Altec, Inc. v. Fwd Corp.

399 F.2d 860, 1968 U.S. App. LEXIS 5737

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 21, 1968
• Docket: 25530_1
• Status: Published

Opinions

JOHN R. BROWN, Chief Judge:

As pressed on us now the question in this case is one which is simply stated: May a seller of a motor vehicle who is liable under implied warranty to its purchaser for damage to the vehicle resulting solely from a defect in the vehicle, recover from the negligent manufacturer the amount of such damages the seller has voluntarily expended without suit or prior adjudication of such warranty liability? We say now pressed on us, for the District Court did not either face up to or answer this question. Rather, the Judge followed the will-of-the-wisp of title and concluding that title was in the purchaser, held that the seller could not recover despite unassailed findings of defects due to the manufacturer’s negligence. To permit determination of that Alabama-E'ne problem by the Trial Court we vacate the judgment and remand for further proceedings.

The facts of the case are likewise simple. They involve a negligent Manufacturer — FWD, an innocent Seller — Altec, and an innocent Purchaser — City of Gainesville. FWD through its distributor sold a negligently manufactured truck to Altec, who installed special utility hydraulic derrick equipment, and pursuant to a sale of a completed, altered vehicle delivered it to the City of Gainesville, the Purchaser. Employees of Purchaser took possession of the vehicle at Altec’s plant and proceeded to Gainesville. En route the truck left the road due to a defective steering mechanism, turned over and was heavily damaged.

As this followed closely on the heels of like steering difficulty about a day before delivery with all parties assuming that repairs had been satisfactorily performed, this wreck convoked extended investigation into the probable cause. The councils of war included representatives of Seller, experts of Manufacturer as well as representatives of repairer.¹ This investigation soon revealed, as the Judge, with ample basis passing muster easily under F.R.Civ.P. 52(a) was later to find that the wreck and ensuing damage was due “solely” to “a defect in the steering mechanism” which “was caused by the negligence of the [Manufacturer] in the manufacture or design” of the vehicle. Additionally, it was to anticipate the Judge’s further express declaration with like support that Seller “was not guilty of contributory negligence” and the implied holding that the employees of Purchaser were not negligent in the actual driving of the vehicle.²

Although Manufacturer — apparently unmoved by the investigation to admit its basic liability — does not, cannot, now seriously assert that if it is ever pursued timely by one having an ownership in the vehicle it would have any defense on the merits of the claim of negligent defect and usual seller-warranty, that is not what brings about this struggle. This comes about because, as one might not expect, Seller, recognizing its common-law and Alabama statutory warranty liability³ did not deny liability to Purchaser, did not refuse to repair the vehicle, and did not force Purchaser to sue. And therein lies the problem. Seller did none of these things. Instead, it retrieved, repaired, and returned the vehicle. And, judging by the results so far, this was its mistake.

We say mistake because had Seller forced Purchaser to sue, to adjudicate its liability, there is no doubt that Seller could have impleaded Manufacturer, or after vouching notice and judgment for Purchaser later sued Manufacturer on one or more of the now prevalent theories of indemnity.⁴ Should the result be irretrievably different because Seller admitted liability, recognized its duty, and repaired the vehicle? We emphasize irretrievably because, having followed this somewhat strange course in a world of litigious contentiousness —albeit one which the law surrounded itself with overpowering, exploding dockets⁵ ought to encourage, not discourage or condemn outright — Seller does have some added burdens as a consequence. In doing so all of the objections urged by Manufacturer will be overcome or at least adequately cared for.

Thus, Seller must establish as a legal fact, essential to recovery from Manufacturer, that Seller was legally liable to Purchaser. And since Seller seeks to translate the liability declaration into a money judgment, this burden will include establishing the dollar amount of damage sustained by Purchaser at least to the extent of the amount for which Seller seeks reimbursement. Doing this, Seller overcomes altogether Manufacturer’s beguiling assertion that the procedure now followed is unlike the supposed suit by Purchaser against Seller with impleader of Manufacturer, insinuating somehow that Manufacturer is being cast with no real right to defend.⁶ For as to [1] and [3] the liability of Seller to Purchaser is to be litigated as well as the liability of Manufacturer to Seller or Purchaser, or both. As to [2], damages will likewise be proved and [4] being actually a real party at interest problem, F.R.Civ. P. 17(a), the Court has ample powers to protect against double payment, not the least of which would be requiring a complete or partial disclaimer by Purchaser or suitable indemnity by Seller.

The problem then is what to do about this. We are importuned by Seller to declare now that under Alabama law and the Trial Court’s findings on culpable negligence (going to defects in the manufacture or design of the vehicle) Seller has a warranty liability to Purchaser and, moreover, Manufacturer has a similar liability (a) to Seller as its immediate vendee from Manufacturer’s distributor, and, most likely (b) to Purchaser as one known to be in the chain of exposure.

Thus far we agree with Seller. The District Court found every fact necessary to make Seller liable to Purchaser. These include the sale of a vehicle not reasonably fit for its intended use, no contributory negligence by the Purchaser and recognition by Alabama of the implied sales warranty.⁷ And to these may be added the Court’s articulate determination through amended findings that Seller incurred expenses of $7,046.-88 all of which impliedly constituted Purchaser’s damages as well. We therefore hold, as a matter of law, that Seller was liable to Purchaser for breach of the implied warranty of fitness. It likewise follows that Manufacturer was liable to Purchaser under the Manufacturer’s Liability Doctrine ⁸ which Alabama recognizes.⁹

But we cannot, at this stage, go the next and final step to direct rendition of judgment against Manufacturer for these damages. For — without even so much as intimating a possible whisper of a suggestion of the conclusion required — strong as are the indemnitysubrogation claims-over, this is to ignore our limited role and to deprecate to the point of extinction the vital role of the District Court. For the simple truth is, that so mesmerized did the Judge’s gaze apparently become on the elusive game of “Title, title, who’s got the title?” that he wholly failed to make either express findings on any critical facts or conclusions of law on this very precise legal issue of claims-over.

But this is the trial court’s function. This was a legal issue — indeed the key issue — not really tried and certainly not adjudicated.¹⁰ It is not for us on our own to explore Alabama law on a record which may well be quite deficient on critical facts which would tip the scale one way or the other.

This means that the case must go back for a further limited retrial. The Court must determine for Alabama whether payment or reimbursement by Seller without compelling Purchaser to get a judgment declaring a liability now judicially determined to exist on the record between Seller and Manufacturer alters or affects Seller’s right of recoupment (on subrogation, indemnity or otherwise) from the really culpable party, (Manufacturer). Much has been litigated and factually little remains.¹¹

But judgment — that precious consummation of the ordeal of trial — is yet to come, yet to come on matters of concern to Alabama and for which Alabama trained Judges are certainly the best starting place.

Affirmed in part; reversed and remanded in part.

1 . The repairer was exonerated by the District Court and that judgment is not assailed or affected by our disposition.

2 . These issues have been fully tried and are not to be retried on remand.

3 . Title 57 Alabama Code § 21 (1940). Alabama has. now adopted the Uniform Commercial Code which is to the same effect. Title 7A Alabama Code § 2-314 (1966). See Vinyard v. Duck, 1965, 278 Ala. 687, 180 So.2d 522.

4 . See F.R.Civ.P. 14(a); General Dynamics Corp. v. Adams, 5 Cir., 1965, 340 F.2d 271, 277-281; Falls Industries, Inc. v. Consolidated Chemical Industries, Inc., 5 Cir., 1958, 258 F.2d 277, 284-87. As to admiralty, see new F.R.Civ.P. 14 (c) and Advisory Committee’s Notes, 39 F.R.D. 69, 81 (1966), Alabama recognizes indemnity, see, American Southern Insurance Co. v. Dime Taxi Service, Inc., 1963, 275 Ala. 51, 151 So.2d 783, 4 A.L.R.3d 611; Mallory S. S. Co. v. Druhan, 1920, 17 Ala.App. 365, 84 So. 874; and City of Birmingham v. Trammell, 1958, 267 Ala. 245, 101 So.2d 259, resting wholly on subrogation is not to the contrary.

5 . Peters v. Rutledge, 5 Cir., 1968, 397 F.2d 731, n.22; Allen v. Johnson, 5 Cir., 1968, 391 F.2d 527, 529, n. 6 (en banc).

6 . The brief of manufacturer capsulates it this way:

“The difference in the instant case and the above suggestions we submit is quite apparent. [1.] All issues would have been litigated where all three parties are before the Court. In the instant case nothing is litigated except questions between Altec and FWD. [2.] The City of Gainesville would have proved all of its damages (or later be barred). In the instant case the City didn’t have a chance to prove any damages. [3.] The City would have proved its right to recover under an implied warranty against Altec. In the instant case no such proof appears. [4.] FWD would be protected by the judgments where all parties were before the Court. In the instant case there is nothing to keep the City of Gainesville from suing FWD right now.”

7 . See note 3 supra.

8 . Indeed, Manufacturer candidly admits in its brief:

“The only duty that FWD owed to Altec was the same duty it owed to the City of Gainesville under the manufacturer’s liability doctrine.”

Brief for Manufacturer, at 17

9 . Crane Co. v. Davies, 1942, 242 Ala. 570, 8 So.2d 196.

10 . The Court did allow a post-trial amendment to the complaint setting forth in pleadings this theory but the Judge simultaneously declined to amend conclusions either to recognize or reject it.

11 . See notes 1 and 2, supra. The happening of the occurrence, the existence of the defect as the cause, the sole negligence of Manufacturer therefor, and the warranty liability of Seller to Purchaser and Manufacturer to Purchaser are all foreclosed.