Steele v. J. I. Case Co., 44558

• Decision Date: 05 November 1966
• Docket Number: No. 44558,44558
• Citation: 419 P.2d 902,197 Kan. 554
• Parties: Dale STEELE, Appellee and Cross-Appellant, v. J. I. CASE COMPANY and Western Implement Co., Inc., Appellants and Cross-Appellees.
• Court: Kansas Supreme Court

Page 902

419 P.2d 902

197 Kan. 554

Dale STEELE, Appellee and Cross-Appellant, v. J. I. CASE COMPANY and Western Implement Co., Inc.,

Appellants and Cross-Appellees.

No. 44558.

Supreme Court of Kansas.

Nov. 5, 1966.

Rehearing Denied Dec. 7, 1966.

Syllabus by the Court

1. Where a vendor, under the terms of his warranty, is given a reasonable time to remedy a defective article, the buyer is not required to allow him to tinker with it indefinitely in the hope it may ultimately be made to comply with the warranty.

2. Where a seller of farm combines has the option, under the terms of his warranty, either to furnish new machines in lieu of those found defective or to return the purchase price, the warranty is not fulfilled, under the circumstances shown to exist in this case, by providing new machines for next year's harvest, long after the damage has occurred.

3. In the absence of valid provisions limiting a vendor's liability on his warranty, special or consequential damages may be recovered where they proximately result from a breach of warranty and where they reasonably may be regarded as having been within the contemplation of the contracting parties at the time of their transaction.

4. Liability for consequential or special damages may be limited or excluded by the terms of a warranty unless, under all the surrounding facts and circumstances, the limitation or exclusion would prove to be inequitable.

5. The duty to mitigate damages is not an unlimited one and an injured party is required only to exert reasonable efforts to prevent or minimize his damages within the bounds of common sense.

6. Where a warranty covering machinery has been broken, and the seller attempts to remedy the defect and continues to assure the buyer that the machinery will be made to conform to the warranty, the buyer will not be barred from recovering his damages, where, relying on the seller's promises, he may have failed to take steps to lessen his loss.

7. The record is examined in an action brought to recover consequential damages resulting from a breach of warranty on farm combines and, under the facts and circumstances set out and shown in the opinion, it is held: (1) The seller's warranty was not fulfilled through the medium of replacement of new machines for old; (2) the purchaser is not barred from recovering consequential or special damages by virtue of a provision limiting the seller's liability to the extent of the purchase price of the machines; (3) the purchaser is not shown to have failed in his obligation to mitigate damages; and (4) the verdict is sustained by substantial competent evidence and is not shown to have been based on conjecture and speculation.

Geo V. Allen, Lawrence, argued the cause and Don C. Smith, Dodge City, was with him on the briefs, for appellants and cross-appellees.

James A. Williams, Dodge City, argued the cause and was on the brief for appellee and cross-appellant.

FONTRON, Justice.

This is an action to recover damages to crops growing out of a breach of an express warranty given on three new Case combines. The action was tried to a jury which returned a verdict in favor of the plaintiff. Judgment was entered on the verdict and the defendants have appealed.

The plaintiff, Dale Steele, is a western Kansas farmer engaged in extensive farming operations, on his own and rented land, in Ford and Greeley counties, both in Kansas, and in Kiowa County, Colorado. For the year 1960 he expected to have some 4100 acres of wheat and 1100 acres of barley to be harvested. In this opinion, he will be referred to either as Steele or as plaintiff. The defendant, J. I. Case Company, is a corporation engaged in manufacturing, distributing and servicing farm machinery and equipment, including grain combines, while the defendant, Western Implement Company, Inc., is a wholly owned subsidiary of Case, engaged in marketing Case products. Collectively, they will be called Case, or defendants, or the company.

On November 3, 1959, the plaintiff bought two combines from Case to be delivered on or before June 1, 1960, and later, on June 9, 1960, he purchased a third Case combine from the company. These purchases were evidenced by written orders drawn up on printed forms furnished by Case and containing, on the back side, a printed warranty in which Case warranted its products (1) 'to be well made of good material and to be durable with good care,' and (2) 'if properly set up, adjusted, and operated by competent persons, to be capable under ordinary conditions of doing the work for which it is designed.'

The warranty contained certain exclusions and limitations which are important in this lawsuit and which should be pointed out at this time. In Paragraph 2(a) the warranty provides in substance that if any Case product, after being operated for two days, should fail to fulfill the warranty, written notice thereof should be given the dealer; that if the dealer did not remedy the defect, the company, upon receiving timely written notice, should be given reasonable time either to send a competent person to remedy the defect or suggest a remedy by letter; and if the product was found by the company to be defective in material or workmanship, the company would see to it that the defect was remedied, the purchaser agreeing to render necessary and friendly cooperation.

Paragraph 2(b) of the warranty provides:

'If, after such notice and opportunity to remedy the difficulty, the Company fails to make the product fulfill the warranty, the part that fails shall be returned immediately by the purchaser, free of charge, to the place from whence it was received and the Company notified thereof at its Branch House aforesaid, whereupon the Company shall have the option to furnish another machine or implement or part in place of the one so returned which shall fulfill the warranty, or to cause to be returned the money and notes or proportionate part thereof received for such machine or implement or part and no further claim shall be made.'

Paragraph 3 excludes other express, implied or statutory warranties, while Paragraph 5 of the warranty reads as follows:

'The Company's liability for any breach of this warranty is limited to the return of cash and/or notes actually received by it on account of the purchase price of said product or part.'

The two machines purchased in November 1959 were delivered to plaintiff in Ford County about June 12, 1960, and harvest started about June 16. The third combine was delivered to Greeley County, where harvest commenced some ten or fourteen days later. From the beginning, the combines failed to operate properly, developing numerous and sundry mechanical defects, deficiencies and breakages, and losing a disproportionate amount of grain.

In response to repeated complaints lodged by the plaintiff, Case dispatched various employees and representatives to work on the machines in an effort to correct their defects and improve their performance. It would be entirely impractical, and we deem it wholly unnecessary, to relate in specific detail the many difficulties encountered by plaintiff in his operation of the machines, the frequent attempts by Case to repair the combines and make them work effectively, and the several conferences between Steele and Case concerning the problems which arose from the faulty machines.

It is sufficient to say, at this point, that the plaintiff became 'fed up' with the many delays which resulted from the faulty performance of his new combines and with the inability of Case to remedy their imperfections; that Case, through its representatives, insisted throughout that the machines could be made to work and continued its efforts to prove the point while, at the same time, the company categorically refused Steele's several demands for a return of the purchase price; that plaintiff, on July 17, 1960, signed an order, accepted in writing by a Case representative, for three 1961 Case combines to be delivered on or before June 1, 1961, or as soon thereafter as possible, in payment for which Steele was to trade his three 1960 machines and pay a cash difference of $1,057.80, the order being subject to satisfactory demonstration in the wheat field of the present machines and 1961 models. This order was later superseded by an order of December 31, 1960, reducing the cash payment to $538.12, and the new machines were apparently delivered according to agreement.

It appears from the record that after this order had been signed new headers were placed on the 1960 machines and they were used with other combines until plaintiff's Greeley County crops were finally harvested about July 25, 1960, some ten or fourteen days later than normal. In the meantime, Steele's crops had been materially damaged by adverse weather conditions. The present action was therefore instituted to recover consequential damages resulting from delays due to the alleged breach of defendants' warranty.

At the trial, and in their answer, the defendants claimed that Steele's execution of the order for the new 1961 machines constituted an accord and satisfaction of all claims he might have for breach of warranty. This was sharply disputed by Steele, who contended the transaction settled only his claim for the purchase price of the combines, and there was evidence supporting this view. The conflicting evidence went to the jury which, under instructions not criticized, resolved the dispute in plaintiff's favor. When the appeal was argued, defense counsel conceded this issue of fact had been resolved adversely to his clients and was no longer subject to argument. Hence, accord and satisfaction is not now in the case.

In their brief, the defendants have condensed their statement of points into four general propositions:

1. That plaintiff was furnished three new combines in fulfillment of their warranty.

2. That this lawsuit is contrary to Paragraph 5 of the warranty on which plaintiff relies.

3. That...