Pennsylvania Gas Co. v. Secord Bros., Inc.

• Court: New York Supreme Court
• Writing for the Court: EDWARD M. HOREY
• Citation: Pennsylvania Gas Co. v. Secord Bros., Inc., 343 N.Y.S.2d 256, 73 Misc.2d 1031 (N.Y. Sup. Ct. 1973)
• Decision Date: 09 March 1973
• Parties: PENNSYLVANIA GAS COMPANY, Plaintiff, v. SECORD BROTHERS, INC., et al., Defendants.

Page 256

343 N.Y.S.2d 256

73 Misc.2d 1031

PENNSYLVANIA GAS COMPANY, Plaintiff, v. SECORD BROTHERS, INC., et al., Defendants.

Supreme Court, Chautauqua County.

March 9, 1973.

Wright & Wright, Jamestown, for plaintiff.

Walter M. Donovan, Jamestown, for defendants.

OPINION

EDWARD M. HOREY, Justice.

This is a motion by the plaintiff for summary judgment pursuant to C.P.L.R. Sec. 3212. It raises as its principal consideration the proper means of excluding by contract both implied and express warranties arising during the course of contractual negotiations.

In its complaint the plaintiff seeks to recover from the defendants $25,242.60 representing the balance of the purchase price of certain heating and air conditioning units after crediting a payment of $2805 on a purchase price of $28,047.60. There is also a subsidiary claim for attorneys' fees for the collection of the balance allegedly due.

It appears, without dispute, that on June 20, 1969 at Jamestown, New York, the plaintiff and the defendants signed a written instrument under which the plaintiff agreed to sell and the defendants agreed to purchase 84 Temco heating and air conditioning units. The instrument is made a part of the plaintiff's complaint. Under the terms of the instrument it was agreed that the sum of $25,242.60 would be 'payable thirty (30) days after notice to the purchasers of the receipt of the units . . .' at the plaintiff's warehouse in Chautauqua County. Plaintiff alleges in its complaint the delivery of all goods and the performance of all terms provided in the written agreement. It also alleges the demand for the alleged balance of $25,242.60 and the refusal of the defendants to pay the same.

The answer of the defendants does not deny the essential elements of the plaintiff's cause of action. Allegations of the existence and execution of the written instrument for the purchase and sale of the units are not denied. Allegations setting forth price of the goods and agreement of the defendants to pay it are not denied. Allegation of the delivery of the units is admitted. Allegations of the balance due under the contract, demand for payment and the failure and refusal of the defendants to pay are not denied.

On the basis of the pleadings the plaintiff would be entitled to the recovery it seeks from the defendants.

However, the defendants seek to avoid payment of the amount allegedly owed the plaintiff by setting forth a counterclaim seeking damages from the plaintiff in the amount of $55,776. The allegations of the counter-claim charge that such damages arose from warranties made by the plaintiff's officers and agents that the heating and ventilating units 'were ideal for use in a motel and that the units were so constructed as to eliminate pilot outage and operating costs'. Defendants allege that such warranties were untrue. They allege that the units were subject to numerous break downs; were not suitable for the purposes for which the defendants purchased them; that the units were not constructed properly for motel use in that the units caused severe damage to draperies and that the metal plates protecting the pilot light have become warped breaking the seal and causing pilot outage.

Defendants contend that the alleged warranties were made both orally by the plaintiff's agent and also by written promotional literature furnished the defendants prior to their purchase of the units.

An examination of the written instrument dated June 12, 1969 discloses that it is entitled 'Retail Installment Contract', that it consists of two printed pages, that it was signed by all defendants and approved by the signature of an authorized representative of the corporate plaintiff.

The instrument contains the following relevant information. First, the material for sale is described as follows:

"Quantity Make & Type Model Number

84 Temco 4-Seasons Units 11GH25-1"

Appearing in bold print on the front page of the instrument in a separate allotted space is the following statement in reference to disclaimer of warranties:

'Seller makes no warranties, express or implied, of merchantability, fitness or otherwise which extend beyond the description of the appliance herein.'

Immediately under the quoted provision relating to disclaimer of warranties, in a separate allotted space, there appears in large bold print the following:

'NOTICE TO THE BUYER:

'1. Do not sign this agreement before you read it or if it contains any blank space.

'2. You are entitled to a completely filled in copy of this agreement.

'3. Under the law, you have the right to pay off in advance the full amount due and under certain conditions to obtain a partial refund of the credit service charge.'

Paragraph numbered 10 appearing on the second page under a subtitle of 'Additional Terms', provides as follows:

'10. This agreement contains the entire agreement between Seller and Buyer and no modification hereof shall be binding upon either party unless in writing and signed by both Seller and Buyer. There are no promises, terms, conditions, or warranties other than those contained herein. The failure or omission of Seller to demand or enforce prompt or full compliance with any of the terms or conditions hereof shall not constitute a waiver of any of its rights hereunder.'

The position of the defendants as stated in their brief is as follows: 'The technical information contained in the brochure as well as the oral representations as to efficiency and use of the units must also be read into the contract'.

In contrast, the plaintiff urges that the written instrument alone, devoid of warranties and representations, constitutes the contract between the parties.

The resolution of the issue before this court must start with a determination of what the agreement between the parties was.

Uniform Commercial Code defines 'Agreement' as follows: "Agreement' means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Act, (Secs. 1--205 and 2--208) . . .'. Uniform Commercial Code Sec. 1--201, Subd. 3.

As previously noted, the written instrument contained language purporting to negate the application of warranties express or implied.

Subd. 2 of Sec. 2--316 U.C.C. provides the manner of negating implied warranties of merchantability and of fitness.

As to an implied warranty of merchantability, it requires that language of exclusion 'must mention Merchantability and in case of a writing must be Conspicuous'. (Italics added).

As to implied warranty of fitness, it is provided that language of exclusion 'must be by a writing and conspicuous'. In contrast to disclaimer of implied warranty of merchantability there is no requirement that the word 'fitness' must be mentioned. General language is permitted. This is pointed up by the further provision that: '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 hereof ". See Subd. 2, Sec. 2--316 U.C.C.

The word 'conspicuous' is defined in Subd. 10 of Sec. 1--201 U.C.C. as follows:

"Conspicuous': A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is 'conspicuous' if it is in larger or other contrasting type or color. But in a telegram any stated term is 'conspicuous'. Whether a term or clause is 'conspicuous' or not is for decision by the court.'

The court finds that the printed portion of the instrument purporting to exclude warranties specifically mentions 'merchantability'. The court further finds that it is of contrasting type and plainly visible and thus 'conspicuous' within the meaning of the statute. The written instrument contains a valid exclusion of implied warranties of merchantability and of fitness.

In contrast to the precise statutory requirements for exclusion of implied warranties of merchantability and fitness, Sec. 2--316 U.C.C. does not set forth any requirements to effect a disclaimer of implied warranties other than warranties of merchantability and fitness. Neither does it contain any requirements to effect a disclaimer of express warranties. The negating or limiting of these warranties, however, is mentioned in Subd. 1 of Sec. 2--316 in the following language:

'Sec. 2--316. Exclusion or Modification of Warranties

'(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2--202) negation or limitation is inoperative to the extent that such construction is unreasonable.'

The official comment to Sec. 2--316 U.C.C. (McKinney's Cons. Laws of N.Y., Book 62 1/2) indicates that that section is designed to deal with the disclaimer of all warranties express or implied.

'Purposes:

'1. This section is designed principally to deal with those frequent clauses in sales contracts which seek to exclude 'all warranties, express or implied.' It seeks to protect a buyer from unexpected and unbargained language of disclaimer by denying effect to such language when inconsistent with language of express warranty and permitting the exclusion of implied warranties only by conspicuous language or other circumstances which protect the buyer from surprise.'

The manner and means by which a disclaimer of express warranty and implied warranty, other than of merchantability and fitness are to be effected does not appear to be contained in any statutory provision of the Uniform Commercial Code. However, the practice commentary to Sec. 2--202 U.C.C. by Alfred A. Buerger and ...