Opinion ID: 543819
Heading Depth: 2
Heading Rank: 1

Heading: The Reach of Interstate Commerce in Assembly Contracts.

Text: 44 The Supreme Court in three cases has considered the importance of the complexity of assembly in determining whether the assembly is an integral indispensable part of the sales contract. The York Mfg. Co. v. Colley case has already been discussed in part. 1 45 In York, defendant Colley argued that the supervision of the assembly portion of the contract was separate and distinct from the delivery portion, and concluded, therefore, that since supervision was a wholly intrastate transaction, the plaintiff's suit was due to be dismissed for plaintiff' failure to qualify to do business in the state. The Texas court agreed, but the Supreme Court reversed. The Court concluded that assembly and testing would be relevant and appropriate to the interstate sale of such complex machinery, unless it can be said that an agreement to direct the assembling and supervision of machinery whose intrinsic value depends upon its being united and made operative as a whole is not appropriate to its sale. Id. 38 S.Ct. at 432. Throughout the opinion, the Court emphasized the complexity of the endeavor and the fact that the purchaser bought an ice machine, not the parts of an ice machine. 2 The terms of the supervising engineer provision in the Bucyrus/Taft contract evidences a closer relationship between assembly and sale than did the arrangement in York. 3 The engineer from York Mfg. worked on a per diem basis which was paid by the purchaser, whereas here, the Bucyrus engineer's services were provided by Bucyrus as part of the sales contract. 46 In Browning v. City of Waycross, 233 U.S. 16, 34 S.Ct. 578, 579-80, 58 L.Ed. 828 (1914), the Court concluded that installation of lightning rods, sold in interstate commerce and installed locally by employees of the seller, was not in interstate commerce. The installation was a wholly intrastate affair and bore no relevant or appropriate relation to interstate commerce. York, 38 S.Ct. at 431. In York, the Court distinguished Waycross, concluding that it was not controlling as to a case where the service to be done in a state as the result of an interstate commerce sale was essentially connected with the subject-matter of the sale, that is, might be made to appropriately inhere in the duty of performance. Id. (emphasis added). 47 Finally, in General Railway Signal Co. v. Virginia, 246 U.S. 500, 38 S.Ct. 360, 62 L.Ed. 854 (1918), the State of Virginia contracted with General Railway to purchase and install automatic railway crossing signals at various locations in the state. General Railway manufactures many of the components required for installation; however, to construct these signals as required by the contract it was necessary to employ in this state labor, skilled and unskilled, to dig ditches in which conduits for the wires are placed, to construct concrete foundations, and to paint completed structures. Id. The Court concluded that the recited facts clearly show local business separate and distinct from interstate commerce. Id. The Court commented that this case was very similar to the lightning rods case. In York, the Court distinguished this case stating, the work required to be done by the contract over and above its inherent and intrinsic relation to the subject-matter of the interstate commerce contract involved the performance of duties over which the state had a right to exercise control because of their inherent intrastate character. 38 S.Ct. at 432. 48 These Supreme Court cases indicate that the fundamental question in construction or installation type cases is whether it is appropriate and essential for the seller/manufacturer to continue its involvement after delivery. It satisfies this standard if the subject matter of the sale is sufficiently complex, or if the seller's expertise is necessary to bring the item purchased into useful existence following delivery. With this synthesis in mind, assembly of the dragline was clearly essential to its sale and therefore was part of a unitary interstate transaction. Given the complexity of the assembly process in this case, the majority illogically concludes that assembly was an afterthought. 49 The majority attempts unsuccessfully to distinguish York from the instant case. The majority notes that the [ice] machine was so complex that the [manufacturer/seller's] engineer's services were required to assemble the machine properly. Elsewhere the majority notes that other companies, including an Alabama corporation and Taft itself, could have assembled the dragline. Supra pp. 1512, 1513. (Without any support from the evidence). These comments evidence the majority's misunderstanding of York. In that case, it is clear that the purchaser supplied the mechanics to assemble the ice machine. 34 S.Ct. at 431. The purchaser simply acted as both the general contractor and labor pool. However, the engineer from York Mfg. supervised the entire process. That the purchaser performed the assembly labor did not diminish the complexity of the assembly process. The Court focused on whether the subject matter of the contract was sufficiently complex to render its assembly essential to its sale. It was the fact that assembly required the supervising engineer's expertise that influenced the court's decision. In the instant case, the purchaser instead hired S & H as a general contractor who in turn hired other workmen. This nuance does not alter the analysis. As in York, the engineer's expertise was required to complete assembly. There is nothing in the record that indicates Taft and Bucyrus considered S & H a replacement for the supervising engineer. In fact, the record supports the contrary conclusion which is that all parties to these contracts considered assembly of the dragline essential to its sale. 50