United States v. Franklin Steel Products, Inc.
| Decision Date | 10 September 1973 |
| Docket Number | No. 71-2428.,71-2428. |
| Citation | 482 F.2d 400 |
| Parties | UNITED STATES of America, Appellant, v. FRANKLIN STEEL PRODUCTS, INC., Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael H. Stein (argued), L. Patrick Gray, III, Asst. Atty. Gen., Washington, D. C., Wm. Mathew Bryne, Jr., Robert L. Meyer, U. S. Attys., Larry L. Dier, Asst. U. S. Atty., Los Angeles, Cal., Walter H. Fleischer, Civil Div., Dept. of Justice, Washington, D. C., for appellant.
Albert A. Dorn (argued), Los Angeles, Cal., for appellee.
Before HAMLIN and CHOY, Circuit Judges, and SKOPIL,* District Judge.
The United States sued under 28 U.S. C. § 1345 to recover the contract price plus consequential damages from Franklin Steel Products, Inc. (Franklin) for breach of express warranty to provide aircraft engine bearings which conformed to contract specifications. After a non-jury trial, the district court entered judgment for Franklin. We reverse.
In 1962 Franklin entered into two contracts to furnish the Aviation Supply Office of the Department of the Navy 321 master rod bearings, Curtis-Wright aircraft engine part number 171815, at a cost of $90 each. The contracts required that all bearings be in new and unused condition and meet particular specifications, including a certain percentage of tin to reduce corrosion and steel of a certain hardness to resist stress and fatigue. Failure of the bearings to conform to these specifications could cause complete engine failure and loss of both aircraft and pilots.
The contracts called for inspection by the government before acceptance.1 Inspection procedures were to include magnaflux or zyglo or the equivalent thereof and were specified as 100% final inspection by the Navy's O & R Shop for conformace to the applicable specifications. In addition, the contract contained the following warranty clause:
The bearings supplied by Franklin did not comply with the specifications. The tin content was unacceptable; the steel was of insufficient strength; and the part number was in the wrong place. (This last noncomformity did not diminish the functional integrity of the bearing.) In fact, the bearings were not numbered 171815 bearings, but obsolete bearings which had been replated and renumbered so as to resemble the bearings called for in the contract.
The failure to meet specifications was not discovered by the Navy until after all of the bearings had been accepted and 180 of the bearings installed in engines. The enormity of the hazard actuated the Navy to recall all engines in which Franklin bearings had been installed and to refit them with a proper new bearing. This retrofit operation cost the Navy $817 per engine ($147,060).
The district court held that the government had a duty to inspect the bearing and to determine whether they complied with applicable specifications; that by accepting the bearings the government waived any rights by its failure to discover the defects during its inspection; that the warranty provisions were superseded by the inspection provisions; and that in any case, any rights stemming from the breach of the warranty were waived by the government's failure to return the bearings or make any other demand for breach of the warranty. We disagree.
The 100% inspection clause imposes no duty on the government in favor of Franklin. A reading of the clause and the testimony at trial establish that the clause was inserted only to give further protection to the government beyond that afforded by the warranty. Franklin cannot benefit by the government's failure to take advantage of this protection. We note that this same issue was raised in United States v. Aerodex, Inc., 469 F.2d 1003 (5th Cir. 1972) and was also rejected there.2
Even if the government were obliged to inspect the bearings, the contract specifically provides that inspection and subsequent acceptance are not conclusive "as regards latent defects, fraud, or such gross mistakes as to amount to fraud."3 The inspection failed to uncover at least three deviations from the specifications. One of these, the improper placement of the serial numbers, was patent and could have been discovered during visual inspection. Acceptance of the bearings precludes the government from now objecting to this non-conformity. But acceptance does not bar objection to the latent deficiencies in steel and tin not discoverable by visual inspection. The tests specified in the contracts, magnaflux or zyglo or the equivalent thereof, are not directed at discovering either the hardness of steel or tin content.4 Thus, the inspection clause in no way absolves the contractor from liability for these two major latent defects in the bearings.
In any event, the contract specifically provides that notwithstanding inspection and acceptance the contractor warrants that the goods will conform with the specifications. The warranty supersedes the inspection clause.5 This reading of the contract applies the settled principle that in the case of an express warranty "it is no defense that the buyer, had he inspected, might have found out the falsity of the seller's statements" 8 Williston on Contracts, § 973, at 500 (3rd ed. 1964); General Electric Co. v. United States Dynamics, Inc., 403 F.2d...
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...exercise the right of inspection constitutes a waiver of any other contractual remedy. See generally United States v. Franklin Steel Products, Inc., 482 F.2d 400, 403-04 (9th Cir. 1973), cert. denied, 415 U.S. 918, 94 S.Ct. 1416, 39 L.Ed.2d 472 (1974). When the right to inspect arises after......
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