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Heat Exchangers v. Aaron Friedman

OPINION FILED MAY 14, 1981.

HEAT EXCHANGERS, INC., PLAINTIFF-APPELLEE,

v.

AARON FRIEDMAN, INC., DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. BEN EDELSTEIN, Judge, presiding. MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, Heat Exchangers, Inc., brought this action in the first district municipal court of the circuit court of Cook County, seeking the price due on a sale of goods. Defendant, Aaron Friedman, Inc., counterclaimed for breach of express warranty and for breach of implied warranty of merchantability. Defendant also counterclaimed for negligence, alleging plaintiff was negligent in carrying out its contractual duties. The negligence count was dismissed for failing to state a cause of action, and the case went to trial on all the other claims. At the conclusion of a bench trial, the trial court entered judgment for plaintiff on the complaint and counterclaim.

On appeal, defendant contends: (1) the trial court erred in dismissing the negligence count of its counterclaim; (2) the judgment entered for plaintiff on the breach of warranty counterclaim is against the manifest weight of the evidence. Defendant does not challenge the judgment entered on the complaint, since defendant asserted no defense of breach of warranty in its answer to the complaint, but defendant contends its counterclaim should stand as a set-off against the damages won by plaintiff.

We affirm the dismissal of defendant's negligence claim. We reverse the judgment entered for plaintiff on the breach of warranty counterclaim and remand with directions to enter judgment for defendant on the counterclaim and for the trial court to hold a hearing to determine damages due defendant based on the evidence already presented in the record.

Factual Background

The goods sold in this case were 38 heat pumps, plus accessories, for a total price of approximately $18,000. Plaintiff, through its Koldwave division, manufactures and sells the heat pumps from its offices in Illinois. A heat pump is a machine designed to use water and air to produce heat and air-conditioning. Plaintiff makes four different models of heat pumps: a console model, a horizontal model, a vertical model, and a floor-to-ceiling model. The floor-to-ceiling model was the kind sold in this case. It differs from the other models only in the design of the outside cabinets. The internal components of all the models are essentially the same and consist primarily of a motor compressor, strainer-drier, condensor, evaporator, connecting tubing, a blower, and various electrical parts. These parts are mounted on a chassis that fits inside the cabinets. Other parts include an air filter that fits into the front cabinet wall (in the case of a floor-to-ceiling model) and the unit controls that are designed to be accessible through an opening in the cabinet.

The floor-to-ceiling model is designed to be placed into the corner of a room and to be connected to the plumbing and electrical wiring inside the wall. It is designed to produce heat and air-conditioning for a limited space, such as one room in a multiple-unit structure. Required maintenance for the model includes periodic cleaning of the filter and the not-so-occasional lubrication of the working parts.

In early 1973, the Darvin Convalescent and Nursing Center, Inc., determined that it would expand its nursing home in Livonia, Michigan, to a 132-bed structure from an approximately 55-bed facility. The Michigan engineering firm hired to prepare plans and specifications for all the mechanical parts of the expansion was Master Temp, Inc. Master Temp submitted plans that included the use of heat pumps in the structure, and plaintiff's Koldwave floor-to-ceiling units were chosen based on plaintiff's successful bid.

Pursuant to this bid, plaintiff prepared shop drawings. These drawings showed the design of its heat pumps and gave dimensions to be used by the general contractor in constructing the new building. Based on these shop drawings, the general contractor could construct the plumbing and electrical wiring within the walls so that connecting pipes and wires would protrude from the walls in the area in which the parts of the heat pumps were to be connected. Thus, the heat pumps, if designed according to the shop drawings, could be installed after the building and its rooms were almost completed.

The general contractor hired to build the extension was defendant, a Michigan corporation run by Aaron Friedman, its president. In April 1974, defendant sent a purchase order for 38 heat pumps to plaintiff's representative in Michigan, Logan-Sommerville, Inc. This purchase order was sent on to plaintiff and plaintiff accepted the order and all its terms. One of the terms contained in this purchase order was the following:

"Suppliers of materials * * * guarantee all work and materials for a period of one year * * *, and agree to correct said defects in work or material at their own cost and expense."

Besides the purchase order, there existed another document of significance, plaintiff's engineering manual supplied with its products. One full page of this manual was entitled, "Warranties." On this page were two alleged warranties made with regard to the products. The heading of these warranties was in large, bold print, while the wording of the warranties was in small print. The warranties read essentially as follows:

"1 YEAR WARRANTY

Each Koldwave heat pump and air conditioner is warranted to be free from defect in materials and workmanship under normal use * * * for a period of one year from date of installation * * *. The manufacturer's sole obligation under this warranty shall be limited to furnishing replacement parts F.O.B. factory, Skokie, Ill., for any parts which the manufacturer's examination shall prove to its satisfaction to be defective.

4 YEAR ADDITIONAL WARRANTY

In addition to the above mentioned first year warranty * * *, the manufacturer warrants to the original purchaser that it will, at any time during the next four years following the expiration of the first year warranty, furnish replacement parts for the sealed refrigeration system only. This includes motor compressor, condensor, evaporator, and internal connecting tubing or parts thereof, including the accumulator, strainer, dryer when used on the original equipment, for any of these parts which are proven to the satisfaction of the manufacturer to be inoperative due to defects in material or factory workmanship. * * *. Repairs to the refrigerant system will be made with a nominal service labor charge upon presentation of the conditioner * * * to the Koldwave Dealer or Distributor from whom the unit was purchased.

This Warranty is in lieu of all other warranties expressed or implied and of all other obligations or liabilities on the part of [plaintiff], and we neither assume nor authorize any other person to assume for us any obligation or liability in connection with [the product]."

Friedman admitted at trial that he had seen this page of the manual, but it was never established when his company received this manual or when he saw this page.

After the purchase order was accepted, a series of delays in delivery occurred, with defendant repeatedly requesting delivery and plaintiff repeatedly promising delivery. Also, there was a delay in plaintiff's sending the shop drawings to defendant so defendant could construct the plumbing and wiring and finish the walls of the building. These shop drawings apparently arrived in the late summer of 1974, and defendant completed the necessary construction of the walls. The heat pumps and their accessories were shipped in three installments in October and November 1974, with the last installment arriving in the middle of November 1974. On the shipping invoices that arrived with the heat pumps was written that the heat pumps were being sold with an "additional 4 year warranty."

Eight of the cabinets for the heat pumps arrived in a damaged condition. Defendant informed Logan-Sommerville, plaintiff's representative in Michigan, of this fact. Despite the damage, defendant accepted the goods, and in this action it does not appear that defendant is seeking damages because of the condition of the cabinets when delivered.

The process of installing the heat pumps began in December 1974 and ended in January 1975. While installing the heat pumps, defendant discovered that the majority of the heat pumps were not designed according to the shop drawings prepared by plaintiff. There were basically two discrepancies. First, the cabinets were all in one piece. This essentially caused a problem in mathematics. The cabinets were to be carried into a room in a horizontal position. They were then to be lifted to a vertical position and put into the corner of the room. Since the design of the cabinets was floor-to-ceiling, it was impossible to raise the cabinets up to a vertical position once inside a room because they were in one piece. The attempt would be like trying to raise a 10-foot-high file cabinet from a horizontal position to a vertical position inside a 10-foot-high room. It cannot be done unless a hole is made in the ceiling. According to the shop drawings, the cabinets were supposed to be in two parts, a bottom part consisting of the bulk of the cabinet, and a top part called a "collar" that could be installed after the bottom was placed into the wall.

The second discrepancy was in the basic design of the back wall of the cabinets and the internal components of the heat pumps. The water pipes and electrical wiring that defendant had constructed to extend from the wall were at one height, in accordance with the shop drawings, and the holes in the back walls of the cabinets and the place on the internal components where the pipes and wiring were to be connected were actually designed for a different height. To exaggerate, it could be said that the pipes and wiring in the wall were placed just above the floor and the holes in the cabinets, and the internal connecting parts were designed for connection just below the ceiling.

Defendant informed Logan-Sommerville of these problems. Logan-Sommerville authorized defendant to take necessary measures to change the pipes and wiring in the walls and to cut the cabinets so they could be placed upright in the rooms. Defendant incurred an expense of approximately $6,000 to complete the necessary changes. In March 1975, plaintiff offered a set-off on the price of the units of approximately $2,800 for the work. Defendant rejected this offer and this matter was left in abeyance.

After the units were installed, defendant began the process of putting the front panels on the heat pumps. The front panels would not fit. The front panels were designed to be screwed into the remaining parts of the cabinets. However, the internal components of the heat pumps extended too far from the back of the cabinets and prevented the front panels from being put onto the units. This problem existed in almost all of the heat pumps.

Defendant informed Logan-Sommerville of this problem. Representatives of Logan-Sommerville came to the nursing home and reworked the front panels to make them fit. They redesigned the filter holder in the panels so they would hold thinner filters, thus allowing for the internal components to come closer to the front panels. They also put in new screws to force the panels to go on. However, this action resulted in the panels being "bowed," meaning the bottom and top of each panel bent out away from the rest of the cabinet, while the center part bent towards the internal components. One problem this created, other than unsightliness, was that air from the room could get inside a unit through cracks ...


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