Mountaineer Contractors, Inc. v. Mountain State Mack, Inc., 14067

• Decision Date: 10 July 1980
• Docket Number: No. 14067,14067
• Citation: 268 S.E.2d 886,165 W.Va. 292
• Parties: , 30 UCC Rep.Serv. 134 MOUNTAINEER CONTRACTORS, INC. v. MOUNTAIN STATE MACK, INC.
• Court: West Virginia Supreme Court

Page 886

268 S.E.2d 886

165 W.Va. 292, 30 UCC Rep.Serv. 134

MOUNTAINEER CONTRACTORS, INC. v. MOUNTAIN STATE MACK, INC.

No. 14067.

Supreme Court of Appeals of West Virginia.

July 10, 1980.

Syllabus by the Court

1. When there is evidence in a breach of warranty action which could support the inference that the defects giving rise to the alleged breach did not arise until after the buyer's examination of the goods, the issue of whether the buyer's examination constituted a waiver of the implied warranty of merchantability under W.Va.Code § 46-2-316(3)(b) is a proper question for jury determination.

2. Where a seller promises to pay for repairs to goods delivered to the buyer in a defective condition and the buyer accepts the defective goods in reliance upon the promise to repair, such promises of the seller constitute express warranties.

3. Where it is extremely doubtful that a definite figure can be ascertained representing the actual value of the goods which are the subject of a breach of warranty action, either at the time of the transaction or at the time of delivery, special circumstances exist justifying the use of some other measure of damages than that ordinarily used under W.Va.Code § 46-2-714(2).

George S. Sharp, Kay, Casto & Chaney, Charleston, for appellant.

Clark B. Frame, Morgantown, Stephen P. Swisher, Dunbar, for appellee.

McGRAW, Justice.

Mountain State Mack, Inc., appeals from a ruling of the Circuit Court of Kanawha County, which denied a motion to set aside the jury verdict in a breach of warranty action brought by appellee, Mountaineer Contractors, Inc. Appellant claims that the trial court erred in submitting the case to the jury on the issues of the express and implied warranties allegedly arising from the sale of mining and construction equipment to appellee and in instructing the jury as to the measure of damages. We do not agree and affirm the ruling of the lower court.

Appellee, a corporation located in Morgantown, owns and operates heavy earth-moving equipment in surface mining and comparable industrial projects. Appellant sells such equipment as a part of its business. In July of 1974, appellant's representative and salesman, William Young, contacted Glenn D. Liston, president of Mountaineer Contractors, Inc., and advised him of the availability for sale of four (4) used Caterpillar D-9 bulldozers, which appellee needed for use in its surface mining operations. Pursuant to arrangements made by appellant, Mr. Liston flew to Tennessee with Mr. Young and another of appellant's representatives to inspect the equipment.

The bulldozers, then owned by Harold Mitchell, aka Jack Reynolds, were being used in a strip-mining operating in Tennessee at that time. Mr. Liston, representing appellee, and appellant's representatives observed the machines in operation there. Afterwards, the three men proceeded to a repair shop where appellant's representatives examined the service records on the four bulldozers. Mr. Liston did not inspect these records.

On the return flight to Morgantown, Mr. Young and Mr. Liston discussed terms for the purchase of the machinery by appellee and apparently struck a bargain. According to appellee, Mr. Young assured Mr. Liston that appellee would be permitted to use the equipment for an eight-hour shift, during which time appellee could have its mechanic inspect the equipment for needed repairs, the cost of which would be born by appellant. Appellant was to be responsible for shipping the machinery from Tennessee to Morgantown. Appellee also agreed to purchase a Caterpillar 988 Loader from appellant.

Mr. Liston testified that as each piece of machinery was delivered to Morgantown, in some cases after substantial delay, various defects were discovered. Several of the machines could not be driven from the trailer on which they were shipped and appellee was required to use its employees and other equipment to unload them.

Mr. Liston testified that upon discovering the defects, he immediately telephoned Mr. Young and informed him that appellee would not accept the equipment in its damaged condition. According to Mr. Liston, Mr. Young assured him that appellant would pay for all necessary repairs. In reliance on these representations, appellee agreed to accept the bulldozers and kept records of all repairs made, but was never reimbursed by appellant. Appellee has continued to pay the installments on the equipment as required by the agreement.

At one point, Mr. Young and appellant's bookkeeper went to Morgantown to discuss a settlement. Appellee's office manager testified that at that time appellant's representatives were given copies of all invoices and a breakdown of all repair work done on the machines since their delivery. Mr. Young and the bookkeeper were later fired by appellant and settlement negotiations ended. Mr. Young was subpoenaed as a witness by appellee but failed to appear at trial. He and Mr. Liston were the principal witnesses to the contract terms and negotiations.

Appellee commenced this action in December of 1975 in the Circuit Court of Kanawha County to recover damages upon the theory that appellant had breached certain warranties, express and implied, flowing from the sale of the equipment. At the conclusion of appellee's case, and at the end of all evidence, appellant moved for a directed verdict, which motions were denied by the trial court. The jury rendered a verdict for appellee in the amount of $28,501.00. Appellant's motion to have the verdict set aside was denied and appellant petitioned this Court for review.

Appellant's major contention is that the trial court erred in submitting to the jury the issues of the implied warranties of merchantability and the express warranties to repair which were the basis of appellee's action below. Appellant asserts that the warranties it was claimed to have breached were excluded by law under certain provisions of the Uniform Commercial Code and that therefore the issue of the existence of the warranties was a question of law for the trial court. Appellant also contends that the trial court erred in instructing the jury as to the measure of damages. We will first resolve the issues of the warranties with respect to the sale of the four bulldozers and treat as a separate matter the sale of the end loader.

I

One of appellee's theories of the case at trial was that the sale of the bulldozers gave rise to implied warranties of merchantability which appellant breached by delivering to appellee defective equipment unfit for use in appellee's strip mining operations. Under the Uniform Commercial Code, adopted by the legislature in 1963 and embodied in Chapter 46 of the West Virginia Code, a warranty of merchantability is implied in any contract for the sale of goods where the seller is a merchant with respect to goods of that kind and assures the buyer that, among other things, the goods are fit for the ordinary purposes for which they are used. ¹ The implied warranty of merchantability arises by operation of law, irrespective of the intention of the seller to create it.

The implied warranty of merchantability is not absolute, however. The Uniform Commercial Code anticipates that the parties, by agreement or by deed, may limit or exclude entirely the warranty of merchantability otherwise implied in a contract for the sale of goods. W.Va. Code § 46-2-316. Appellant's contention that it was entitled to judgment as a matter of law on the issue of the implied warranties springs from its position that such an exclusion was effected with respect to the four bulldozers.

Appellant contends that the implied warranties arising from the sale of the bulldozers were waived by the actions of appellee in relation to W.Va. Code § 46-2-316(3)(b), which provides:

Notwithstanding subsection (2) . . . 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.

Appellant asserts that when appellee, by its representative, observed the bulldozers in Tennessee before the sale and declined to inspect their service records, the warranties of merchantability flowing from those transactions were excluded by operation of law and appellant was entitled to judgment as a matter of law. In view of the facts of this case we must disagree.

It was uncontroverted at trial that Mr. Liston, as appellee's representative, did in fact observe the bulldozers in operation on the job site in Tennessee before agreeing to buy them. While testimony was in conflict as to the duration and extent of that examination and as to what sort of inspection would be necessary to reveal to a buyer, such as appellee, the defects complained of here, both Mr. Liston and appellant's witness Mitchell/Reynolds indicated that the bulldozers were in good working order at the time of the examination. Mitchell/Reynolds also testified that the machines were working when they were loaded for shipment to appellee. Yet appellee's representative testified without contradiction that when the equipment arrived in Morgantown, some of the bulldozers could not be started and driven from the shipping platform because of damage to the pony motor, final drive, torque converter, or transmission pump. Moreover, Mr. Liston testified, and appellant admitted, that in disassembling the bulldozers for transport through West Virginia, the bolts holding the blades, trunnion balls and ripper attachment were cut off with a torch, instead of being unscrewed. Finally, appellee introduced uncontradicted evidence that one of the bulldozer blades which was delivered was not the same blade attached to the machine at the time Mr. Liston saw it.

It is an obvious corollary of § 46-2-316(3)(b) that warranties of merchantability are not excluded with respect to defects...