Professional Lens Plan, Inc. v. Polaris Leasing Corp., 57947

• Decision Date: 06 December 1985
• Docket Number: No. 57947,57947
• Parties: PROFESSIONAL LENS PLAN, INC., Plaintiff-Appellant, v. POLARIS LEASING CORPORATION, Defendant and Third Party Plaintiff-Appellee, v. IMPACT SYSTEMS, a corporation, and Ohio Scientific, a corporation, and Okidata Corporation, Third Party Defendants-Appellees.
• Court: Kansas Supreme Court

Page 1297

710 P.2d 1297

238 Kan. 384

PROFESSIONAL LENS PLAN, INC., Plaintiff-Appellant, v. POLARIS LEASING CORPORATION, Defendant and Third Party Plaintiff-Appellee, v. IMPACT SYSTEMS, a corporation, and Ohio Scientific, a

corporation, and Okidata Corporation, Third Party

Defendants-Appellees.

No. 57947.

Supreme Court of Kansas.

Dec. 6, 1985.

Syllabus by the Court

1. Summary judgment is proper if no genuine issue of fact remains, giving the benefit of all inferences which may be drawn from the admitted facts to the party against whom judgment is sought.

2. When summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment.

3. Summary judgment is particularly appropriate where the facts are not disputed and the only questions presented are questions of law.

4. An agency has been defined as a contract, either express or implied, by which one of the parties confides to the other the management of some business to be transacted in his name, or on his account, and by which that other assumes to do the business and to render an account of it.

5. The determination of what constitutes agency and whether there is any competent evidence reasonably tending to prove the existence of agency is a question of law.

6. An express agency exists if the principal has delegated authority to the agent by words which expressly authorize the agent to do a delegable act.

7. An implied agency may exist if it appears from the statements and conduct of the parties and other relevant circumstances that the intention was to clothe the agent with such an appearance of authority that when the agency was exercised it would normally and naturally lead others to rely on the person's acts as being authorized by the principal.

8. An ostensible or apparent agency may exist if a principal has intentionally or by want of ordinary care induced and permitted third persons to believe a person is his or her agent even though no authority, either express or implied, has actually been conferred upon the agent.

John C. Fay, Manhattan, argued the cause and was on brief for plaintiff-appellant.

Donn J. Everett, argued the cause, and Judith E. Pottorff, Manhattan, was with him on brief for third party defendants-appellees Ohio Scientific.

MILLER, Justice.

This is an appeal by the plaintiff, Professional Lens Plan, Inc., from an order entered by the Riley District Court granting a motion for summary judgment in favor of the defendant, Ohio Scientific, a corporation. This is the second appearance of this case in this court. See Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 675 P.2d 887 (1984). The sole issue here is whether the record establishes that Impact Systems was the agent of Ohio Scientific. The trial court found that it did not.

Early in 1979, Professional Lens Plan, Inc., (PLP, or the plaintiff) engaged Loren H. Shellabarger to help select a computer system. He had wide experience in the field and, while he had no detailed knowledge of Ohio Scientific's computers, he was aware of them as well as forty or fifty others. During Shellabarger's search, Ohio Scientific (OSI) ran several large display ads in the microcomputer media. The ads listed a telephone number. Shellabarger called the OSI number and was referred to two dealers, one of which was Impact Systems, a corporation in Lee's Summit, Missouri. He visited several times over a two- or three-month period with Gary Comens, president and principal owner of Impact.

Ultimately, Shellabarger presented five computer systems to Dr. Price, one of the principals of PLP, and Price selected a computer manufactured by OSI. An order was placed with Impact. Impact did not carry computers in stock, but ordered a C3-B microcomputer from OSI, and an NEC printer and a terminal from Tekaids. The computer was delivered in September 1979. For tax purposes, PLP leased the computer from Polaris Leasing Corporation; Polaris paid Impact for the system but had nothing to do with the selection of or negotiation for the system. Impact delivered and installed the system at the plaintiff's place of business in Manhattan, Kansas. Problems surfaced immediately and the computer never worked properly.

PLP initially sued Polaris for cancellation of the lease contract and damages. Polaris counterclaimed for the payments due on the lease. Plaintiff settled that action by paying $20,000 to Polaris in order to resolve its counterclaim. Plaintiff sought and was granted permission to amend its pleadings to bring an action directly against Impact, OSI, and Okidata, the manufacturer of a hard disc, one of the major component parts of the computer.

In 1984 we heard an interlocutory appeal by PLP and Okidata. We quote from the opinion for the statement of the issues and the resolution thereof:

"The first ... issue concerns whether the district court erred in finding Professional Lens had a cause of action against Okidata. Stated more specifically, the question is whether Kansas permits a corporate ultimate purchaser, who has incurred only economic loss, as opposed to personal injury or property damage, to recover on theories of breach of implied warranty of fitness and merchantability, from a manufacturer with whom the ultimate purchaser was not in contractual privity.

....

"We conclude implied warranties of fitness and merchantability are not extended to a remote seller or manufacturer of an allegedly defective product, which is not inherently dangerous, for only economic loss suffered by a buyer who is not in contractual privity with the remote seller or manufacturer. Accordingly the district court erred in holding that Professional Lens had a cause of action against Okidata Corporation for economic loss based on breach of implied warranty.

"The second issue ... [Are warranty and damage limitations contained in Okidata's sale of the hard disc to Ohio Scientific binding upon Professional Lens, the ultimate purchaser?] ... is moot.

"The third issue is whether the district court erred in permitting Professional Lens to amend its pleadings after the expiration of the applicable statute of limitations and bring an action directly against third-party defendants Okidata Corporation and Ohio Scientific for breach of implied warranties.

....

"Here again, this court's previous determination Professional Lens has no cause of action against Okidata renders this issue as it relates to Okidata moot. However, it would be inappropriate to move to the next issue without reference to the procedural problems that exist in this case. Only Okidata sought an interlocutory appeal on the first three issues raised in this case and the district court granted the right to Okidata alone to take this appeal on these issues. Ohio Scientific is an appellee herein and is not an opposing party to any position of appellant Okidata in this appeal. Notwithstanding these facts, Ohio Scientific wears the same shoes as does Okidata as to issues number one (implied warranty) and three (statute of limitations). Ohio Scientific has filed a brief herein which essentially is a 'me too' to Okidata's brief. Despite the procedural problems in the way the matter comes before us, we conclude judicial economy and the best interests of the litigants would be better served by simply declaring the lack of privity between Professional Lens and Ohio Scientific defeats Professional Lens' claims against Ohio Scientific for breach of implied warranties on the rationale set forth in issue number one herein. Therefore, the statute of limitations issue is also moot as to Ohio Scientific. [Emphasis supplied.]

....

"The final issue is the only issue raised by Professional Lens Plan, Inc., in its interlocutory appeal and is stated as follows: In light of the trial court's ruling sustaining Impact Systems' motion for summary judgment against Polaris Leasing in this case, does privity of contract exist between plaintiff and Impact Systems?

....

"... This is a matter which was not determined by the district court.

"We conclude this issue is not the proper subject of an interlocutory appeal and, accordingly, we have no jurisdiction to determine it. The interlocutory appeal of Professional Lens must be dismissed." 234 Kan. at 745-57, 675 P.2d 887.

Our opinion was filed in the district court of Riley County on February 8, 1984. On May 4, the plaintiff filed an amended petition alleging that Impact was an agent of OSI. OSI responded by filing a motion for summary judgment together with a memorandum in support thereof. It contended that there were no facts before the court which supported plaintiff's claim that Impact was in fact an agent of OSI. Instead, it contended the facts clearly showed that Impact was simply a dealer, one who buys and sells, and that there was no agency relationship between OSI and Impact.

The trial court prepared a memorandum setting forth the facts and its ruling. The court carefully reviewed the depositions and other records before it, and indexed its findings of fact to those documents. Omitting the citations to the record, the trial court's findings of fact and conclusions of law are as follows:

"FACTS

"(1) Impact Systems is a retailer of computer products and services for computers ranging from repair and installation to programming.

"(2) Impact Systems selected the computer package based upon the needs of the customer, Professional Lens Plan, and ordered equipment from various manufacturers to fill that order. The computer package was selected by Shellabarger, as a consultant for the plaintiff. Shellabarger did use an Ohio Scientific catalog.

"(3) Impact Systems, in dealing with Ohio Scientific, was not given any preferential treatment that would give the appearance of an agency relationship. Comens stated that as he was looking for the solution to the problem, he inquired about replacement of...