and Puritan expressly warranted its machinery would:
1. Handle 650 hogs per hour;
2. Lower meat temperature to 50 degrees and lower liver temperature to 40 degrees Fahrenheit;
3. Produce offal which could be sold as fresh, rather than as frozen; and
4. Eliminate double handling.
When Klayman's new plant began production in early 1967, Puritan's machinery had been installed. At first, the kill rate was 250 hogs per hour and although the equipment was not trouble-free, it performed in a satisfactory manner. With greater production and warmer weather, however, the problems increased. Adjustments and alterations did not eliminate the difficulties and the double handling of livers had to be undertaken. It also became necessary for Klayman to give up the sale of livers as a fresh product and to sell them frozen at a lower profit margin.
Faced with even more difficulties as the kill rate was advanced, Klayman refused to make payment of the balance due unless Puritan would reduce its warranties to writing and promise to redesign the equipment at its own expense, if necessary, to conform to those warranties. Puritan would not do so, and brought this suit to recover the balance of the purchase price.
Much of the controversy centers around what was meant by the elimination of "double handling." To Herman Klayman this meant that livers could be placed directly into packing boxes as they came from the chilling machine. On the other hand, Karl Oberdorfer testified that the machine had never been intended to produce such results. Instead, it was his idea that a large tub or pan would be placed at the end of the chilling machine; the meat would drop into it and be kept in a refrigerated area for a number of hours. During that time, the surface of the livers, which had become frozen in the chilling machine and the internal portion of the livers which had remained comparatively warm, would become equalized in temperature. The livers could then be packed, and thus, to Oberdorfer's way of thinking, would have only been handled once.
While this may well have been Oberdorfer's intention from the beginning, I conclude that he never made it known to Mr. Klayman, who had seen one of Mr. Oberdorfer's machines operating at a meat packing plant in Iowa. There, the chilled livers were placed immediately into packing boxes and Klayman assumed that the machine which his company was purchasing would accomplish the same results. Oberdorfer testified that it could not do so because the Iowa plant later froze and sold its livers as frozen and Klayman wished to sell livers which it produced as fresh. I conclude that this explanation was not made to Herman Klayman in advance of his purchase from Puritan.
I find persuasive the fact that Klayman made no provision for a liver cooler of the type which Oberdorfer said was required. As Oberdorfer described it, a necessary adjunct to his liver chiller was a cooling room where the livers could be held until the internal and external temperatures were equalized. The only refrigerated area available in the Klayman plant for this purpose was really made for shipping rather than cooling purposes and was approximately a quarter of a mile away from the liver chiller. Thus, the livers had to be carted a quarter of a mile to the cooler and then returned to the area of the chiller to be packed. Herman Klayman's wide experience in the meat packaging industry was not questioned. This was a three million dollar facility and in the planning stages for several years. It is apparent to me that if an adequate explanation had been made to Mr. Klayman as to the requirements for the equalization of internal and external liver temperatures, he would have provided a cooler within a reasonable distance from the end of the chiller. Since there was no cooler, I conclude there was no explanation and Mr. Klayman was left to believe that the equipment he purchased would produce the same results for the sale of fresh livers as the equipment he saw in Iowa produced for the sale of frozen livers.
The liver and head-meat chiller were therefore unable to produce a salable product at 650 hogs per hour as warranted to Klayman. Thus, Puritan breached the express warranties
it had made.
I also find that there was an implied warranty of fitness for a particular purpose.
Puritan had full and complete knowledge of the purpose for which Klayman intended to use the chillers. Mr. Walters and Mr. Oberdorfer were the coinventors of the chillers Puritan supplied. As the Third Circuit has stated:
"Under a warranty of fitness for a particular use, the seller warrants that the goods sold are suitable for the special purpose of the buyer . . ."
Pritchard v. Liggett & Myers Tobacco Co., 295 F.2d 292, 296 (3d Cir. 1961). Puritan clearly knew the special purposes for which Klayman purchased the chillers. Klayman relied upon Puritan's judgment, experience and representation that the chillers would fulfill its purpose. See Frigidinners, Inc. v. Branchtown Gun Club, 176 Pa. Super. 643, 109 A.2d 202 (1954); Miller & Co., v. Gibbs, 6 Leb. 344, 352 (C.P. 1958).
Puritan offered several defenses to Klayman's claim that the warranties had been breached. First it was asserted that the unsatisfactory performance of the chillers was due to poor maintenance by Klayman. There was no real evidence, however, to support this position. The damage which was described could have resulted from faulty design and faulty performance as well as from improper maintenance. For example, there was testimony that the lid on the head-meat chiller was bent. Obviously this might have been the result of improper handling, but there was testimony from Klayman's plant superintendent that the meat bunched up around the auger forcing the top of the machine up.
It was also asserted on behalf of Puritan that Mr. Oberdorfer stood ready to adjust the chillers to achieve a capacity of 650 hogs per hour. He said that raising the speed at which the auger turned and the providing of additional coolant by lengthening the intervals when the control valves were open would have made the greater capacity feasible. It is entirely possible that these adjustments would have increased the speed at which the meat was processed, but this still would not have enabled Klayman to pack livers as they came out of the chiller. In short, the end product would have been no more satisfactory to Klayman than was the product at the lower kill rate.
Puritan contends that Klayman failed to give notice within a reasonable time of any alleged breach. However, there was a constant flow of letters, telephone messages, and complaints both to Puritan and to its service agent, AIRCO. These constituted adequate and timely notice of the defects in the chillers and the resulting breach of warranties. It is undisputed that AIRCO had its service representative at Klayman's plant constantly in an attempt to make the equipment perform satisfactorily. Klayman afforded ample opportunity to permit Puritan to make changes, adjustments, and alterations in the machinery. Klayman acquiesced when Mr. Oberdorfer added a new CO horn and suggested the reinstitution of double handling to get a salable product. This did not, however, constitute a waiver of the breach of warranties. See KLPR TV, Inc. v. Visual Electronics Corp., 327 F. Supp. 315, 325-26 (W.D. Ark. 1971), modified, 465 F.2d 1382 (8th Cir. 1972); C.f. Marks v. Lehigh Brickface, Inc., 19 Pa.D. & C.2d 666, 673-77, 73 Dauph. 244, 252-53 (C.P. 1959). What is a reasonable time for notice of a breach of warranty is an issue of fact. Necho Company v. Denise Coal Company, 387 Pa. 567, 570, 128 A.2d 771 (1957). I conclude that Puritan had adequate and reasonable notice of the breaches of its warranties.
Puritan correctly argues that the burden of proof for breach of warranty is on the buyer in regard to goods accepted.
Miron v. Yonkers Raceway, Inc., 400 F.2d 112, 119 (2d Cir. 1968); Standard Packaging Corp. v. Continental Distilling Corp., 259 F. Supp. 919, 920 (E.D. Pa. 1966), aff'd, 378 F.2d 505 (3d Cir. 1967). Reviewing the evidence I find that Klayman has successfully met this burden.
Finally, Puritan contends Klayman waived its right to recover by retaining the equipment and by not first rejecting it and tendering its return. This is not true. The Uniform Commercial Code expands the remedies available to both buyer and seller. One remedy is that the buyer may accept and keep the goods. Then in an action by the seller for the purchase price, the buyer may set off any damages he sustained from any breach of the contract.
The only requirement is that the buyer notify the seller of his intention and reason for withholding payment.
Klayman's letter of October 17, 1967, satisfies this requirement by stating it will not pay the rest of the purchase price until Puritan guarantees that it will at Puritan's expense replace or redesign the chillers to conform to its warranties. This is adequate notice to Puritan and allows Klayman to set off any provable damages from the amount still due on the contract.
I now come to the question of damages. As stated before, Klayman is liable for the contract price because it did not reject the equipment. Klayman, however, is allowed to set off all provable damages proximately caused by Puritan's breach of warranties.
The damages to which Puritan is entitled are set forth in 12A P.S. §§ 2-714(2), (3) & 2-715(2):
2-714(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
(3) In a proper case any incidental and consequential damages under the next section may also be recovered.
2-715(2) Consequential damages resulting from the seller's breach include