United States District Court, Northern District of Illinois, E.D
September 13, 1982
ABCO METALS CORPORATION, PLAINTIFF,
J.W. IMPORTS COMPANY, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Decker, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff, Abco Metals Corporation ("Abco"), has filed its
amended complaint in this diversity action against three
defendants, J.W. Imports Company, Inc. ("J.W. Imports"), E.
Laursens Maskinfabrik ("Laursens"), and Equico Lessors, Inc.
("Equico"), alleging breach of express warranties, breach of
implied warranties of merchantability, breach of implied
warranties of fitness for a particular purpose, strict products
liability, negligence, and breach of contract. All nine counts of
the complaint involve the delivery and use of an allegedly
defective wire chopper manufactured by defendant Laursens, a
Denmark corporation. Each of the three defendants has filed a
motion to dismiss at least some of the counts. Defendant Laursens
has moved to dismiss all counts against it, including counts
stating causes of action for breach of express warranties (Count
I), breach of implied warranties (Counts III and V), strict
liability in tort (Count VII), and negligence (Count VIII).
Defendant J.W. Imports has filed an answer to the breach of
warranties counts against it (Counts II, IV and VI), and has
joined in Laursens' motion to dismiss the tort counts (Counts VII
and VIII). Finally, Equico has
moved to dismiss the only two counts naming it as a defendant,
which allege strict liability (Count VII) and breach of contract
(Count IX). After a short statement of the facts, each motion
will be discussed in turn.
I. Factual Background.
The following facts have been alleged in plaintiff's amended
complaint filed on May 14, 1982 ("complaint"), which, for the
purpose of these motions, must be considered as true. In early
1980, Abco contacted J.W. Imports to inquire about buying a large
capacity wire chopper and granulator for use in Abco's scrap
metal processing business. A wire chopper is used in the
recycling of insulated wire and cable. Among other things, it
strips insulation from the metal conductor in the wire, usually
copper, which is then sold to a refiner for reprocessing. Abco
had had prior business dealings with J.W. Imports, and had
previously purchased a smaller capacity wire chopper and
granulator. Like the one involved here, the smaller wire chopper
had been manufactured by Laursens, for whom J.W. Imports was the
exclusive distributor in North America.
A meeting was arranged to discuss Abco's particular
requirements and the details of the newly proposed sale. Those
present at the meeting included Ray Ebinger, president of Abco;
Jorgen Warrer, president of J.W. Imports, and Ole Christiansen,
an engineer employed by Laursens. According to the complaint,
Ebinger specifically told Warrer and Christiansen that Abco
needed a wire chopper capable of processing mixed # 2 insulated
wire at a rate of 10,000 pounds per hour. Warrer and Christiansen
agreed that Laursens would build for Abco and J.W. Imports would
sell to Abco the wire chopper. Allegedly, Warrer and Christiansen
guaranteed that the wire chopper would meet the requirements
outlined by Ebinger. The purchase price of the machine was
The sale of the wire chopper was structured in the following
manner. Laursens was to manufacture the wire chopper and sell it
to J.W. Imports. It was agreed that J.W. Imports would then sell
the wire chopper to Equico, an equipment leasing company, who
would "lease" it to Abco. Pursuant to that arrangement, Abco
forwarded a substantial security deposit to J.W. Imports, and a
purchase order was exchanged between Equico and J.W. Imports,
with a copy being sent to Abco.
Abco and Equico then executed an agreement stated in the terms
of a lease. Under the agreement, Abco made an initial payment to
Equico of $55,152.50, to be followed by sixty monthly payments
of $2,459.00, in exchange for the wire chopper. Contemporaneously
with that agreement, Abco and Equico also executed a purchase
option, pursuant to which Abco could purchase the wire chopper
from Equico at the expiration of the sixty-month period for
$10,000. Plaintiff alleges that Laursens and J.W. Imports were
informed that the arrangement with Equico was strictly for
financing purposes, and that notwithstanding the "lease"
characterization, the import of the entire arrangement was that
Abco was purchasing the wire chopper from J.W. Imports and
The wire chopper was delivered to Abco in June 1980. After
accepting the machine, Abco learned that the chopper was not
capable of operating at a 10,000 pounds per hour capacity, and
that it could not process mixed # 2 insulated wire. Shortly after
Abco discovered that the wire chopper did not meet the expected
specifications, it notified both Laursens and J.W. Imports of the
problem. Laursens and J.W. Imports both assured Abco that the
problems would be cured. Abco alleges that in fact the problems
were not solved, and that the wire chopper has never operated
satisfactorily. As a consequence, Abco claims that it has
suffered damages from the purchase of the wire chopper itself,
from its purchase of additional equipment to be integrated with
the wire chopper, the maintenance and installation of the wire
chopper, the destruction of wire that was processed in the
chopper, and lost profits.
II. Laursens' Motion to Dismiss Warranty Counts.
In Counts I, III, and V, Abco alleges that the failure of the
wire chopper to work as expected constituted a breach by Laursens
of each of the three types of warranties created by the Uniform
Commercial Code. In Count I, Abco claims that the statements from
Laursens' representatives to the effect that the wire chopper
would process 10,000 pounds of mixed # 2 insulated wire were
affirmations of fact and promises constituting express warranties
which were subsequently breached when the chopper did not work.
Abco alleges in Count III that the wire chopper, as delivered,
was not fit for the ordinary purposes for which wire choppers are
used, and, therefore, Laursens breached its implied warranty of
merchantability. Finally, Count V alleges that, at the time
Laursens manufactured the wire chopper for Abco, Laursens was
aware of the particular purposes and needs of Abco, and the
failure of the wire chopper to meet those purposes constituted a
breach of the implied warranty of fitness for a particular
purpose. See Uniform Commercial Code, §§ 2-313, 2-314, and 2-315,
Ill.Rev.Stat. ch. 26, §§ 2-313, 2-314, and 2-315.
Laursens attacks all three of the warranty counts on
essentially the same grounds. Relying on the structure of the
deal between the various parties, Laursens claims that there was
no contract between it and Abco. Rather, Laursens notes that the
wire chopper was first sold to J.W. Imports, then sold to Equico,
who finally leased it to Abco. Therefore, Laursens argues that it
is not in privity of contract with Abco. According to Laursens,
without privity of contract between Laursens and Abco, the breach
of warranty claims do not state causes of action.
Initially, the court notes that the parties apparently assume
that Illinois law should govern this diversity action. Without
any suggestion to the contrary, the court agrees with the
parties' assumption. Turning to Laursens' specific arguments,
Illinois law does not always require privity of contract between
the user and the manufacturer of the product, at least insofar as
the enforceability of implied warranties of merchantability and
fitness for a particular purpose are concerned.
"[G]enerally privity only extends to the parties to
the sale and implied warranties are not applicable
between the buyer and a remote
manufacturer. . . . This is not true, however, where
there is a direct relationship between the
manufacturer and the seller . . ., or where, as here,
the manufacturer knew the identity, purpose and
requirements of the dealer's customer and
manufactured or delivered the goods specifically to
meet those requirements."
Franks' Maintenance & Engineering, Inc. v. C.A. Roberts Co.,
86 Ill. App.3d 980, 992-93, 42 Ill.Dec. 25, 408 N.E.2d 403 (1st Dist.
1980) (citations omitted). See Rhodes Pharmacal Co. v.
Continental Can Co., 72 Ill. App.2d 362, 372-73, 219 N.E.2d 726
(1st Dist. 1966).
From the allegations of plaintiff's complaint, it is apparent
that both conditions for avoiding the privity requirement may
exist in this case. Abco has alleged facts indicating that there
was a direct relationship between it and Laursens involving the
wire chopper. Laursens' employee was present at the meeting where
the purchase of the wire chopper was discussed, and he promised
the machine would meet Abco's requirements. Abco notified
Laursens when the wire chopper did not operate as expected. After
the notification, Laursens assured Abco that the chopper would be
fixed, and evidently took some steps to do so, though the
attempted repairs failed. Those allegations, if true, establish
the requisite direct relationship between Abco and Laursens.
Likewise, the same allegations show that Laursens was well aware
that Abco was J.W. Imports' customer, and that Laursens was
informed of Abco's purpose in buying the wire chopper and of
Abco's particular requirements. Given plaintiff's allegations,
privity of contract between Abco and Laursens was not necessary
for the implied warranties to arise.
This leaves only Laursens' arguments concerning the express
warranty. Apparently, the Illinois courts have not directly
considered whether the privity requirement for express warranties
will be eased under the same conditions that allow the
requirement to be relaxed for the purposes of implied warranties.
In dictum, however, an early Illinois decision suggested that no
distinction should be made between express and implied
"Since the Uniform Commercial Code, effective in
1962, adopts the third-party beneficiary language in
discussing the effect of express and implied
warranties, it seems that this doctrine should be
extended here to a situation where a seller makes a
product for a user who is not a direct buyer, but
with whom the seller has direct dealings."
Rhodes Pharmacal, supra, 72 Ill. App.2d at 372, 219 N.E.2d 726
(emphasis added). The effect of that language is to broaden the
definition of the term "seller" in UCC § 2-213 to include all
those within the chain of production with whom the ultimate user
of the product had direct and substantial contact. Laursens has
not identified any Illinois precedent which would suggest that
the Illinois courts would rule differently when faced with this
question, nor has Laursens suggested any other compelling reasons
to distinguish between implied and express warranties.
Finally, reading Abco's allegations liberally, the court
believes that an oral contract concerning the wire chopper may
exist between Abco and Laursens; a contract sufficient to meet
the privity requirement should it be necessary to do so.
Laursens' statements at the meeting, later contacts between
Laursens and Abco delineated in Ebinger's affidavit filed by
Abco, and Laursens' efforts to fix the allegedly defective wire
chopper all may evidence the existence of such a contract. There
is no question that oral statements made in the course of such a
relationship may rise to the level of express guaranties. See
Capital Equipment Enterprises, Inc. v. North Pier Terminal Co.,
117 Ill. App.2d 264, 254 N.E.2d 542 (1st Dist. 1969). Laursens'
motion to dismiss the warranty counts against it will be denied.
III. Laursens' and J.W. Imports' Motions to Dismiss Tort
Laursens has also moved to dismiss Counts VII and VIII of the
complaint. J.W. Imports has joined in that part of Laursens'
motion and has adopted the arguments raised by Laursens. In Count
VII, Abco alleges that the wire chopper was defective and
unreasonably dangerous when it left the control of the three
defendants, and that, as a result, Abco suffered damage to its
property, specifically, a quantity of mixed # 2 insulated wire
that was processed in the chopper and destroyed. Abco claims that
the three defendants are strictly liable for the damage that
resulted. In Count VIII, Abco alleges that Laursens and J.W.
Imports were negligent in providing a defective wire chopper, and
that the negligence resulted in the same damage to Abco's wire as
was alleged in Count VII.
Laursens' arguments in support of dismissing Abco's tort claims
are based on the Illinois Supreme Court's recent opinion in
Moorman Manufacturing Co. v. National Tank Co., 91 Ill.2d 69, 61
Ill.Dec. 746, 435 N.E.2d 443 (1982). There, the Illinois court
held that a plaintiff may not recover for "solely economic
loss[es]" resulting from a product defect on either strict
liability or negligence theories, but rather the plaintiff was
required to look to the warranty remedies provided by the UCC.
Id. at 81, 61 Ill.Dec. 746, 435 N.E.2d 443. Laursens claims that
Abco is attempting to recover only its economic losses, and has
failed to allege the occurrence of any accident "involving some
violence or collision with external objects" caused by the
defect. Id. at 83, 61 Ill.Dec. 746, 435 N.E.2d 443 (quoting Note,
Economic Loss in Products Liability Jurisprudence, 66 Colum
L.Rev. 917, 918 (1966)). Abco has responded by arguing that it is
claiming more than damages for its solely economic loss. It is
also claiming damages for its property — the mixed # 2 insulated
wire — which was destroyed because of the defects in the wire
It appears that Abco's analysis of the majority's opinion in
Moorman is correct. The holding there was stated in two parts:
"We . . . hold that, where only the defective
product is damaged, economic losses caused by
qualitative defects falling under the ambit of a
purchaser's disappointed expectations cannot be
recovered under a strict liability theory."
Id., 91 Ill.2d at 85, 61 Ill.Dec. 746, 435 N.E.2d 443.
"We do hold, however, that when a product is sold
in a defective condition that is unreasonably
dangerous to the user or consumer or to his property,
strict liability in tort is applicable to physical
injury to plaintiff's property, as well as to
Id. at 81, 61 Ill.Dec. 746, 435 N.E.2d 443
. Based on those two
quotes, the Illinois court has drawn the relevant distinction
between those situations where the defective product simply
breaks down and situations where the defective product destroys
some other items of the plaintiff's property in the course of the
breakdown. In the latter case, tort remedies are available to the
plaintiff. Here, Abco has alleged that the wire chopper did not
simply break down, but that in doing so, it also destroyed a
substantial amount of Abco's property. Under Illinois law,
therefore, Abco's tort claims do state causes of action.
IV. Equico's Motion to Dismiss.
Equico is named as a defendant in only two of the nine counts
of plaintiff's amended complaint. In Count VII, as discussed
above, Abco states a claim against Equico and the other
defendants based on the theory of strict liability for defective
products (products liability). In Count IX, which applies only to
Equico, Abco claims that Equico breached its contract with Abco
by failing to supply consideration, specifically because the wire
chopper never worked as specified. Equico has raised separate
arguments for dismissal of the two counts against it, which will
be considered in turn below.
Concerning Count VII, Illinois law recognizes that strict
products liability may be applied to commercial lessors who rent
out defective products. See Crowe v. Public Building Commission,
74 Ill.2d 10, 23 Ill.Dec. 80, 383 N.E.2d 951 (1978). The
Illinois Supreme Court justified the extension of Section 402A of
the Restatement (Second) of Torts to include lessors as well as
sellers by observing,
"A lessor is subject to strict liability because his
position in the `overall producing and marketing
enterprise' ([Dunham v. Vaughan & Bushnell
Manufacturing Co.,] 42 Ill.2d 339, 334
[247 N.E.2d 401]) is no different from that of a seller.
Typically, the commercial lessor is within the
original chain of distribution and reaps a profit by
placing a product in the stream of commerce. At the
point in the chain of distribution where the product
passes through the hands of the lessor, he becomes as
capable as a seller to prevent a defective product
from proceeding through the stream of
commerce. . . . Consequently, the public policy
rationale which justifies the use of strict liability
as a means of shifting the burden of initial loss
from the injured user applies with equal force
whether the defective product is placed in the stream
of commerce by a seller or by a lessor."
Id. at 15, 23 Ill.Dec. 80, 383 N.E.2d 951
Equico argues, however, that despite the Illinois court's
ruling in Crowe, it should not be strictly liable in tort for any
defects in Abco's wire chopper. In order to reach that result,
Equico relies on the distinction between "commercial" lessors and
"financial" lessors. The two types of lessors may be defined as
follows. A normal, commercial lessor is someone who rents a
product to its customer for a relatively short period, with the
expectation that the product will be returned at the completion
of the term of the lease and, perhaps, then leased to other,
future customers. A common example of such a lessor would be the
Hertz Corporation, which rents vehicles for short periods. It is
now well established that such organizations may be held strictly
liable for damages that result if the products
they rent prove to be defective. See Galluccio v. Hertz Corp.,
1 Ill. App.3d 272, 274 N.E.2d 178 (5th Dist. 1971).
A "financial" lessor, on the other hand, does not actually
provide the equipment to the lessee, but rather provides the
money which allows the user of already selected equipment to
purchase it. To a substantial extent, a financial lessor may be
analogized to a bank that loans money to its clients. Rather than
simply loaning the money for the purchase to the ultimate user of
the equipment, the transaction is set up as a "lease," with the
lessor "purchasing" the equipment for the specific purpose of
"renting" it to the user. Certain tax consequences often provide
the incentive for so structuring the transaction. Normally, the
lessor has no familiarity with the particular equipment involved,
and rarely does the lessor intend to take possession of the
equipment when the lease term is completed. Therefore,
contemporaneously with entering into the lease agreement, the
parties generally execute an option whereby the user can purchase
title to the equipment from the lessor at the end of the lease
period for an amount less than the then expected value of the
equipment. See Francioni v. Gibsonia Truck Corp., 472 Pa. 362,
372 A.2d 736, 740 n. 3 (1977).
Equico claims that its agreement with Abco is not a true,
commercial leasing arrangement, but rather is nothing more than
a financial lease. There is certainly no question that that is
indeed the case here. Plaintiff itself has alleged, "J.W. Imports
and Laursens were informed that the arrangement with Equico was
strictly for financing purposes." Amended Complaint, ¶ 17. The
copy of the lease, which plaintiff has included in the record,
reinforces that conclusion. In the lease, Abco recognizes that
it, not Equico, was responsible for selecting the wire chopper.
Equico specifically disclaimed all warranties concerning the
chopper, and Abco waived all claims it might have against Equico
resulting from any defect, malfunction, or the condition of the
machine. And, when the lease was signed, Equico and Abco also
entered into an option agreement providing that Abco could
purchase the wire chopper for $10,000.
Given the particular features of the Abco-Equico lease, and
those of financial leases in general, Equico argues that the
public policy reasons which support extending strict products
liability under Section 402A to commercial lessors do not apply
to financial leases. Recognizing that its argument has not been
addressed by the Illinois courts, Equico places its primary
reliance on the decision of the Supreme Court of Pennsylvania in
Nath v. National Equipment Leasing Corp., 497 Pa. 126,
439 A.2d 633 (1981).
The facts of Nath are closely analogous to those involved here.
Plaintiff Nath was injured while working with an allegedly
defective wire and cable stripping machine. Nath's employer,
Keystone Metals Co., had acquired the machine from Rigby
Manufacturing Co., after bargaining directly with them concerning
the machine's purchase price. Keystone asked the Nath defendant,
National Equipment Leasing Corp. ("National"), to finance the
purchase. Rigby Manufacturing then acceded to National's request
to re-invoice the machine, showing National as the owner.
National leased the machine to Keystone Metals and filed a
financing statement on it in accordance with the provisions of
the Uniform Commercial Code. After Nath's injury, he sued both
Rigby Manufacturing and National.
Following several earlier appeals and a trial, the lower court
in Nath concluded that the lease between National and Keystone
Metals was purely a financing device. Then, relying on the
footnote in Francioni, supra, the lower court held that strict
liability under Section 402A did not apply to financial lessors.
Upon appeal, the Pennsylvania Supreme Court agreed.
First, the Pennsylvania Court reviewed the policy
considerations behind Section 420A strict liability. The court
then concluded that those considerations precluded imposing
strict liability on National.
"Section 402A which provides for a form of strict
liability is, of course, not predicated upon `fault'
or `negligence.' That
which provides the basis for fastening liability upon
suppliers of products is that the supplier or
manufacturer is the one that has the control over the
product and places it within the stream of commerce.
The party merely financing the transaction has no
control over its manufacture, is not involved in the
selection of the product nor in any way makes a
representation as to its quality or soundness.
Between the financier and the ultimate purchaser, it
is usually the latter who selects the goods,
negotiates for its purchase and has control over its
"While it is true that the financing makes the
purchase possible, and to that limited extent the
financier can be perceived to have participated in
the delivery of the product, such a tangential
participation in the supplying of the goods does not
justify the imposition of strict liability. As noted,
the financier is not supplying the chattel but rather
is offering the use of money.
"Financing institutions are not equipped to pass upon
the quality of the myriad of products they are called
upon to finance nor do they have direct impact upon
the manufacturing process of the product to exercise
quality control. Finally, their relationship with a
particular manufacturer does not, in the normal
course, possess the continuity of transactions that
would provide a basis for indirect influence over the
condition and the safety of the product."
Nath, 439 A.2d at 636. See Cole v. Elliott Equipment Corp.,
653 F.2d 1031
(5th Cir. 1981). Equico urges this court to accept the
analysis in Nath as the result that the Illinois courts would
reach if they, rather than the federal district court, were faced
with this question.
Plaintiff Abco argues to the contrary, claiming the policy
considerations behind the products liability law in Illinois are
different from those in Pennsylvania, and that when those
different considerations are taken into account, this court
should find that Illinois would impose strict liability on
financial lessors. In support of its arguments, Abco relies
primarily on three Illinois cases: Crowe, supra; Dunham v. Vaughn
& Bushnell Manufacturing Co., 42 Ill.2d 339, 247 N.E.2d 401
(1969); and Connelly v. Uniroyal, Inc., 75 Ill.2d 393, 27
Ill.Dec. 343, 389 N.E.2d 155 (1979).
Each of those cases emphasizes the standard Illinois products
liability rule — that liability extends to everyone who "is
within the chain of distribution" or who "reaps a profit by
placing a product in the stream of commerce." Crowe, 74 Ill.2d at
15, 23 Ill.Dec. 80, 383 N.E.2d 951. In Dunham, the Illinois
court imposed liability on a wholesaler who sold a defective
hammer, even though the box in which the hammer was packaged was
never opened by the wholesaler. In Connelly, the court held the
licensor of the trademark appearing on the product would be
liable if the product was defective. The court stated,
"A licensor is an integral part of the marketing
enterprise, and its participation in the profits,
reaped by placing a defective product in the stream
of commerce . . ., presents the same public policy
reasons for the application of strict liability which
supported the imposition of such liability on
wholesalers, retailers and lessors."
Id., 75 Ill.2d at 411, 27 Ill.Dec. 343, 389 N.E.2d 155
omitted). The facts in Connelly, however, suggest that the
defendant Uniroyal had particularly close control over the
product, in that it provided "detailed information as to the
methods, processes and formulae used in the manufacture of tires
and tubes." Id. at 407, 27 Ill.Dec. 343, 389 N.E.2d 155
Abco argues that Equico, as a financial lessor, is like the
wholesaler in Dunham and the trademark licensor in Connelly. Abco
suggests that Equico is partially responsible for placing the
wire chopper in commerce. Abco has filed an affidavit stating
that it would not have purchased the machine if Equico had not
been involved in the transaction. Also, Abco argues that Equico
will make a substantial profit from this deal. The total of
Abco's initial payment to Equico,
plus the sixty monthly payments required by the lease, are
considerably larger than the purchase price of the wire chopper.
This court, however, is unconvinced by plaintiff Abco's
arguments, basically because they ignore the facts and commercial
realities of the deal between Abco and Equico. In fact, Equico is
not responsible for putting the defective wire chopper into the
stream of commerce, as that phrase is used by the Illinois
courts. By the time Equico was brought into the deal, Abco had
already met with Laursens and J.W. Imports, negotiated the
specifications and price of the wire chopper, and agreed to
purchase it. As Equico properly notes in its brief in support of
this motion, it did not provide the machine but merely provided
the money to make the purchase of the machine possible. The court
does not believe that Abco could seriously argue that, if it had
borrowed money from a bank to pay for the wire chopper, the bank
would be liable for any defects. In the instant transaction,
Equico occupies essentially the same position as the bank would.
Abco's arguments concerning Equico's profits suffer from
similar defects. Viewing Equico's actions properly, it is clear
that Equico did not profit "from the defective wire chopper" as
Abco contends. Rather, the excess amount received by Equico over
and above the purchase price of the wire chopper is nothing more
than the interest charged by Equico for the use of its money.
Finally, it is clear that imposing liability on Equico would
merely burden financing companies without furthering in any way
the traditional justification for strict products liability. As
stated in Crowe, strict liability is placed on those "in a
position to prevent a defective product from entering the stream
of commerce," by "either adopt[ing] inspection procedures or
influenc[ing] the manufacturer to enhance the safety of a
product." Id., 74 Ill.2d at 13-14, 23 Ill.Dec. 80,
383 N.E.2d 951. As a financial lessor, with no expertise in the products
involved, and not having been brought into the deal until after
the sale was agreed to, Equico had no control whatsoever over the
quality of the wire chopper. In sum, this court believes that the
Illinois courts would accept the reasoning in Nath and find that
financial lessors would not be strictly liable for defective
In a final effort to salvage its strict liability claim against
Equico, Abco argues that its agreement with Equico could be found
to be an installment sales contract, rather than a lease. If so,
Abco claims that Equico could clearly be held liable under the
landmark Illinois case on strict liability, Suvada v. White Motor
Co., 32 Ill.2d 612, 210 N.E.2d 182 (1965). However, the court
does not believe that the products liability question should
depend on how this transaction might be treated for tax or
bankruptcy law purposes. Whether the agreement between Equico and
Abco is viewed as a "true" lease or as an installment sale, the
facts of the financial lease arrangement do not change. It is
those facts that compel the conclusion that Count VII of the
amended complaint against Equico should be dismissed.
The only remaining count of the amended complaint against
Equico is Count IX, which alleges that Equico breached its
contract with Abco by failing to provide the consideration called
for in the contract — a working wire chopper. Equico has moved to
dismiss Count IX as well, arguing that the allegations of
plaintiff's complaint demonstrate conclusively that Equico did
provide the necessary consideration. The court agrees.
The terms of the lease agreement between Equico and Abco
clearly show that Equico was not obligated to provide a
non-defective wire chopper in order to comply with the lease.
Abco specifically waived all claims that it might have against
Equico if the machine were in fact defective, and agreed to the
following term in the lease: "No defect of unfitness of the
equipment shall relieve lessee of the obligation to pay rent, or
any other obligation under this agreement to lessor." Complaint,
Exhibit B at 1. Given the financial nature of this lease, as
described above, Equico's consideration was not the machine, but
rather the money to purchase the machine from Laursens
and J.W. Imports. Equico has provided the required sum of money,
and therefore, has met its obligations under the contract. Other
courts which have addressed this question have reached the same
conclusion. See Citicorp Leasing, Inc. v. Allied Institutional
Distributors, Inc., 454 F. Supp. 511 (W.D.Okla. 1977); Bill
Stremmel Motors, Inc. v. IDS Leasing Corp., 89 Nev. 414,
514 P.2d 654 (1973); Transamerica Leasing Corp. v. Van's Realty Co.,
91 Idaho 510, 427 P.2d 284 (1967); Funding Systems Leasing Corp.
v. King Louie International, Inc., 597 S.W.2d 624 (Mo.App. 1979).
For the reasons stated above, defendant Laursens' motion to
dismiss is denied. Defendant J.W. Imports' motion to dismiss
Counts VII and VIII of the amended complaint is denied. Laursens
and J.W. Imports are ordered to answer or otherwise plead within
20 days after the entry of this order. Defendant Equico's motion
to dismiss is granted, and Equico is ordered dismissed from this
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