Shinrone, Inc. v. Tasco, Inc.

• Decision Date: 19 September 1979
• Docket Number: No. 61974,61974
• Citation: 283 N.W.2d 280
• Parties: 27 UCC Rep.Serv. 421 SHINRONE, INC., and Francis G. Bridge, Appellees, v. TASCO, INC., Appellant.
• Court: Iowa Supreme Court

Page 280

283 N.W.2d 280

27 UCC Rep.Serv. 421

SHINRONE, INC., and Francis G. Bridge, Appellees, v. TASCO, INC., Appellant.

No. 61974.

Supreme Court of Iowa.

Sept. 19, 1979.

Francis Fitzgibbons and Harold W. White, of Fitzgibbons Brothers, Estherville, for appellant.

Thomas L. McCullough of McCullough Law Firm, P. C., Sac City, for appellees.

Considered by REYNOLDSON, C. J., and LeGRAND, REES, HARRIS and ALLBEE, JJ.

HARRIS, Justice.

In this law action, tried to the court, $206,877.22 was awarded for consequential damages in the sale of two calf confinement buildings. On defendant's appeal we affirm the trial court.

Tasco, Inc., is an Iowa company which manufacturers, distributes, and assembles livestock confinement buildings. Shinrone, Inc., owns land in Nebraska and Iowa which it farms and on which it raises cattle. As a part of its business Shinrone operates cow-calf operations, in which it raises Simmental and Maine-Anjou breeding stock, described by the trial court as "purebred, exotic animals."

As a result of prior purchases of swine confinement buildings from Tasco, Shinrone purchased calf nurseries from Tasco in 1973, one for the operation in each state. These buildings were purchased to house sick calves, orphan calves, and otherwise normal calves which were not achieving full growth potential. This intended use was made known to Tasco prior to purchase. Shinrone first began using a Tasco building at its Nebraska location. The use of the Tasco building at the Iowa farm began several weeks later, approximately May 1, 1974. By this time Shinrone had already stopped using the building at the Nebraska farm. The use of the building at the Iowa farm continued for several weeks, until temporarily suspended due to an almost 100 percent loss of calves placed in the building due to pneumonia. Tasco then sent experts to advise Shinrone on how to cure the problem. After following the experts' recommendations the building was reopened but, after several weeks, was again closed because of continuing losses.

Taking the evidence in the light most consistent with the verdict, poor ventilation in the buildings caused dampness which in turn caused calves confined there to catch pneumonia. The pneumonia resulted in the deaths of 379 calves.

The parties agree that the calf confinement buildings are "goods" within the meaning of the uniform commercial code. Under section 554.2105(1), The Code 1977, " '(g)oods' means all things . . . which are movable at the time of identification to the contract for sale . . . ." This could have been no later than when the buildings were shipped to the site. See § 554.2501(1)(b). See generally Bonebrake v. Cox, 499 F.2d 951, 957-58 (8th Cir. 1974).

I. Tasco asserts the trial court erred in denying its motion for directed verdict. The claim is that Shinrone failed to prove a defect of Tasco's building was a proximate cause of the losses.

Controlling principles have become so familiar and well established as to be listed in the appellate rules:

In considering the propriety of a motion for directed verdict the court views the evidence in the light most favorable to the party against whom the motion was made.

Iowa R.App.P. 14(f)(2).

Generally questions of negligence, contributory negligence and proximate cause are for the jury; it is only in exceptional cases that they may be decided as matters of law.

Iowa R.App.P. 14(f)(10).

Even when the facts are not in dispute or contradicted, if reasonable minds might draw different inferences from them a jury question is engendered.

Iowa R.App.P. 14(f)(17).

Notwithstanding these principles Tasco argues that the testimony of Shinrone's expert, Dr. Craig Schwartz, coupled with the nonexpert testimony, was insufficient to establish proximate cause. Tasco relies on Winter v. Honeggers' & Co., Inc., 215 N.W.2d 316, 323 (Iowa 1974), where we said:

This court has announced that expert testimony indicating that it is possible a given factual circumstance was the cause of plaintiff's injury or "could have caused it" is insufficient, standing alone, to generate a fact question. Expert testimony indicating probability or likelihood of a causal connection is necessary for this purpose. However, when testimony of an expert witness that a described condition is merely "possible" or "might" exist as a consequence of a stated cause is coupled with other testimony, nonexpert in nature, that the described condition of which complaint is made did not exist before occurrence of those facts alleged to be the cause thereof, a fact question as to causal relation is generated. (Authorities.)

See Duke v. Clark, 267 N.W.2d 63, 66 (Iowa 1978); Oak Leaf Country Club, Inc. v. Wilson, 257 N.W.2d 739, 747 (Iowa 1977); Becker v. D & E Distributing Co., 247 N.W.2d 727, 730 (Iowa 1976).

We think there was ample support in the record for the trial court's finding that Dr. Schwartz felt the calf losses were probably, not merely possibly, due to the design of the nursery. The nonexpert testimony corroborated this view and showed that the condition of the calves did not exist before their exposure to the confinement building.

Defendant's first assignment is without merit.

II. The trial court's decision contained a finding that Shinrone rightfully revoked acceptance of the facility pursuant to section 554.2608, The Code 1977. Tasco asserts that, after such a finding, the trial court could not award consequential damages. This assertion is answered by the following provisions of the uniform commercial code:

Where . . . the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (section 554.2612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid

a. "cover" and have damages under the next section as to all the goods affected whether or not they have been identified to the contract . . . .

§ 554.2711(1).

The buyer may recover from the seller as damages the difference between the cost of cover and the contract price Together with any incidental or consequential damages as hereinafter defined (section 554.2715), but less expenses saved in consequence of the seller's breach.

§ 554.2712(2) (emphasis added).

Consequential damages resulting from the seller's breach include

a. any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise . . . .

§ 554.2715(2).

Under these provisions we find nothing inconsistent between Shinrone's revocation of acceptance and its claim for damages. See W & W Livestock Enterprises, Inc. v. Dennler, 179 N.W.2d 484, 490 (Iowa 1970); White and Summers, Uniform Commercial Code, § 8-3, p. 265 (1972). Tasco's claim that revocation barred the right to damages is without merit.

III. Throughout trial Tasco objected to Shinrone's evidence on the special value of the lost livestock. A portion of Tasco's motion for directed verdict was based on the same objections. Tasco contends that the proper measure of damages for loss of the cattle was their market value. Because the calves involved were too young to market as breeding stock, Tasco contends the damages awarded because of the heifer loss should have been based on the calves' value as feeder calves raised for slaughter.

Shinrone, of course, contends the trial court was correct in valuing the heifers' loss on the basis of their potential value as breeding stock, even though there was no available market for these heifers for breeding purposes. Because the bull calves were not purebred they could not be considered as breeding stock and the trial court set their value in accordance with Tasco's theory of damages. But recovery was allowed for the substantially higher value of the heifer calves as potential exotic breeding stock.

Consequential damages, resulting from a seller's breach, are defined by section 554.2715(2)(a) as "any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise . . . ."

The commentary to this section states:

3. In the absence of excuse under the section on merchant's excuse by failure of presupposed conditions, the seller is liable for consequential damages in all cases where he had reason to know of the buyer's general or particular requirements at the time of contracting. It is not necessary that there be a conscious acceptance of an insurer's liability on the seller's part, nor is his obligation for consequential damages limited to cases in which he fails to use due effort in good faith.

Particular needs of the buyer must generally be made known to the seller while general needs must rarely be made known to charge the seller with knowledge.

Any seller who does not wish to take the risk of consequential damages has available the section on contractual limitation of remedy.

Expanding the commentary is the following from White and Summers, Supra, § 10-4 at 316-17:

Section 2-715(2) holds the defendant liable for "any loss resulting from general or particular requirements for which the seller at the time of contracting Had reason to know. . . ." (emphasis added). In other words, "the test is one of reasonable foreseeability of probable consequences." This objective formulation is wholly consistent with the language used by Baron Alderson himself, "(The defendant is liable for such loss) as may Reasonably be supposed to have been in the contemplation of both parties." The Baron went on to say that if the buyer communicated "special circumstances" to the seller, the loss that would ordinarily follow in such circumstances should be compensable because the parties should reasonably have contemplated it, that...