No. 12613 

IN THE SUPREME COURT OF TF'E STATE OF MONTANA 

1974 

CHARLES S PURGEON, 

Plaintiff and Respondent, 

JAMIESON MOTORS, a corporation, 

Defendant and Appellant. 

Appeal from: District Court of the Twelfth Judicial District, 

Honorable Thomas Dignan, Judge presiding. 

Counsel of Record: 

For Appellant : 

Burns, Solem and MacKenzie, Chinook, Montana 

William M. Solem argued, Chinook, Montana 

For Respondent : 

Sias and Hendrickson, Chinook, Montana 

Oscar Hendrickson argued, Chinook, Montana 

Submitted: March 19, 1974 

Decided : @R 2 5 1974 

Filed : a 2 5 1974 
Mr. Justice Wesley Castles delivered the Opinion of the Court. 

This is an appeal from a judgment of the district court 

of Blaine County, sitting without a jury, in favor of the plaintiff in an action to rescind a purchase contract for breach of 

warranties. 

Defendant, Jamieson Motors, is a corporation engaged in I 

the business of selling machinery. Plaintiff, Charles Spurgeon, 

is engaged in farming and ranching operations. In January 1970, 

plaintiff entered into a contract to purchase from defendant a 

used 16' Case Combine approximately ten years old for the sum of 

$1,700. Prior to entering into the contract, plaintiff examined 

the combine and it was agreed that certain work would be performed on the combine and that it would be made "field ready". The 

agreed-upon wark was performed and the combine was "field ready" 

when plaintiff took delivery. 

Plaintiff took delivery of the combine in July of 1970 at 

defendant's lot and drove it some 62 miles over gravel roads to 

his farm. Early in August, 1970, plaintiff began to use the combine to harvest grain; after harvesting approximately five acres, 

the variable drive on the combine broke. After 5 or 6 repair 

attempts by plaintiff and defendant approximately 15 more acres 

were harvested. The combine then broke down again and was not 

repaired until mid-November 1970. In 1971 plaintiff used the 

combine to harvest approximately 5 acres and again the combine 

broke down. After repairs, 3 more acres were harvested and then 

the straw walker broke. Plaintiff phoned defendant and defendant 

offered the use of another combine. Plaintiff refused this offer 

and hired combines to finish the harvest of his 1971 crop. In 

September, 1971, plaintiff returned the combine to defendant's lot. 

Subsequently, defendant offered to repair and attempt to sell the 

combine on plaintiff's behalf but no agreement was reached. 
The only representations made as to the condition of the 

combine were that it would be "field ready" when delivered. The 

district court found that the combine was in fact "field ready" 

when plaintiff took possession. The purchase contract was for 

a "used combine" and provided in pertinent part: 

" * * * This warranty is in lieu of all other 

warranties, expressed, implied, or statutory, and 

all other obligations or liabilities on the part 

of the Dealer and Company. No representative of 

the Company has authority to change the terms of 

this warranty in any manner whatsoever and no 

assistance to Purchaser by the Dealer or Company 

in the repair or operation of the Case product 

shall constitute a waiver of the conditions of 

this warranty, nor shall such assistance extend 

or revive it. This warranty does not apply to 

used or second-hand machines." (Emphasis added.) 

Undisputed testimony in the record indicates that the custom and 

usage in the area was that used machinery was not warranted. The 

only exception to this practice was the so called 50-50 warranty 

given on late model equipment under which the dealer pays onehalf the cost of repairs and the purchaser pays the other half. 

During 1970 and 1971 defendant paid one-half the cost of repairs 

to the combine. In 1970 plaintiff paid the other half. Plaintiff 

refused the cost of one-half of the repairs in 1971 thus giving 

rise to defendant's counterclaim for $139.90, which represents 

one-half of the cost of repairs performed during 1971 at plaintiff's 

request. 

The district court based its judgment for plaintiff on 

conclusions of law that the implied warranties as to merchantability and fitness for purpose of use were not met, and that plaintiff 

returned the combine within a reasonable time after discovery of 

the breach of these warranties. 

Plaintiff raises two issues on this appeal. First, that 

the district court erred in finding implied warranties of merchantability and fitness for purpose applicable. Second, that even 
if the warranties of merchantability and fitness for purpose were 

applicable it was error to find that plaintiff rescinded within 

a reasonable time. 

Defendant raises three separate arguments in support of 

the contention that the district court erred in finding implied 

warranties of merchantability and fitness for purpose applicable. 

First, defendant asserts that the warranties did not apply to 

used goods. Second, defendant claims that the implied warranties 

were excluded under the terms of the contract. Finally, he asserts 

that the warranties were excluded by usage of trade. If any one 

of these claims are valid, then it will be unnecessary to consider 

any of the other issues raised. 

The implied warranties on which plaintiff relies are 

created by 87A-2-314, R.C.M. 1947, which provides: 

"Implied warranty--merchantability--usage of 

trade. (1) Unless excluded or modified (section 

87~-2-316) ; a warranty that the goods shall be 

merchantable is implied in a contract for their 

sale if the seller is a merchant with respect to 

goods of that kind. Under this section the serving 

for value of food or drink to be consumed either 

on the premises or elsewhere is a sale. 

"(2) Goods to be merchantable must be at least 

such as 

"(a) pass without objection in the trade under 

the contract description; and 

"(b) in the case of fungible goods, are of fair 

average quality within the description; and 

"(c) are fit for the ordinary purposes for which 

such goods are used; and 

"(d) run, within the variations permitted by the 

agreement, of even kind, quality and quantity within 

each unit and among all units involved; and 

"(e) are adequately contained, packaged, and 

labeled as the agreement may require; and 

"(f) conform to the promises or affirmations of 

fact made on the container or label if any. 

"(3) Unless excluded or modified (section 87A-2-316) 

other implied warranties may arise from course 

of dealing or usage of trade." 
Section 87A-2-315, R.e;M. 1947, provides: 

"Implied warranty--fitness for particular purpose. 

Where the seller at the time of contracting has 

reason to know any particular purpose for which 

the goods are required and that the buyer is relying on the seller's skill or judgment to select 

or furnish suitable goods, there is unless excluded 

or modified under the next section an implied warranty 

that the goods shall be fit for such purpose." 

The warranties created by these two sections are limited by 

section 87A-2-316, R.C.M. 1947, which provides: 

"Exclusion or modification of warranties. (1) Words 

or conduct relevant to the creation of an express 

warranty and words or conduct tending to negate 

or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to 

the provisions of this chapter on par01 or extrinsic 

evidence (section 87A-2-202) negation or limitation 

is inoperative to the extent that such construction 

is unreasonable. 

" (2) Subject to subsection (3), to exclude or 

modify the implied warranty of merchantability or 

any part of it the language must mention merchantability and in case of a writing must be conspicuous, 

and to exclude or modify any impl&ed warranty of 

fitness the exclusion must be by/writing and conspicuous. Language to exclude all implied warranties 

of fitness is sufficient if it states, for example, 

that 'There are no warranties which extend beyond 

the description on the face hereof.' 

" (3) Notwithstanding subsection (2) 

" (a) unless the circumstances indicate otherwise, 

all implies warranties are excluded by expressions 

like 'as is,' 'with all faults' or other language 

which in common understanding calls the buyer's 

attention to the exclusion of warranties and makes 

plain that there is no implied warranty; and 

" (b) when the buyer before entering into the contract has examined the goods or the sample or model 

as fully as he desired or has refused to examine 

the goods there is no implied warranty with regard 

to defects which an examination ought in the circumstances to have revealed to him; and 

" (c) an implied warranty can also be excluded or 

modified by course of dealing or course of performance or usage of trade. 

"(4) Remedies for breach of warranty can be limited 

in accordance with the provisions of this chapter 

on liquidation or limitation of damages and on contractual modification of remedy (sections 87A-2-718 

and 87A-2-719) ." 
Applied to the facts of this case provisions of 

87A-2-316(3)(c), R.C.M. 1947, which provide for the limitation 

of warranties by usage of trade are particularly relevant. 

Section 87A-1-205(2), R.C.M. 1947, defines the term usage of 

trade saying: 

"A usage of trade is any practice or method of 

dealipg having such regularity of observance in 

a place, vocation or trade as to justify an expectation that it will be observed with respect 

to the transaction in question. * * *" 

Undisputed testimony in the record indicates that used farm 

machinery, particularly used combines, was not warranted with 

the exception of the 50-50 warranty under which each party to 

the transaction paid for one-half of the cost of repairs. If 

the plaintiff-purchaser was or should have been aware of this 

trade usage it will effectively exclude the warranties on which 

he relies. 

Preliminary to a discussion of plaintiff's knowledge, it 

should be noted that he owned a large farm-ranch operation and 

had been in the farming business for a substantial length of time. 

While there is no direct evidence by the plaintiff in the record 

which shows that he was aware of the trade usage with regard to 

used equipment, it is not disputed that he paid for one-half , of 

the repairs during the first year he had the combine. This willingness to pay in part for repairs is inconsistent with the existence of the warranties plaintiff now claims existed. Plaintiff 

bargained for a combine warranted to be "field readyn when he 

took delivery and this he received. He knew or should have known 

that used machinery was customarily not warranted beyond a sharing 

of the cost of repairs, and he acquiesed for more than a year in 

this arrangement with regard to the used combine. From this it 

appears plaintiff was aware of the usage of trade limiting warranties on used machinery and that accordingly the implied warranties 
of merchantability and fitness for purpose are excluded. 

Since we have held the warranties relied on by plaintiff 

to be inapplicable, it is not necessary to determine whether 

or not return of the combine occurred within a reasonable time. 

The judgment of the district court is reversed and the 

cause remanded for further proceedings not inconsistent with the 

foregoing. 

We concur: . 

' f- ,/ . ' i 

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Chief Justice ,f-" 

u Ju tices