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Crest Container Corp. v. R.h. Bishop Co.





Appeal from the Circuit Court of Shelby County; the Hon. Frank G. Schniederjon, Judge, presiding.


Plaintiff, Crest Container Corporation, commenced this action against defendant and third-party plaintiff R.H. Bishop Company to recover damages for breach of contract. Bishop filed a third-party complaint against Fedders Corporation, Climatrol Division, alleging breach of warranties. The circuit court of Shelby County entered judgment in favor of Crest on a jury verdict and allowed Fedders' motion for directed verdict made at the close of Bishop's case. Bishop appeals from both decisions of the trial court.

This case arises from the design and installation of a commercial heating system. In 1974, Crest Container Corporation constructed a new building at their plant location near Shelbyville. The general contractor was Northeast Construction Managers. R.H. Bishop was a subcontractor employed to do plumbing, heating and air conditioning. Bishop designed the heating system based on general specifications and a performance plan developed by Crest. The system consisted of a boiler and insulated piping that carried steam to 13 separate heating units located throughout the building. Each unit contained copper coils manufactured by Fedders-Climatrol.

The system became functional by the fall of 1974. Almost immediately, Crest experienced problems with the system. It did not heat adequately and several of the heating units leaked. It also developed water hammer, described as accumulated water in the coils slamming against obstructions in the system. In accordance with its one-year warranty, Bishop made numerous repairs to the units during the 1974-75 heating season. Almost as soon as repair was accomplished, new leaks were discovered. At one point the units were modified by placing a flat stainless steel disc or pancake at one opening of the unit so that steam could not enter the unit on both sides. The system did produce more heat after the modification but Crest continued to experience leaks. The leaks and the repairs continued throughout the 1975-76 heating season. Finally, on May 25, 1976, Bishop, Crest and Northeast Construction Managers entered into a supplemental agreement. It required Bishop to make specific modifications to the system as recommended by Crest's consultant; it further required Bishop to hydrostatically test all coils, repairing and replacing as necessary to meet the minimum requirements of the test. Bishop warranted the coils against defects, faulty workmanship and leaks for the 1976-77 heating season. It further warranted to repair any leaks that developed during 1976-77 for another heating season. Crest and Northeast Construction covenanted not to sue Bishop for problems to be remedied by the agreement, excepting any violations of the agreement.

Bishop completed the tests and performed repairs in early fall, 1976. In December, Les Bracken, Crest's plant manager, called Bishop's president, Charles Amacher. Bracken explained that the coils continued to leak and that repairs were no longer being made. Amacher replied that his company had already spent too much money and that they weren't going to make further repairs. In January of 1977, Amacher called to tell Bracken that he was going to bring an expert with him to the plant to check the system. It was Amacher's belief that Crest may have been partly responsible for the problem. Bracken, on advice of corporate counsel, told Amacher he could come only if he brought a letter of intention that he was there to remedy the leaking problems but could not come on a "fishing expedition." Amacher stated that no one would come and no more repairs were made.

Crest proceeded to have the system replaced by another contractor, Burdick Plumbing & Heating Company. The system was replaced during the summer of 1978. Crest has not experienced leaking problems since the replacement.

Crest incurred damages for the replacement of the heating system, for water damage to inventory stored at the plant and for labor for plant cleanup. The jury returned a verdict for Crest and awarded damages in the amount of $34,466.

• 1 Bishop contends that the verdict is against the manifest weight of the evidence. Bishop's argument is essentially that the jury's verdict was excessive. Bishop argues that the maximum amount for which it can be held liable is the cost of the replacement of the coils. Amacher testified that all work necessary to replace the coils would cost $17,525. Crest's proof of damages was invoices paid by Crest to Burdick. Those invoices included costs for increasing trap sizes, increasing coil capacity, increasing supply lines, installing air vents, and installing vacuum breakers. Bishop argues this additional work constitutes a renovation of the system and is outside the scope of Bishop's liability according to the May supplemental agreement.

We disagree. When the agreement is read as a whole, it is clear that its purpose was to ensure that Crest had an efficient, functioning heating system. Although Burdick's invoices included work beyond simple replacement of the coils, there was evidence from which the jury could conclude that the system would not operate as warranted without the additional modifications. We also note that Crest was careful to deduct from the Burdick invoices the expense of installing humidifiers and control valves which are separate from the heating system. Crest was also required to deduct changes made in the piping system as Crest had accepted this system under the terms of the May agreement. The jury verdict was supported by the evidence, and the judgment in favor of Crest for $34,466 is affirmed.

Bishop also appeals from the trial court's allowance of Fedders-Climatrol's directed verdict.

In 1974, Mueller Climatrol Corporation was bought by Fedders Corporation and became a wholly owned subsidiary. At that time, a complete transfer of all the employees of Climatrol was made to an independent company, Clover Distributing. In 1977 Mueller Climatrol merged with Fedders.

Bishop supplied Clover Distributing with a purchase order and performance specifications for the Crest job. Some time before the order was accepted by Clover, Don Ennis, a sales representative, called Climatrol's sales manager about the suitability of Climatrol's coils for the job. The coils were rated for a 15-pound steam capacity while Crest's specifications required 30 pounds steam capacity. Ennis was assured the coils would be adequate. The same assurance was later given to Vincent Stanec, vice-president and general manager of Clover. After receiving the assurances, the coils were ordered from Climatrol and shipped directly to the Crest plant.

Bishop's third-party complaint alleged that the coils as manufactured by Climatrol breached an express warranty and the implied warranties of merchantability and fitness for a particular purpose. Breach of warranty is the proper theory for recovery of economic loss. (Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill.2d 69, 435 N.E.2d 443.) It prayed for statutory damages or in the alternative for indemnification. A directed verdict was allowed on all three counts.

The standard to be applied by this court in review of a directed verdict is well established. We must find that all of the evidence, when viewed in the light most favorable to Bishop, so overwhelmingly favors Fedders-Climatrol that no contrary verdict could stand. Pedrick v. Peoria ...

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