Court Opinion

ID: 3139759
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:50:05.542654+00
Date Added: 2024-06-11T11:54:34.861018
License: Public Domain

No. 3--05--0643
___________________________________________________________________
Filed October 6, 2006.
                       IN THE APPELLATE COURT OF ILLINOIS

                                     THIRD DISTRICT

                                         A.D., 2006

R.O.W. WINDOW COMPANY f/k/a                   )       Appeal from the Circuit Court
ROCKDALE SALES & TRIM, INC., its              )       of the 12th Judicial Circuit,
predecessor-in-interest,                      )       Will County, Illinois
                                              )
       Plaintiff-Appellant,                   )
                                              )       No. 03-L-601
       v.                                     )
                                              )
ALLMETAL, INC.,                               )       Honorable
                                              )       Amy M. Bertani-Tomczak,
       Defendant-Appellee.                    )       Judge, Presiding.

_________________________________________________________________

       JUSTICE CARTER delivered the Opinion of the Court:

______________________________________________________________________
                               ________

       The plaintiff, R.O.W. Window Company, brought suit against the defendant, Allmetal,

Inc., for breach of implied warranty of fitness for a particular purpose and breach of implied

warranty of merchantability. The trial court found that the implied warranties had been

disclaimed and granted the defendant=s motion to dismiss the suit with prejudice. The

plaintiff appeals and argues: (1) that the disclaimer was invalid because it was not

conspicuous, (2) that the disclaimer was ineffective because it was not part of the sales

contract, and (3) that the employee making the purchase orders did not have authority to

waive the implied warranties. We affirm.
                                            FACTS

       The facts as determined from the pleadings and other documents filed in the trial

court are as follows. Plaintiff is a corporation that manufactures insulated glass windows to

be used in new construction. Defendant is a corporation that sells corner keys and spacers

to be used in the manufacture of insulated glass. From 1994 through 1998, plaintiff

purchased corner keys and spacers from defendant to be used in plaintiff=s insulated glass

windows. Those windows were sold to plaintiff=s customers with a ten year warranty.

During the warranty period, the glass in the windows failed at an abnormally high rate due

to a problem with the corner keys and spacers. The plaintiff incurred losses as a result of

having to replace the failed pieces of insulated glass, loss of profits from the sales of those

replacement units, and costs incurred for the payment of an installer to replace the units.

       In October of 2003, plaintiff brought suit against defendant for breach of implied

warranty of fitness for a particular purpose and breach of implied warranty of

merchantability. The plaintiff sought more than $1 million in damages.

       In April of 2005, the defendant filed a motion to dismiss the complaint with prejudice

pursuant to section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9)

(West 2004)) alleging that it had disclaimed the implied warranties that the plaintiff had

sought to recover upon. Attached to the motion were numerous supporting documents.

Two of which were copies of a portion of the defendant=s yearly product catalog from 1989

and 1994. 1 The portion of the catalogs that was attached was the section entitled ATerms &

       1
         A copy of the disclaimer from the 1989 and 1994 product catalogs are attached to this
order as Attachment #1 and Attachment #2.

                                               2
Conditions of Sale@. Along with other conditions of sale, that section contained the

following disclaimer:

              ATHE SELLER HEREBY EXPRESSLY DISCLAIMS ALL

              WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING

              ANY IMPLIED WARRANTY OF MERCHANTABILITY OR

              FITNESS FOR A PARTICULAR PURPOSE. PRODUCTS

              ARE SOLD >AS IS= AND ON THE CONDITION THAT THE

              PURCHASERS SHALL MAKE THEIR OWN TESTS TO

              DETERMINE         THE      MERCHANTABILITY            OF     SUCH

              PRODUCTS AND THEIR FITNESS FOR ANY PARTICULAR

              PURPOSE.        THE LIABILITY OF ALLMETAL, INC. FOR

              SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES FOR

              INJURY TO A PROPERTY FOR ANY REASON OR FOR ANY

              OTHER LOSS RESULTING FROM A PRODUCT DEFECT OR

              FAILURE SHALL BE LIMITED TO THE PURCHASE PRICE

              OF THE PRODUCT.@

       The disclaimer was the only text on the page to be listed in all capital letters, other

than the company name at the top of the page. The print size for the disclaimer was not

noticeably larger or smaller than the print size used for all of the other text on the page. In

the first copy of the catalog section, the disclaimer was listed in the bottom left corner of the

page in a separate text box surrounded by a square border. In the second copy of the

catalog section, the disclaimer was listed in the bottom right corner of the page in a

separate shaded text box. Although in both copies of the catalog, the disclaimer was set off

                                               3
in its own text box, the box did not contain a heading. The catalog itself was over 200

pages long with a table of contents at the front. The first section of the table of contents

entitled AGeneral Information@ contained the subsection, ATerms and Conditions@ (noted

above).

       Also attached to the defendant=s motion to dismiss was a copy of the defendant=s

standard invoice. 2 Almost all of the invoice was printed in all capital letters. In the center of

the invoice, the following disclaimer was listed:

                 ATHE SELLER HEREBY EXPRESSLY DISCLAIMS ALL

                 WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING

                 ANY IMPLIED WARRANTY OF MERCHANTABILITY OR

                 FITNESS FOR A PARTICULAR PURPOSE. PRODUCTS

                 ARE SOLD >AS IS= AND ON THE CONDITION THAT THE

                 PURCHASERS SHALL MAKE THEIR OWN TESTS TO

                 DETERMINE         THE      MERCHANTABILITY            OF     SUCH

                 PRODUCTS AND THEIR FITNESS FOR ANY PARTICULAR

                 PURPOSE. THE LIABILITY OF ALLMETAL, INC. FOR

                 SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES FOR

                 INJURY TO PROPERTY OR ANY PERSON OR FOR ANY

                 OTHER LOSS RESULTING FROM A PRODUCT DEFECT OR

                 FAILURE SHALL BE LIMITED TO THE PURCHASE PRICE

                 OF THE PRODUCT.@

       2
           A copy of the standard invoice is attached to this order as Attachment #3.

                                                   4
       There was no heading above the disclaimer and it was listed in fine print, which was

somewhat smaller than the print size used on the rest of the invoice. Like most of the text

on the invoice, the disclaimer was printed in all capital letters. There was a small area of

open space both above and below the disclaimer.

       The defendant=s motion also had attached to it the affidavit of Phillip Collin, the

president of defendant corporation. In the affidavit, Collin averred that since 1989, the

above noted disclaimer had been provided to defendant=s customers in the yearly product

catalog. Collin also averred that every invoice for products purchased since 1989 by the

plaintiff had contained the above noted disclaimer.

       The plaintiff filed a written response to the motion to dismiss. In support of its

response, the plaintiff attached the affidavit of Glen Brooks, the president of plaintiff

corporation. Brooks averred as follows. Plaintiff located and purchased defendant=s corner

keys and spacers based on the recommendation of the designer of plaintiff=s window

system, not based upon the defendant=s product catalog. The purchase orders were

produced from plaintiff=s computer and were not based on the defendant=s catalog. As

former sales manager and president, Brooks was not aware of any disclaimer or limitation

of warranty in defendant=s catalog or invoices. Chuck Dzarnowski, the employee who had

ordered the corner keys and spacers until his retirement in 2000, did not have the authority

to waive any warranty for items that he had purchased. Only William Gebhardt, the former

general manager and current vice president of the corporation, had the authority to do so.

The defect in the corner keys and spacers was not discoverable upon reasonable

inspection upon delivery of defendant=s products. The windows failed months or years after

they were manufactured and installed in new construction when the spacer slipped off of

                                             5
the corner key in thousands of windows.

      After reviewing the court filings and hearing the arguments of the parties, the trial

court granted the defendant=s motion to dismiss. This appeal followed.

                                         ANALYSIS

      The plaintiff argues that the trial court erred in granting the motion to dismiss. Our

review of this issue is de novo. Van Meter v. Darien Park Dist., 207 Ill. 2d 359, 367-368,

799 N.E.2d 273, 278 (2003) (dismissal pursuant to section 2-619 is reviewed de novo). In

conducting such a review, we must construe all of the pleadings and supporting documents

in the light most favorable to the non-moving party. Van Meter, 207 Ill. 2d at 367-68, 799

N.E. 2d at 278.

      In support of its argument, the plaintiff first asserts that the disclaimer

             was invalid because it was not conspicuous. As the plaintiff

             notes, section 2-316 of the Uniform Commercial Code (810

             ILCS 5/2-316(2)) requires that all written disclaimers of the

             implied warranties of merchantability or fitness must be

             conspicuous. The purpose of this rule is to protect the buyer

             from surprise. Bell Fuels, Inc. v. Lockheed Electronics Co.,

             Inc., 130 Ill. App. 3d 940, 944-945, 474 N.E. 2d 1312, 1316-

             1317 (1985). The UCC defines Aconspicuous@ as follows.

                    AA term or clause is conspicuous when it is so written

             that a reasonable person against whom it is to operate ought to

                                              6
               have noticed it. A printed heading in capitals (as: NON-

               NEGOTIABLE BILL OF LADING) is conspicuous. Language in

               the body of a form is >conspicuous= if it is in larger or other

               contrasting type or color. ***@ 810 ILCS 5/1-201(10).

       The determination of whether a particular term or clause is conspicuous is to be

made by the court. 810 ILCS 5/1-201(10). The court should make that determination by

asking if attention can reasonably by expected to be called to the term or clause. Bell

Fuels, Inc., 130 Ill. App. 3d at 946, 474 N.E. 2d at 1317.

       Applying the above legal principles to facts of the present case, we find that the

written disclaimers contained in the product catalog and in the invoices are conspicuous. In

the catalog, the written disclaimer was contained in a section entitled, ATerms and

Conditions of Sale@. That section was listed in the table of contents at the front of the

catalog. As for the disclaimer itself, it was printed in all capital letters and was set off in a

separate text box that was either surrounded by a border or was shaded. The language

used very specifically disclaimed the implied warranties in question. In the invoice,

although smaller, fine print was used, the disclaimer was again listed in all capital letters.

The plaintiff tries to minimize the significance of this by arguing that almost all of the text on

the invoice was in capital letters. However, the disclaimer was essentially the only textual

paragraph on the invoice, was set off by open space above and below it, and was located

in the center of the page. As with the catalog, the language used in the invoice very

specifically disclaimed the implied warranties in question. While it may be true that the

defendant could have made the disclaimers more conspicuous, that is not the test before

this Court. The disclaimers were presented in a manner reasonably sufficient to draw

                                                7
attention to them. See Bell Fuels, Inc., 130 Ill. App. 3d at 946, 474 N.E. 2d at 1317. We

are not persuaded by the cases cited by the plaintiff to the contrary. They simply do not

address the factual situation that we are confronted with in the present case. Nor do we

accept the plaintiff=s invitation to find that a disclaimer written in fine print can never be

conspicuous. See Clements Farms, Inc. v. Ben Fish & Son, 120 Idaho 185, 189, 814 P. 2d

917, 921 (1991) (fine print of itself does not render a disclaimer inconspicuous); Sierra

Diesel Injection Service, Inc. v. Burroughs Corp., Inc., 890 F. 2d 108, 114 (9th Cir. 1989)

(whether a disclaimer is conspicuous is not simply a matter of measuring the type size or

looking at the placement of the disclaimer within the contract). In reaching this conclusion,

we are mindful that the transactions before us are between two business entities. The

courts are less reluctant to hold businessmen to the terms of contracts to which they have

entered than consumers dealing with skilled corporate sellers. Bowers Mfg. Co., Inc. v.

Chicago Mach. Tool Co., 117 Ill. App. 3d 226, 233, 453 N.E.2d 61, 66 (1983).

       We turn now to the plaintiff=s second assertion--that it was not bound by the

disclaimers because the disclaimers were not a part of the sales contract. As the plaintiff

suggests, it is generally true that a disclaimer sent with goods when they are shipped is

insufficient. Gideon Service Division v. Dunham-Bush, Inc., 80 Ill. App. 3d 633, 637-638,

400 N.E. 2d 89, 92 (1980)). However, an implied warranty may be excluded by course of

dealing. 810 ILCS 5/2-316(3)(c) (West 2004). A course of dealing is a sequence of

previous conduct between the parties to a particular transaction which is fairly to be

regarded as establishing a common basis of understanding for interpreting their

expressions and other conduct. 810 ILCS 5/1-205(1) (West 2004). A course of dealing

between parties gives particular meaning to and supplements or qualifies the terms of the

                                              8
agreement. 810 ILCS 5/1-205(3) (West 2004).

       The record before us in the present case indicates that the plaintiff was a customer

of the defendant for several years. The plaintiff and the defendant had business dealings

going back to 1989. During that period, all of the invoices that the defendant sent to the

plaintiff had a conspicuous disclaimer of implied warranties printed on them in the center of

the page. In addition, the product catalog that the defendant sent out to its customers each

year, also contained a conspicuous disclaimer of the implied warranties.

       This is not a case such as Gideon Service Division v. Dunham Bush Inc., cited by

the plaintiff, where the buyer and seller were involved in a single transaction. See Gideon

Service Division, 80 Ill. App. 3d at 634-635, 400 N.E. 2d at 89-90. Rather, in the present

case, there was a course of dealing that took place over several years. That course of

dealing supplements the terms of the parties= agreement and establishes that the exclusion

of implied warranties was a part of the bargain. See Capitol Converting Equipment, Inc. v.

LEP Transport, Inc., 965 F.2d 391, 396 (7th Cir. 1992) (course of dealing established that

liability limitation contained on transportation company=s invoice was part of agreement);

Tolmie Farms, Inc. v. J.R. Simplot Co., Inc., 124 Idaho 607, 612, 862 P.2d 299, 304 (1993)

(course of dealing between parties over several years--during which time seller of farm

chemical had sent buyer numerous invoices containing warranty disclaimers and had each

year posted label containing disclaimer on distribution tank at plaintiff=s farm--established

that seller had effectively disclaimed implied warranties of merchantability and fitness); J. D.

Pavlak, Ltd. v. William Davies Co., Inc., 40 Ill. App.3d 1, 4, 351 N.E.2d 243, 246 (1976)

(contract terms and prior dealings of parties were sufficient to exclude any implied warranty

that meat would not have a fat content of more than 15%). Contrary to the plaintiff=s

                                               9
argument, the affidavit of Brooks denying knowledge of the disclaimers, standing alone, is

not sufficient to create a material issue of fact regarding whether a course of dealing as to

an exclusion of implied warranties existed between the defendant and the plaintiff. See

Capitol Converting Equipment, Inc., 965 F.2d at 395 (affidavit of company president

denying knowledge of liability limitation, standing alone, was not sufficient to create a

genuine factual dispute over whether a course of dealing as to a liability limitation existed

between the two companies).

       Having determined that the disclaimers were conspicuous and that they were made

a part of the parties= agreement by the course of dealing, we must consider the plaintiff=s

third and final assertion--that its purchasing employee did not have authority to waive the

implied warranties.

       An agent's authority to bind a principal may be actual or apparent. Progress Printing

Corp. v. Jane Byrne Political Committee, 235 Ill. App. 3d 292, 307, 601 N.E. 2d 1055, 1066

(1992). Actual authority is authority that is derived from a specific grant of authorization to

perform a particular act (express) or that is inherent in the agent=s position (implied).

Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at 1066. Apparent authority is

that authority which a reasonably prudent person, in view of the principal's conduct, would

naturally suppose the agent to possess. Progress Printing Corp., 235 Ill. App. 3d at 308,

601 N.E. 2d at 1066. Apparent authority arises where a principal creates, through words or

conduct, the reasonable impression that the putative agent has been granted authority to

perform certain acts. Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at 1066.

The principal, having created the appearance of authority, is estopped to deny it to the

detriment of a third party. Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at

                                              10
1066. In the present case, the record before us shows that the plaintiff=s purchasing

employee had ordered spacers and corner keys from the defendant over the course of

several years. The plaintiff accepted and used those products, paid out on the invoices,

and allowed the purchasing employee to order more products without objection and without

ever communicating any limitations to the defendant.         The facts establish that the

purchasing employee had, at the very least, apparent authority to enter into transactions

with the defendant. See Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at

1066. Thus, we conclude that the plaintiff=s third assertion is without merit.

       For the foregoing reasons, we affirm the order of the Circuit Court of Will County

dismissing the plaintiff=s suit with prejudice.

       Affirmed.

       SLATER and O=BRIEN J. J. concurring.

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