Court Opinion

ID: 9646804
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:11:41.126324+00
Date Added: 2024-06-11T14:59:06.716952
License: Public Domain

BARDGETT, Judge,
dissenting.
I respectfully dissent. I believe that when these appellants, ordinary purchasers, bought the new air conditioner they were entitled to get what they had bargained for and what Chrysler had warranted to provide — a new article, free from defects, that operated according to specifications. This the Kawins did not receive.
In the summer of 1968, the Kawins sought to replace the central air conditioning i.i their home. Before making such an expensive purchase, the Kawins had shopped for a central unit backed by a reputable company that gave the most favorable warranty terms. Having read Air-temp’s specimen warranty, the Kawins, in September 1968, entered into a contract to purchase a Chrysler central air conditioning unit and its warranty, paying over $2,000. In October 1968, the unit was installed.
The next summer the Kawins used the central unit and it failed to operate properly. After six service calls,1 the problems *46ended when Chrysler replaced the defective compressor. Three years later in 1972, the compressor, which was still under warranty, proved defective. Chrysler offered to “replace” the defective compressor with a rebuilt one — a used part. The Kawins, properly I think, asked that a new compressor be installed. Chrysler refused. As a result, the Kawins brought suit claiming that (1) Chrysler breached the warranty by refusing to furnish a new compressor to replace the defective one and (2) Chrysler perpetrated a fraudulent merchandising practice by concealing a material limitation of the warranty, i.e., the company replaced defective parts with rebuilt ones, not new parts.
Although the failure of the part took place almost four years after the Kawins bought the unit, it is undisputed that the warranty, with respect to the compressor, was still in full force. Under this contract, the length of time plays no part whatsoever. And under this contract, I believe that its clear, unambiguous terms obligated Chrysler to provide a new air conditioning unit free from defects. In the event the unit was defective, then Chrysler was obligated to put it in the warranted condition so that the purchaser would receive what Chrysler had guaranteed — a new unit free from defects.
The relevant provisions of that warranty state:
Airtemp Division of Chrysler Corporation warrants its packaged air conditioning or heating product identified below to be free of defects in workmanship and material under normal use and service. Airtemp’s obligation under this warranty is limited solely to repairing or replacing parts fob Dayton, Ohio, which in its judgment are defective in workmanship or material, and which are returned freight prepaid to its Dayton, Ohio plant or other designated point.
The above warranty applies for a period of one year from date of original installation. The hermetic compressor ... is warranted for a period of five years from date of original installation.
General provisions: Airtemp makes this warranty in lieu of all other warranties, express or implied. In no event shall Airtemp be liable for special or consequential damages.
The principal opinion holds that under the terms of this warranty Chrysler did not breach its obligations by offering to “replace” the defective compressor with a rebuilt one. In so holding, the principal opinion defines the word “replace” as “to supplement with a substitute or equivalent.” The sources cited for this definition, however, are wholly inapplicable.
The principal opinion cites Black’s Law Dictionary 1168 (5th ed. 1979) in support of its construction of “replace”. This definition of “replace” in Black’s Law Dictionary, however, simply cites Olenick v. Government Employees Ins. Co., 42 A.D.2d 760, 346 N.Y.S.2d 320 (1973)—the other source cited by the principal opinion to support its definition of “replace”. I believe that when a term appears in Black’s Law Dictionary with a case citation, the meaning is really derived from the case and should be understood in the context of the cited case and not apart from it. And, in examining Olen-ick, it becomes clear that the definition of “replace” is lifted from a context inapplicable to the instant case.
In Olenick, a liability insurance policy contained a clause whereby liability would be insured against if the car involved in the collision was a replacement for the one described in the policy. The court was construing a clause in an automobile liability policy with respect to bodily injury and property damage coverage. The word “automobile” as used in the policy “means not only the automobile described in the policy, but also a ‘temporary substitute automobile’ and a ‘newly acquired automobile.’ ” Olenick v. Government Employees *47Ins. Co., 68 Misc.2d 764, 773, 328 N.Y.S.2d 50, 59-60 (Sup.Ct.1971), aff’d as modified, 42 A.D.2d 760, 346 N.Y.S.2d 320 (1973). This usual provision regarding a newly acquired automobile is sometimes referred to as the replacement car coverage — that is to say, if the newly acquired car replaces the automobile described in the policy, the liability insurance continues with respect to the newly acquired car. The issue before the Appellate Division was whether, in this context, the second car replaced the first so as to afford continuing liability coverage for personal injury and property damage. Resolution of this issue turned on whether the first car, a Buick, had been disposed of or was incapable of further service at the time the second car was acquired. The Appellate Division of the Supreme Court of New York, after reciting certain facts, held:
That policy, which was issued by Liberty Mutual to Phyllistine Bryant, the purported owner, contained a “replacement provision” which essentially provided that a newly acquired automobile which is acquired “by the named insured or * * * [her] spouse” is covered by the same policy issued with respect to the car originally insured, if, in fact, the newly acquired car replaces the originally insured car.
We agree with Liberty Mutual that the word “replace”, given its plain, ordinary meaning, means to supplant with a substitute or equivalent. Thus, in order for the Pontiac to have replaced the Buick, there must have been evidence showing that the Buick had been disposed of or was incapable of further service at the time of the replacement (see Yenowine v. State Farm Mut. Auto. Ins. Co., 6 Cir., 342 F.2d 957; State Farm Mut. Auto. Ins. Co. v. Shaffer, 250 N.C. 45, 108 S.E.2d 49; Mitcham v. Travelers Ind. Co., 4 Cir., 127 F.2d 27; Lynam v. Employers’ Liab. Assur. Corp., D.C., 218 F.Supp. 383). The instant record is barren of any such evidence.
42 A.D.2d at 761, 346 N.Y.S.2d at 321 (emphasis added).
English words are regularly used in differing contexts and as a result take on different meanings. As the court of appeals recognized in Adams v. Covenant Sec. Ins. Co., 465 S.W.2d 32 (Mo.App.1971):
The word “replace” is not ambiguous. It means [in the context of an insurance replacement clause] “to take the place of; to serve as a substitute for or successor of.” Webster’s Third New International Dictionary. Nonetheless the word “replace” does have a flexible meaning, depending on the sense in which it is used. (Compare use of the word “permission” in Winterton v. Van Zandt, supra, [17] [351 S.W.2d 696 (Mo.)].) The test of the meaning of non-technical words in an insurance policy is not merely the meaning implied to them by the insurance experts who drafted the policy; instead, courts are more concerned with the meaning that would ordinarily be understood by the layman who bought and paid for the policy. Greer v. Zurich Insurance Company, Mo., 441 S.W.2d 15 [12]; Hammontree v. Central Mutual Insurance Co., Mo.App., 385 S.W.2d 661 [3-6].
Id. at 34 (emphasis added).
It seems obvious that the use of the Olen-ick construction of “replace” is completely out of context and has no application to this case. No one would suggest that when one buys a new car and disposes of an older car that their values are the same. Olenick simply did not involve any obligation on anyone’s part to repair or replace anything. To utilize Olenick as authority in this case would be to say that Chrysler Corporation would have satisfied its warranty obligation by installing a ten-year-old air conditioner in the Kawins’s home when the new one did not work, on the premise that the old one replaced the new one as the air conditioning unit in Kawins’s home. One might “replace” an old car with a new one or a new one with an old one, but that act on the part of an individual (insured) has no bearing whatever on the meaning of a warranty provision whereby the seller (Chrysler) is under a contractual obligation to “replace or repair” defective parts in the equipment it sells to a purchaser. It made no difference in Olenick what type, model, or year the newly acquired car was, just so it func*48tioned as transportation. The real issue under that particular insurance provision was whether the first car had been disposed of or was inoperable as an automobile. If so, the newly acquired car replaced the insured vehicle, and if not, it didn’t.
The Olenick case does demonstrate, however, that the meaning ascribed to words depends on the context in which they are used. And, in my opinion, “replace” in the context of a new equipment purchase means to replace that which was bought— new parts. Nevertheless, the principal opinion uses Olenick for its definition of “replace” and sets up a strawman to defeat the Kawins’s claim. It finds that appellants want to use the word “new” in front of the word “parts”. But, the principal opinion finds that under the warranty Chrysler’s promise to replace a defective part only required the warrantor to provide the “equivalent” of the part in terms of how long the part had been used. Hence, a “new” compressor would be the equivalent of a “new” compressor, at 43 n.3, and a “used” compressor need only be substituted for a “used” compressor, id. at 43. Under this reasoning, I assume in order to provide an “equivalent” for a defective part, that a three-year-old defective compressor must be replaced with a three-year-old defective compressor, or at least a three-year-old used compressor.
Still, I think the suggestion in the principal opinion that appellants “seek to extrapolate the phrase by inserting the words ‘with new’ so the challenged phrase would read, ‘Airtemps obligation is limited solely to repairing or replacing [with new] parts . . . ’” is just as untenable as it would be to suggest that respondent desires to insert the words “with rebuilt” just before the word “parts”. Yet that is what the principal opinion does.
No one seeks to insert words into the challenged phrase. It is our duty to decide if the warranty provision means that Air-temp will, if it does not repair, replace the parts with the equivalent of those which were purchased and not something else, such as used or rebuilt parts.
In my opinion, the main difficulty with the principal opinion is that it treats the warranty obligation as if it were a policy of insurance whereby the insurance company agreed to pay a sum equivalent to the depreciated value of the object — to replace as is. If I negligently damage another’s automobile, my legal obligation would be to pay damages equal to the difference between the before and after value, and I would not be required to provide the other party with a new car. I would simply be required to pay for the damage I caused but it could not exceed the depreciated (present) value of the car I damaged. That is what the principal opinion regards as the extent of Airtemp’s obligation. But, in my example, I had no contractual (warranty) obligation to the other party. It is mixing apples and oranges to view the obligations of new product warranties and general law on damages as similar — they are not similar.
The warranty is not a gift from the seller. It is part of the purchase and is included in the purchase price. Advertisements of warranties are commonplace and are used to induce consumers to buy one product over another. As stated in Adams v. Covenant Sec. Ins. Co., supra, 465 S.W.2d at 34, “[C]ourts are more concerned with the meaning that would ordinarily be understood by the layman who bought and paid for the policy.” And construing the warranty as an ordinary person would read it, I think it clear that the warranty to “replace” defective parts means to restore the equipment to its condition as represented when sold — new. It is not ambiguous; at least I do not believe any purchaser has any doubt about what it means. It means “new” when the product bought is new.
If a person were going to pay over $2,000 for a new air conditioning unit, he probably would do what the Kawins did — read the various warranties carefully and try to get the most favorable one. Once a decision, based in large part on the warranty given, had been made, he would expect to receive what had been guaranteed — a new, defect-free central air conditioner. If before the contract was signed, however, the salesper*49son said, “If your brand-new air conditioner goes bad, we only replace parts with rebuilt ones,” I think it unlikely the person would spend $2,000 with the prospect of getting used parts should any part prove defective.
No one has had the temerity to argue that had the Kawins known that defective parts would be replaced by used parts, rather than new parts, they would have bought the equipment anyway. I suggest our common experiences in this respect would dictate that the purchase would not have been made. That is because a reasonable person buying expensive equipment would expect the replacement of parts under warranty would be with the type of parts originally purchased — new. That is the reasonable expectation from the face of the warranty and it should be given effect here.
The warranty to replace defective parts obviously relates to the character of the item sold. Its character is that it is new. The warranty is specifically directed to that aspect of the product. There seems to be an unspoken value judgment being made that a “rebuilt” part (by definition a used part) is just as good as a new (unused) part. That may be correct from time to time but it simply isn’t what the warranty of a new product calls for. Surely a seller would be committing a deception if he sold a rebuilt (used) product as a new product. The customer may well accept a rebuilt part in lieu of a new part, but that should be the customer’s decision where he is entitled, under the warranty, to have the defective part replaced by a part of the like and quality he purchased in the first place. I’m sure it will come as a surprise to the purchasing public and to business enterprises which buy new machinery and equipment to be told that a new product warranty calling for replacement of defective parts means the option is with the manufacturer or seller to place a used part into the new equipment instead of the type of replacement which returns the product to the state it was in when purchased — new.
Lip service seems to be given to the new product warranty in footnote 3 of the principal opinion wherein it is suggested that new parts might be required if the product fails very soon after purchase. Why the distinction? If a manufacturer can satisfy the warranty with used parts after a year or two, why not after just a month? The answer is there is no valid distinction when the obligation arises under a warranty such as we have here directed to a new product. The distinction attempted in the principal opinion leaves the legal requirement undertaken by a manufacturer’s or seller’s new product warranty to replace defective parts in limbo, to be decided on a case-by-case basis depending on when the defective part manifested itself. All this assumes, as is the fact in this case, that the warranty to replace defective parts was and is operative (not expired) at the time the defect was discovered, and whatever the obligation of the seller is, it arises under the warranty issued at the time of the purchase of the new product and not by reason of any other, if any there be, duty of the seller.
The warranty in the instant case conforms to the general wording of a “limited” warranty. That is to say, the seller’s obligations and liabilities are limited to those set forth in the warranty. Cases dealing with the seller’s obligations are usually suits for damages where the seller allegedly failed to live up to the warranty and illustrate the obligation undertaken by the warranty.
In Chatlos Systems, Inc. v. National Cash Register Corp., 635 F.2d 1081 (3d Cir. 1980), the court stated the following:
This section requires analysis of the applicable remedy so as to determine its essential purpose and whether it has failed of that purpose. Several goals of the limited remedy of repair may be envisioned, but its primary objective is to give the seller an opportunity to make the goods conform while limiting exposure to risk by excluding liability for damages that might otherwise be due. Beal v. General Motors Corp., 354 F.Supp. 423 (D.Del.1973). Viewed from the buyer’s standpoint, the repair remedy’s aim is to provide goods that conform to the contract for sale and do so at an appropriate *50time. A delay in supplying the remedy can just as effectively deny the purchaser the product he expected as can the total inability to repair. In both instances the buyer loses the substantial benefit of his purchase.
Id. at 1085 (emphasis added).
And in Delhomme Indus., Inc. v. Houston Beechcraft, Inc., 669 F.2d 1049 (5th Cir. 1982), the court held: “The test in determining whether a limited warranty failed of its essential purpose is whether the buyer is given, within a reasonable time, goods that conform to the contract.” Id. at 1063 (emphasis added).2
The question here really is whether supplying a rebuilt (used) part puts the air conditioner in conformance with the contract under which it was purchased. It seems clear that the air conditioner would not have conformed to the contract of purchase when purchased if it contained a used compressor because it was represented and sold as a new (unused) air conditioner. To conform the air conditioner to the purchase contract when a defective part is to be replaced simply means the part must conform to the contract and that contract called for a new air conditioner. Therefore, a new part is necessary for conformance.
It is my opinion that a layman (consumer) who buys and pays for a new air conditioner and its limited warranty would ordinarily understand that defective parts are to be replaced by what he bought — new parts. It is of no consequence that Airtemp has been replacing new parts with used parts in the past as a matter of unspoken policy. Surely a purchaser need not investigate the unstated policy of a seller prior to purchasing a new air conditioner. It certainly was not the burden of the appellants to prove the seller had, in the past, lived up to its warranty by doing what the warranty on its face required — new parts for new parts. Nor, in my opinion, is it any defense for the respondent to show that it had an unstated policy of replacing new parts with used parts. That holding in the principal opinion simply allows a seller or manufacturer to avoid the ordinary meaning of the words used in a new purchase warranty by not conforming its practice to the plain meaning on the face of the warranty.
In my opinion, the Federal Trade Commission’s Regulations, 16 C.F.R. §§ 26.2 and 26.12 (1968) were admissible, and the trial court erred in sustaining respondent’s objection thereto. The appellants bought the warranty just as surely as appellants bought the air conditioner. Warranties are an integral part of the marketing of products, particularly new products. To say otherwise is to simply ignore the daily advertising on television, radio, and in the print media, and their impact on and importance to the potential purchasers and the sale of goods. The warranty here did cover defective parts and as such it “marketed” the replacement guarantee as part of the sale of the new product and warranted that if it failed the defective parts would be replaced so as to conform the equipment to the purchase contract.
The principal opinion states: “Plaintiffs have cited no authority (and we find none) which holds that the ‘marketing’ of a rebuilt product or part includes the fulfillment of the warranty terms long after the sale had been completed.” at 45. The answer is that the warranty itself was marketed and, on its face, would lead an ordinary purchaser to conclude that the parts spoken of in the warranty would be new parts. If the respondent intended to use used parts in the purported fulfillment of the warranty, then that constituted a false, misleading, deceptive, or unfair trade prac*51tice, because it was not disclosed at the time the new air conditioner with warranty was sold.
What is the difference between a new and a used (rebuilt) item? Everybody knows the difference — the new item has not been used by anyone. The used or rebuilt item has been used. Every purchaser knows the difference. What is a rebuilt item? In the first place, it isn’t new; it is used. What are its quality characteristics— what’s the standard or is there any for qualifying as a “rebuilt” item? There are no quality standards that I know of — to the contrary, they are whatever the party who repairs a used item says they are. The clear distinction known to all as between a “new” item and a “used (rebuilt)” item is reflected in the price tag and that is something that every consumer knows. I believe the principal opinion does an enormous disservice to the public by allowing the manufacturer or seller to substitute used parts for new parts in the seller’s discretion based on unstated policy, which is clearly contrary to the new equipment warranty that the buyer purchases. By definition, the used part does not make the equipment purchased new conform to the new purchase contract. Therefore, the principal opinion permits a violation by the seller of one of the most important marketing commitments utilized by sellers in competitive merchandising of new products and deprives the buyer of the right to rely on the most important security he has when purchasing new equipment — the dealer’s or manufacturer’s warranty.
The appellants-purchasers in this case bought a new air conditioner and the warranty and paid over $2,000 for them. The equipment did not work due to a defective compressor. The respondent failed to repair it and refused to replace the defective compressor with the kind appellants bought — a new one — which I regard as required by the clear, unambiguous terms of the warranty, and as ordinarily understood by purchasers.
For the reasons stated, I respectfully dissent.

. Although not raised by this case, the repeated failure to repair the air conditioner alone might have been sufficient to breach the warranty. As stated in Givan v. Mack Truck, Inc., 569 S.W.2d 243 (Mo.App.1978):
When a manufacturer limits its obligation to repair and replacement of defective parts, and repeatedly fails to correct the defect as promised within a reasonable time, it is liable *46for the breach of that promise as a breach of warranty.... Furthermore, the buyer is not bound to permit the warrantor to tinker with the article indefinitely in the hope that it may ultimately be made to comply with the warranty.
Id. at 247 (footnotes omitted) (citations omitted).

. The same observation was made in Beal v. General Motors Corp., 354 F.Supp. 423 (D.Del.1973), when the court said:
The purpose of an exclusive remedy of replacement or repair of defective parts, whose presence constitute a breach of an express warranty, is to give the seller an opportunity to make the goods conforming while limiting the risks to which he is subject by excluding direct and consequential damages that might otherwise arise. From the point of view of the buyer the purpose of the exclusive remedy is to give him goods that conform to the contract within a reasonable time after a defective part is discovered.
Id. at 426 (emphasis added).