Mid Continent Aircraft Corp. v. Curry County Spraying Service, Inc.

• Decision Date: 30 June 1977
• Docket Number: No. 8772,8772
• Citation: 553 S.W.2d 935
• Parties: 21 UCC Rep.Serv. 1273 MID CONTINENT AIRCRAFT CORPORATION, Appellant, v. CURRY COUNTY SPRAYING SERVICE, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 935

553 S.W.2d 935

21 UCC Rep.Serv. 1273

MID CONTINENT AIRCRAFT CORPORATION, Appellant, v. CURRY COUNTY SPRAYING SERVICE, INC., et al., Appellees.

No. 8772.

Court of Civil Appeals of Texas, Amarillo.

June 30, 1977.

Rehearing Denied July 25, 1977.

Underwood, Wilson, Sutton, Berry, Stein & Johnson (H. C. Pipkin), Amarillo, for appellant.

Aldridge, Harding, Aycock & Actkinson (Johnny Actkinson), Farwell, for appellees.

REYNOLDS, Justice.

In the buyer's action to recover from the seller damages to a used aircraft and the resulting economic loss caused by a defect in the aircraft engine which rendered the aircraft an unreasonably dangerous product, the trial court imposed strict liability in allowing recovery against the defense that the used aircraft was bought subject to the terms and conditions of an "as is" sale. While the "as is" sale excluded any liability under a contractual warranty, it did not eliminate the strict liability for physical harm imposed by tort law. Affirmed.

The material facts are established by the undisputed evidence and the trial court's unchallenged findings of fact. They are that Bobby Shivers, d/b/a Shivers Flying Service in Vernon, Texas, acquired a 1971 single engine Piper Pawnee aircraft, designed for agricultural work, in a wrecked condition. Repair of aircraft is regulated by the Federal Aeronautics Administration, and no one may perform aircraft repairs unless rated and licensed to do so by the FAA. Repair work on an airframe, such as wings and fuselage, is authorized by one license, and another license is required for authorized mechanical work on the engine of an aircraft. A separate log book reflecting each type of repairs is required to be maintained with the aircraft.

Shivers, licensed by the FAA to perform only airframe work, repaired the airframe and so certified in the airframe log book. The engine repair was contracted to Robert D. Hawkins, an FAA licensed engine mechanic maintaining his shop as Hawkins Aircraft at Quanah, Texas. The engine was removed and subjected to a major overhaul by Hawkins. After Hawkins reinstalled the engine and performed a test flight, he certified the engine overhaul in the engine log book.

Shivers advertised the repaired aircraft for sale. He sold it "as is" to Mid Continent Aircraft Corporation, a Missouri corporation, and the aircraft was flown from Vernon to Mid Continent's airfield at Hayti, Missouri. No one employed by Mid Continent was licensed to perform engine work.

By inquiring about Shivers' advertisement, personnel of Curry County Spraying Service, Inc., a New Mexico corporation, learned that the aircraft had been sold to Mid Continent. Three corporate officers of, and a pilot employed by, the spraying service went to Missouri to inspect the aircraft. The only representations made by Mid Continent were that the aircraft was purchased from Shivers, that Mid Continent had not performed any work on the engine, and that Mid Continent was selling the aircraft in the same condition in which it was purchased from Shivers.

After a review of the aircraft's log books, a telephone consultation with Shivers, and a test flight by their pilot, the officers of the spraying service bought the aircraft for the corporation. The sales order was executed by the spraying service's vice-president, and immediately over his signature were these words:

Enter an order for the airplane described above, subject to the terms and conditions of an "as is" sale.

The aircraft was flown by the spraying service's pilot to its airfield at Clovis, New Mexico, and thereafter used in agricultural spray work. Some twenty-one days and thirty hours of engine time after purchase and while a field in Parmer County, Texas, was being sprayed, the engine quit in flight. The pilot landed the aircraft on a rough county road, damaging the fuselage and wings. No personal injury or damage to other property was sustained.

An FAA licensed aircraft and engine mechanic employed by Hutcherson Air Service in Plainview, Texas, inspected the engine. He concluded that the cause of engine failure was the absence of a small safety lock plate on a bolt that attaches a gear to the crankshaft of the engine. The absence of the lock plate permitted the gear bolt to loosen, allowing the crankshaft gear to back out of place about a quarter of an inch and shear the dowel pin in the timer. This had the same effect as turning off the ignition switch on the aircraft.

Curry County Spraying Service, Inc., instituted this suit against Mid Continent, Shivers and Hawkins to recover for the physical damage to the aircraft and for its loss of use. Its causes of action were grounded on breach of implied warranties of merchantability and fitness of the aircraft, negligence in failing to discover and correct or warn of the defect in the engine, and strict liability in tort for an unreasonably dangerous defect in the engine. Cravens, Dargan & Company, the insurer of Upon motion by Mid Continent and Shivers, the cross action was severed and, thereafter, the main cause was heard by the court without the intervention of a jury. The court decreed that Curry County Spraying Service, Inc., and Cravens, Dargan & Company recover jointly and severally from Mid Continent Aircraft Corporation, Robert D. Hawkins, d/b/a Hawkins Aircraft, and Bobby Shivers, d/b/a Shivers Flying Service, the sum of $8,348.49 composed of $4,658.49 as the reasonable cost of repairs, and $3,690 for loss of use of the damaged aircraft as measured by the rental of a replacement aircraft during repairs with interest and costs.

the aircraft for the spraying service, entered its appearance as a party plaintiff. Mid Continent cross-actioned to recover from Shivers and Hawkins any damages for which it might be adjudged liable to the spraying service. Shivers answered both actions, but Hawkins, so far as the record reveals, filed no answer.

Among the court's numbered findings of fact are these summarized facts:

1. Hawkins failed to install the crankshaft gear bolt lock plate, which was negligence proximately causing the crash and resulting damages;

2. The absence of a crankshaft gear bolt lock plate rendered the aircraft an unreasonably dangerous product at the time of its purchase;

3. Both Shivers and Mid Continent were, at the times material, engaged in the business of selling airplanes;

4. Shivers and Mid Continent knew at the time each sold the aircraft that it would reach the user and ultimate consumer in the condition in which it was sold;

5. The defect rendering the aircraft unreasonably dangerous did not arise from normal use of the aircraft;

6. Neither Shivers nor Mid Continent made any express warranty of suitability, fitness, freedom from defects, or of any kind, but sold the aircraft "as is"; and

7. Neither Shivers nor Mid Continent knew, or was negligent in failing to ascertain or warn, that the aircraft was unreasonably dangerous when sold.

By the court's legal conclusions, Hawkins was liable in tort for his negligence and Shivers and Mid Continent were liable under the tort rule of strict liability.

Only Mid Continent has appealed. In contending that the sale contract absolved it of all liability and that the Court erred in imposing strict liability in tort, Mid Continent does not challenge either the measure or the amount of damages awarded.

The questions, then, are: (1) whether the rule of strict liability applies when a defect rendering a product unreasonably dangerous to a user or consumer or to his property causes only physical harm to the product itself; and (2) if so, whether an "as is" sale sanctioned by the Texas Uniform Commercial Code (1968), V.T.C.A., Bus. & C. § 2.316(c)(1), absolves the seller of that strict liability. We answer the first question in the affirmative, and the second in the negative.

Prior to legislative embracement of the Uniform Commercial Code, Texas historically followed the common law rule that, absent applicable statutory provisions, implied warranties did not arise in the sale of secondhand goods purchased with knowledge of their used condition. 26 Baylor L.Rev. 630, 634 (1974). The legislature reenacted the 1965 Uniform Commercial Code as a part of the Texas Business and Commerce Code (1968) to take effect on 1 September 1967. The Code provisions do not distinguish between new and used products. Created by § 2.314 and § 2.315 of the Code are implied warranties that the goods sold shall be merchantable and are, under certain circumstances, fit for the particular purpose required, unless the implied warranties are excluded or modified under § 2.316. By § 2.316(c)(1) it is provided that 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.

If applicable to a given sales transaction, this legislation must be followed, and it may not be changed, by the courts.

Meanwhile, the Texas common law, which the courts may change, underwent a gradualistic and cautious approach to imposing strict liability until the decision in McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787 (Tex.1967). That decision committed the Texas courts "to the rule of strict liability expressed in Section 402A of The American Law Institute's Restatement of the Law of Torts (2d Ed.) as applicable to all persons engaged in the business of selling who sell a product in a defective condition which renders it unreasonably dangerous to a user or consumer or to his property." Pittsburg Coca-Cola Bottling Works v. Ponder, 443 S.W.2d 546, 548 (Tex.1969). Specifically, the rule is stated thusly:

§ 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his...