money for its repair."

Compensatory and exemplary relief was demanded in the amount of $750,000.

Count I of the complaint alleged that defendant breached an "express warranty" created by GMC's media advertising and its salesman's statements that he had examined the unit, particularly the engine, and found it to be in "good condition". Count II, entitled "implied warranty", asserted that the plaintiff had relied on the skill of the defendant's salesman to select a unit suitable for the plaintiff's intended purpose, which was the hauling of construction debris, thus giving rise to an implied warranty of fitness. This count claims that the physical defects, including mechanical difficulties, in the tractor rendered it unfit for the plaintiff's uses. The complaint contained no reference to the documents by which the sale was made.

In response, the defendant relied on the sale documents, including a "retail order form" and an "installment sale contract". The order form, in the nature of an offer to purchase, described the tractor and set forth the price upon which the plaintiff and the salesman had agreed. It was stamped on its face with the proviso "SOLD (AS IS)" in letters approximately one-fourth inch tall. On the reverse side, "additional terms and conditions" included the following, printed in red ink:

"9. There are no express warranties, made by the Seller herein, on the vehicle or chassis described on the face hereof except that in the case of a new vehicle or chassis the printed General Motors new vehicle warrant delivered to Purchaser with such vehicle or chassis shall apply and the same is hereby made a part hereof as though fully set forth herein. In case of a used vehicle or chassis, the applicability of an existing manufacturer's warranty thereon, if any, shall be determined solely by the terms of such warranty.

"10. Any used motor vehicle sold to Purchaser by Seller under this Order is sold at the time of delivery by Seller without any guarantee or warranty, expressed or implied, including any implied warranty of merchantability or fitness for a particular purpose, as to its condition or the condition of any part thereof except as may be otherwise specifically provided in writing on the face of this Order or in a separate writing furnished to Purchaser by Seller."

The installment sale contract indicated that the plaintiff paid $2,000 down on the purchase and financed the balance of the price through the defendant. The reverse side of this document contained "additional terms", most printed nine lines to the inch. In boldface print seven and one-half lines to the inch, the document provided:

"7. It is mutually understood and agreed that: (a) there is no implied warranty of merchantability, no implied warranty of fitness for a particular purpose and no implied warranty which extends beyond the description of said property on the face hereof; (b) except where the undersigned seller is also the manufacturer of said property and, as such manufacturer, issued to buyer or to a prior buyer of said property said manufacturer's separate written new product warranty in respect thereof and said warranty is in effect at the date hereof, there are no express warranties and no representations, promises or statements have been made by said seller in respect of said property unless endorsed hereon or incorporated herein by reference hereon; but said seller's obligations under any express warranty made and evidenced as aforesaid shall continue in accordance with the terms thereof and regardless of whether said seller shall have transferred and assigned to another said seller's rights hereunder; and (c) buyer will not assert against any subsequent holder as assignee of this contract any claim or defense which the buyer may have against a manufacturer or seller other than the undersigned seller of said property or any component, accessory or part thereof."

The defendant's motion for summary judgment on Counts I and II was based on GCR 1963, 117.2(3), claiming that there existed between the parties no genuine issue as to any material fact. By stipulation of the parties, the trial court decided the motion on the depositions of the plaintiff and the defendant's salesman, in lieu of affidavits. ¹ In his deposition, the plaintiff acknowledged the execution of the documents on which the defendant relied for its defense. He testified that he had understood that no warranties were made with respect to the engine or transmission of the truck, and that he had been free to try the cab tilt mechanism when he inspected the unit at the defendant's place of business.

Warranties of merchantability and fitness for a buyer's intended use arise by implication but may be negated by contrary contractual terms meeting the requirements of M.C.L. § 440.2316(2), (3); M.S.A. § 19.2316(2), (3):

"(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that 'There are no warranties which extend beyond the description on the face thereof.'

"(3) Notwithstanding subsection (2)

"(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like 'as is', 'with all faults' or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and

"(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and

"(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade."

The documents that embody the agreement in this case meet the statutory requirements and therefore operate to preclude liability for breach of any implied warranty. We also observe that the plaintiff's freedom to inspect the tractor, including the tilt cab, precludes his recovery under his implied warranty claim.

The express warranty claim apparently relies on the defendant's salesman's statements that the unit was in "good condition". In the sale of a used machine to a knowledgeable buyer, this general expression of opinion cannot be held to create any express warranty.

Count IV of the complaint was entitled "fraud and deceit", and alleged that the statements and advertisements upon which the plaintiff relied for his warranty claim were known to be false and were made by the defendant in order to induce the plaintiff to purchase the tractor. Like the motion for summary judgment on Counts I and II, the defendant's motion on this count was brought under GCR 1963, 117.2(3) and relied on the depositions of the plaintiff and the salesman.

" 'The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. Each of these facts must be proved with a reasonable degree of certainty, and all of them must be found to...