649 N.E.2d 887 | Ohio Ct. App. | 1994
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *761 Aluminum Line Products Company ("Aluminum Line") purchased a 1982 Rolls-Royce Silver Spur automobile ("the vehicle") from Qua Buick, Inc. ("Qua Buick") on November 16, 1982 for a purchase price of $95,318. The purchase price was remitted to Qua Buick at the time of delivery. Aluminum Line received a "Rolls-Royce Motors Limited Warranty" when it purchased the vehicle.
The vehicle suffered from a multitude of problems, both cosmetic and mechanical, leading to repeat service by Qua Buick. Kenneth Wessel, the president and principal shareholder of Aluminum Line, penned a letter to Rolls-Royce Motors, Inc. ("Rolls-Royce") on October 29, 1985, in which he set forth: "I have no recourse but to ask for the TOTAL recall and disposition of this motor car." A copy of this letter was sent to Qua Buick.
Aluminum Line subsequently filed an action in the Court of Common Pleas of Cuyahoga County for breach of warranties, express and implied, and for attorney fees under the Magnuson-Moss Warranty Act, Section 2301 et seq., Title 15, U.S. Code ("Magnuson-Moss Act"). The trial court entered judgment in favor of Rolls-Royce and Qua Buick. As part of its decision, the court found that Aluminum Line did not state a claim for revocation of acceptance; even if it had, the court concluded that the facts of the case did not support such a claim.
This court in Aluminum Line Products Co. v. Rolls-RoyceMotors, Inc. (Apr. 2, 1992), Cuyahoga App. No. 59790, unreported, 1992 WL 67646, held that appellant Aluminum Line was deprived of the benefits of the limited warranty on the vehicle and that the warranty failed in its essential purpose. We also held that Aluminum Line should receive attorney fees under the Magnuson-Moss Act, *762 but that it failed to present evidence with reasonable certainty on the issue of damages. Finally, we agreed with the trial court that Aluminum Line's claim for rescission was not equivalent to a claim for revocation of acceptance; therefore, we did not review the trial court's determination that Aluminum Line was not justified in its revocation of acceptance.
The Supreme Court of Ohio in Aluminum Line Products Co. v.Rolls-Royce Motors, Inc. (1993),
R.C.
"(A) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it:
"(1) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
"(2) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.
"(B) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
"(C) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them."
In order to recover under R.C.
The Supreme Court in Aluminum Line Products Co. found that Aluminum Line satisfied the initial requirement of R.C.
The court noted that a letter sent to Qua Buick included Aluminum Line's intention to have the vehicle recalled and disposed of; although Aluminum Line continually used the word "rescission," the documents submitted and the arguments presented to the trial court clearly supported Aluminum Line's proposal that it sought to revoke acceptance of the vehicle.Id.,
In McCullough v. Bill Swad Chrysler-Plymouth, Inc. (1983),
The buyer thereafter filed a complaint on January 12, 1979. By the time of trial on June 25, 1980, the vehicle's odometer indicated it had been driven 35,000 miles, 23,000 of which were accumulated after Bill Swad's receipt of the buyer's letter of notification of revocation. Id.,
At trial, Bill Swad asserted that the buyer's continued operation of the vehicle after advising it of revocation was inconsistent with having relinquished ownership of the car. Therefore, the value of the car to the buyer was not substantially impaired by the alleged nonconformities. Finally, the warranties furnished to the buyer supplied the only legal remedy for alleviating the vehicle's alleged defects. Id.,
The McCullough court initially recognized that whether continued use of goods after revocation vitiates the revocation is solely dependent upon the reasonableness of the use. It did so by relying on decisions from other jurisdictions. Id., *764
Triers of fact were then supplied with the following guideline to determine whether a buyer's continued use of a good after revocation of its acceptance was reasonable. A trier of fact must ask itself the following questions: (1) what instructions, if any, did the seller provide to the buyer upon being notified of the buyer's revocation of acceptance; (2) did business needs or personal circumstances compel the buyer's continued use; (3) during the period of continued use, did the seller persist in its assurance to the buyer that all nonconformities would be cured or that he would be otherwise compensated for any dissatisfaction or inconvenience suffered by him; (4) did the seller act in good faith; and (5) did the buyer's continued use unduly prejudice the seller?McCullough,
The existence of the "reasonable use" test and the foregoing questions inherently recognize that buyers may be constrained by circumstances not under their control, circumstances which may be controlled by the seller. "Clearly, to penalize the buyer for a predicament not of his own creation would be patently unjust."McCullough,
The court in McCullough proceeded to find based upon this criteria that the buyer acted reasonably in the continued use of the vehicle even after revocation of acceptance. It provided the following justification for its finding:
First, the buyer was entitled to retain possession of the vehicle, since Bill Swad failed to advise her as to how she should return it after she revoked acceptance of the vehicle.McCullough,
The court thereafter cited R.C.
"On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care, and custody and may hold such goods and resell them in like manner as an aggrieved seller as provided in section
Accordingly, continued use was permissible as it protected the buyer's security interest in the vehicle. Id.,
The court went on to consider Bill Swad's argument that even if the buyer's continued use of the vehicle was reasonable, the usage was "prima facie evidence" that the vehicle's nonconformities did not substantially impair its value to the buyer. Consequently, Bill Swad proposed that the buyer was precluded from revoking acceptance of it under these circumstances. The court rejected this argument by referring to its recognition that circumstances beyond the buyer's control may mandate continued use, even after revocation of acceptance. "Thus, it cannot seriously be contended that appellee [buyer], by continuing to operate the defective vehicle, intimated that its nonconformities did not substantially *766
diminish its worth in her eyes." Id.,
As a last resort, Bill Swad submitted that since the buyer's complaints primarily concerned cosmetic, rather than safety-related, flaws, the defects were trivial. The court first noted that the defects were not merely cosmetic, but were consequential, as some of the buyer's complaints focused on chronic steering, transmission and brake problems. The court next recognized that "even purely cosmetic defects, under theproper set of circumstances, can significantly affect thebuyer's valuation of the good." (Emphasis added.) Id.; seePavesi.
The McCullough court elaborated as follows:
"Whether a complained of nonconformity substantially impairs an item's worth to the buyer is a determination exclusively within the purview of the fact-finder and must be based on objective evidence of the buyer's idiosyncratic tastes and needs. Asciolla v. Manter Oldsmobile-Pontiac, Inc. (1977),
Taking into consideration Bill Swad's argument that the express and implied warranties furnished to the buyer provided her with a sole remedy, the court outright concluded that the warranties failed of their essential purpose. Id. It then quoted from Gen. Motors Corp. v. Earnest (1966),
"`* * * at some point after the purchase of a new automobile, the same should be put in good running condition, that is, the seller does not have an unlimited time for the performance of the obligation to replace and repair parts.' Clearly, the hourglass has run on appellant's efforts to place the car in goodrunning order. Thus, notwithstanding appellee's continuedoperation of the vehicle, the instant action is plainly onewhich permits the buyer to resort to remedies dehors thewarranties." (Emphasis added.) Id.,
The trial court in the present case found that Aluminum Line did not possess the right of revocation of acceptance based upon the following reasons. First, it did not have a right to revoke its acceptance against Rolls-Royce in accordance withVoytovich v. Bangor Punta Operations, Inc. (C.A.6, 1974),
An appellate court may not reverse a finding of the trier of fact as being against the weight of the evidence where there is competent, credible evidence in support thereof. Seasons CoalCo. v. Cleveland (1984),
With regard to the trial court's first conclusion, case law in Ohio establishes that a direct buyer-seller relationship must exist in order for the remedy of revocation of acceptance to be available. Voytovich,
This court in Arrow fully discussed the impact of these decisions in the context of an action to revoke acceptance of a vehicle against both the car dealer and the manufacturer. We first noted the general rule that car dealers are purchasers from the manufacturer and only agents insofar as they have the authority to extend the manufacturer's limited warranty to their customers. Arrow, citing Conte v. Dwan Lincoln-Mercury, Inc.
(1976),
An agency is established when (1) the principal held the agent out to the public as possessing sufficient authority to embrace the particular act in question, or knowingly permitted the agent to act as having such authority; and (2) the person dealing with the agent knew of the facts, and acting in good faith, had reason to believe and did believe that the agent possessed the necessary authority. Funk,
To the extent that the trial court herein definitively ruled that Aluminum Line could not revoke acceptance against Rolls-Royce based on Voytovich alone, it erred in not determining whether an agency existed between the dealer and manufacturer. Nonetheless, a review of the record fails to reveal any evidence that an agency relationship existed between Qua Buick and Rolls-Royce with regard to the sale of the vehicle. Defense Exhibit No. 2 illustrates that Qua Buick was the dealer that imported the vehicle from Rolls-Royce, and that the vehicle had a suggested retail price of $119,611. There is no evidence that Aluminum Line was under the impression that Qua Buick was actually negotiating the sales price of the vehicle, which was reduced to $95,318, on behalf of Rolls-Royce. Although it is apparent that representatives for Rolls-Royce actively participated in the decisions pertaining to the warranty service on the vehicle, and an agency existed with regard to administering the warranty, it cannot be extrapolated that an agency existed between Qua Buick and Rolls-Royce with regard to the sale of the vehicle. See Funk,
The trial court also found that Aluminum Line did not revoke acceptance within a reasonable time as required by R.C.
In Funk, the trial court directed a verdict in favor of the defendant, Montgomery AMC, because the purchaser's "attempt at revocation came `far too late' because age and mileage had already substantially impaired the value of the car."1Funk,
As applied to the case before us, we also find that the age of the vehicle and its mileage did not render Aluminum Line's revocation untimely. At the time Wessel directed his letter to Rolls-Royce in October 1985, the vehicle had been driven 14,814 miles. This amount (14,814 miles) in a three-year period is well below the commonly recognized standard of driving a vehicle an average of 10,000 miles per year. Further, even though Aluminum Line technically possessed the vehicle for three years, clearly it spent many a day in Qua Buick's service center.2 Additionally, the nearly 15,000 miles logged on the vehicle before Aluminum Line's attempt to revoke acceptance did not substantially impair the value of the vehicle. SeeMcCullough (vehicle driven 12,000 miles at the time of notification of revocation of acceptance did not prejudice seller because vehicle could have *770 been resold; even when odometer read 35,000 miles at the time of trial, vehicle was still marketable).
The trial court further found that the defects complained of by Aluminum Line were "minor, never rendered the Car unusable or otherwise affected the car's utility, and never posed any safety threat." Therefore, the "defects" did not substantially impair the vehicle's value.
Wessel testified at trial with regard to how these "defects" affected Aluminum Line as follows:
"Q. So we are clear on something, Mr. Wessel, did this car live up to the Aluminum Line Products Company's expectations?
"A. No.
"* * *
"Q. Why not?
"A. It didn't perform, it was unusable.
"It was unusable the bulk of the time that we had it.
"* * *
"Q. Did any of the defects or problems that you have identified shake Aluminum Line Products Company's faith in your reliability of this vehicle?
"A. Yes.
"Q. Which ones?
"A. The brake system, height control mainly."
As stated supra in McCullough, "[a]ny defect which shakes the buyer's faith or undermines his confidence in the reliability and integrity of the purchased item is deemed to work a substantial impairment of the item's value and to provide a basis for revocation of the underlying sales agreement." McCullough,
There are two remaining grounds for the trial court's conclusion that Aluminum Line did not revoke acceptance of the vehicle. The first ground is based upon Wessel's continued use of the vehicle after he notified Qua Buick of his intention, and the second one focuses on Qua Buick's repair of a majority of the vehicle's problems and Wessel's declining its offer to remedy a remaining flaw.
It is undisputed that Aluminum Line was afforded a three-year or 50,000 mile warranty on the vehicle at the time of purchase. It is also undisputed that when a purchase of goods takes place, the buyer believes that the goods will be delivered either in a fit condition, or the warranty that accompanies the goods will guarantee that they will be repaired to a fit condition. Qua Buick was always ready and willing to take the vehicle in for repair and it was even willing to continue the repairs after Aluminum Line notified it of the revocation. In Alum. LinesProducts Co. (Apr. 2, 1992), this court found that Aluminum Line was deprived of the benefits of the limited warranty on the vehicle and that the warranty failed of it essential purpose. As the court in McCullough adopted from General Motors Corp. v.Earnest, we so adopt:
"`* * * at some point after the purchase of a new automobile, the same should be put in good running condition, that is, the seller does not have an unlimited time for the performance of the obligation to replace and repair parts.' Clearly, the hour glass has run on appellant's efforts to place the car in good running order. * * *" McCullough,
We acknowledge that Aluminum Line was no doubt financially able to procure another vehicle when the 1982 Silver Spur was exhibiting continued difficulties, unlike the purchaser inMcCullough, a clerical secretary who could not afford such a venture. However, the trial court's insistence that Aluminum Line had other vehicles to rely on is not evidenced in the record. Wessel personally owned other vehicles, but he testified that the 1982 Silver Spur was the only company vehicle and it is Aluminum Line after all which sought revocation of acceptance.
Although the trial court did not refer to all of the questions posed by the McCullough court in determining whether Wessel's continued use of the vehicle was proper after notice of revocation of acceptance,3 we must discuss the reasonableness of Wessel's continued use in accordance with all of the questions. First, we note Wessel requested in his October 29, 1985 letter that he be advised as to the disposition of the vehicle when it registered 14,814 miles. Rolls-Royce *772 only responded in correspondence dated November 13, 1985 that Wessel's October 29, 1985 letter was forwarded to the service department so that "we can resolve any problems which may remain." Therefore, rather than instruct Wessel as to the disposition of the vehicle, neither Rolls-Royce nor Qua Buick responded except to suggest continued service. See McCullough (seller's failure to respond to buyer's request for instructions pertaining to disposition of vehicle precluded seller from complaining about the buyer's continued use of the vehicle). Second, as stated supra, there is no evidence in the record which shows that Aluminum Line owned any other vehicle for business purposes. Third, not only did Qua Buick attempt to repair the continuing problems with the vehicle prior to Aluminum Line's notice of revocation, it continued in this attempt after notice. Fourth, we question whether Qua Buick acted in good faith in the repair of the vehicle. Qua Buick's position was that Wessel was a finicky buyer and he was disturbed by the reduction in the sale price of later model Silver Spurs. According to Qua Buick, the combination of this personality trait and the dissatisfaction prompted the revocation of the vehicle rather than the vehicle's malfunctioning and/or cosmetic defects. Qua Buick's insistence that nothing was truly wrong with the vehicle, particularly that its height control system never malfunctioned, quite honestly conflicts with any declaration that it acted in good faith. The conflict is enhanced by the fact that Wessel was a Rolls-Royce patron without any indication of previous disappointment. It is also enhanced by the fact that Aluminum Line paid the negotiated sale price for the vehicle in full and in cash. Aluminum Line thus possessed the entire interest in the vehicle and had every right to assume that it would function properly or be made to function properly. Finally, as we discussed supra, we find no evidence that Wessel's continued use of the vehicle after the October 29, 1985 notice unduly prejudiced Qua Buick.
In conclusion, the trial court's reasons for concluding that Aluminum Line's revocation was neither timely nor done without a substantial change in the vehicle's condition are not supported by competent, credible evidence. Our review of the record demonstrates that Aluminum Line timely notified Qua Buick of the revocation of acceptance of the vehicle without any substantial change to its condition. The trial court's ruling that the evidence presented at trial failed to prove the elements of revocation of acceptance is accordingly reversed. Compare George (even if buyer revoked acceptance of draperies, rather than rejected them, buyer's continued use of draperies for approximately one year was an unreasonable use that waived revocation, where buyer continued to use the goods after her initial complaint without any attempts to remedy the deficiencies on behalf of the seller or any indication as to disposition of the goods). *773
Judgment entered in favor of Aluminum Line as to the sole issue of revocation of acceptance under R.C.
Judgment accordingly.
NAHRA, C.J., and BLACKMON, J., concur.