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November 2, 1966


The opinion of the court was delivered by: LORD, III

 In this diversity action, plaintiff sued for the price of goods sold to defendant. Defendant counterclaimed, alleging breach of the implied warranties of merchantability and of fitness for a particular purpose. Uniform Commercial Code, 12A P.S. §§ 2-314, 2-315.

 Plaintiff proved simply the book account and rested, whereupon defendant offered its proof, following which we granted plaintiff's motion for a directed verdict. Defendant has moved for a new trial. Viewing all the evidence in the light most favorable to defendant, the following are the facts:

 There is no dispute as to the price agreed upon by the parties ($10,369.25) or as to the specifications of the goods which were ordered and delivered. The goods consisted of thousands of individual "holiday" boxes into each of which defendant was to place a bottle of its whiskey. Pursuant to defendant's purchase order, the individual boxes were circled by an acetate band, on which appeared certain information pertaining to the liquor as required by law. The idea was that this band could be easily removed by the ultimate purchaser so that the box would be free of commercial labeling when presented to the recipient as a gift. Each case was prepared for the reception of the ten or twelve boxes by the insertion of "cells" which served as compartments for each package.

 The insertion of the bottles into the boxes presented no difficulty. Unfortunately, though, when defendant's packers began to insert the individual boxes into the cells of the shipping case, many, if not most, of the acetate bands either ripped or were otherwise damaged. Since the goods could not be shipped in this condition, defendant expended additional time, effort, and money in devising a solution to its problem. The solution, which was largely but not entirely successful, consisted of (1) enlarging the size of the cells in the shipping case in an attempt to accommodate the larger bulk of the holiday package, and (2) the insertion of the holiday boxes into glassine bags before they were placed in the shipping cells so as to reduce contact between the bands and the cell sides.

 The defendant's usual year-round practice was to ship liquor bottles in compartmentalized cases without any wrapping or box. It was only during the holiday season that the bottles were first placed in special "gift packages," whose design was approved by defendant (and, in this case, executed by plaintiff), and then the boxes were inserted in the shipping cells. Defendant knew that the cells would have to be enlarged to contain the special boxes, and accordingly they were enlarged even before the difficulties with the acetate bands developed.

 After the acetate bands began to tear, the cells were again enlarged, but the overall shipping-case being of finite dimensions, unlimited further enlargement would have been impossible. Furthermore, defendant's witness Boddorff testified that the cells could not be too large, else there would be danger of breakage. However, it was not until after the holiday boxes had been preliminarily inserted into the glassine bags that the difficulty was in any material way remedied.

 Since the only dispute at trial concerned the alleged breach of implied warranties, the burden was on the defendant to prove that the breach had in fact occurred. Chandler v. Lafferty, 282 Pa. 550, 128 A. 507 (1925); Wilbert v. Pittsburgh Consol. Coal Co., 385 Pa. 149, 122 A.2d 406 (1956). We concluded at trial that defendant had failed to sustain its burden and accordingly directed a verdict for plaintiff. Defendant now contends that we were in error, alleging that its evidence, if believed, raises fair and legally cognizable inferences sufficient to sustain the counterclaim.

 First, defendant claims that its evidence establishes a breach of the implied warranty of merchantability:

 See Eimco Corp. v. Lombardi, 193 Pa.Super. 1, 162 A.2d 263 (1960); Knapp v. Willys-Ardmore, Inc., 174 Pa.Super. 90, 100 A.2d 105 (1953).

 The "ordinary" purpose for which plaintiff's holiday box was to be used was to contain a bottle of defendant's liquor. This purpose was unquestionably well-served, and there are neither allegations in the counterclaim nor proof in the record that the package did not adequately contain the bottle. If defendant had been able to ship or sell its holiday packages without the necessity of further packing them into cases for re-shipment, no problem at all would have arisen under the contract.

 A sample of the containers and acetate band manufactured by plaintiff had been submitted to defendant in advance of actual production. After certain modifications, the styles were approved by defendant, the items were manufactured, and they were delivered to defendant, which used the boxes for the very purpose for which they were intended. Every specification was, so far as the record reveals, fully complied with. It was only when the boxes were inserted into the re-shipping cells that difficulty ensued. The boxes as such were unquestionably merchantable.

 As to the acetate band, we find no evidence whatsoever to sustain defendant's contention that it was in any way unmerchantable. It did what it was supposed to do: it circled the package and contained the appropriate wording. It was torn and mutilated only when an ...

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