Sampson Const. Co. v. FARMERS COOP. EL. CO., MARSHALL, OKL., 8812.

• Citation: 382 F.2d 645
• Decision Date: 08 August 1967
• Docket Number: No. 8812.,8812.
• Parties: SAMPSON CONSTRUCTION COMPANY, Inc., Appellant, v. FARMERS COOPERATIVE ELEVATOR COMPANY, MARSHALL, OKLAHOMA, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

382 F.2d 645 (1967)

SAMPSON CONSTRUCTION COMPANY, Inc., Appellant, v. FARMERS COOPERATIVE ELEVATOR COMPANY, MARSHALL, OKLAHOMA, Appellee.

No. 8812.

United States Court of Appeals Tenth Circuit.

August 8, 1967.

Donald R. Newkirk, Wichita, Kan. (Wayne Coulson, Paul R. Kitch and Dale M. Stucky, Wichita, Kan., on the brief), for appellant.

Alex Cheek, Oklahoma City, Okl., (Cheek, Cheek & Cheek, Oklahoma City, Okl., on the brief), for appellee.

Before PHILLIPS, LEWIS and HILL, Circuit Judges.

ORIE L. PHILLIPS, Circuit Judge.

Farmers Cooperative Elevator Company,¹ an Oklahoma corporation, brought this action against the Sampson Construction Company,² a Kansas corporation, to recover damages for a breach of an implied prospective covenant in a contract for the construction by Sampson of a grain storage annex to a grain elevator owned by the Elevator Company.

On February 17, 1959, the Elevator Company entered into a contract with Sampson, by which Sampson agreed to furnish the design, plans and specifications for the construction of such grain storage annex, consisting of 13 storage tanks with a capacity of 288,000 bushels, and to provide the engineering, materials and labor for the construction of such grain storage annex and to construct it, in accordance with such plans and specifications, as a turn-key job.

The specifications furnished by Sampson provided that the steel reinforced concrete in the structure would be mixed in such a proportion that it would have a compression strength upon 28 days of curing of 3,000 pounds per square inch.

The annex was completed in June, 1959, although some repairs were made by Sampson in the period between June, 1959, and June 14, 1962.

On June 19, 1964, four of the 13 tanks that were filled with wheat to their capacity collapsed, spilling the wheat and broken pieces of concrete mixed together on the ground. The elevator was a federally licensed grain storage warehouse and a federal examiner ordered that the grain in the remaining nine tanks be removed and that they not be used for storage unless and until their use was approved by a qualified engineer. The nine tanks were found not suitable for further use for grain storage.

Samples were taken, consisting of representative pieces of concrete that came from different locations in the four tanks that had collapsed, and which provided a fair sampling of the concrete in such tanks. Six of them, picked at random, were selected for compression tests. One was not tested, because it had a hairline fracture in the core taken therefrom. The other samples showed a compression strength of 1,575, 2,290, 1,660, 2,710 and 1,880 pounds per square inch.

Pieces of the broken concrete were examined and disclosed the cement had pulled away from the rock aggregate in the concrete, instead of breaking such aggregate apart as it would have done, had the concrete had a compression strength per square inch of 3,000 pounds. The investigator found pieces of broken concrete, where the cement could be rubbed away from the aggregate with the fingers, showing that there were places where either the mixture was not strong enough to hold the aggregate in the cement, or the bond between batches of cement poured at different times was too weak to hold them together in the structure.

Steel hooks are used to anchor the steel reinforcing bars in the concrete. The hooks used in the concrete in the collapsed tanks were too short and too small in diameter to meet recognized standard requirements and to perform their intended function of preventing the reinforcing bars from slipping. When a reinforcing bar so slips, the result is increased pressure or thrust on the other bars in the concrete in the adjacent area.

The inadequate compression strength of the concrete, the areas in the structure where the cement was too weak, or where different batches were not properly bonded, and defective anchorage of the reinforcing bars resulted in a structural failure, which was the proximate cause of the collapse.

The Elevator Company could not have discovered the weaknesses in the concrete or the inadequacy of the hooks by the exercise of reasonable diligence, before the collapse of the tanks on June 19, 1964.

The trial court held that the warranty was prospective and instructed the jury that where a general contractor is engaged in the business of building grain storage facilities "and by contract undertakes to perform and furnish material, * * * requiring the exercise of care, skill and knowledge to perform such work and furnish such material, there is an implied warranty that the work and material furnished by such contractor shall be of proper workmanship and proper material and be reasonably fit for the purpose for which it is intended to be used."

The trial court further instructed the jury that if they found the materials used by Sampson and the workmanship of the laborers employed by it in the construction of the storage annex were not of the quality, type and kind that would provide a structure reasonably fit for its intended purpose and that would last and serve such purpose for a reasonable length of time, the jury should return a verdict for the plaintiff, but if they found the materials used and the workmanship of the laborers employed by Sampson were reasonably fit and suitable to provide a structure that would serve its intended purpose and last for a reasonable time, the jury should return a verdict for the defendant.

Thus, it will be seen that the trial court, in effect, held that there was included in the implied warranty of fitness and suitability a prospective warranty that the materials used and the workmanship of the laborers employed by Sampson would be reasonably fit and suitable to provide a structure that would serve its intended purpose for a reasonable time.

At the trial, counsel for Sampson admitted there was an implied warranty of suitability and fitness in the construction contract, but asserted that it was breached, if at all, in June, 1959, when the annex was completed, and that the action was barred by limitation.

Sampson was served with process in Kansas, in accordance with the provisions of § 1, c. 32, Okl.Laws 1963, 12 O.S. Supp.1963, § 187. Such § 187, supra, which became effective September 13, 1963, in the form it was originally enacted, in parts here pertinent, read as follows:

"(a) Any person, firm, or corporation other than a foreign insurer licensed to do business in the State of Oklahoma who is a nonresident of this State³ and who does any of the acts hereinafter enumerated, whether in person or through another, submits himself, and if an individual his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doings of any of said acts:

"(1) the transaction of any business within this State;

"(2) the commission of any act within this State;

"(3) the manufacture or distribution of a product which is sold in the regular course of business within this State and is used within this State;

"(4) contracting to insure any person, property, or risk located within this State at the time of contracting.

"(b) Service of process upon any person who is subject to the jurisdiction of the courts of this State, as provided in this section, may be made by personally serving the summons upon said person outside of this State with the same force and effect as though summons had been personally served upon him within this State. Said summons shall be served and returned in the manner directed in 12 O.S.1961, § 175, and shall be verified in the manner directed in 12 O.S.1961, § 158. * * *"

Counsel for appellant contend that the statute may not be retrospectively applied and that the service in the instant action is therefore void.

From a judgment on a jury verdict in favor of the Elevator Company, Sampson has appealed.

I Was the Action Barred by Limitation?

Sampson contends the action was barred by limitation, based on the premise that the implied warranty of fitness and suitability was breached, if at all, in June, 1959, when the elevator was completed.⁴

The contract was made and performed in Oklahoma and is governed by Oklahoma law. In the case of Hepp Brothers, Inc. v. Evans, Okl., 420 P.2d 477, the court, in the third syllabus, which in Oklahoma is the law of the case,⁵ stated:

"If a warranty relates to a future event, before which the defect cannot be discovered with reasonable diligence, the warranty is prospective in character and the applicable period of limitations runs from the time of that event."

In that case, Hepp Brothers agreed to furnish and install a floor covering, consisting of vinyl tile squares, in the kitchen and den of a new house being built by Charles and Joyce Evans. The tile was installed in August and September, 1960. On August 29, 1963, the Evanses brought an action against Hepp Brothers for breach of a prospective implied warranty, alleging that in June, 1962, the tile squares began to come loose from the floor and continued so to do until all the squares had become loose.

The failure of the tile squares to adhere to the floor was due to defective adhesive used to cement or affix them to the floor. In that case, the trial court held that the Evanses could not have discovered the defectiveness in the adhesive used by the exercise of reasonable diligence until the tile began to come loose from the floor; that there was an implied warranty of fitness that the tile would adhere to the floor and last for a reasonable time; that a reasonable time had not elapsed when the tile came loose from the floor; that the cause of action did not accrue until the Evanses first learned of the defect in the adhesive used, when the tile began to come loose from the floor in June, 1962, and that the action was not barred by limitation.

On appeal, the Supreme Court of Oklahoma held there was an implied warranty of fitness in the contract to furnish and install...