*1 Products, Farms, Division Feed Inc. Co., Oats of National September 13, August Rehearing denied Filed 1-1075A191. [No. 1977. Transfer denied December 1977.] *2 Heller, Heller, Ltd., Harlan Harlan Mattoon, Illinois, Ray Fehrenbacher, Fehrenbacher Fleming, & Olney, Illinois, Kixmiller, Shake, Lewis, Robert V. Kixmiller Sturm, & Vincennes, appellant. Doolittle, Emison, Doolittle, Jr., Emison P. &
Robert Vincennes, appellee. SUMMARY
CASE Products, a division of Na- Feed C.J. Corno Robertson, complaint Oats, (Como), filed a on installment Inc. tional naming Thompson security agreements in an action sale and Farms, (Thompson Farms) defendant. of ex- the contract theories breach
counterclaimed under press warranties, implied of mer- warranties and breach chantability particular purpose, and tort and fitness for a negligent design liability Thomp- and strict tort. theories of negative appeal on decision of son Farms contends counterclaims and affirmative defenses the trial court contrary to law. reverse remand. We *3 indicated, uncontradicted, except where
The facts which are originally incorporated in was and are as follows. Como doing Illinois, Missouri, in time of trial business at the was selling Kentucky, poultry Indiana Arkansas livestock and and formulated the 1968 and Full feed. Como Circle In Marketing Hog Plan) year Plan, (the and for about one tested operation 16, 1969, pig under the Bill the feeder Plan. June On manager territory was hired Como field Lannan Indiana, Kentucky and representative for northwest southern During orientation his one week at Corno’s home office Illinois. McCormick, Louis, told in Lannan was Bud St. Como manager, the Plan described sales brochure sales most blueprints his influential sales tool for the and would be promotion of feeds and solicitation of sales Como dealerships. promotional device, aas Plan was conceived which program prospective producer dealer or a offer the
would company feed had. no other in Como consists
The Plan as described brochure hog (“Corno’s blueprint a house 1) for slatted floor Low-Cost Finishing lagoon, financing Unit”) over and for Pork built erection, Complete Program 2) purchase Como’s Feed and hogs financing, 3) for the and feed Pork Production Con- financing cooperation packing pig feeder with a tract for including marketing company, assistance the fattened financing hogs. purchase producer who elects his agreement hog purchase under the house is bound loan requirements feed from Como for the his duration of the agreement. customer could loan A use combination of the hogs components. example, For Plan’s Como would finance hog if the used a different feed farmer house. early August, 1969, Wayne Thompson, Lannan In contacted manager Triple Fertilizer, (Triple T), T Grain and Vincennes, Indiana, dealership. Shortly a Comor about there- after, Lannan, Thompson, Bonner, Bud McCormick Basil T, employee Triple met in days Vincennes for two concerning dealership, hog discussions the cost of the design, the houses, finance, amount profit- Corno would ability for the producer, of the endeavor dealer and topics asking about Plan Triple T Wayne Thompson promote. designs was familiar with other design. convinced and had to be about merits of Como’s during meetings, telephoned those McCormick Also and ob- suppliers. prices dealership agreement from material tained A Wayne suggestion Thompson’s Triple consummated. At T according was to undertake furnish houses blueprint provided arranged Como. Plan and McCormick advertising paid for for and which described a Low- “Corno Financing Unit”, territory. Pork T’s Cost *4 brochure, presented Plan, hoghouse Lannan Bill and Wayne Thompson, blueprint Thompson, his brother Ron and father, Thompson. Thompson As directors of their Charles agreed they Farms, Inc., hog to build and have financed two hog time At that Farms was not houses. building became production Because business. costs.of requested originally estimated, Wayne Thompson higher than financing head; higher per approval came from McCor- Matthews, president of Feed Prod- superior, Corno Mr. mick’s and, carpenter crew Triple with McCormick’s T hired ucts. locating suppliers, purchased materials. Lannan help in weekly reports to the inspected and sent Corno the structure engineering Wayne problems arose, home office. Whenever overseeing Billy Wells, Triple employee T Thompson, or units, called McCormick instructions erection Loogootee Wayne trips Thompson made and Knox proceed. operating County, Indiana, and to Missouri observe hog houses. 1969, the last units were finished week October weighing 1,000 pigs 31, pounds, from 35 to 45 about
on October placed purchased and inside the units. were Como entered a loan commitment November On $247.45, agreement, a fee of on each house. Billy request,
Upon Wells submitted two let- McCormick’s containing requirements of his final material a list ters containing changes. approved some blueprint Corno’s sales McCormick, plans manager, initialed the Bud so that proceed financing. department could with the credit Como house, plans speci- so the finance would Como Thompson’s approved by had to houses fications Financing department as a Como Low-Cost Pork the sales financing completed. approval, Before after it was Como Unit financing pay statement and that the required a customer also payment Thompson Farms’ payment. down on each a down paid on house, December 1969. The down $2,981.42, paid invoices, recorded as T’s and the payment was sent to Corno. record was entered December
On Security labelled an “Installment Sale and into what purchase $10,997.76 price for the Agreement” for a loan *5 security hog interest provided a of the first house. loan made the same in that check was house. Corno’s day Farms, T Grain “Thompson Inc. and to the order of 11, 1969, Fertilizer, a similar “Install- and Inc.” On December Security Agreement” into ment entered between Sale and was amount, on the second parties the same for same house, the order of day made to and the next a check was a nor made parties. Triple. T Como the same two Neither merely houses, profit the loan covered on the sale of the actual cost after the units were finished. very delivery pigs described
At health houses, good, pigs put in the after the were but within a week arrival, signs appeared. weeks after their stress two Within McCormick, Wayne to com- Thompson contacted and Lannan signs bloody dysentery, thump- hogs plain that the showed biting, ing, their pneumonia, coughing, and ear and tail called, weights medi- uneven. A veterinarian had become ordered, purchased feeds were cation was and more medicated early February, hogs Como, improve. In did not from but pigs autopsies on performed several the veterinarian they weighing died approximately pounds, and found dysentery pneumonia. and of swine February 3, 1970, Wayne Thompson went with Lannan
On Thomp- and Matthews. to St. Louis to meet with McCormick the units: a continuous problems with son reiterated through floors, vapor strong up the slatted water draft flowed dripped on the roof and on the uninsulated metal condensed lagoon continuously wet, hogs causing cold and them be strong broke, ammonia smell froze, pipes froze and the water units, part of the floor plywood put down cover filled the piled pigs eaten manure some drafts was block day, up pigs died or three to ten up plywood, from two on the twenty man-hours consumed twelve on the units and labor day of the hour recommended Como. instead meeting, solutions, pre- and at the he possible studied had financing. suggestions requested further corrective sented financing reluctantly poultry curtains to approved for houses, waterlines open close the insulation side drafts, stop roof, pens to and the windbreakers between boxing windows, down louvers on the back sides lagoon. approved for were Loans the water level Triple T and $1,500 house, payable to for each and made were the earlier loans. Farms as during hogs were sold lived from the initial batch approxi- April March and batch That summer another *6 mately 1,000 hogs pneu- death from was introduced. loss dysentery approximately monia and of these two batches 2,000 hogs twenty-five percent. was year- promoted for
Como’s low-cost Pork had been Units forty-five thirty-five pigs round to use. Feeder introduced at weight pounds to market of 200 could be finished feed, pounds, pounds pellet each on 520 to 540 of Como represented good was rate. At the then be a feed conversion value, profit per predicted market head from a of $18 loan, producer pay which the on its would back to Como per per year. per head The discussion of head $2.00 $5.00 profit always part pitch. costs and of Her- the sales Paul rington, representative, another testified con- Corno sales cerning Finishing the Como Low-Cost Pork Units: say Yes, a “A. I most of the —that it would be would you you profit, profit, if
show of sure couldn’t sell a house.” couldn’t show a because large Keeping hogs place a number of a small would save Only day labor and time. about hour a was said necessary pigs. to check and feed the
Thompson payments made the four Farms three on Agreements” Security “Installment on Sales as follows: 31, 1970, payment $1,000, pay- March a on a June January 18, 1971, payment $1,000, ment of on last $5,145.65. following presented appeal: are issues in this allegations Thompson
I. Farms’ of error in its Were sufficiently specific correct present motion to errors appeal? an issue on adequately present errors Thompson II. Did its issues negative appealing in its to correct motion decision ? responsible principal
III. Is Corno as T’s for the Finishing of the sale two Como Low-Cost Pork Units Farms? meaning Is IV. seller within U.C.C. Article II? goods”
V. Was transaction “sale within the meaning of Article the U.C.C. II? alleged given VI. Was notice of the breach warranties required by Article U.C.C. II? Did express VII. Corno make warranties? Did the implied
VIII. transaction involve warranties of merchantability particular pur- fitness for a pose?
I. arguments. Initially, procedural We will first address Corno’s specifications appellant’s Corno contends that motion present appeal correct errors no issue because “judgment” grounds error, Farms used the word in its instead term “decision” in Ind. as used Rules of Proce- *7 dure, (A) (4) (8). Trial Rule 59 and relies, lengthy discussion, in a on decided case law1 promulgation attempt
before 59 in an TR. to find a similar purpose upon within TR. 59 to dismiss cases technical dis- tinctions. agree that is a
We
there
distinction between a “decision”
“judgment”,
that,
example,
and a
and
herein the decision
Rosenzweig
(1882),
342;
1.
v. Frazer
82 Ind.
Fletcher
Rodefer
(1883),
563;
(1968),
App. 220,
89 Ind.
Shuman v. Hauk
142 Ind.
233
Ramey
(1967),
678;
App. 500,
N.E.2d
v. Urban
141 Ind.
229 N.E.2d
836;
(1957),
App. 591,
529;
Watson v. Watson
144
Ind.
N.E.2d
(1955),
81,
Lynch
891;
Adkins v. State
234 Ind.
123 N.E.2d
v. Milwaukee
(1903),
1025;
Harvester Co.
159 Ind.
65 N.E.
Gates v. Baltimore
Ry.
& O.S.W.
Co.
Ind.
no and that merit was no the contracts there on should recover the defendant. counterclaims of defenses and affirmative Rule Burns Indiana Statutes Until-promulgation of Trial trial. Because causes for a new 2-2401 established Annotated § jurisdictional, appellate interpreted to be this statute was in the required for new trial to be worded motion courts language precise statute. specification recent as 1968 held that a
A case as of error declaring judgment new trial “the in the motion in this contrary presented question appeal to law” no matter is recognize did not such a cause for a since the statute new App. Hauk 142 Ind. trial.2 Shuman 233 N.E.2d requirement There is no such in Trial Rule 59 for precise the motion correct errors to recite the lan guage (B) specifically rule. Section states: (1968 Repl.) (Re- 2. Burns Indiana Statutes Annotated §2-2401 pealed 191, §3) provided: Acts ch. may granted 2-2401 Causes for. —A new trial [610]. following cases: Irregularity proceedings court, jury pre- First. or vailing party, court, discretion, by or order of or abuse of which party prevented having from a fair trial. jury prevailing party. Second. Misconduct of the or surprise, ordinary prudence Third. Accident which could not guarded against. have damages. Fourth. Excessive recovery, Fifth. Error in the assessment of the amount of whether large small, upon contract, too or too where the action or for the injury property. or detention of That the verdict or decision is not Sixth. sustained sufficient evidence, contrary or is to law. Newly-discovered evidence, party apply- Seventh. material for not, ing, diligence, which he could with reasonable have discovered produced at the trial. Eighth. occurring excepted Error of at the trial law making court, party may application; granting trials, and the new party applying therefor, same at the costs of allow the or on abiding suit, portion costs, costs the event of the the justice as the may equity require, taking of the case into consideration necessary. make such new trial the causes [Acts 38, 420, p. (Spec. Sess.), ch. 240.] § *8 “(B) Form of motion. A motion to correct error shall claimed, upon state the issues issues is but the error required language are not to be stated under or in the núes, by by the reasons allowed these statute or specific law. The statement of claimed shall be rather errors general, accompanied than and shall be statement grounds upon the facts and which the errors are based.” (Emphasis supplied.) requires sufficiently specific put Trial Rule a statement to alleged. particular trial court on notice of the error Finch v. State 264 Ind. not 388 N.E.2d Como does “judgment” claim proper that use of the word instead of the actually word impaired “decision” manner the task of the trial court render its decision on matters raised to in this motion to correct errors. admits that the facts grounds grounds listed would be error judgment. agree Harvey with
We Professors & Townsend that: judge the trial believes “[i]f the Motion Correct Errors interpretation be insufficient reason of a technical Rule, insufficiency specification of error charged, moving he party should order the a more make specific produce statement or to additional information.” 4 Harvey Townsend, F. Practice, W. B. p. & R. Indiana (1971). specifications grounds find the We of error and the there- adequately present under Farms’ claims of Though longer summarily error. we no will affirm trial court’s decision misstatement, because of this technical we attorneys caution to be aware of the distinction between a udgment. j decision or verdict and a
II. challenges Como next speci the form of Farms’ fications of appeals error motion correct as it errors negative appealing negative
from a decision. When decision, only question presented contrary whether decision of the trial court was Corporation to law. A.S.C. v. First National Bank Elwood 19, 167 241 Ind. N.E.2d 460. through four, Thompson Farms errone specifications In one support sufficiency ously challenges of the evidence *9 the sufficiency challenge negative A decision. court’s contrary to decision was evidence a contention that on question our consideration presents no for the evidence (1974), Corp. 160 Borden appeal. v. Town Borden Cabinet of (1972), 138; Hulst App. 312 Ver Ind. N.E.2d Hoffman App. 214. 153 Ind. 286 N.E.2d incorpo- five,
However, appellant lists specification through grounds four specified in one rates errors and the of the court are “errors conclusions of asserts such incorporation, but manner law.”3 do not recommend this We five, are ade- case, through specification issues these this quately presented for our review. alleges six, Thompson error specification
In number Farms against raised counterclaim which in the court’s decision negligent design. Thompson an issue of Farms bore burden sufficiency merely proof questioning issue; on that of that issue. of the evidence it waived consideration has supra. Corporation, A.S.C. ig- alleges appellant trial court specification
In seven establishing agency relationship between nored evidence appellant Triple “If evidence entitled T. Corno contrary it, the of the trial court was relief denied decision agency Corporation, supra at An issue of to law.” A.S.C. 462. sufficiently raised for our consideration. merely Appellant’s specification final of error is recital alleged facts; no error our review therein. is App. 141, 3. Corno cites Mitchell Lawson 145 Ind. proposition assignments N.E.2d error or such that when two or more assigned gross, jointly, good, or in such are “all reasons must be assignment appeal.” Id., on cause will be available at By specifications through p. the incorporating five, 261. one four within both contrary sufficiency might error error and the to law be under- assigned jointly. assignments sufficiently of error are stood to be clear to be understood Thus, again reject trial court. we Corno’s pre-Trial merely Rule law to affirm the trial court reliance irregularity. because a technical III. negative appeals from decision
Because only defenses, we reverse where on its affirmative conflict, substantially without evidence before the court is findings conflicting support the court has made evidence findings decision, support evidence or of its such contrary to the or conclusion which is one reasonable inference contrary is then to law. decision. Such decision court’s App. 669, DeMichaeli & Associates v. Sanders 167 Ind. N.E.2d trial court’s Farms contends failure agent of and its conclusion Triple T was an Corno find that meaning not a seller within the of that term (U.C.C.), contrary under the Code are Uniform Commercial findings, special the trial court found that In its law. *10 hog Thompson purchased Farms two houses. T sold and “Findings Fact. of Fertilizer, Triple T and Inc. constructed and 8. Grain sold hog Thomp- two houses to the slatted floored Defendant son, Farms, . . . hog purchased Triple 13. the two houses from Defendant T Fertilizer, Inc., and which billed the two houses Grain Turnkey Finishing Triple
to Defendant as T Units.” Swine in the trial But its conclusions of law court stated: Law. “Conclusions of 1. transaction between and Defendant Plaintiff Corno Farms, Inc., respect with Low Cost Finishing goods subject Pork Units was not a sale of provisions of Article the Uniform Commercial II Code.” finding
The trial court made no of law on conclusions agency.
A review of uncontradicted evidence convinces us that it Triple for the trial court to find T was unreasonable agent not an Corno.4 purchase 4. by This decision addresses two houses Triple T, responsibilities from and does not decide all Triple arising from sales T to customers.
694 representative Triple find T was a local cannot
We
its
transacting
agent
all
business
general
of Como’s
agreement
territory
dealership
is
full
dealership
since
however,
record,
we do find
before us in
record. From the
as
agency relationship
T
implied
which established
relating
agent
special
pursuant
activities
Corno’s
Marketing
Hog
Plan.
Como Full Circle
a)
Agency
relationship which results from
is defined
aas
another,
person to
the manifestation of consent
one
in his
his behalf or
b)
undertake
business
some
authority
name,
subject
control,
c)
to his
person to
act.
the other for
so
consent of
such
v.
Wayne
Company
Ft.
Lincoln National Bank
Trust
&
agent
acts
(1941),
App.
Parker
110
tive,
not be
to law
the evidence entitled
would
unless
Bishop
appellant to
Metrailer
relief which
denied.
case,
App.
this
*11
130 Ind.
Uncontradicted evidence will sometimes inferences, case, and when this is the reasonable the inference by prevail. Corpo- the trier of drawn fact will A.S.C. supra. Elwood, ration First Bank National How ever, the trial court’s conclusion found to be way the evidence is all unreasonable when one and but one proved, from the conclusion can be reached facts such conclu being contrary to the sion conclusion reached trial court.
The Triple uncontradicted evidence shows that T consented represent promote to Corno Corno’s exclusive Full meetings representa- Plan. In the first between Circle Corno’s Triple representatives, parties tive T’s discussed in design requirements detail the choice of and material Wayne finally agreed Plan. house design promote blueprint Hog Como Full Circle Marketing behalf, subject specifications Plan on Corno’s imposed within the Plan. There is no evidence that Triple promote T to undertake refused Full Corno’s Circle presented Triple program. or that T the Plan Plan as its own erecting just Triple any hog didT not consider confinement required attempt structure that a customer’s needs in an inventory from increase its own sales its of Corno feeds. The unit, engi- structure it would sell was a Como and when arose, neering employee, Billy problems Wells, T’s Wayne himself, contacted depart- the Corno sales ment direction. pursued promotion blueprint Corno’s name. logo clearly and is the Corno labeled
shows “Corno Low-Cost Finishing Triple T authorized Unit.” Pork use Marketing Hog promote Plan as a booklet tool Full Circle program. “Como Products” The words Feed followed *12 Large every page of this address, appear on booklet St. Louis and trucks. signs to the dealer’s store were attached “Corno” Bonner, well representative, Basil as as Triple T sales Herrington and representatives, Bill Paul two sales Corno Finishing as Lannan, they promoted the a that Unit testified promotional plan. company’s product part of that and Como repeatedly Thompson findings, the court to its trial refers In Finishing Pork as “Corno Low-Cost Units.” Farms’ units manager, Wayne McCormick, approved sales Mr. Corno’s hog Triple T Thompson’s proposal to have build the houses charge equal to the and price, cost materials labor and one hog products. Production houses profit, for without Plan, integral Full component Corno’s Circle and was an executing part Triple proposed method of this of the Plan T’s and to asked authorized consented Corno. was Como design, particular product paid Triple promote its and T to advertising district, approved financing Triple T’s for hog Therefore, Triple T. sold would unrea- for houses Triple T’s to find that sales houses were not sonable by Como. authorized sign representatives
Triple were authorized T to financing guaranteeing approving Plan; under the contracts bring about, specialized simply to their function was between customer, relationship a contractual which would Como financing provide the customer’s to increase investment exchange promise buy production in Corno’s feeds. signing financing, agreed By the contract customer throughout obliga- exclusively use Feeds life of Como financing every contract promise term was a made tion. This Therefore, Triple Triple Como, not to T’s T. customers were Como, contractually Triple merely while T bound purchased for distribution Corno Feeds under the conduit territory. Plan for the argument selling Triple T rests its own “Triple Turnkey use the words
product on T Swine billing Finishing invoice. T’s This Unit” contention totally all if other evidence was dis- could be reasonable disregarded. representa- Farms believed presented with the Corno Plan tives were brochure Finishing blueprint representative, Unit a Como sales at agreed they purchase product. which time no There is evidence indicate that understood *13 Triple Corno, selling of T, instead was the Unit as its own product. specifications final list the to Thomp- houses sold Farms,
son to McCormick, which was sent the also used term Finishing “Triple Turnkey T Swine Units.” Use of this label may in product these instances have identified the to the local dealer, it product identity does remove from the but component promotional product. aas of Corno’s only interpretation We conclude that the reasonable of the finding supports agency. implied evidence the Triple of T con- promotion products, sented to the undertake feed Corno’s subject designated by Corno, to the terms of the Plan as Triple consented pursuance Como authorized T’s acts in of the Plan.
We further conclude that is parties Como bound to third by all apparent scope acts within the actual or Triple T’s
authority. T, agent, acting as the Finishing when sold Units under the Plan. Como, principal, Thus responsible as is seller products purchased Corno, under this Plan. principal, As agent, liability not its must bear for all actions that occurred relating agency relationship promotion within the Full Circle Plan. person “. . . rule Indiana is that where is [T]he known contracting agent another, be as an who is known to principal, contract, authority
be if within the granted agent agent, is personally does not bind the principal.” but binds Heugel (1961), 579, Tudor App. 583, 132 Ind. 178 N.E.2d v. rev’d grounds, on other 264 280 N.E.2d Ind. University
(1972) Kiyose ; Trustees Indiana also: See App. 34, 166 Ind. N.E.2d throughout By the Corno name sales prominence design by blueprints, pre-engineered and on the brochure advertising by personal pro- restrictions, the reimbursed representatives supply offer to motion Corno Corno’s plan (financing), participate the means principal have assumed could Plan. It was Como’s own under the sales the transactions lengthy Lannan, who, means of a representative, Bill sales representatives, Thompson Farms’ con- presentation to the at Farms. two houses built them have vinced McLaughlin (1892), Brewing Co. Foss-Schneider In the 418-419, 839-840, this court App. N.E. 5 Ind. stated agency times, implied will, at from circum- . . An “. rights parties, protect stances, innocent in order agency in fact exists. The law no contract of even where upon Agency, question in therefore is well stated Mechem sec- this ‘It as a It there be stated tion 84. general *14 said: person a has held out another rule that whenever given agent capac- to him in a him act for as his authorized knowingly permitted ity; or and without dissent such has agent capacity; in or where his to act as his such other habits and course dealing reasonably to of have been such as agent, presumption that other au- the such was his warrant thorized transaction or single capacity; it a in that whether be in to act transactions, authority of in a series his capacity conclusively for him in that will be other to act such rights may necessary protect the
presumed, so far as be good in faith and have relied thereon persons third who prudence, and he of reasonable will be in the exercise agent, deny author- that such was his permitted do, provided that he assumed to do act such ized the apparent scope presumed the real or is the act within authority.’
[*] [*] [*] rule, condi- under circumstances and “. . . that when suffer, persons who made the must one two tions one circumstances possible respon- must be held and conditions just salutary sible, one.” a and is points findWe that all evidence conclusion that special agent, with Como contracted T to be its and Plan, perform authorized in its use of the Como Full Circle necessary including promotion, production all acts Finishing key product were a Units which under the Corno Plan.
V. financing in contends that it was involved transaction and cannot considered a seller of be Thompson houses to Farms. agree
We with Corno and the trial court transac- through #D, tions evidenced “In- exhibits #A each titled Security Agreement”, installment Sales were loan commit- ments entered into between Como and Farms. In agreement security each loan commitment claimed Como improved interest purchased house which was or proceeds. (1) use of the (Burns ((h) See: IC 26-1-9-105 Ed.).5 Ed.) 26-1-1-201(37) (Burns Code Code party” Uniform Commercial defines “secured Code lender, seller, person as a or other there whose favor is
security clearly qualifies interest. Corno as a lender security favor whose there is interest. IC 26-1-9-105(1) (Burns Ed.). (i) Code parties of the as to nature The intention financ- ing following transaction further evidenced resolu- adopted by the board tion directors 13,1969:
on November RESOLVED, corporation “BE IT borrow from Products, Co., Feed a division of National Oats Louis, time, Illinois, of East from St. time to such sums as necessary opinion officers, officer, corporation, of said to execute all instruments n required loan, loans, to secure said said Company.” *15 agreement However, our the court with trial loan com- were Thompson mitments entered into between Corno question validity security 5. No of the is interest raised U.C.C., under Article 9.
700 dispositive re- is not issue of Corno’s
Farms the Notwithstanding sponsibility results in as a seller. parties jurisdictions particular two other financing agency seller, re were not a a In Sherwood both 1359, Services, 1974), F.Supp. (S.D.N.Y. Diversified 701; Industries, Inc. Cash Rep. Atlas National U.C.C. Register Kan. P.2d 16 U.C.C. Co. finding Rep. a we conclude that in this case that Corno finding financing agency preclude does a acted as a seller.6 Corno also a Department responsible the sale of
Corno’s Sales hog representative houses. A Como sales solicited hog houses, directly he T to become a dealer to solicited sell hog houses, and he as customer for the conformity regularly inspected the erection of the units for necessary notify blueprints; the Sales to the Corno it was arose1, Department design problem functional whenever or department provided approval the unit and that official financing product provided. as a Como before could be person “a who contracts The code defines a seller as sells or goods.” Corno, Ed.). (Burns to sell IC Code 26-1-2-103
through agents (sales personnel and dealer work- Plan), ing within who contracted seller Farms. houses to sell two (Burns financing agency 6. The defines at IC 26-1-2-104 Code Ed.), Code “(2) ‘Financing bank, agency’ company finance or means a against person goods ordinary in course of makes advances who business arrangement either or who with or documents of title buyer ordinary course make or seller or the collect intervenes sale, payment due claimed the contract or under making against paying purchasing seller’s or draft advances taking by merely or not it for collection whether documents of agency’ accompany ‘Financing also a includes bank title or other in draft. similarly persons person who who intervenes between are buyer goods (section respect position of seller and [26-1-]2-707).” ordinary performed financing apparently “in the course services against goods,” this and did improvements. case “under the . so contract of business .. for sale” of the houses and *16 financing agency After in transaction.7 Corno also was a this approval, Financing Department completed consideration of a tradi- application. the loan total transaction was not The that, tional in instead of extend- conditional sales transaction ing credit, money in advanced to loan,8 pay Triple to form of so that T would be able quickly purchased. labor and materials it for the 1971, disagree
We with reliance on IC 26-1-2-102 Corno’s (Burns Ed.) Code to this transaction from considera- remove tion under Article II of the U.C.C.: requires, [chap- “Unless the otherwise context this article applies any to goods; apply not to transactions it does
ter] transaction which although of an form unconditional present contract as a sell operate to sale to is intended security Industries, . . .” Atlas transaction. See also: supra. agreement The security transaction, finance awas but goods whole transaction also involved the of under sale Party’ U.C.C. The use of the words “Corno . called .. ‘Secured agrees to “Thompson sell” . . called Farms . ‘Borrower’ agrees buy” who complexity reflects of the transaction parties recognize indicate that the the dual nature the transactions.
y.
warranty provisions
Article
II
Uniform Com
clearly
mercial
goods.9
are
Code
limited to the
Bona
sale
recognized
7.
agency
Some cases have
finance
that has a
participation
broader
interest or
in a transaction
than that of the
moneylender, may
usual
duty
party
incur a
to a
and be liable for losses
party
beyond
scope
sustained
privity
which occur
of its
financing responsibility.
Savings
Connor
Great Western
and Loan
Association
Rptr.
69 Cal.2d
73 Cal.
P.2d
Flamingo
224;
Fishing,
(Fla.
39 A.L.R.3d
App. 1971),
Inc. Nix
Drift
316;
Development
251
3d
App.
So.2d
Callaizakis v. Astor
Co.
4 Ill.
Although plan pre-designed, Corno’s was specially designed hog producers, area Indiana specially it was manufactured for Farms. supplied more than design professional recommendation. Thompson Farms purchased product charged for the finished unit. Company Aluminum See: America v. Corp. Electro Flo 1971), (10th 451 F.2d Cir. Rep. U.C.C. “goods”
The U.C.C. defines as follows: things “(1) (including means all ‘Goods’ specially manu- *18 goods) factured which are at movable the time of identifica- tion to the contract for money other than sale the in which price paid, the is to (article be investment securities 8 [26- things and in action. 26-1-8-406] ‘Goods’ also in- 1-8-101— young cludes the unborn growing and crops animals and things other realty identified attached to as described in goods the section on to (section realty be severed from [26-1-]2-107).” (Bums IC 26-1-2-105 Ed.). Code question arises, things the were units which were mov- able at the time of identification to the contract for sale? hog loan the contract Corno
Within refers to the houses as along “equipment” bins, augers, with the bulk waterers, feed- ers, the equipment hog and used with the Pro- houses. lending agree- printed form within the additional the
visions provided:- ment equipment the from its not remove “1. will [Borrower] Party the
physical where delivered Secured location writing Party in he first consent of Secured unless in obtains advance, equipment will not misuse the 2. abuse or [Borrower] deteriorate, except for permit not it will to be wasted transfer, encumber, ordinary tear, sell, or dis- nor wear any subjected to pose equipment permit it of the be Party charge in the of Secured unpaid without consent wirting. advance [*] [*] [*] event of his covenants 5. In the Borrower shall breach Party may agreement take under . this . . Secured peaceful equipment all its possession and exercise rights applicable under law. ingress ating of Paragraph (Provides egress 5) houses Secured the upon [*] Party default [*] house and its [*] addition agents purpose provisions right of oper- agent-seller, paying for the Triple T, responsible for ordinary labor and materials manufacturer. single completed pack- price paid T for the labor,
age, but also which included materials agreement would be Como unit included the financing. acceptable car-washing home, electricity, center have and a A mobile “goods” by Abriani Jones considered Indiana Courts. been Helvey 635; App. 556, (1976), 350 N.E.2d v. Wabash 169 Ind. 608; County App. N.E.2d REMC 151 Ind. App. 148 Ind. Abbett N.E.2d 733. gallon finding 1-million water tank which was to be that a In “goods” meaning on site constituted within assembled Appeals U.C.C., Circuit Court of stated: 7th arising ample support in under the cases UCC find “We given coverage ‘goods’ scope not to itself being but instead should be viewed as construction narrow underlying carry purpose out the scope so as broad achieving uniformity in commercial transac- Code
705 Code, 1-102, tions. terms, its own is to be § liberally construed, uniformly applied should be to achieve purposes. We believe Illinois would so decide. In present case, scarcely while the finished tank was one to be shelf, taken any authority off are we unaware specially goods manufactured small dies should be very large tank not so In the classified. words the UCC ‘thing’ this ‘specially was a ‘movable’ That manufactured.’ agreed agreed buy which PDM to sell and Brookhaven goods was not services but as defined in the UCC.” Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water (7th 1976), 572, 580,18 Co. Rep. Cir. 532 F.2d 939- U.C.C. Honeggers’ 940. See Co., (Ia. 1974), also: Winter v. & N.W.2d 316. “goods”
We are satisfied that the were houses meaning they within appar- of the U.C.C. as were ently parties so considered court. trial
VI. asserts, appeal, first time on give alleged causing Farms failed to notice of the defects claimed breaches warranties until it filed its counterclaim proceedings. trial court parties agreed accepted goods. tender of accepted, tender has When been U.C.C. provides buyer that “the must within a reasonable time after he discovers or have discovered should any notify breach the seller of breach or be barred any remedy. (3) from (Burns . . .” (a) 26-1-2-607 IC Code Ed.). Only given buyer required when has notification as (3) (a) may damages he 2-607 recover loss result § ing (Burns from his breach. seller’s IC 26-1-2-714 Code Ed.). interpreted jurisdictions
These have statutes been impose upon recovery. precedent the claimant a condition Honeggers’ Co., Inc., supra; v. Winter & L.A. Green Seed Company Arkansas Williams 246 Ark. Page 717; Camper City
S.W.2d
Home
& Mobile
Sales
Annot.,
810;
53 A.L.R.2d
(1974) ,
See:
297 So.2d
Ala.
*20
require
1976).
(Supp.
interpretation that
the notice
270
recovery
supported
the Commission’s
ment
is
conditions
2-607,
to the
as “noti
refers
notice
Comment to U.C.C. §
rights.”
buyer’s
the notifica
When
fication which saves
notice re
precedent, as this
condition
tion
a substantive
is
procedure
interpreted,
con
quirement
rather than a
been
has
complaining party’s complaint must con
precedent,
dition
against
allegation
whom the
party
of notice to
tain an
supra;
warranty
Winter,
L.A.
of
is directed.
claimed breach
City
Page, supra;
Aurora
Green, supra;
See:
of
(1975) , 263 Ind.
We precedent and (3) (a) condition notice a substantive 2-607 claiming warranty party complaint, breach in his allege given, 2-607 that notice was in accordance with must § 9(C), According Procedure, (3) (a). Rules of Trial Rule Ind. precedent, pleading performance of this condition was suf- generally that notice was Thompson Farms to aver ficient for defense, given, 1(7) which was it did in its affirmative incorporated by reference into its counterclaim Number III: duly notified of defects “That Plaintiff was warranty express
said implied warranties, houses and of the breach has failed to make but Plaintiff to the warranties.” said houses conform said per provides 9(C) denial Trial Rule also “[a] specifically made and with formance shall be occurrence Honneg particularity. .” Court in Winter v. . . The gers’ Inc., Co., supra, the federal inter & discussed similarly (c) pretation Civ. held of Fed. R. P. 9 merely put that notice was not in issue where the defendant given. generally notice was denied responded affirmative Farm’s answers general an denial. It cannot raise issue counter claims general Therefore, nonperformance no fact denial. presented question notice the trial issue as
.707 “Questions pleadings. proposition court as to a of fact presented upon trial court and which no evidence was introduced appeal.” cannot raised for the first time be Rettinger Kinzel v. App. Ind. 277 N.E.2d 913; Company Case J.I. Ind. Sandefur findings properly N.E.2d trial 519. The court no made fact concerning notice. 9(C) specifically requires
Because Trial Rule a denial aof precedent pleaded specially, interpret condition to be we this requirement supercede argument that when some evi- dence introduced, pleadings as to the of notice issue should considered to have been amended Ind. under Rules (B) Procedure Trial Rule conform to the evidence. policy promote is to 15(B)
“The behind TR. relief for a party actually forthcoming upon trial, based evidence at *21 notwithstanding by the initial pleadings.” direction set Ayr-Way Stores, (1973), 86, Chitwood v. 261 Ind. words, N.E.2d 335. In other amendments are allowed where sufficiently pleaded original facts are complaint which put party should have on notice as to the evidence presented complaint may at trial. change be amended theory recovery supported by where the facts.
However, 9(C), by requiring precedent TR. a condition to be pleaded establishes also it does not an become issue specific the defendant unless answers with denial. Evidence during describing may introduced trial the transaction facts given, include which show whether notice was but lack warranty within the notice not theories is an issue to be answering trier of determined fact unless the party pleads lacking. specific in a manner that notice was
VII. special finding, In Number trial court found: specifically did not impliedly “32. Plaintiff make warranties relative to “Corno Low Cost Pork Fin- ishing Units” but did recommend the use of same.” of ulti- this conclusion whether not indicate does The record that there found the court because drawn fact was mate actually trial court found sale, no or whether did express in the record statements that Como’s express The court went warranties. not constitute Findings 2 and Defenses Nos. find, for Affirmative under Finishing type not the of Pork best units “were that the Como rep Como did and Plaintiff or obtainable available units product “is simple statement to be.” resent same describing puffing, of fact statements but the best” would be may express capabilities found to war be product’s Equipment Corp. Klages Ordnance v. General ranties. 22; Rep. Sup. Bickett A.2d U.C.C. 240 Pa. Company (W.D.Ky. Rep. 1972), 12 U.C.C. & Grace W.R. unclear, conclusion is court’s basis Because the regarding light a sale and transfer of our discussion Farms, goods upon remand the from Como findings concerning further ex make trial court express nonexistence warranties. istence or
m hand, implied does not make an the other one On warranty. merchantability [I]mplied warranties of “. . . and fitness agreement puropse particular do not arise out
for a
between the
they may
specific
parties;
exist when
even
no
buyer.
promise has been made
seller
Intra
Service,
Inc. v. Pervo Paint Co.
state Credit
App.2d
236 Cal.
182;
Rptr.
Centrella, (1970),
46 Cal.
Vernali
*22
Sup. 476,
wise his holds himself out as knowl- edge peculiar goods practices or skill to the or involved knowledge in be attributed the transaction or to whom such or skill employment agent his or broker or intermediary other as occupation who his himself holds out having knowledge such or skill.” IC 26-1-2-104 Ed.). (Burns Code only finding the trial court to this relevant issue reads as follows: prepared by “26. In Como, brochures Plaintiff Corno held having special
itself out as expertise regard skills and with raising to the following swine in manner: prepared A. It describing the circulated brochures Hog Marketing Plan’, including ‘Como Full Circle the rec- use Finishing ommended of ‘Como Low Pork Cost Units.’ B. Finishing It recommended the use of ‘Como Low Cost Pork feed, Units’ and solicited the sale of Como products by through agents and dealers. prepared plans specifications ItC. for construction Finishing ‘Como Low Cost Pork Units’ for use its customers. represented purchasers, including 27. Plaintiff Corno Thompson Farms, Inc., that tested the has ‘Corno Low Finishing had, fact, Cost Pork Units’ certain made ” Finishing tests the ‘Como Low Pork Cost Units.’ finding The Court made no ultimate Como was mer- respect chant with houses.
However, need we not consider whether is a merchant respect with to the sale of the houses in this transaction implied warranty because we find that an of fitness particular purpose warranty does exist. Such occurs where: contracting “. . . the seller at the time has reason to goods particular purpose know for which the are re- buyer quired relying and that on the seller’s skill judgment goods, select or furnish suitable there is modified, unless excluded under the next section an *23 goods pur- warranty fit for implied be such shall Ed.). (Burns
pose.” 26-1-2-315 Code IC patricular purpose for which knew Como hog sales houses. Corno to the Como Farms intended use persuade department representatives made contacts to give presen- Wayne Thompson to a dealer and similar sales purchase Thompsons persuade them to tations to the hogs. begin production told hog Corno houses were be used. purpose units them the pigs introduced into that small would be knew they finishing completed that Mr. were autumn. when units Wayne Thompson put not to small had warned McCormick winter,” but the pigs in “in the dead batch of the units 1,000 on pigs entered the units October Wayne clearly evidence shows The uncontradicted adequacy Corno-type skeptical about the However, he had in the he testified that confidence house. and he consented build houses name brand relying judgment on their on skill because he operations. His reliance was their reinforced confinement particular eagerness to finance that house. specifically provides the
The Code method ex- implied or elusion modification warranties: Subject modify “(2) to subsection or exclude merchantability warranty any part or implied of it the the of a any implied a merchantability language must mention and in the case writing conspicuous, modify and to must be exclude warranty the exclusion must be fitness conspicuous. Language writing implied to exclude all states, example, if of fitness is sufficient warranties that beyond are extend ‘There warranties which no ” description the face hereof.’ Notwithstanding (2) (3) subsection (a) indicate unless circumstances all im- otherwise plied expressions are excluded language like ‘as is’ warranties ‘with understanding which in all or other common faults’ buyer’s calls the attention exclusion of warranties no plain implied warranty; there is and makes (b) buyer entering when the into the before contract goods sample fully has examined the or the or model as he goods desired or has refused examine there implied warranty regard no with to defects which an ex- amination ought circumstances to have revealed to him; and (c) implied warranty can excluded modified also be *24 by dealing usage course performance or course of Ed.). trade.” (Burns (Emphasis IC 26-1-2-316 Code supplied.) Record discloses no evidence of disclaimer of the implied warranty particular purpose fitness for the of rais- ing hogs. Therefore, small it remained full at the force time of Wayne Thompson inspected the sale. and Robert Loogootee, Como unit in However, Indiana. that examination was in the necessarily fall and would not have revealed the problems by to be caused winter weather or hot summer weather.
Whether implied warranty fitness, Como breached its damages and the questions amount of are of fact for trial court. We must therefore remand this cause for further find- ings holdings consistent with this Court’s that Como was the hog seller of the Thompson Farms, through agent houses to Triple T, and implied warranty that an of fitness for a par- purpose ticular existed in the transaction.
We reverse and remand for further action not inconsistent opinion. with this
Lowdermilk, J., concurs; Garrard, J., (participating des- ignation) part, part concurs in opinion. dissents in with
OPINION PART CONCURRING IN AND
DISSENTING IN PART agree J. I do not that the facts of this case in the Garrard, dispute between Como (Corno) Feed Products Farms, (the buyer) properly can be characterized as a goods” bring “sale of parties’ dealings so as to under Article 2 of the Uniform See, Commercial Code. 26- IC 1-2-102,105. did,1
However, apparently the trial do not believe as court I buyer’s conten- dispositive of the this determination is warranty. tions toas breach of pretrial a contract between Corno order asserted gave implied buyer express warranties which rise respecting a buyer
which the breached asserted were majority, facts, forth in detail house. The are set which hog feed promote the sale of disclose Como desired Hog Full Circle it manufactured. it devised Como To do so encourage designed Marketing farmers plan Plan. The engage raising Thus, de- pigs feeder for market. signed reasonably priced slatted-floor house raising promoted pigs profitably with as means expenditure plan time Corno little the farmer. Under agreed hog houses as well to finance the of such construction arrange- provided acquisition pigs It to be fed. they size. pigs reached market ments sale of the when agreement by the farmer plan The condition of was an agree- financing during the life use feeds *25 Corno, directly that ments. In this there no doubt case is negotiated implementation agreed buyer for with the allegedly defec- plan. beyond question of the It is that the also buyer design upon the tive of house the basis the is premises any liability of Como.
Under these it I believe is immaterial whether circumstances party supplied the third who the materials constructed and/or according approval plans speci- the house to its Corno’s agent merely independent fications was or con- similarly It its feed tractor. is immaterial whether Como sold through agent through its a dealer. There was bar- own gained-for buyer meeting of minds between and the the special findings 1. court that the situa- of the trial determined goods by reading tion a sale Corno. A fair of the did constitute findings other determination the court found that Corno that and the court’s conclusions indicate because of this obligations. warranty no had 2 Court’s conclusions 1 as Affirmative No. 1. Defense
713 plan. under such without use While circumstances finding majority’s special agency difficult ascer is constituting consideration, tain a no such benefit to Corno necessary benefit is formation of a valid contract. buyer
consideration arises from the detriment
incurred
through
adoption
plan
of the
of the
house.
use
Glasgow
(1884),
175;
Pitcher
v. Hobbs
Dove
99 Ind.
v.
(1869),
(1965),
440;
Ind.
Timberlake v. J.R. Watkins Co.
32
909,
554,
App.
App.
138 Ind.
N.E.2d
reh. den. 138 Ind.
209
Turning question warranty, then to the Williston “implied warranty” the term to warranties be restricted implied by (3rd Ed.) 4 Indi law. Williston on Contracts § e.g., appear (See, ana decisions amenable to this limitation. 300; Theis (1972), Hewer 280 N.E.2d Ind. Carmichael Lavengood App. v Ind. N.E.2d . 177; App. 1005) Hitz Warner Ind. 93 N.E. express warranty and it accords with the broad definition of Code, found in the Uniform Commercial IC 26-1-2-313: “(1) Express warranties the seller are created as fol- : lows (a) any promise affirmation of fact or made buyer goods seller which relates to the and becomes
part ranty promise. bargain express of the basis of creates an war- goods shall conform to the affirmation or (b) goods description of part which made bargain wárranty express basis creates an goods description. shall conform to (c) any sample part or model which is made the that the bargain express warranty basis creates an goods sample whole of the shall conform to the or model. (2) necessary express It is not to the creation of an war- ranty that the use seller formal words such as ‘warrant’ ‘guarantee’ specific or that he have a to make intention *26 warranty, merely an but affirmation of value of the the goods merely purporting or a statement the seller’s opinion goods or commendation the of does not create a warranty.” spe- similarly apart from defined warranty
Express has been code adopt commercial the therefore cial statute.2 I would warranty for express general definition as the definition purposes contract law. for a determination therefore be remanded case should n which. were express warranties made whether .Como by damages suffered
breached, so, and, the extent if buyer. the my view, not, within contract with Como
Since the ,code,, implied warran- the of the commercial sales .article the directly applicable. The are 26-1-2-314 ties ICof imply apparently not rule warranties. traditional would Compare, purposes. particular merchantability or fitness (1976), Ind. &.Co., however, Brown Barnes v. Mac supra. Heuer, 619; Theis v. 342 N.E.2d recognized long that a hand, has Indiana On per duty may reasonable care to use promisor owe contemplated the contract. Where formance of matters an maintain promisee duty breached arises Walling Mfg. v. Beckett negligence. Co. Flint & action for appears to me that It 503. Ind. 79 N.E. theoretical, (as liability opposed to imposed in such a case liability) under circumstances such or doctrinal basis for liability imposed for closely approximate mer might chantability. appropriate
However, case to do not this is I believe given to these similari- effect to be determine the extent and findings,- request permitted court, ties.- findings buyer’s general counterclaim for make quality thing sold, (not condition of the “An affirmation of opinion belief).made the seller at as a matter the time uttered buyer assuring purpose sale, truth of the facts of affirmed, relied on for the purchase, inducing him to make the if so received and and by express warranty.” purchaser, Shippen is an Bowen 30 L. Ct. Ed. 1172. 122 U.S. 7 S. *27 negligence. Procedure, 52(D). Indiana Rules of Trial Rule It against buyer support found evidence to there was that result. liability, any,
I would for a reverse determination of if express warranty. of Como for breach of Reported at 366 N.E.2d
Note. —
