Tennessee-Carolina Transp., Inc. v. Strick Corp.

• Decision Date: 11 December 1974
• Docket Number: No. 95,TENNESSEE-CAROLINA,95
• Parties: , 16 UCC Rep.Serv. 116 TRANSPORTATION, INC. v. STRICK CORPORATION.
• Court: North Carolina Supreme Court

Page 181

210 S.E.2d 181

286 N.C. 235, 16 UCC Rep.Serv. 116

TENNESSEE-CAROLINA TRANSPORTATION, INC. v. STRICK CORPORATION.

No. 95.

Supreme Court of North Carolina.

Dec. 11, 1974.

Welling & Miller by George J. Miller and Charles M. Welling, Kennedy, Covington, Lobdell & Hickman by Hugh L. Lobdell, Charlotte, for defendant-appellant.

Wallace S. Osborne, Waggoner, Hasty & Kratt by William J. Waggoner, Charlotte, for plaintiff-appellee.

MOORE, Justice.

The sales contract here involved was executed in Pennsylvania but was to be performed by delivery of the trailers in Illinois. Defendant now contends that the substantive law of the place of performance (Illinois) controls the question of breach of implied warranty and, if there was a breach, the measure of damages.

In the former opinion in this case we stated:

'. . . (T)he parties have not contended that any law other than the law of Pennsylvania shall govern. We proceed accordingly, noting only that the contract of sale did not attempt to choose the applicable law, but each of the six security agreements provided: 'This instrument . . . is made and accepted in Pennsylvania, and shall be governed and interpreted according to the laws of Pennsylvania.'

'Therefore, the substantive issues in the case before us are to be resolved under the law of Pennsylvania, of which we are required to take judicial notice by G.S. § 8--4. With respect to procedural matters, the law of North Carolina governs (Citation omitted).' Transportation, Inc. v. Strick Corp., 283 N.C. 423, 431, 196 S.E.2d 711, 716 (1973).

The decision by the Supreme Court on a prior appeal constitutes the law of the case, both in subsequent proceedings in the trial court and on a subsequent appeal. As stated by Parker, Justice (later Chief Justice), dissenting in part in Collins v. Simms, 257 N.C. 1, 11, 125 S.E.2d 298, 305 (1962):

'As a general rule, when an appellate court passes on questions and remands the case for further proceedings to the trial court, the questions therein actually presented and necessarily involved in determining the case, and the decision on those questions become the law of the case, both in subsequent proceedings in the trial court and on a subsequent appeal, provided the same facts and the same questions, which were determined in the previous appeal, are involved in the second appeal. Hayes v. City of Wilmington, 243 N.C. 525, 91 S.E.2d 673; Bruce v. O'Neal Flying Service, 234 N.C. 79, 66 S.E.2d 312; Pinnix v. Griffin, 221 N.C. 348, 20 S.E.2d 366, 141 A.L.R. 1164; Robinson v. McAlhaney, 216 N.C. 674, 6 S.E.2d 517; Strong's N.C. Index, Vol. 1 Appeal and Error, sec. 60, where many of our cases are cited; 3 Am.Jur., Appeal and Error, sec. 985.'

This contention is without merit.

Defendant next contends that the court erred in excluding evidence offered by defendant to show the value of the trailers as entered on plaintiff's books, the depreciation taken by plaintiff, and the price obtained by plaintiff when the trailers were resold after having been used for almost six years.

Questions of the admission and exclusion of evidence are generally procedural and governed by the Lex fori. Transportation, Inc. v. Strick Corp., supra.

The measure of damages in this case for breach of warranty is "the difference At the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted. . . .' Pa.Stat.Ann. tit. 12A, § 2--714(2) (1970). (Emphasis added.)' Id., at 283 N.C. 436, 196 S.E.2d 720. '(T)he Proper time for a determination of the value of the trailers under Pa.Stat.Ann. tit. 12A, § 2--714(2) was the period from 30 August 1967 through 31 October 1967, the time during which delivery and acceptance of the trailers occurred.' Id., at 283 N.C. 437, 196 S.E.2d 720. In the former decision we held that the opinions of two witnesses--opinions of the value of the trailers more than two and one half years and five years after the time of acceptance--were improperly admitted. We stated:

'Where the value of personal property at a given point in time is in issue, evidence of its value within a reasonable time before or after such point is competent as bearing upon its value at the time in issue. Newsom v. Cothrane, 185 N.C. 161, 116 S.E. 415 (1923). Evidence of the property's value beyond a reasonable time before or after that point lacks probative force and is incompetent. Highway Comm'n v. Hartley, 218 N.C. 438, 11 S.E.2d 314 (1940) (real property). See 31A C.J.S. Evidence § 183(5) (1964) . . ..' Id., at 283 N.C. 437, 196 S.E.2d 720.

Applying this rule, we hold that the trade-in value some six years after the delivery and acceptance in 1967 was too remote in time to be competent and was properly excluded.

Depreciation schedules are maintained for two primary reasons: first, to create a depreciation reserve which, coupled with the salvage value of the equipment, will enable the owner to replace the equipment when no longer useful due to deterioration from age, use, and improvements due to better methods; second, to enable the owner to make a reasonable annual deduction from gross income to offset loss in value and thereby reduce taxable income. Various methods of depreciating items are permissible, such as straight line, 200% Declining balance, and sum of the years-digits. Treas.Reg. § 1.167(b) (1974). The plaintiff in this case used a straight-line method over a six-year period. Depreciated value is an arbitrary valuation and does not necessarily reflect fair market value. Depreciation is a means of setting aside a reserve or sinking fund for replacement and, further, a tax deduction for business expenses. The depreciation schedules and the depreciated values do not fairly point to the value of the trailers in 1967--the time of delivery and acceptance. Hence, these were properly excluded.

Plaintiff introduced evidence that tended to show the trailers had soft faulty top rails that gave way and thereby caused the trailers to fail; that, according to Strick's specifications, the rails should have a 78 to 84 hardness, and that one trailer tested by a Barcol Impressioner had a hardness factor of 64 to 68. To rebut this evidence, defendant offered the testimony of James Nelson Johnson, found by the court to be an expert in the field of trailer repair and maintenance. In the absence of the jury, this witness testified that on 22 January 1974 he examined five of the trailers in question that had been traded in by the plaintiff to Fruehauf Corporation; that he ran a test on the top rails of these trailers with the Barcol Impressionor; that these top rails were the original rails installed when the trailers were built in 1967; and that these tests disclosed that the top rails on these five trailers had a hardness factor varying from 78 to 90. On objection by the plaintiff, the court stated, 'I am not going to permit him to give the foregoing testimony in the presence of the jury,' and the evidence was excluded.

Whether evidence of condition at one time is competent as evidence of condition at another time 'depends altogether on the nature of the subject matter, the length of time intervening, and the extent of the showing, if any, on the question of whether or not the condition had changed in the meantime.' 1 Stansbury's North Carolina Evidence § 90 (Brandis Rev.1973). A good statement of the law of evidence of subsequent conditions is found at 29 Am.Jur.2d, Evidence § 300 (1967):

'It has sometimes been held, in view of the general principle of inadmissibility of evidence of similar or comparable facts having no probative value, and probably also because of the circumstances of the particular case, that evidence that a condition existed at a specific time is not admissible for the purpose of showing a condition or state of affairs at some other time. However, in view of the inference or presumption of the continuance of a condition or state of facts once established by proof, it is more generally held that when the condition of premises or of an appliance at a particular time is in issue, evidence of the condition of such premises or appliance at a time prior or subsequent to the time in question is relevant and admissible, provided it relates directly to the issue in question and is not too remote in point of time. So far as such interval of time is concerned, the...