Shaw Equipment Co. v. Hoople Jordan Const. Co., 17070

• Decision Date: 29 March 1968
• Docket Number: No. 17070,17070
• Parties: SHAW EQUIPMENT COMPANY, Appellant, v. HOOPLE JORDAN CONSTRUCTION COMPANY, Inc., et al., Appellees. . Dallas
• Court: Texas Court of Appeals

Page 835

428 S.W.2d 835

SHAW EQUIPMENT COMPANY, Appellant, v. HOOPLE JORDAN CONSTRUCTION COMPANY, Inc., et al., Appellees.

No. 17070.

Court of Civil Appeals of Texas.

Dallas.

March 29, 1968.

Rehearing Denied June 7, 1968.

Charles A. Girand of Brundidge, Fountain, Elliott & Churchill, Dallas, for appellant.

Robert H. Thomas of Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellees.

DIXON, Chief Justice.

Appellant Shaw Equipment Company, a corporation, brought suit against appellees Hoople Jordan Construction Company, Inc. and Hoople Jordan individually on a combination note and conditional sales contract executed by appellees in connection with the purchase of a heavy equipment road construction machine called a duo-stabilizer. Appellant will hereinafter be referred to as Shaw and appellees as Jordan.

Jordan filed an answer and also a cross-action asking cancellation of the note and mortgage on the grounds of breach of warranty, false representations and failure of consideration.

Shaw replied by supplemental petition, alleging that for fourteen months prior to execution of the purchase agreement and note and mortgage Jordan had used the machine under the terms of a lease agreement; that during such time Jordan had become fully aware of the machine's performance capabilities; and by reason thereof had waived any right to claim false representations or warranties and was estopped to assert that the consideration for the note had failed.

A jury returned a verdict finding that (1) prior to the execution of the conditional sales agreement Shaw's agents represented that the duo-stabilizer would satisfactorily perform the work for which it was intended, (2) which representation was of a material fact; (3) was relied on by Jordan; (4) Jordan was reasonably justified in relying on said representation; (5) the representation was false, (6) Jordan was injured by the falseness; (7) Jordan would not have signed the contract were it not for the false representation; and (8) the value of the use of the duo-stabilizer from May 1964 to February 1966 was $9,894.24.

No issues were submitted to requested with reference to Jordan's plea of failure of consideration. No issues were submitted or requested with reference to Shaw's pleas of waiver and estoppel.

Shaw's motions for instructed verdict and for judgment Non obstante veredicto were overruled. Based on the jury verdict judgment was rendered for Jordan setting aside and rescinding the note and conditional sales contract, declaring title to the machine to be vested in Shaw, divesting Jordan of any interest or claim in it, and further decreeing that Shaw take nothing against Jordan.

FACTS

In 1964 Jordan had several contracts with the State for road construction in East Texas. The soil encountered contains clay material which has to be broken down in order to make it more granular so that the roadbed can stand the pressure put upon it by the weight of the road surface materials and the heavy traffic. It is necessary to aerate the soil, then mix it with oil after which it is packed with rollers. The function of the duo-stabilizer is to dig up the soil, aerate it, and mix it with oil.

In 1964 the machine in question was put through a four-hour demonstration in New ton County on a road which Jordan had under construction. The machine performed satisfactorily. On May 4, 1964 the parties signed a written lease contract whereby for an indefinite period of time Jordan agreed to pay Shaw rental at the rate of six cents per square yard of soil mixed by the stabilizer, based on State Highway Department monthly progress reports.

On the same day he signed the lease agreement, May 5, 1964, Jordan signed a purchase option agreement. This instrument gave Jordan the option to purchase the duo-stabilizer at a purchase price of $28,370, the price to be reduced by the total amount of rentals paid by Jordan to Shaw under the terms of the lease and rental agreement. This option agreement expressly provided that the machine would be purchased 'in the condition it is at the time of exercising such option, and without warranty of any kind by the Seller.' (Emphasis ours.)

Jordan testified that prior to the time of his execution of the lease agreement and the option to purchase Burns, Shaw's salesman, represented to him that the duo-stabilizer would perform Jordan's job to his satisfaction; that it was as good or better than anything on the market; that it was the answer to everybody's dreams in the stabilization business; and that it would answer everybody's prayers in East Texas for stabilization. Jordan also testified that Burns told him the machine would dig and mix soil to a depth of fourteen inches. This would be a big advantage, for most stabilizers could not dig to a depth greater than six inches. If it was necessary to dig deeper most machines had to do it in two operations.

From the first, according to Jordan, the stabilizer failed to perform satisfactorily. Every day Jordan had trouble with it; a bearing would go out, or a gear go out. He told Shaw about it and Shaw on various occasions sent a service man to work on the machine and even had a factory representative flown to the scene of the operations. But 'they hadn't found the answer to fixing it yet.' When the blade was plowing seven or eight inches under ground the bearings were in the dirt, which would cause the bearings to wear out.

Notwithstanding these difficulties Jordan kept the machine and used it from time to time when weather conditions permitted on jobs in Newton, Henderson and Liberty Counties. Between May 5, 1964 and July 27, 1965, a period of over fourteen months, the machine dug nd mixed approximately 100,000 yards of soil. During that time Jordan paid Shaw the sum of $4,872.24 as rentals on the machine. By July 27, 1965 Jordan was in arrears on rental payments.

On July 27, 1965 Jordan exercised its option to purchase the machine. The corporation signed a note for $30,022 payable in monthly installments of $1,250 each and signed also a conditional sales contract. Jordan became the owner of the legal title to the machine subject to a chattel mortgage in favor of Shaw. The arrears in rental payments were brought forward and included in the amount of the note. The conditional sales contract provides: 'Dealer sells to Purchaser and Purchaser buys and acknowledges receipt of the above described property in good order and condition.' It also contains this provision: 'Said property is sold in its present location and condition and without warranty of any kind.' (Emphasis ours.)

Jordan himself testified that he read the conditional sales contract before signing it and that he signed it voluntarily.

Jordan testified that C. C. Crawford, Shaw's Assistant Sales Manager, told him to go ahead and sign the purchase papers and that he, Crawford, would see that Shaw treated him right and that the machine would be made to perform the job. There is no evidence that Crawford at the time he made this statement, did not intend to perform it.

It is obvious and undisputed that Jordan purchased the stabilizer and executed the note and mortgage with full knowledge of its performance capabilities and limitations.

Jordan presented as an expert witness H. W. Murphy, a machinery salesman for other and competitive lines of stabilizers. But Murphy's testimony, though critical in some particulars of the machine here in controversy, was not especially helpful to Jordan's case. For Murphy admitted that this stabilizer would satisfactorily perform stabilization work in Henderson and Newton Counties where Jordan was using it if a man 'had time enough to work the job out with the machine.'

In February 1966 Jordan returned the machine to Shaw's yard in Dallas. He did so after a talk with Mr. Chitty, Shaw's Credit manager. He says he told Mr. Chitty that Jordan had been rained out of jobs it then had to work on, and that the machine then needed some work to be done on it and Jordan couldn't keep up the payments with it raining so that the machine couldn't work. Jordan also talked at this time to McDougal, Shaw's shop foreman, about repairs and modifications. McDougal told him Shaw would put a new design on the stabilizer but Shaw 'wouldn't stand behind it.'

On June 4, 1966 Shaw instituted this suit for foreclosure. Jordan was behind several months on its installment payments.

Hoople Jordan himself testified that it was 'when they sued me' that he decided not to take the machine back. This would mean that though he had possession of the machine from May 4, 1964 to June 4, 1966 (a period of more than two years), had used it many times and had full knowledge of its alleged defects, he did not decide to attempt to rescind his contract until he was sued after he had fallen behind on his monthly installment payments.

OPINION

The alleged representations of Burns, the salesman, that the machine would perform to Jordan's satisfaction, that it was as good or better than anything on the market, that it was the answer to everybody's dreams in the stabilization business, and that it would answer everybody's prayers in East Texas for stabilization, are all expressions of opinion, or are dealers' talk, or puffing, which do not come within the category of fraudulent misrepresentations. 25 Tex.Jur.2d 679, 689; 37 C.J.S. 241.

If we be mistaken as to the above holding in respect to any of the alleged representations, we nevertheless hold, for reasons hereinafter stated, that as a matter of law the alleged representations even if false at the time they were made, do not entitle Jordan under the undisputed circumstances, to cancel and rescind the contract of purchase and the note and mortgage.

The undisputed facts show that Jordan at the time he signed the contract of purchase and the note and mortgage had full knowledge that the alleged representations were false. He had given the machine a thorough tryout over a period of fourteen months...