Perry v. Lawson Ford Tractor Co., 50597
| Decision Date | 17 June 1980 |
| Docket Number | No. 50597,50597 |
| Citation | 613 P.2d 458,1980 OK 90 |
| Parties | 29 UCC Rep.Serv. 75, 1980 OK 90 Howard PERRY, Appellee, v. LAWSON FORD TRACTOR CO. and Ford Motor Company, Appellants. |
| Court | Oklahoma Supreme Court |
Appeal from District Court, Muskogee County; Bill Ed Rogers, Judge.
Action by buyer against dealer and manufacturer for fraud and misrepresentation in sale of combine and for breach of warranty. From jury verdict in buyer's favor for breach of implied warranty, dealer and manufacturer appeal. Judgment
REVERSED AND CAUSE REMANDED.
A. Carl Robinson, Muskogee, for appellant Lawson Ford Tractor Co. Boesche, McDermott & Eskridge, by Lance Stockwell and Marilyn Adamson, Tulsa, for appellant Ford Motor Co.
Pearson and Green, by Bruce Green, Muskogee, for appellee.
This appeal deals with the sufficiency of evidence to sustain a claim for breach of warranty and with the correctness of instructions on the measure of damages. The specific questions presented are: (1) Did the trial court err in instructing that the buyer had a claim for breach of implied warranty? (2) May warranty be implied from a sale of used equipment? (3) Did buyer's examination of the machine (combine) operate to exclude the implied warranty of merchantability? (4) Was the evidence sufficient to sustain a claim as to the machine's unfitness for its intended purpose? (5) Did the trial court err in failing to instruct on the effect of a disclaimer clause in the express warranty? (6) Did the evidence show that the injury to the crops was legally recoverable because it proximately resulted from breach of warranty? (7) Was there error in instructing the jury on the measure of damages for breach of express and implied warranties? and (8) Did the trial court err in its instruction on consequential damages?
We hold: (1) Since the evidence was in conflict on the issue of whether buyer actually received the express warranty on the combine, there was no error in instructing on both implied and express warranties. (2) Unless it is expressly disclaimed, warranty may be implied from the sale of used equipment. (3) The evidence here did not reflect that buyer's pre-sale examination of the combine operated, as a matter of law, to exclude from the transaction an implied warranty of merchantability. (4) The evidence was sufficient to submit, as an issue for the jury, the combine's merchantability or fitness for its intended purpose. (5) The jury was improperly instructed on the measure of damages for breach of implied warranty. (6) The evidence was not sufficient for determination of damages to the crops or to the combine. (7) The trial court should have instructed on the theory advanced and evidentially supported by the seller that buyer was barred from recovery based on implied warranty because of the disclaimer clause contained in the express warranty.
Plaintiff (buyer) purchased a combine from a local dealer (seller). 1 Inside the equipment seller placed an operator's manual. The third page of the manual included an express warranty from both the manufacturer and dealer which (1) limits buyer's remedy to the cost of repair and replacement of defective parts and excludes recovery of consequential damages and (2) expressly disclaims any other express or implied warranties of merchantability and fitness. During the first few months after purchase, buyer experienced numerous breakdowns in the machine. Some of the problems the seller was successful in remedying temporarily. Because of the breakdowns buyer claimed to have lost several crops that year. Buyer's suit against the dealer and manufacturer was based on (a) fraud and misrepresentation in the sale of the combine and (b) on breach of express and implied warranties. The petition declared upon two causes of action. At trial buyer's fraud claim failed when the trial court sustained a demurrer to the evidence. The claim for breach of implied warranty resulted in a verdict for the buyer. It awarded him $10,500 for damages to the combine and $20,212 in consequential damages for lost crops. Dealer and manufacturer bring joint appeal.
According to the seller's position, the buyer's right of recovery is limited to the terms of the express warranty given at the We next deal with seller's contention that no warranty of merchantability may be implied from the sale of used goods. Seller relies on pre-Code case law 2 and on the terms of § 1-103. 3 That code section provides that "unless displaced by the particular provisions of this Act" the principles of pre-existing law would supplement the Code provisions. We find this argument unpersuasive.
time of sale. Since that warranty contained a disclaimer of all implied warranties, it is the seller's view that there was error in instructing on implied warranty. The dealer testified that at the time of sale the buyer was furnished an operator's manual for the equipment bought. It contained a copy of the warranty (usually printed at the third and fourth pages). The buyer related that some pages were in fact missing or torn out from his copy the lost pages being apparently those which comprised the warranty and that he did not recall ever seeing a copy of the printed warranty. In short, the evidence does not establish as undisputed fact that the buyer did receive a copy of the express warranty. There was hence no error in instructing with respect to both express and implied warranties.
In their application to warranties implied from sale, code provisions make no distinction between new and used goods. According to § 2-314, when the sale is by one who is a merchant dealing in the kind of goods that are sold, the Code neither exempts the transaction from, nor modifies, the warranty. It is to be implied as a contract term. 4 UCC comments clearly reflect a warranty of merchantability may be implied in a sale of used goods. 5 The overwhelming weight of authority supports this view. 6 Courts which departed from the majority position were persuaded to do so by continued recognition in the respective jurisdiction of pre-Code law which had negated the implication of warranty in a used-goods transaction or by some special circumstances in the case. 7 We decline to follow the minority view persuaded as we are that all contrary pre-existing Oklahoma law has been replaced by the Code.
We hold that the provisions of § 2-314(1) were clearly intended to apply to all sales of goods by a merchant who deals in them (or similar goods), unless the parties by agreement specifically exclude or modify the legally-imposed warranty of merchantability. The Code simply does not authorize the exception of used goods from the purview of implied warranty of merchantability. To do otherwise would contradict its provisions. 8
Seller also contends that warranty may not be implied from the combine sale because buyer had inspected and operated it before purchase. The post-sale defects, it is urged, are chiefly those discovered and corrected before the sale. They cannot now be considered latent in character. Buyer counters that the evidence is conflicting with respect to whether the purchase occurred before or after the inspection.
The terms of § 2-316(3)(b) exclude from implied warranty of merchantability defects which pre-sale examination should have revealed to buyer. 9 In this case evidence identifies numerous defects which were noticed by the buyer before he took possession of the equipment and during its trial use. These defects, which seller promised to remove, were in fact temporarily remedied. After the sale the buyer experienced more problems with the same parts and some malfunction of other parts. There is nothing in the evidence which would compel a finding that the defects, which eventually rendered the combine inoperable and unacceptable, should have been discovered by a buyer, unskilled in mechanics, through normal use of short duration and casual inspection. The record is sufficient to sustain a finding, implicit in the verdict, that the buyer's examination could not have revealed the equipment purchased to be unfit for its intended purpose. 10
Seller next contends the evidence was insufficient to support a verdict bottomed on breach of implied warranty.
Under 12A O.S.1971 § 2-314(2) goods are merchantable when, at the least, they are fit for the ordinary purposes for which they are used. Merchantability is a flexible concept based on the circumstances of the sale and dependent on the description of the goods. 11 It does not connote best quality or perfection in detail. 12 But it does require, at the very least, that goods operate for their ordinary purpose. This is not to say there cannot be problems or breakdowns with a merchantable machine. But a breakdown upon almost every occurrence of use is incompatible with conformity to merchantable standards. The record amply supports a finding of breached warranty implied from the sale.
Seller asserts several errors in the trial court's instruction on consequential damages. Its first complaint is that the instruction was improper since the express warranty excluded liability for consequential Seller next argues there is no evidence to show the crops were lost as a result of breached warranty. According to the record, a bearing went out shortly after buyer began harvesting his milo crop. The machine was inoperable while he was waiting for delivery of the spare part. Once the combine was fixed, heavy rains prevented the buyer from immediately re-entering the field. Birds then destroyed the milo crop before it could be harvested. Buyer also experienced difficulty with the combine when harvesting his soybean crop. After attempting to repair the machine, rains once again prevented him from entering the field before he lost the soybean crop. Seller advances the argument that unseasonable rains were an "independent, unforeseeable and...
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