Rowe Intern., Inc. v. J-B Enterprises, Inc.

• Decision Date: 06 May 1981
• Docket Number: J-B,No. 80-1312,80-1312
• Citation: 647 F.2d 830
• Parties: 32 UCC Rep.Serv. 446 ROWE INTERNATIONAL, INC., Appellee, v.ENTERPRISES, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 830

647 F.2d 830

32 UCC Rep.Serv. 446

ROWE INTERNATIONAL, INC., Appellee, v. J-B ENTERPRISES, INC., Appellant.

No. 80-1312.

United States Court of Appeals,

Eighth Circuit.

Submitted March 12, 1981.

Decided May 6, 1981.

Edward E. Murphy, Jr., Clayton, Mo., for appellee.

Sleater & Sleater, W. W. Sleater (argued), M. C. Sleater, Clayton, Mo., for appellant.

Before BRIGHT and ROSS, Circuit Judges, and HARRIS, ^* Senior District Judge.

OREN HARRIS, Senior District Judge.

Rowe International, Inc., (Rowe) brought this diversity suit against J-B Enterprises, Inc., (J-B) to recover the balance due on the purchase price of vending machines sold to J-B. The sales of the vending machines were based on eight separate installment contracts, each of which contained an acceleration clause in the event of default. J-B counterclaimed, alleging breach of implied warranties and misrepresentation in addition to incidental and consequential damages.

The facts in the case are that Rowe sold two models of can soda vending machines, the 400 and the 460, which were manufactured for it by Victor Products. Changing technology in the can soda manufacturing business had begun to cause problems with the vending mechanism on these machines. These problems were discovered as early as 1973. So long as the soda was packaged in cans with thicker steel walls there did not seem to be any difficulty, but when the manufacturers started putting soda in the thin walled cans that were not as firm, jamming problems with the ejecting mechanism developed. After Victor failed to develop a vending mechanism to handle the soft walled cans, Rowe developed such a mechanism on its own. The new mechanism was made available to its distributors for installation in machines which were out of its standard one year warranty and offered to substitute the mechanism in machines which were still under warranty.

Rowe determined to cease the distribution of the Victor machines and secure its machines from another source. Rowe had an inventory of 1,000 Victor machines. The old style machines were promoted during the latter part of 1975 and in 1976 by offering one free machine for every two purchased.

J-B originally purchased a total of 21 Model 460 machines from Rowe in 1974. They operated in a satisfactory manner and were adequately serviced by Rowe. In 1975, J-B bought a Model 400 machine from Rowe. It was placed in a low to moderate volume location, and although there were some jamming problems, it was serviced by Rowe.

In 1976, J-B decided to purchase a total of 75 machines under Rowe's promotion program. These machines were to be delivered in groups over a period of a year so that they could be placed out in new locations. These machines were identical to the machines that J-B had purchased earlier. The warranty furnished by Rowe for all the machines was one year. None of these machines had the new ejectors.

In October of 1977, J-B terminated its vending business because its employees voted to join the Teamsters Union. The business was purchased by two other vending machine operators, Kay C and D.E.B. The installment sales agreements between Rowe and J-B required Rowe's consent in the event of a sale of the mortgaged equipment. J-B indicated that all debts were going to be paid and Rowe consented to the sale of the vending machines. The contracts of sale to Kay C and D.E.B. required J-B to pay off existing balances on the equipment and also specifically disclaimed any implied warranties of merchantability or fitness for a particular purpose.

Subsequent to the sale of its business, and continuing through June of 1978, when the lawsuit was filed, J-B made payments on its account to Rowe. J-B made 10 payments totaling $5,938.58, but these payments did not bring the account current. J-B sold all but 16 of the Rowe machines as a part of the sale of the business, 10 of these remaining machines were sold elsewhere and 6 remained in J-B's possession at the time of the trial.

At the trial, the jury was given four verdict forms (two on the complaint, and two on the counterclaim). The jury returned all four verdict forms finding for both parties on each part. The trial judge ¹ sent the jury back and they returned a verdict for Rowe on its cause of action in the amount of $17,704, and for Rowe on J-B's counterclaim. J-B appeals from this jury verdict.

J-B initially argues that the trial court erred in failing to grant J-B's motion for a directed verdict at the close of all the evidence. J-B contends the evidence was undisputed that the machines did not have the revised ejector mechanism, Rowe knew at the time of the sale the machines would jam without them, and J-B continually notified Rowe of the problems with the machines and was constantly reassured the problems would be cured. Thus, J-B asserts that in June of 1978 it was entitled to revoke acceptance of the machines under 400.2-608, R.S.Mo.1969. This section provides:

(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it

(a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

Whether the purchaser's revocation of acceptance of a commercial unit occurs within a reasonable time is ordinarily a question of fact for the jury. Applebaum v. Falco Leasing Company, 447 S.W.2d 799 (Mo.App.1969); Dopieralla v. Ark. La. Gas Co., 255 Ark. 150, 499 S.W.2d 610 (1973).

In addition, the sufficiency of notice and what is reasonable time within which to give notice of breach of warranty are ordinarily questions of fact for the jury. Green Seed Co. of Ark. v. Williams, 246 Ark. 463, 438 S.W.2d 717 (1969); Pritchard v. Liggett & Myers Tobacco Company, 295 F.2d 292 (3rd Cir. 1961).

The Court, therefore, concludes that the trial court properly denied defendant's motion for a directed verdict on its counterclaim.

J-B next argues that the trial court erred in failing to instruct the jury on its claim for fraudulent misrepresentation and its claim for punitive damages which are the result of fraud, as set out in Defendant's instructions 11 and 12.

J-B's requested instruction 11 provides:

Your verdict must be for J-B Enterprises, Inc., if you believe that Rowe International, through its employees, told J-B Enterprises that Rowe's service department would service and maintain the vending machines, and that Rowe had engineers who would work upon and solve any problems that might arise concerning the vending machines, and that when said statements were made, Rowe knew they were false or was consciously ignorant of whether they were true or not, and J-B Enterprises did not know that these statements were false and relied upon these statements in entering into the sales contracts with Rowe.

The Missouri courts have held that the essential elements of fraud are:

(1) a representation was made of a material fact which was false and known to be false, or was recklessly made, (2) the statement was made with the intent to deceive for the purpose of inducing the hearer to act upon it, (3) the hearer reasonably relied upon it (4) to his injury and damage. Bauer v. Adams, 550 S.W.2d 850 (Mo.App.1977).

A failure to prove any one of these elements is fatal to the claimant's right to recover. Bauer v. Adams, supra.

J-B's theory of recovery is based upon the rule followed in Brennaman v. Andes & Roberts Brothers Construction Co., 506 S.W.2d 462, 465 (Mo.App.) which states that the burden of proof in fraud for misrepresentation of intention to perform an agreement requires the claimant to demonstrate that the promissor did not intend to perform at the time the agreement was made. Such a misrepresentation of intention is to be distinguished from a mere promise or expression of opinion, both of which are not actionable. Bauer v. Adams, supra; Brennaman v. Andes & Roberts Brothers Construction Co., supra.

The issue thus narrows to the single question of whether the evidence in this case demonstrated a present intent not to perform the required service upon the machines at the time the agreement was made.

An intention to deceive can be proved by direct evidence or by circumstantial evidence from which intent could be inferred. Bauer v. Adams, supra; Klecker v. Sutton, 523 S.W.2d 558 (Mo.App.1975). However, failure of performance is insufficient to establish this intent or to shift the burden of proof. Bauer v. Adams, supra. More importantly, a party may...