Mountain Fuel Supply Co. v. Central Engineering & Equipment Company

611 P.2d 863, 29 U.C.C. Rep. Serv. (West) 817, 1980 Wyo. LEXIS 277
CourtWyoming Supreme Court
DecidedMay 30, 1980
Docket5129
StatusPublished
Cited by31 cases

This text of 611 P.2d 863 (Mountain Fuel Supply Co. v. Central Engineering & Equipment Company) is published on Counsel Stack Legal Research, covering Wyoming Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mountain Fuel Supply Co. v. Central Engineering & Equipment Company, 611 P.2d 863, 29 U.C.C. Rep. Serv. (West) 817, 1980 Wyo. LEXIS 277 (Wyo. 1980).

Opinion

RAPER, Chief Justice.

This case involves a warranty on a natural gas compressor. The primary question is whether the district court correctly determined, both as to facts and law, when the ninety-day warranty on the compressor began to run. In addition, issues are raised as to whether there were implied warranties of merchantability and fitness for purpose in addition to the express ninety-day warranty, whether the district court correctly found the claim to be for a liquidated amount and awarding interest as a result, and whether the district court erred in not awarding damages for a counterclaim for loss of production of natural gas while the compressor was out of service during repairs.

We shall affirm the district court.

The appellant, Mountain Fuel Supply Company, solicited and received an offer from appellee, Gary Operating Company (Gary) to sell a reconditioned natural gas compressor, which had been manufactured in 1955. The initial offer to appellant was made in a letter dated October 25, 1974. The offer recited the model offered, detailed the overhaul to be performed on the unit and stated:

“All piping and bottles cleaned. All engine and compressor tolerance will be within Ingersoll-Rand new manufacturer specifications and the unit will carry a 90-day unconditional warranty. Parts book and all tolerances will be furnished.
“Price, FOB your location, in as new condition $138,000.00”.

This offer was never accepted.

A new offer was made by Gary on April 30, 1975. In pertinent part, it provided:

“We are pleased to quote on an SVG-10 [ 1 ] gas compressor, per the attached Bill of Materials. The price shown is FOB Casper, Wyoming. Delivery date is June 30, 1975.
“The unit will be guaranteed to produce 550 HP at 7200 feet above sea level rated at 400 rpm. The unit will also carry a 90-day parts and labor warrantee [sic] with compressor valve and rings excluded.[ 2 ]
“Terms for purchase will be 90 per cent of the total cost due within 30 days of *866 delivery and 10 per cent after 90 days of operation.”

The price quoted in this offer was $147,-811.78 and was accepted. It is the warranty in this accepted offer which is at issue in the appeal before the court.

The terms of the offer and acceptance— contract of sale — were not strictly adhered to. The record reveals that delivery of the components did not take place until late September of 1975 3 and that the delivery was effected at appellant’s Hiawatha site at a remote location in southwestern Wyoming. At the time of physical delivery of the unit, there was still considerable work to be accomplished before it would be operational. This was a custom installation by seller at the buyer’s site. Because of Gary’s manpower shortage problems, appellant’s crews assisted in mechanical work on the unit, for which appellant received credit.

In late December 1975, but effective November 1, 1975, appellee Gary sold the assets of its Central Engineering Division to the appellee, Central Engineering & Equipment Company (Central) but Gary Operating Company assumed the obligation for the ninety-day warranty on the unit in question.

Work on the unit continued through November 1975 and until February 1976. The record reveals that the total price actually paid for the unit was $184,217.09. A payment of $166,287.61 was made on November 18, 1975. $17,929.48 was retained and on May 7, 1976, appellant made the final payment to Central of $11,443.48, this making the $17,929.48 due, $6,486.00 having been credited to appellant for labor and materials it expended in bringing the unit into operation which was Central’s responsibility. According to appellant, this payment was made about thirty days after start of full-time operation of the compressor as an accommodation to Central, rather than after ninety days of operation as provided by the contract terms.

The engine portion of the compressor was tested on February 26, 1976, although the entire compressor unit was not placed in operation. During that test, a number of problems were uncovered which were corrected by Central. Appellant then went about connecting the piping so that the unit could begin its job of compressing gas and the whole unit was set into operation on March 25, 1976. More adjustments were made at that time in order to bring the unit up to the required 550 HP, and nozzle rings of the wrong size were replaced. These final adjustments were completed and the unit began working full time on about April 2, 1976.

On June 3, 1976, the unit suffered a major mechanical breakdown. Central repaired the unit at a cost of $45,911.82. Appellant refused to pay the repair bill, asserting that the unit was still covered by the ninety-day warranty. Central then initiated this action by filing a complaint for the sum owed by appellant to Central for goods sold and delivered. Appellant answered, counterclaimed against Central, and made a third-party complaint against Gary, all premised on the warranty provisions of the contract.

A trial was had before the district court in July 1978. The district court entered judgment on September 5, 1978, 4 pursuant to his memorandum decision letter dated August 4, 1978. The decision letter recited the facts substantially as outlined above. The court concluded that the warranty period began to run on February 26, 1976, because he perceived that the agreement between the parties contemplated that the warranty period was to commence upon *867 “start-up.” The breakdown on June 3, 1976, was then some ninety-eight days after start-up and the trial judge concluded the ninety-day warranty had expired. The district court also concluded that the warranty was not one of future performance, that the running of the warranty period was not tolled during the time when the unit was being repaired. The trial judge further found that following start-up, on February 26, 1976, Central honored the warranty and made repairs without charge, and that the failure of the unit to immediately produce the required horsepower was within the contemplation of the parties and was remedied in accordance with the warranty. As a consequence of its decision, the district court did not consider any consequential damages incurred by appellant. The court also determined that the claim of Central was for a liquidated amount and that appellant was obligated to pay prejudgment interest on Central’s claim. There were numerous other factual and legal findings detailed in the decision, but we do not recite them because they are not contested in this appeal.

The judgment essentially mirrored the district court’s decision letter. The decision letter was detailed and comprehensive both in its factual findings and statement of legal reasoning and has been of great assistance to this court. We encourage such careful consideration during the trial court phase of difficult litigation.

The issues raised by the appellant are summarized as:

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611 P.2d 863, 29 U.C.C. Rep. Serv. (West) 817, 1980 Wyo. LEXIS 277, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mountain-fuel-supply-co-v-central-engineering-equipment-company-wyo-1980.