Valley Refrigeration Co. v. Lange Co.

• Decision Date: 18 May 1943
• Citation: 242 Wis. 466,8 N.W.2d 294
• Parties: VALLEY REFRIGERATION CO. v. LANGE CO.
• Court: Wisconsin Supreme Court

242 Wis. 466

8 N.W.2d 294

VALLEY REFRIGERATION CO.

v.LANGE CO.

Supreme Court of Wisconsin.

March 9, 1943.

Rehearing Denied May 18, 1943.

This is an appeal from a judgment of the Circuit Court for Brown County; Henry Graass, Circuit Judge.

Action by the Valley Refrigeration Company against the Lange Company to recover balance due on conditional sale contract for refrigeration machinery, wherein defendant interposed a counterclaim, setting up breach of warranty and fraud in the inducement of the contract. From an adverse judgment, the plaintiff appeals. [By Editorial Staff.]

Judgment reversed, and cause remanded with directions.

This was an action by Valley Refrigeration Co., a corporation plaintiff, against the Lange Company, a corporation, defendants, commenced on October 9, 1941, to recover the balance due upon a conditional sales contract for certain refrigeration machinery. A counterclaim was interposed by defendant setting up (1) breach of warranty and (2) fraud in the inducement of the contract. The action was tried to the court and jury and a special verdict submitted.

The jury found (1) that defendant had made known to plaintiff that it wanted and required refrigeration equipment capable of freezing and caring for from 400 to 500 thousand pounds of smelt during the April, 1941, smelt run and would want equipment capable of producing temperatures of 30 degrees below zero in the sharp freezer, and zero in the storage rooms; (2) that plaintiff represented its equipment would be fit for the purposes required; (3) that the equipment failed to perform the services required, and (4) that defendant relied upon the plaintiff's representations that the equipment installed would perform the services required. The jury found that there was no failure properly to install refrigeration equipment.

Defendant's damages upon its counterclaim were apportioned as follows: (1) for improper installation, $15.75; (2) for damages for smelt received and spoiled, $468; (3) for expenses of handling spoiled smelt, $60.

Upon motions after verdict, the court changed the answers to subdivision (b) of the damage question from $468 to $2,458.50. Judgment was entered on May 23, 1942, for $1,094.25, the amount of its counterclaim in excess of the balance due upon the conditional sales contract and $179.57 costs and disbursements.

Martin, Clifford & Dilweg, of Green Bay (Lloyd O. Warne, of Green Bay, of counsel), for appellant.

Smith & Smith, of DePere, and Kaftan, Rahr & Kaftan, of Green Bay, for respondent.

WICKHEM, Justice.

On March 20, 1941, plaintiff, a dealer in refrigeration machinery, executed a written contract with defendant, owner of a cold storage plant by the terms of which plaintiff agreed to sell and to install in defendant's plant certain refrigeration equipment to be paid for by installments. Defendant corporation had for many years engaged in the manufacture and sale of patent medicines. Until about a year prior to the making of the contract defendant had never been engaged in the cold storage business. It then installed refrigeration equipment of low capacity in its plant. On January or February of 1941 defendant was approached by an association of fishermen who offered defendant a contract to freeze and store their smelt catch for 1941 estimated to run between 400,000 and 500,000 pounds of smelt. Plaintiff held its officers and employees out as trained refrigeration engineers and had advised defendant prior to the time of sale, exacting a fee for such advice. Defendant, through its manager, communicated with plaintiff, disclosed its negotiations with the producers of the smelt, and what would be required of defendant. Plaintiff was asked for an assurance that defendant's plant, after installation of the purchased machinery, could handle the refrigeration of a smelt run up to 400,000 to 500,000 pounds. (The usual period of a smelt run is ten days.) Defendant produced testimony and the jury found that this assurance was specifically given. The written contract for the sale of the equipment contains the following provisions which are claimed to be material in this case:

“Guarantees

“We guarantee first-class material and workmanship for one year from the date when the equipment is first put in operation. In the event that material furnished by us shall prove to have been defective at the time it was furnished, natural wear and tear, misuse and accident excepted, we agree to repair or furnish a duplicate of any such part free on board cars at factory within such period.

“No liability shall attach to us, however, for damages or delays caused by defects, beyond making such repairs or furnishing duplicate parts, nor shall we be liable for any defective material repaired or replaced without our consent.”

The schedule descriptive of the machine sold reads in part: “1-6x6 Ammonia machine, used but guaranteed to be in good operating condition running at 277 R.P.M. and producing 5.88 tons of refrigeration at 5# suction pressure and 155 # discharge pressure requiring 14.8 B. H. P.”

The contract also contains the following provision: “This document contains the entire proposed agreement between the parties hereto. It is understood that there are no agreements, promises, or understandings other than those incorporated in this proposal in printed or written form.”

The machine was to be completely installed by April 15, 1941. Demand for the use of the plant to freeze and store fish began to come in earlier than this, however, and on the 11th, 12th and 13th of April, 158,000 pounds of fish came into the plant. The plant was unable to handle this quantity of fish and 78,200 pounds smelt spoiled. Defendant was compelled to pay the owners of this fish at the rate of 3¢ per pound and the cost of hauling the fish away from the plant. There is evidence that plaintiff consented to receiving fish prior to April 15, although there is a conflict as to the amount of fish that plaintiff consented to receive. While this conflict was not submitted to the jury it must be considered resolved against plaintiff by operation of section 270.28 Stats.

Defendant's counterclaim was the only matter contested upon the trial. It is for damages (1) for breach of warranty and (2) for fraud. The case was tried and decided upon a theory that there was a breach of implied warranty of fitness for a disclosed purpose. Section 121.15 Stats., Uniform Sales Act, provides in substance that where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller's skill or judgment (whether he be grower or manufacturer or not) there is an implied warranty that the goods shall be reasonably fit for such purpose. Section 121.15(6) also provides that an express warranty does not negative a warranty or condition implied under this act unless inconsistent therewith. Defendant claims that this is an instance where a buyer has disclosed the purpose for which the machinery is required, relied upon the seller's skill or judgment and therefor, by operation of law, has the benefit of an implied warranty that the goods are reasonably fit for the purpose disclosed. Were it not for considerations hereinafter to be discussed, we should have some doubt whether the term “fitness” as that term is used in the statute, in connection with implied warranties is applicable to the present situation. We would suppose that a warranty of fitness has to do with the intrinsic qualities and characteristics of the property sold. As, for...