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Texas Motorcoaches Inc. v. A.C.F. Motors Co.

filed: February 13, 1946.

TEXAS MOTORCOACHES, INC. (A CORPORATION), COMPLAINANT,
v.
A.C.F. MOTORS COMPANY (A CORPORATION), DEFENDANT, APPELLANT IN NO. 8892, AND J.G. BRILL COMPANY (A CORPORATION), DEFENDANT AND THIRD PARTY PLAINTIFF, APPELLANT IN NO. 8893, AND BUDD WHEEL COMPANY, THIRD PARTY DEFENDANT, APPELLANT IN NO. 8894.



APPEALS FROM THE JUDGMENTS OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. (CIVIL ACTION 2845).

Before Biggs, McLAUGHLIN and O'connell, Circuit Judges.

Author: O'connell

Opinion OF THE COURT

By O'Connell, Circuit Judge.

These actions to recover damages for breach of implied warranty arise out of the same set of circumstances. Their determination will dispose of the ultimate liability for personal injuries and property damage to third parties, between a buyer, a seller, a manufacturer of a finished product and a maker of a component part assembled in that which was made and sold.

In August, 1940, the plaintiff, Texas Motorcoaches, Inc., (hereinafter referred to as "Texas") purchased in Philadelphia for use in its business as a common carrier in Texas, ten parlor-type motor coaches from A. C. F. Motors Company (hereinafter referred to as "A. C. F."), which was acting as sales agent for their manufacturer, J. G. Brill Company (hereinafter referred to as "Brill"). The brake drums assembled in these motor coaches were in manufactured by Budd Wheel Company (hereinafter referred to as "Budd") and sold in Philadelphia to Brill.

On October 14, 1940, one of these motor coaches, while being operated on a public highway in the State of Texas, swerved off the road into a ditch, causing personal injuries to seventeen passengers as well as certain property damage. Following this occurrence, claims were made against Texas for damages caused by negligent operation of the bus. Texas did not contest these claims but paid out $20,939.78 in their settlement. Texas also spent $399.16 in repairing the motor coach.

On November 6, 1942, more than two years later, Texas filed a complaint in the District Court for the Eastern District of Pennsylvania to recover these sums, asserting that A. C. F. and Brill were liable to it for breach of an implied warranty that the motor coach was fit for the use for which it was intended (carrying passengers for hire). Texas alleged that the motor coach was equipped with a defective brake drum which caused the bus to run off the road into the ditch, thereby harming persons and property in consequence of the breach of warranty.

A. C. F. denied liability and filed a cross-claim against Brill for whatever damage might be assessed against it basing its claim on the breach of an identical implied warranty. Brill denied liability and filed a third party complaint against Budd for whatever damage might be assessed against it, resting its claim on a breach of implied warranty that the brake drum was properly manufactured and fit for use upon parlor coaches of this particular type. Budd denied any breach of warranty. Nowhere in the pleadings, be it in the Complaint filed by Texas, the Answer and Cross-complaint filed by Brill, the Answer and Third Party Complaint filed by A. C. F., and the Answer of the Third Party Defendant, is there an averment of notice of breach of implied

After a trial before a jury, judgment in the District Court was entered for Texas and against A. C. F. in the sum of $26,013.60 together with costs; for A. C. F. and against Brill in like sum; and, finally, for Brill against Budd in the same amount. A. C. F., Brill and Budd moved for judgment n.o.v. or in the alternative for a new trial. The court below denied all of these motions.

A. C. F. and Brill have appealed, seeking a reversal of the trial Judge's refusal to grant judgment n.o.v. Budd likewise has appealed seeking a similar reversal or, in the alternative, a new trial.

Possessing jurisdiction because of diversity of citizenship, the District Court was required to apply the rule of conflict of laws applicable in the State in which it sat (Pennsylvania): Klaxon Co. v. Stentor Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). Existence of an implied warranty of quality was thus to be determined by the law of the place of contracting: Griffin v. Metal Product Co., 264 Pa. 254, 107 A. 713 (1919); cf. Chicago Pneumatic Tool Co. v. Ziegler, 151 F.2d 784, 789 (C. C. A. 3, 1945); Restatement, Conflict of Laws, Section 332.

Whether there was a breach of warranty and, if so, what legal consequences resulted (including the measure of damages) depended upon the law of the place of performance of the contract: York Metal & Alloys Co. v. Cyclops Steel Co., 280 Pa. 585, 124 A. 752 (1924); Restatement, Conflict of Laws, Sections 358, 413; Goodrich on Conflict of Laws, Section 111.

Here, the evidence indicated that the sale of the brake drums and the motor coach took place in Pennsylvania. Title to the coach passed in Philadelphia. Completed performance by the defendant therefore occurred in Pennsylvania. If any warranty existed, its performance or breach occurred when and where the particular products were sold. What happened in Texas was merely a manifestation and result of the breach of warranty (if there was one). The public highways of Texas proved but the testing grounds ...


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