The Continental Shear Conveyor Model MD-10 with stacker was delivered to Amsco in June, 1973, and installed by Continental in Amsco's plant.
Repeated operational problems occurred constantly at Amsco which required stopping production, hand carrying materials and so forth (Tr. p. 5).
From the beginning until Amsco returned the equipment to Continental in December 1974, it failed to function properly.
Upon delivery a caster had been broken off the conveyor in the truck. Pursuant to a call to Continental by Amsco the latter was told to have the caster repaired.
The proximity switch which governed the lift table did not work and another had to be obtained from Continental.
The timing control had the wrong voltage. Continental advised Amsco to replace it; the cost of replacement to Amsco was $400.
The tamping arms bent material coming off the conveyor which was "the least bit skewed." This bent material had to be scrapped.
At times when narrow pieces were sheared they would hang up in the conveyor. This condition required Amsco to have an employee on hand to disengage the hung up narrow pieces.
By the end of June, 1973, Continental was aware that there were serious problems with the stacker portion of the equipment and commenced to redesign it. In July, 1973, about 12 blueprints were prepared by Continental's design department and approved by its chief engineer concerning this stacker. The original stacker was removed by Continental in 1973 and a different style stacker was substituted. No price was mentioned. The substituted stacker did not utilize the expensive lift table which had been installed into the floor behind the shear. The replacement stacker did not function as well as the original stacker and continued to cause the product to be scratched and marred. It also required a different size skid for each set of sheared pieces of different sizes. The stacker problems were never corrected. The original stacker was never returned to Amsco despite the assurance Mr. Jarman made to Mr. Wilner that it would be returned on July 8, 1974.
The lift arms on the conveyor did not function properly in that they did not rise up at the right time.
On or about April 29, 1974, Amsco and in turn Barney notified Continental that the conveyor-stacker system did not function as promised, represented and warranted and that it would be returned as they did not desire to keep it (Exs. 22, 25).
In May, 1974, Amsco and Barney relented as to the finality of rejection and extended Continental one last opportunity to correct the problems with the system. Thereupon, Continental sent Mr. Walton and Mr. Cantey to Erie. On June 1, 1974, these Continental representatives were in a short time able to get the conveyor portion of the system to work harmoniously with the D & K Shear and no further complaints were raised concerning the timing of the shear.
When Continental did not return the original stacker by early September, the extension of time to make changes and corrections was withdrawn. On or about September 23, 1974, Continental was notified that it should pick up the conveyor-stacker system at Amsco's plant (Exs. 32, 36, 38, 40).
Continental did not pick up the equipment and Amsco caused it to be shipped to Continental on December 4, 1974.
In the spring of 1975, Mr. Jarman went to Erie and submitted a new proposal for a conveyor-stacker system to Amsco. Representatives from Barney were present. The new proposal differed in several respects from the previous quotations and had a lower price (Ex. 48).
Amsco rejected the new proposal.
Barney has sustained damage by Continental's breach of implied and expressed warranties including loss of $2,635 expected profit.
The court has jurisdiction of the subject matter and the parties. The provisions of Article 2 of the Uniform Commercial Code, 12A P.S. § 2-101 et seq., are applicable.
Continental is a merchant under the U.C.C. definition § 2-104:
"'Merchant' means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction . . ."
In our opinion Continental impliedly warranted that the Continental MD-10 conveyor-stacker system it quoted to Barney for resale to Amsco would work properly with the D & K Model OHS 10625 Shear ordered by Amsco and would be fit for the particular purpose which Barney and Amsco intended. Continental impliedly warranted that the MD-10 conveyor-stacker system would automate Amsco's Shear operation and would reduce labor cost and increase production. Continental impliedly warranted to Barney that the conveyor-stacker system it quoted for resale to Amsco would operate with a D & K shear and handle sheared metal .030 to 1/4 inches thick without scratching, denting or marring.
Lewis v. Mobil Oil Corp., 438 F.2d 500 (8th Cir. 1971); Puritan Manufacturing, Inc. v. Klayman & Company, 379 F. Supp. 1306 (E.D.Pa.1974); Tennessee Carolina Transp. Inc. v. Strick Corp., 283 N.C. 423, 196 S.E.2d 711 (1973).
Continental impliedly warranted that the conveyor-stacker system was of merchantable quality in that it would work properly with a D & K Shear and handle polished steel, nickel clad, monel and plain steel without damage in an automated manner.
Tennessee Carolina Transp. Inc. v. Strick Corp., supra.
This warranty arises and extends to situations where the goods are purchased for resale. Ambassador Steel Co. v. Ewald Steel Co., 33 Mich.App. 495, 190 N.W.2d 275 (1971). Comment 1 of the U.C.C. 12A P.S. § 2-314 states: "Also the warranty of merchantability applies to sales for use as well as to sales for resale."
Continental expressly warranted that its conveyor-stacker system would be able to handle from .030 inch polished stainless steel to 1/4 inch nickel clad with denting, scratching or marring. Continental expressly warranted that the conveyor-stacker system designed and manufactured for it for Barney for resale to Amsco would be fit for the special purposes for which Amsco required in its shearing operations.
The express warranties were breached.
Barney and Amsco promptly notified Continental of the problems Amsco was having with the conveyor-stacker system, and gave timely notice to Continental of the warranty breaches. 12A P.S. § 2-607(3)(a).
Barney and Amsco properly revoked their acceptance of the equipment after giving Continental ample opportunity to cure and correct the conveyor-stacker system.
The revocation of acceptance by Barney and Amsco was justified because of the various breaches by Continental of the implied and express warranties.
Barney is entitled to recover the price paid to Continental on August 27, 1973, in the sum of $18,445 with interest or damages for detention at 6%.
Restatement, Contracts § 337. Cf. Tennessee Carolina Transp. Inc. v. Strick Corp., supra, 196 S.E.2d at p. 724; Hussey Metals Div. v. Lectromelt Furnace Div., 417 F. Supp. 964 (W.D.Pa.1976).
Pursuant to 12A P.S. § 2-715, Barney is entitled to recover as consequential damages its loss of profit in the sum of $2,635, and incidental damages sustained by Barney, all of which were proximately caused by Continental's warranty breaches, as follows:
1. After the system failed to work properly, Mr. Wilner, Barney's agent, was required to make additional visits to Amsco's plant to deal with these problems. The time consumed was 33 hours. The cost to Barney at $40 per hour was $1,320.
2. With respect to these problems other Barney personnel made three special trips to Erie and one to Aurora, Indiana. The time consumed was 36 hours. The cost to Barney was $1,440.