Title: HARRINGTON v HOLIDAY RAMBLER CORP
Citation: N/A
Docket Number: 13662
State: Montana
Issuer: Montana Supreme Court
Date: January 13, 1978

No. 13662 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977 MOODY J. HARRINGTON and V I C ~ HARRINGTON, husband and wife, Plaintiffs and Respondents, -vs- HOLIDAY RAMBLER CORPORATION, Defendant and Appellant. Appeal from: District Court of the Eighth Judicial District, Hon. Nat Allen, Judge presiding. Counsel of Record: For Appellant: Church, Harris, Johnson & Williams, Great Falls, Montana Donald LaBar argued and Earl Hanson argued, Great Falls, Montana For Respondents: Hoyt and Bottomly, Great Falls, Montana John Hoyt argued and Tom Lewis argued, Great Falls, Montana Submitted: November 28, 1977 ~ecided: JAN 1 3 1978 JAN 1 3 1978 M r . Justice Gene B. Daly delivered the Opinion of the Court: P l a i n t i f f s Moody J. Harrington and Vicki Harrington commenced t h i s action i n the District Court, Cascade County, alleging fraud and breach of warranty t o recover damages from alleged defects i n a travel t r a i l e r purchased by them from Holiday Rambler Corporation. The jury returned a verdict for both general damags and punitive damages i n favor of Harringtons. From t h i s f i n a l judgment Holiday Rambler appealed. Holiday Rambler is a manufacturer of travel t r a i l e r s and s e l l s these t r a i l e r s to qualified independent dealers throughout the United States, who i n turn s e l l directly t o the public. The t r a i l e r involved i n the instant l i t i g a t i o n i s a 1972 model Holiday Rambler Travel Trailer constructed by defendant i n Wakarusa, Indiana, i n September 1971. Similar t o the auto- mobile business, the travel t r a i l e r business manufactures some of the new models prior to the beginning of a calendar year, and the travel t r a i l e r i n question here was one of the f i r s t of the 1972 models produced i n the f a l l of 1971. It was 8 feet wide and 31 feet long with tandem axles. A n independent Spokane, Washington dealer, Don King, transported the t r a i l e r t o Spokane from the factory a f t e r a dealers' meeting i n September 1971. Before the t r a i l e r l e f t the factory its various components, including the LP gas system, plumbing system, water system, and e l e c t r i c a l system were checked and approved. The dealer, Don King, who was never made a party t o the action, but t e s t i f i e d the same systems were checked for the Harringtons prior t o the time they purchased the t r a i l e r and took delivery i n Spokane, Washington, on March 6 , 1972. - 2 - The t o t a l purchase price of the travel t r a i l e r was $9,506.90. They paid $2,506.90 down, and the remaining balance of $7,000 was financed over 7 years a t 1 2 percent interest. O n March 11, 1972, the Harringtons l e f t Spokane for Great Falls, Montana and a f t e r they settled i n Montana they complained of defects i n the t r a i l e r t o Holiday Rambler. A t that time Holiday Rambler offered, i n writing, t o make repairs t o the t o t a l satisfaction of the Harringtons without cost only i f the Harringtons would bring the t r a i l e r to the factory a t Wakarusa, Indiana. They refused t h i s offer of repair and insisted on a new t r a i l e r . I n August 1972, the t r a i l e r was parked adjacent t o the home of the Harringtons' attorney and l e f t there u n t i l the time of t r i a l i n November 1976. It was stored outside, exposed t o the elements and was vandalized on one occasion. The warranty had several months t o run a t the time the t r a i l e r was l e f t with the attorney. After the t r a i l e r was parked a t the l o t of their attorney no repair requests were made by the Harringtons, no e f f o r t s were made t o either repair or s e l l the t r a i l e r , and it was abandoned and depreciating u n t i l the time of t r i a l . Monthly payments to the finance company eventually ceased i n l a t e 1973. Holiday Rambler defended principally upon the grounds the Harringtons intentionally relinquished any claims they might otherwise have had a f t e r they rejected the clear, unequivocal offer t o repair made by Holiday Rambler t o Harringtons. Further, Holiday Rambler claimed that Harringtons failed to mitigate t h e i r damages and contended it never was given a reasonable opportunity t o repair the travel t r a i l e r . The case was t r i e d before a jury commencing on November 8, 1976 and continued u n t i l November 11, 1976. The jury returned a verdict i n favor of p l a i n t i f f s and against defendant, assessing $17,691.90 i n general damages and $20,000 i n punitive damages. The issues presented for review are: 1. Whether the verdict for general damages i n favor of p l a i n t i f f s was supported by substantial credible evidence? 2. Did the court commit reversible error i n overruling defendant's objection t o p l a i n t i f f s ' testimony concerning opinions a s t o causation of physical illness? 3. Did the court commit reversible error i n giving p l a i n t i f f s ' proposed instruction on punitive damages? 4. Did the court commit reversible error i n giving p l a i n t i f f s ' proposed instruction on "implied malice"? 5. Did the court commit reversible error i n denying defendant's motions for directed verdicts on the issues of: a. actual fraud; b. constructive fraud; and c. s t r i c t l i a b i l i t y . Issue 1. In Strong v. Williams, (1969), 154 Mont. 65, 68, 460 P.2d 90, t h i s Court said: "It i s well settled i n t h i s jurisdiction t h a t wherever there i s a conflict i n the evidence t h i s Court may only review the testimony for the purpose of determining whether there i s any substantial evidence in the record t o support the verdict * * *. Where the evidence is conflicting, but substantial evidence appears i n the record t o support the judg- ment, the judgment w i l l not be disturbed on appeal * * *." See also: Kirby v. Kelly, (1972), 161Mont. 66, 504 P.2d 683; Davis v. Davis, (1972), 159 Mont. 355, 497 P.2d 315. It is apparent from the record that the jury as a matter of law misconstrued the court's instruction on the measure of damages for breach of warranty i.e., the difference between the value of the goods accepted and the value they would have had i f they had been as warranted. The jury awarded the sum of $12,691.90 for the t r a i l e r a s a part of the general damages. The t o t a l price paid by p l a i n t i f f s for the t r a i l e r was $9,506.90. That price included options and services which were sold t o them directly by Don King Trailer Sales and were not warranted products on the t r a i l e r when the t r a i l e r was sold by Holiday Rambler t o Don King. These added options and services had a t o t a l value of $1,506.90. The jury awarded the value of the entire r e t a i l value of the t r a i l e r , the value of a l l the services and options supplied by Don King, and i n addition awarded the t o t a l amount of time charges for the entire amount of the sales contract, a l l of which amounted t o $12,691.90. Although there a r e but a few cases on t h i s point, it is the rule of law that a consumer purchaser cannot recover the purchase price from the manufacturer who was not a party t o the s a l e on the grounds of breach of warranties. Carlson v. Shepbxd-Pontiac, Inc., (1970), 63 Misc.2d 994, 314 N.Y.S.2d 77. The reason for t h i s rule i s apparent i n the instant case. The defendant, Holiday Rambler, did not receive the sales price. The actual sales price which included the dealer's profit was received and retained by Don King, the independent dealer, who was not a party t o t h i s action. The only money received by Holiday Rambler was the wholesale prfce which was paid by Don King t o Holiday Rambler. Therefore, Harringtons would have to join the dealer a s a party and sue for recission t o recover the f u l l purchase price, which included the dealer's profits. This, p l a i n t i f f s failed t o do. The jury awarded damages for the f u l l purchase price which included the brake controls, awning, t r a i l e r hitch, a l l i t e m s not manufactured o r supplied by Holiday Rambler. Also, Holiday Rambler had no part i n the financing, which was handled through the dealer. Holiday Rambler contends that it is a universal rule that a party must mitigate a l l of h i s damages. Holiday feels that Harringtons' failed t o mitigate damages by not having the t r a i l e r repaired by a third party, failing t o cover by purchasing a substitute t r a i l e r and continuing t o use the t r a i l e r a f t e r they knew of defects. This doctrine of avoidable consequence is properly stated i n Spackman v. Ralph M. Parsons Co., (1966), 147 Mont. 500, 505, 414 P.2d 918, 921, where t h i s Court held: "The duty t o reduce o r mitigate damages i s a positive one upon the injured person, but it has l i m i t s . The t e s t is: What would an ordinary pru- dent person be expected t o do i f capable, under the circumstances?" The record discloses the Harringtons did everything within their power t o have the t r a i l e r repaired by the authorized Holiday Rambler dealer. They did not take it t o a third party t o be repaired because they were fearful of voiding the warranty. A suggestion that Harringtons should have t o buy another t r a i l e r for some $9,000 i s clearly not within the doctrine. Harringtons had no other choice but t o use the t r a i l e r a f t e r they discovered the defect. It was serving a s the family home because of a severe housing shortage i n Great Falls when the family arrived there. A s stated, the jury i n awarding damages failed to: (1) Subtract out accessories and services totaling $1,506.90 for which Holiday Rambler did not warrant and is not liable. (2) Take into account that Holiday Rambler i s not l i a b l e for finance charges which totaled $3,185. There i s substantial credible evidence t o support a proper verdict computed as : General Damages Given by District Court $17,691.90 Less Services & Accessories -1,506.90 Less Finance Charge -3,185.00 Proper award $13,000.00. Issue 2. Holiday Rambler contends the t r i a l court erred i n overruling its objection t o unqualified opinion evidence given by M r . Harrington regarding causation of physical illness. Har- ringtons presented no medical testimony of a physician. They presented no copies of medical records o r b i l l s of any doctor o r hospital. The only proof of any physical sickness caused the Harringtons due t o defects i n the t r a i l e r was given by the Harringtons themselves. The testimony given by Moody Harrington should not have been admitted over objection of counsel. The testimony speculated a s t o the cause of sickness incurred by Harringtons while living i n the t r a i l e r . Moody Harrington was not qualified t o make such conclusions and a l l h i s testimony was self-serving. However, t h i s error by the t r i a l judge was harmless i n view of testimony of physical injury and i l l n e s s t o the Harringtons by way of Vicki Harrington which was admitted into evidence without objection of defense counsel. This testimony was, i n part: "Q. N o w were there any other defects i n the t r a i l e r that you noticed? A. Yes, there were. "Q. Tell the jury about those? A. The front window i n the t r a i l e r leaked, and there were some sharp edges on the table, and m y daughter cut her finger twice on that. "Q. Now, was there a gas leak i n the t r a i l e r a t any time? A. Yes, there was, a serious gas leak. "Q. A l l right, how serious? A. Well, for three weeks we kept getting sick, w e l l , I should say, the children and I, you know, because m y husband was gone quite a b i t of the time, and so we were getting sick more than he did. The way it started out, I started getting headaches galore, and was nauseous a l l the t i m e , i n fact, I thought that there was maybe some- thing e l s e that was wrong, which there wasn't, but w e just kept getting sicker and sicker, and the headaches wouldn't go away, and i f w e went away for a v i s i t , o r went shopping for the day, the headaches would disapper, and we would come home a t night, and we would be i n the t r a i l e r for t h i r t y minutes, and the headaches would s t a r t again, and so I had started taking the children that time to the A i r Force doctor, you know, out a t the base, and he thought that w e had a mild case of the f l u , so he said for us t o eat- just plain toast, and plain soda crackers, and tea, but not t o take solid food for awhile, so t h a t ' s the food that we stayed on for approximately ten days, because it j u s t kept getting worse, and finally I kept thinking, 'Well,' I says, 'the odors were smelling so bad, that I've got t o do something,' so I got hold of Modern Equipment Company, and I told them that I suspected that there might be a gas leak, but I don't know for sure, but something i s certainly making everybody sick, and it j u s t hasn' t gone away, and I didn' t think by that time that it was the f l u , because there was no diarrhea o r any of the other symptoms which, you know, a person might have with the flu, so Modern Equipment came out, and, sure enough, there was a gas leak, and underneath the burner, you know, would be the, well, the second burner i n t h i s way that you turn on, the man discovered i n the copper tubing that comes out, you know, t o put the gas in, you know, that come up t o where you turn the button on, there was a defective hole underneath there, and t h a t ' s where the gas was escaping from, so he went ahead and cut t h i s piece out, and fixed it. "Q. And then did you al'l get well? A. Yes sir, we did. "Q. What was the next thing, then, that you discovered was wrong with the t r a i l e r ? A . Well, i n the kitchen area, the paneling overhead f e l l down i n the kitchen area also, as well a s the paneling i n the living room. "9. Also the paneling i n the kitchen? A . Yes. "Q. A l l right, and then a f t e r that, M r s . Harrington, what happened? A. Well, a f t e r that I started noticing that there were odors i n the t r a i l e r , and when I say ' l i k e odors' it was l i k e that maybe there was, oh, like for instance you l e f t a window open, and there was an outhouse close by. "Q. Did these odors bother you? A. Yes, they did. "Q. H o w bad did these odors get? A. Well, they got t o the point that i f you were trying t o e a t your dinner, the odors i n the t r a i l e r itself,you know, it was certainly quite evident that the odors were there, and w e had a terrible problem trying t o e a t , and I used a great amount of Lysol and other s t u f f , you know, trying t o get r i d of that odor, but i t would not go away. "Q. Did your children complain a t a l l about these odors i n the t r a i l e r ? A. Well, not t o the point that they complained about the odors i n the t r a i l e r so much, but they knew that the odors, well, m y daughter mentioned t o m e that her bedroom smelled funny. "Q. And did these odors affect the food that you had i n the t r a i l e r ? A. Yes, they did. "Q. I n what manner? A. Well, for instance, I had graham crackers i n there, and I had Ritz crackers, and 1 had cookks, oh, l e t m e see, those were Oreo cookies, and I had those up i n the cabinet, and I had Rice Krispies stored up there i n the cabinet too, and when I would go t o feed m y daughter t h i s food, oh, l i k e giving her a bowl of Rice Krispies before she would go t o school. and she kept on saying, 'Ahhh, don't make me eat that s t u f f , ' she said, because she said it was making ' her sick, and I said, 'Well, you've g,ot to eat, I says, I Because you've got t o go to school,' and she kept on refusing t o e a t her food. Well, I would make her eat it, you know, because she had to have her food, and she would throw up. "Q. And who i s 'she?' A. M y daughter, Sharon. "Q. And how old was she then? A. That time about five and a half. "Q. And Sharon would become ill? A. Yes sir. "Q. Now, how much concern did you have, Mrs. Harrington, for yourself, and your children, when they got so sick and so ill, and when you had a l l of these problems that you have told t h i s jury about? A . W e l l , it made m e very upset, well, not only upset, but a s well a s ill, due t o the f a c t that I having t o have t o take the children t o the doctor when I was sick. "Q. This would cause you additional problems, is that right? A. Yes sir." There is ample evidence in the record that the ~arrington family suffered emotional distress at the hands of Holiday Rambler. This Court in McGuire v . American Honda Co., (1977), Mont . , 566 P.2d 1124, 34 St.Rep. 632, relied on lay testimony of the plaintiff, his wife, and the plaintiff's cousin in determining that there was substantial credible evidence in support of the plaintiff's theory of causation. The testimony of Vicki Harrington, all of which went into evidence without objection, is admisszble to show that a manufacturing defect caused these injuries. Issue 3. Holiday Rambler contends the Court erred in giving plaintiffs' instruction on punitive damages. It character- izes this case as one arising under contract in an attempt to bring the case within the limitations of section 17-208, R . C . M . 1947, which provides: 11 Exemplary damass--in what cases allowed. In any action for a breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, the jury, in addition to the actual damags may give damages for the sake of example, and by way of punishing the defendant ," (Emphasis added. ) It is clear that in ~ontana, and generally, a party may not pursue both an action for recission and damages for deceit or misrepresentation. Fraser v. Clark, (1960), 137 Mont. 362, 376, 352 P.2d 681, On the other hand, an action on the contract - and an action for fraud or misrepresentation in the inducement of the contract are not incompatible. See: Miller v. Fox, (1977), Mont . - 3 P.2d , 34 St.Rep. 1367; Paulson v. Kustom Enterprises, Inc., (1971), 157 Mont. 188, 483 P.2d 708; Falls Sand 6 Gravel Co. v . Western Concrete, Inc., (1967), 270 Here, it was gipulated by the parties that the p r e t r i a l order should supersede the e a r l i e r pleadings. I n the p r e t r i a l order Harringtons alleged Holiday should be made t o pay punitive damages because of fraud, malice and oppression by its unjusti- fiable, deceptive and deceitful conduct i n misrepresenting the type and quality of its t r a i l e r t o people such as p l a i n t i f f s and t o the consumer public a t large. It is clear from the record and the pfeerhl order that Harringtons were bringing t h i s case i n t o r t , separate and distinct from any action arising out of contract. This case would f a l l within the parameter of Miller v. Fox, supra; Paulson v. Kustom Enterprises, Inc., supra; and Falls Sand & Gravel Co. v. Western Concrete, Inc., supra. Therefore punitive damages were properly considered. Issue 4 . The court did not e r r i n giving an instruction on implied malice. Section 17-208 authorizes exemplary damages where the defendant "* * * has been guilty of oppression, fraud, o r malice, actual o r presumed * * *.'I The instruction i n question advises the jury that it is not necessary t o show actual malice to recover punitive damages. This instruction i s a correct statement of the law. Issue 5. Holiday Rambler, a f t e r instructions were s e t t l e d , made a motion for a directed verdict on the grounds there was no evidence t o support an award for fraud, actual o r constructive, and no evidence t o support damages for s t r i c t l i a b i l i t y i n t o r t under §402A, 2 Restatement of Torts 2d. I n reviewing the record there was evidence of both actual and constructive fraud and the court properly allowed these issues t o go t o the jury. Evidence for recovery under $40294, 2 Restatement of Torts 2d, presented for jury consideration included numerous defects and the effect on the family, including: 1. A floor which sagged. 2. A defective hot water tank. 3. A defective septic tank. 4. A defective bath tub drain. 5. A defective gas connection t o stove. This Court i n MacDonald v. Protestant Episcopal Church, (1967), 150 Mont. 332, 336, 435 P.2d 369, stated: "* * * I n ruling on the motions for dismissal and a directed verdict, the court must view the evi- dence i n the l i g h t most favorable to the plaintiff and i f a prima facie case i s made out the motion should not be granted * * *." Here, when applying the rule stated above, the evidence presented was entitled t o jury consideration and therefore the directed verdict was properly denied. The judgment of the District Court i s affirmed except for the dollar amount of the damage award. W e s t r i k e the sum of $4,691.90 from the general damage judgment and a s modified i s affirmed i n the amount of $13,000.00. // Justice r W e Concur: AG . Peter G. M Judge, s i t t i n g Justice Paul G. &field.