Richards v. Goerg Boat and Motors, Inc.

• Citation: 384 N.E.2d 1084,179 Ind.App. 102
• Decision Date: 18 January 1979
• Docket Number: No. 3-376A58,3-376A58
• Parties: , 25 UCC Rep.Serv. 1002 Richard J. RICHARDS, Plaintiff-Appellant, v. GOERG BOAT AND MOTORS, INC., Kenner Boat Company, a Division of A. J. Industries, Inc., and Citizen's Bank of Michigan City, Indiana, Defendants-Appellees.
• Court: Indiana Appellate Court

Page 1084

384 N.E.2d 1084

179 Ind.App. 102, 25 UCC Rep.Serv. 1002

Richard J. RICHARDS, Plaintiff-Appellant, v. GOERG BOAT AND MOTORS, INC., Kenner Boat Company, a Division of A. J. Industries, Inc., and Citizen's Bank of Michigan City, Indiana, Defendants-Appellees.

No. 3-376A58.

Court of Appeals of Indiana, Third District.

Jan. 18, 1979.

Gordon A. Etzler, Clifford, Hoeppner, Houran, Wagner & Evans, Valparaiso, for plaintiff-appellant.

Anthony W. Rosinia, Michigan City, for defendant-appellee Goerg Boat and Motors, Inc.

Leon R. Kaminski, Edward L. Volk, Newby, Lewis, Kaminski & Jones, La Porte, for defendant-appellee Kenner Boat Co.

John T. Mulvihill, South Bend, for defendant-appellee Citizen's Bank of Michigan City, Indiana.

HOFFMAN, Judge.

This is an appeal from a summary judgment entered against plaintiff-appellant Richard J. Richards on his complaint for damages for breach of warranties, both express and implied, arising from the sale of a 47-foot houseboat to Richards for use on Lake Michigan by defendants-appellees Goerg Boat and Motors Inc., the dealer, and Kenner Boat Company, a division of A. J. Industries, Inc., the manufacturer.

Richard J. Richards, a small truck fleet operator, became interested in the purchase of a houseboat having viewed a particular model in magazines and at the Chicago boat show. He discussed his interest in the possible purchase of a houseboat known as a Suwanee 47 with Carl Ellison, the president of Goerg Boat and Motors Inc., a dealership in Michigan City, Indiana. He thereafter attended a dealer show for which Ellison had given him tickets. Richards was pleased with the information he received from Kenner people at the show but he was reluctant to make the financial commitment required of a production model. Accordingly, Ellison made inquiries with Kenner Boat Company for a used or demonstrator Suwanee 47. Upon this request an offer to sell containing a description of the boat was made by Kenner through Goerg. The offer was made by Goerg because the purchase had to be made through a dealer. Ellison arranged a trip to Arkansas where Richards was to visit the Kenner factory and make an inspection of the houseboat. In connection therewith Richards used the proposition from Kenner describing the boat. Appellant made the trip in October of 1968 with a personal friend who was experienced in the amateur appraisal of boats.

Upon arrival at the Kenner Boat Company, Richards and his friend met Joe Carver, a salesman, who showed him through the plant describing their production method of using hand laid up fiberglass. The threesome then made a visual inspection of the boat noting defects described on the proposition. There was also a further inspection of that portion of the bilge area which was visible through the center compartment. At that time there was no rot, dampness or deterioration. Carver then took Richards and his friend for a ride, crossing the wake wave and exhibiting the controls and operation of the boat. Richards operated the vessel himself for a time. Carver in his deposition stated that the boat was for sale "as is," that it could be used on inland lakes and rivers, that there would be no warranty and that there were possibly problems with cracks in the cabin fiberglass.

Upon returning to Michigan City, Richards gave a deposit to Goerg Boats through Mr. Ellison, in order to have the boat delivered the following March. In March of 1969 Richards received a telephone call that the boat had been delivered to Goerg. He went to the marina several days later and discovered that water was being pumped out of the hull. The hull was scratched, the wooden doors were warped, the curtains were discolored, mildew was on the carpeting, and the paneling had delaminated. There were also external cracks in the fiberglass on the decks, the cabin and around the windows. Ellison went over the boat with Richards and called Kenner, notifying them of the water damage and defects. Ellison made a list of defects which were to be fixed and Kenner authorized Goerg to make the repairs. However, Mrs. Ellison, the secretary-treasurer for Goerg, feeling that the boat was at the time of delivery not in a saleable condition, entered a stop-payment order with their bank, the Citizen's Bank of Michigan City, on Goerg's check to Kenner. ¹

Simultaneously, Richards proceeded with his own work attempting to commission the vessel while repairs were being made. While so engaged he discovered approximately 20,000 pounds of water throughout the various hull compartments. Ellison notified Kenner of the situation. Carver flew to Michigan City where his inspection confirmed Richards' complaints about the hull. At that time Richards told Carver that he wanted to return the boat and that he would not pay the balance until everything was fixed. While at lunch with Richards and Mrs. Ellison, Carver assured Richards not to worry; they would make the boat right. Mrs. Ellison stated in her deposition that she was unhappy with Carver's perception of the problem since she thought the vessel was represented as being seaworthy when, in fact, it was not. However, Richards allowed further work to be done. After one of the engines refused to start, Goerg made additional repairs including extensive repositioning of fuel tanks. Subsequently, the windows were discovered to be inadequate and were removed to permit refastening with screws. New cracks developed in the cabins. Rain continued to leak in. Richards made additional calls to Kenner about the defects and expressed dissatisfaction with Georg's repair work. Kenner sent two special repairmen from Arkansas. Richards worked with these individuals for two weeks. They recovered the cabin with fiberglass and made repairs to the cracks. However, after completing their work they said the boat was unsafe for use on the lake. Richards told them he did not want the boat. There followed a discussion about returning the boat but Richards did not follow through because he still liked the design concept of the vessel.

Although further work had to be performed on the engines and outdrives, the repair work done by the factory representatives made the vessel appear to be in good condition. Thus, on the Fourth of July weekend Richards took the boat on its first outing across Lake Michigan through the waterway to Starved Rock on the Illinois River. During the trip one engine stalled and the windows leaked some rainwater. New cracks began to appear. After the trip Richards was still unsatisfied, feeling the boat was essentially unsafe in that it gave the "appearance of breaking up." Nevertheless, Ellison put considerable pressure on him to pay the balance which he did under protest and on the condition that he receive a warranty. A check for $9,412.10 was given to Goerg on July 12, 1969, when Richards simultaneously received a written express warranty on the hull from Kenner. At that time a bill of sale and a carpenter's certificate from Kenner were issued evidencing the transfer of title. After further assurances from Ellison, Richards decided to go ahead with his previously planned vacation trip on the houseboat.

That trip involved taking some Sea Scouts to Mackinac Island, Michigan where Richards would meet his wife. On the outbound trip Richards experienced excessive working in the hull. Rainwater leaked in and cracks began to appear. While on return from the island in the Straits of Mackinac one of the four main stringers broke loose from the hull and the rear window broke out. Richards returned to harbor. Two inspectors found that the bow skeleton had broken loose from the fiberglass skin, so Richards decided that the boat was unsafe to return with his passengers.

Richards called Goerg and talked to Mrs. Ellison. He explained the defects and expressed his dissatisfaction with the houseboat. Mrs. Ellison felt it was unsafe. Accordingly, at Mackinaw City, Michigan, several heavy items were removed to lighten the boat and the passengers were put ashore. After weighing the alternatives Richards decided to return the boat himself to Michigan City. Ellison said he would deal with Kenner, that the season would soon be over and that Goerg would take care of the boat. Richards wrote an extensive letter to Mr. Kenner which notified him of the problems on the trip. Goerg removed the boat from the water. Negotiations were begun to replace a production model for the prototype plus $5,000 and freight. However, Richards refused the arrangement because Kenner would not provide a warranty with a new production boat. Thereafter the boat sat at Goerg's.

Two years later in 1971 the houseboat was sold by Goerg and Richards through a broker to a buyer in Chicago, Illinois. Ellison's attorney helped to make the arrangements, the check being paid from Vernon Larson to Goerg for the purchase. Richards eventually received the net proceeds from that sale.

On April 14, 1970, Richards filed his complaint against Goerg alleging, Inter alia, that the dealer had breached implied warranties of merchantability, breached express warranties that the boat was of sound material and workmanship and breached the implied warranty of fitness for a particular purpose, that is, for use upon Lake Michigan. Richards further alleged his revocation of acceptance of the boat and prayed for judgment against Goerg for the purchase price coupled with incidental and consequential damages.

Goerg filed an answer to Richards and cross-claimed against Kenner and the Citizen's Bank of Michigan City, Indiana. The dealer alleged as to Kenner that the boat was manufactured with structural and material defects resulting in a breach of its express warranty thereby incurring damages to Richards for which Goerg should be indemnified. As previously noted, Goerg's third party cross-complaint against Citizen's Bank alleged breach of contract for failure to honor a stop-payment order on a check issued to Kenner for payment of...