World Wide Lease, Inc. v. Grobschmit

586 P.2d 889, 21 Wash. App. 537, 25 U.C.C. Rep. Serv. (West) 687, 1978 Wash. App. LEXIS 1958
CourtCourt of Appeals of Washington
DecidedOctober 16, 1978
Docket5151-1
StatusPublished
Cited by6 cases

This text of 586 P.2d 889 (World Wide Lease, Inc. v. Grobschmit) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
World Wide Lease, Inc. v. Grobschmit, 586 P.2d 889, 21 Wash. App. 537, 25 U.C.C. Rep. Serv. (West) 687, 1978 Wash. App. LEXIS 1958 (Wash. Ct. App. 1978).

Opinion

Dore, J.

— Plaintiff World Wide Lease, Inc., sued the defendants for past due lease payments for an automatic ice vending machine. The defendant cross-complained against Tyler Reco, d/b/a Refrigeration Engineers, alleging breach of express and implied warranties claiming the machine was defective. The trial court awarded plaintiff judgment for unpaid lease payments in the amount of $10,000. Defendants were awarded judgment on their cross complaint against Tyler Reco in the amount of $4,241.44. Cross complainants appeal, claiming the amount of the judgment against Tyler Reco should have been in an amount equal to the plaintiff's judgment.

We reverse the judgment against Tyler Reco in its entirety.

Issues

1. Whether there was an implied warranty of fitness for a particular purpose, which ran from Tyler Reco, the seller of the ice machine, through the lessor World Wide Lease, Inc., to the lessee Grobschmit.

2. Did the lessee Grobschmit, by signing the equipment acceptance notice waiving all expressed and implied warranties as to the lessor World Wide Lease, Inc., waive all such warranties as to the seller Tyler Reco?

3. Could the lessee Grobschmit, 8 months subsequent to accepting the ice vending machine, revoke such acceptance?

*539 Facts

Defendants Grobschmit owned and operated a supermarket known as La Conner Food Center in La Conner, Washington. They decided to acquire an automatic ice vending machine. A contract was prepared for the purchase of such machine from Tyler Reco on terms which specifically excluded warranties of merchantability or fitness for a particular purpose. This sale was never consummated. Grobschmit later decided that the vending machine would be leased from plaintiff in order to retain the defendants' capital for purchase of other refrigeration equipment.

An ice vending machine was then sold by Tyler Reco to World Wide Lease, Inc., the lessor, to facilitate leasing to Grobschmit. Thereafter, defendants executed a personal property lease for the ice vending machine. The terms of the lease included the following statement in prominent contrasting type on the face of the lease document:

3. THE EQUIPMENT IS SATISFACTORY IN EVERY WAY, ACCEPTED BY LESSEE AND APPROVED FOR PAYMENT BY LESSOR. LESSEE • HEREBY AGREES THAT IT HAS FULLY INSPECTED THE PROPERTY LEASED HEREUNDER AND ACKNOWLEDGES IT TO BE IN GOOD. CONDITION AND TO ITS COMPLETE SATISFACTION. LESSEE UNDERSTANDS THAT LESSOR MAKES NO WARRANTIES, EITHER EXPRESSED OR IMPLIED, AS TO THE CONDITION OF THE PROPERTY, OR ITS FITNESS FOR ANY PARTICULAR PURPOSE.

The machine was then installed in defendants' supermarket on July 26, 1974. From the time the machine was installed until the time of trial, the ice machine failed to perform as intended. Difficulties of the machine included repairs necessitated by vandalism, a recalcitrant coin changer, and difficulties with the conveyor mechanism. Nevertheless, the trial court found the machine did function in its refrigeration and storage capacities 100 percent of the time and 75 percent of the time as an automatic vendor. In summary, the court found it was 80 percent effective in use by the defendants.

Grobschmit was advised by representatives of both World Wide Lease, Inc., and Tyler Reco not to accept the *540 machine or to execute the equipment acceptance notice until he was satisfied with the performance of the machine. Substantial repairs were undertaken at no cost to Grob-schmit, and after an additional period of observation, defendants executed an equipment acceptance notice on February 17, 1975. The equipment acceptance notice expressly acknowledged that the lease equipment had been delivered and received as follows:

[TJhat said chattels have been examined and/or tested and are in good operating order and condition, and are in all respects satisfactory to undersigned and as represented, and that said chattels have been accepted by undersigned for purposes of said Equipment Lease. We understand that you, as lessor, make no warranties, either express or implied, as to the condition of the property, or its fitness for any particular purpose.

(Italics ours.) The acceptance further stated in prominent contrasting type of even larger size than the rest of the notice:

PLEASE DATE THIS LETTER ON THE DATE YOU ACCEPT THE EQUIPMENT YOU ARE LEASING. DO NOT EXECUTE THIS FORM UNTIL YOU HAVE POSSESSION OF THE EQUIPMENT AND IT IS SATISFACTORY TO YOU.

In August 1975, defendants revoked their acceptance of the machine.

Decision

Issue 1. We must first determine whether or not the seller Tyler Reco was legally responsible for an implied warranty of fitness for a particular purpose to the lessee. The undisputed testimony established that the agent for Tyler Reco, Bud Turner, who incidentally was a friend of Grobschmit, undertook to sell Grobschmit all of his refrigeration needs for the La Conner Food Center. He recommended to Grobschmit that he purchase the subject machine to meet the competition.

In order for a plaintiff buyer to recover on an implied warranty of fitness for a particular purpose, three *541 elements are necessary: (1) The seller must have reason to know the buyer's particular purpose; 1 (2) the seller must have reason to know that the buyer is relying on the seller's skill or judgment to furnish appropriate goods; and (3) the buyer must in fact rely upon the seller's skill or judgment.

The refrigeration unit was sold by Tyler Reco to the plaintiff for the same price it originally had offered to sell the machine to Grobschmit. In finding that Tyler Reco owed a warranty of fitness for a particular purpose to the lessee Grobschmit, the court in its oral opinion stated:

I find that in the relationships of the parties this was not anything other than a device, a financing tool whereby Mr. Grobschmit acquired the use of this machine. When World Wide Lease purchased that machine they, for all practical purposes, did so on behalf of and as agent for Mr. Grobschmit. They didn't make the selection of the machine. They didn't negotiate price; they had nothing to do with the prior negotiations, and that was a purchase by World Wide Lease on behalf of Mr. Grobschmit, and in accordance with the lease or submitted by Tyler Reco. Any warranties, any obligations that Tyler Reco had ran right through World Wide Lease and did in fact' inure to the benefit of Mr. Grobschmit. Mr. Grobschmit's transactions and dealings with World Wide Lease were entirely independent of his dealings with Tyler Reco. World Wide Lease on its own made no warranties, and I don't think that it is claimed that they did so by Mr. Grobschmit.

The trial court then entered findings of fact and conclusions of law consistent with this opinion.

Finding of fact No. 6:

At the request of defendant, Grobschmit, World Wide Lease, Inc., issued its purchase order to Tyler Reco, requesting the purchase of the above referred to ice vending machine.

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586 P.2d 889, 21 Wash. App. 537, 25 U.C.C. Rep. Serv. (West) 687, 1978 Wash. App. LEXIS 1958, Counsel Stack Legal Research, https://law.counselstack.com/opinion/world-wide-lease-inc-v-grobschmit-washctapp-1978.