William C. Mitchell, Ltd. v. Brown

• Decision Date: 25 March 1998
• Docket Number: No. 96-1521,96-1521
• Citation: 576 N.W.2d 342
• Parties: WILLIAM C. MITCHELL, LTD., An Iowa Corporation d/b/a Bill Mitchell Swine Service, Appellee, v. Richard BROWN, Appellant.
• Court: Iowa Supreme Court

Page 342

576 N.W.2d 342

WILLIAM C. MITCHELL, LTD., An Iowa Corporation d/b/a Bill Mitchell Swine Service, Appellee, v. Richard BROWN, Appellant.

No. 96-1521.

Supreme Court of Iowa.

March 25, 1998.

Kenneth R. Munro of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellant.

Richard J. Howes and Ronald L. Anderson of Howes & Anderson, P.C., Des Moines, William Wheatcraft, Des Moines, and Jeanne K. Johnson, Des Moines, for appellee.

Considered en banc.

SNELL, Justice.

Defendant appeals from a jury verdict in favor of plaintiff on claims of negligence and breach of implied warranty. Defendant contends the district court erred as follows: (1) in submitting plaintiff's claim for breach of implied warranty to the jury; and (2) in instructing the jury on two theories of negligence which defendant contends were unsupported by the record and Iowa law. We affirm.

I. Background Facts and Proceedings

The plaintiff, William C. Mitchell, Ltd. d/b/a/ Bill Mitchell Swine Service, is a hog breeding company operating primarily in Madison County, Iowa. Defendant Richard Brown, at times pertinent to this case, was a hog breeder operating in Shelby County, Iowa. In the mid-1980s, Brown orally contracted with Mitchell to function as a "multiplier" operation for Mitchell. As a multiplier operation, Brown would purchase boars and gilts at a discount from Mitchell, relocate the animals to his Shelby County farm, mate them, and sell the select offspring to Mitchell for a premium. All of the animals Brown kept on his farm were either breeding stock sold to him by Mitchell or the offspring of the breeding stock. The animals which Mitchell purchased from Brown were added to the herd at his sales center for sale to third parties for breeding purposes.

In the late summer of 1992, a pseudorabies outbreak occurred in the herd at Mitchell's sales facility. Brown's herd also tested positive for pseudorabies. The outbreak necessitated a quarantine at Mitchell's sales facility beginning in mid-September 1992. Normal operations at the sales center did not resume until April 1993. In September 1994, Mitchell filed a petition against Brown alleging claims of negligence, breach of implied warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. Mitchell contended Brown was negligent in one or more of the following ways: (1) failing to limit or prevent access by unauthorized persons onto Brown's farm; (2) failing to consult with a veterinarian as to the presence or absence of pseudorabies in herds on neighboring farms; (3) failing to follow proper pseudorabies testing procedures. Mitchell also maintained Brown had breached implied warranties by selling him animals infected with pseudorabies. Prior to trial, Mitchell dropped his claim for breach of implied warranty of fitness for a particular purpose.

Brown filed a motion for summary judgment on two grounds. First, he contended that because Mitchell and his two expert witnesses acknowledged during discovery that they had no direct evidence of any negligence on Brown's part, they would not be able to prove negligence at trial. Second, he argued that because Mitchell acknowledged he had been informed prior to purchasing the suspect animals from Brown that Brown's herd had been certified "qualified negative" for pseudorabies by the State of Iowa and that the animals had been in Brown's possession for longer than thirty days, then pursuant to Iowa Code chapter 554A (1991), Brown was immune from Mitchell's claim of breach of implied warranty. The district court denied Brown's motion for summary judgment and the matter proceeded to trial.

At trial, Brown stipulated that the source of the pseudorabies outbreak at Mitchell's operation was gilts sold by Brown to Mitchell in the late summer or early fall of 1992. In an attempt to show Brown's negligence in his disease prevention measures, Mitchell presented evidence regarding two incidents in 1990 when Brown's father, who at that time worked at Brown's breeding facility, failed to follow proper disinfecting procedures. Brown's father's involvement in the breeding facility ceased in 1990; however, he lived at the farm where Brown's breeding operation was located at the time the outbreak occurred. In addition, to show Brown's alleged negligence, Mitchell's experts testified regarding Brown's alleged duty to question his veterinarian about pseudorabies outbreaks at neighboring farms. However, the experts failed to testify conclusively that such a duty existed because they claimed a "confidential" relationship exists between farmers and their veterinarians.

At the close of evidence Brown made a motion for directed verdict which the district court denied. Brown made objections to several of the court's instructions to the jury, which the court overruled. The jury instructions regarding the negligence claim did not separate the three theories of negligence, but stated that the jury must find Brown was negligent in one or more of the three alleged ways. The special verdict form submitted to and completed by the jury did not have separate damage forms for the negligence and breach of implied warranty claims. Rather, damages for the two claims were combined on one special verdict form. The jury returned verdicts for Mitchell on both the negligence and breach of implied warranty claims and set Mitchell's damages at $325,318. Brown filed a motion for judgment notwithstanding the verdict, which the court denied. Brown appealed.

On appeal, Brown argues that no statutory or common law duty exists that required him to consult with his veterinarian about pseudorabies outbreaks on neighboring farms. He also argues insufficient evidence was presented regarding the allegation that he failed to properly control access to his facility for disease prevention purposes. Brown further contends that he complied with the disclosure requirements of Iowa Code chapter 554A, and is therefore entitled to the exemption from liability for implied warranty provided by that chapter. Mitchell argues that Brown failed to preserve error on his arguments regarding the negligence claims. He also argues Brown did not preserve error on the implied warranty claim. Substantively, Mitchell maintains Brown did not comply with the disclosure requirements set forth in chapter 554A and that, therefore, the implied warranty exemption should not apply.

II. Discussion

A. Implied Warranty Claim

1. Preservation of Error

Mitchell claims Brown failed to preserve error regarding the district court's submission of the implied warranty claim. Prior to trial, Brown filed a motion for summary judgment claiming that section 554A.1 provided an absolute defense to the implied warranty claim. The court denied the motion for summary judgment, finding that a genuine issue of fact existed as to whether Brown had fully complied with state disease testing requirements. After the close of evidence, Brown's attorney made a motion for directed verdict regarding the implied warranty claim.

We have given this issue careful consideration and conclude that error was preserved. Brown raised his arguments on this issue in his motion for summary judgment and again via his motion for directed verdict on the implied warranty claim.

2. The Merits

a. Chapter 554A--Livestock Warranty Exemption

Iowa Code section 554A.1 provides an exemption from implied warranty claims in livestock sales in certain instances. In 1992, the section provided in pertinent part:

[A]ll implied warranties arising under sections 554.2314 and 554.2315 are excluded from a sale of cattle, hogs, sheep and horses if the following information is disclosed to the prospective buyer or the buyer's agent in advance of the sale, and if confirmed in writing at or before the time of acceptance of the livestock when confirmation is requested by the buyer or the buyer's agent:

a. That the animals to be sold have been inspected in accordance with existing federal and state animal health regulations and found apparently free from any infectious, contagious, or communicable disease.

b. One of the following, as applicable:

(1) Except when the livestock have been confined with livestock from another source or assembled within the meaning of subparagraph 2, the name and address of the present owner, and whether or not that owner has owned all of the livestock for at least thirty days.

Chapter 554A was enacted by the Iowa legislature in 1980, but it has never been interpreted by our court or the court of appeals. This type of legislation has its roots in the 1960s and 1970s, when courts, after many years of enforcing the doctrine of caveat emptor, began applying the implied warranty provisions of the Uniform Commercial Code to livestock sales, providing a remedy for buyers of diseased livestock. See Reed v. Bunger, 255 Iowa 322, 333-34, 122 N.W.2d 290, 297-98 (1963) (holding that in light of enactment of Uniform Commercial Code in Iowa, older decisions based on the rule of caveat emptor were not applicable in livestock sale); Ver Steegh v. Flaugh, 251 Iowa 1011, 1023-25, 103 N.W.2d 718, 725-27 (1960) (same); see generally Jeanne Ann Foster, Note, Implied Warranties in the Sale of Diseased Livestock in Iowa; A Return to Caveat Emptor?, 31 Drake L.Rev. 637 (1981-82). Lobbying groups which supported the enactment of chapter 554A contended that because it is nearly impossible to warrant the health of livestock, implied warranties should be excluded from such sales. See Sharon L. Soorholtz, Note, The Iowa Livestock Warranty Exemption: Illusory Protection for the Buyer, 67 Iowa L.Rev. 133, 134 (1981) [hereinafter Soorholtz]; see also Leah C. Hill, Note, "A Pig in the Parlor Instead of the Barnyard"? An Examination of Iowa Agricultural Nuisance Law, 45 Drake L.Rev. 935, 951-58 (1997) (discussing the history of agricultural nuisance law and recent legislation designed to provide immunity for livestock farmers from...