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WILLIAM O. CARDWELL AND IVA M. CARDWELL v. INTERNATIONAL HOUSING (12/01/80)

SUPERIOR COURT OF PENNSYLVANIA


filed: December 1, 1980.

WILLIAM O. CARDWELL AND IVA M. CARDWELL, HIS WIFE,
v.
INTERNATIONAL HOUSING, INC., T/D/B/A PALM CITY MOBILE HOMES, APPELLANT

No. 2114 October Term, 1978 Appeal from the Judgment in the Court of Common Pleas of Lebanon County, Civil Action--Law, No. 565, 1975.

COUNSEL

Harry W. Reed, Jr., Lebanon, for appellant.

Bruce A. Grove, Jr., Harrisburg, for appellees.

Price, Spaeth and Lipez, JJ. Spaeth, J., files a dissenting opinion.

Author: Price

[ 282 Pa. Super. Page 501]

The instant appeal is from a judgment in the trial court awarding appellees $6,404.98 in their suit in assumpsit to rescind a contract for the purchase of a mobile home and awarding appellant $179.19 in its counterclaim. Finding the evidence insufficient to support appellees' cause of action, we reverse.

On September 9, 1971, appellees executed an agreement to purchase a two-bedroom mobile home from appellant. Although not incorporated into the agreement, testimony established that appellees had been shown and agreed to purchase a 1971 PMC mobile home, manufacturer's serial number ending in the last three digits 230. On September 22, 1971, an installment sales contract was executed by the parties. This agreement, however, listed the home as a 1971 PMC mobile home, serial number 277. Appellant then assigned the financing contract to a local bank and warranted its enforceability.

In late September 1971, appellees moved from their former residence in Maryland to appellant's mobile home park in Lebanon County with the expectation that the two-bedroom number 230 home would be situated in the park. Instead of finding the two-bedroom home, appellees found a three-bedroom mobile home, serial number 277. They immediately notified appellant and the financing bank that a mistake had been made. Because they were without accommodations, however, appellees moved into the three-bedroom

[ 282 Pa. Super. Page 502]

    mobile home, whereupon they discovered numerous major defects in its construction. After repeated complaints were made to appellant regarding the defects in the number 277 home and their desire to obtain the number 230 two-bedroom home, appellees were instructed by appellant to select another home which would be installed in a newly constructed portion of appellant's mobile home park. Appellees selected a two-bedroom mobile home serial number 228, and it was installed in August of 1972. Upon moving into this home, appellees discovered that it did not include various furnishings that had been promised and that it had various defects.

In November 1972, appellant requested appellees to execute the certificate of title to the number 277 three-bedroom home that had been previously occupied by appellees. Appellant had found a purchaser for the home, but was unable to complete the transfer until appellees signed the certificate of title. Appellees refused to sign the certificate claiming that they would not execute any papers until the defects in the number 228 home in which they were then residing were rectified. Relations between the parties continued to deteriorate, and appellant's records indicate that the final service call on the number 228 home took place in May of 1973. Thereafter, throughout 1973, appellees ignored appellant's repeated correspondence requesting that they sign the certificate of title to the model 277 home, apparently on the basis of appellant's failure to correct the defects in the model 228 home.

In or about January of 1974, appellant initiated a criminal proceeding under section 207 of the then-applicable Vehicle Code on the basis of appellees' refusal to effectuate a transfer of the certificate of title to the number 277 mobile home. See Act of April 29, 1959, P.L. 58, § 207, as amended 75 P.S. § 207(a) (1971), repealed and replaced, 75 Pa.C.S. § 1111(a). In response to that complaint, appellees retained counsel, who advised them to sign the certificate of title to the three-bedroom mobile home.

[ 282 Pa. Super. Page 503]

Appellees' counsel then entered into negotiations with appellant to resolve the dispute over the number 228 two-bedroom mobile home. Appellees' attorney posted a letter to appellant's counsel on May 29, 1974, in which he asserted that the number 228 two-bedroom mobile home was in used condition, listed various defects and stated that his clients "want what they bargained for, namely, a new P.M.C. mobile home." (Record at 361a) (emphasis in original). By another letter on June 14, 1974, appellees' attorney inquired as to the position of appellant and stated that "[s]hould I not have a written reply from you within 10 days of this letter, I shall presume that you wish me to follow the formal litigation route and I will immediately do so." (Record at 363a). Three days later, on June 17, 1974, appellant's counsel responded, in part, as follows:

"I had forwarded your letter of May 29 to International Housing, Inc., and further, spoken to Lee Heisey, Secretary of International Housing, Inc., in regard to getting in touch with Mr. John Kuhn [then president of appellant] in an effort to piece together the facts of this case. As of this date, Mr. Heisey is still attempting to assemble relevant information pertaining to your claim but, apparently has had little co-operation from Mr. John Kuhn in this matter. I hope that you can persuade Mr. Cardwell to be patient until we have had an opportunity to carefully review the merits of his complaints." (Record at 364a).

Testimony established that the parties did not engage in additional negotiations thereafter.

On March 14, 1975, appellees filed suit alleging breach of the original sales agreement by appellant. Preliminary objections were filed and dismissed, and after an unexplained delay, appellant filed its answer and counter-claim on January 17, 1977. On the advice of counsel, appellees continued to reside in the mobile home until June 1975,*fn1 when they

[ 282 Pa. Super. Page 504]

    were forced to vacate the home and leave it in appellant's park after appellant evicted them for violation of certain regulations governing the mobile home park. Thereafter, they continued to make payments on the home until February 1976.*fn2 The home was finally repossessed by appellant in October 1976.

When the case came to trial, the court instructed the jury that appellees could recover on either of two theories: (1) that they never accepted the two-bedroom number 228 home in August 1972 as a substitute for the number 230 originally promised; or (2) that they accepted the home but subsequently revoked their acceptance as a result of the defects. At the close of trial, the jury returned a verdict awarding appellees $6,404.98, representing the amount they had paid to appellant for the home, and for appellant on its counterclaim for $171.19, representing rent at its mobile home park for three months at the rate of $53.00 per month plus $12.19 for parts installed by one of its repairmen in fixing a defect in the furnace of the number 228 home. Appellant now appeals alleging that the evidence was insufficient to sustain the award under either theory upon which the case was submitted to the jury, and thus, the trial court erred in refusing its motion for judgment non obstante veredicto. We agree, but as indicated in our discussion below, reverse and remand for a new trial.

Before addressing appellant's contentions, we initially note that our standard of review in an appeal from a trial court's refusal to enter judgment n. o. v. is to view the evidence, and all inferences reasonably deducible therefrom,

[ 282 Pa. Super. Page 505]

    in the light most favorable to appellees as the verdict winners. See, e. g., Gonzalez v. United States Steel Corp., 484 Pa. 277, 398 A.2d 1378 (1979); Atkins v. Urban Redevelopment Auth., 263 Pa. Super. 37, 396 A.2d 1364 (1979). Moreover, we note that a mobile home has been held to fit within the definition of "goods" in section 2-105 of the Pennsylvania Uniform Commercial Code, Act of April 6, 1953, P.L. 3, § 2-105, amended, Act of October 2, 1959, P.L. 1023, § 2, 12A P.S. § 2-105 [hereinafter U.C.C.] see Duffee v. Judson, 251 Pa. Super. 406, 380 A.2d 843 (1977), and in the absence of a contrary agreement, the provisions of the U.C.C. will govern in interpreting the transaction between the parties. See U.C.C. section 1-102(3).

Acceptance of Number 228 Mobile Home as a Substitute

Although the trial judge instructed the jury to determine whether appellees agreed to accept the number 228 home as a substitute for the number 230, we note that neither party on appeal has addressed the issue whether the award may be supported based upon this theory. Indeed, appellees by their own admissions appear to have conceded that the verdict may not be supported on that basis. At trial, appellee William Cardwell testified that after appellees rejected the three-bedroom number 277 mobile home, he was instructed by appellant in August 1972 to select a new two-bedroom home for installation in appellant's park. He selected and agreed to accept the two-bedroom number 228 home as a substitute for the number 230 provided that it was "okay."*fn3 Thereafter, no one associated with appellant made any promises that appellees would receive the number 230 home that was the subject of the original agreement. Moreover, William Cardwell also testified that he would have been content simply to have the defects in the model

[ 282 Pa. Super. Page 506228]

mobile home repaired. Thus, by their own evidence, appellees conceded that they abandoned their rights under § 2-601 of the U.C.C. to reject the mobile home as nonconforming to the original contract calling for delivery of the number 230 home. See U.C.C. § 2-607(2).

Revocation of Acceptance

With respect to the second contention, appellant alleges that the evidence was insufficient to support recovery on the theory that appellees revoked their acceptance of the number 228 home as a result of the defects in the home because: (1) appellees did not notify appellant that they were revoking their prior acceptance; (2) there was no offer or tender after the revocation, if any; (3) the revocation, if any, occurred after an unreasonable passage of time; and (4) the use of the mobile home for a number of years constitutes an acceptance precluding revocation.*fn4 Before undertaking an analysis of these contentions, we must review the trial court's determination that appellant waived these defenses

[ 282 Pa. Super. Page 507]

    by failing to specifically allege them in the new matter section of its answer to appellees' complaint.

Appellees' complaint, filed in March of 1974, merely alleged that appellant breached the contract of sale by its failure to deliver the number 230 mobile home that had originally been agreed upon and its delivery of first a used three-bedroom home and then a used two-bedroom home, and specified various defects in the two-bedroom home. Appellees also alleged that at the time appellant delivered the two-bedroom home in August of 1972, and on numerous occasions thereafter, appellees continued to object that they had not received the number 230 home that had been the subject of the original agreement of sale. Thus, by their own pleadings, appellees appeared to be proceeding upon only one theory-that they never accepted the number 228 mobile home as an accommodation for the number 230 home.*fn5 In response to the complaint, appellant averred that appellees requested the delivery of the number 228 mobile home in August 1972, that the home was new and not used, and that appellees had accepted it.*fn6

[ 282 Pa. Super. Page 508]

At trial, appellees abandoned their earlier strategy that they had never accepted the number 228 home and proceeded under a theory that although they had accepted the number 228 home in substitution for the number 230 home, they subsequently revoked that acceptance on the basis of the latent defects.*fn7 In support of this theory, appellees

[ 282 Pa. Super. Page 509]

    presented evidence to establish that the home was defective, that appellees had continually objected regarding the defects and that on May 29, 1974, their counsel sent a letter to appellant stating that appellees wanted a new mobile home to replace the number 228 in which they were then residing. Thereafter, the judge submitted the case to the jury on appellees' new strategy and specifically instructed them that any revocation of acceptance must be made within a reasonable time after discovery of the basis for revocation, that notice of such revocation must be made to the seller and that once revocation is made the buyer cannot exercise any right of ownership in the goods.

In light of the above summary, we cannot agree that appellant waived the defenses discussed earlier. The initial complaint filed by appellees alerted appellant to only one theory of recovery and it was to this theory that appellant responded in its answer. When appellees at trial proceeded upon a different theory relating to the revocation of acceptance of the number 228 home by virtue of the defects, and the trial court instructed the jury on the elements necessary for a proper revocation, appellant in its post-trial motions posited objections that certain of the elements had not been established. Under this statement of facts, we cannot agree with the trial court that appellant waived the defenses to the revocation theory by failing to plead them in its answer when that theory was not presented in the original complaint.*fn8

[ 282 Pa. Super. Page 510]

Notice of Revocation

Appellant's first challenge to the revocation of acceptance theory is that appellees never informed appellant that they were revoking their acceptance as a result of the defects. Under section 2-608(2) of the U.C.C., a party revoking a prior acceptance of goods found to be defective must notify the seller within a reasonable time of the revocation. A party gives notice "to another by taking such steps as may be reasonably required to inform the other in ordinary course," U.C.C. section 1-201(26), and "[a] person has 'notice' of a fact when . . . from all the facts and circumstances known to him at the time in question he has reason to know that it exists." U.C.C. section 1-201(25). In establishing the appropriate standard for giving notice, comment 5 to section 2-608 employs the criteria of "good faith, prevention of surprise and reasonable adjustment", and provides that "[f]ollowing the general policy of this Article, the requirements of the content of notification are less stringent in the case of a non-merchant buyer," although the same comment states that merely objecting to defects in the goods does not, without more, constitute notice that the buyer is revoking his acceptance.

Examining the evidence in light of the above parameters, we conclude that the letter from appellees' counsel on May 29, 1974, while perhaps lacking the clarity of purpose expected of a trained counselor in a commercial transaction, could have reasonably been construed by the jury as a revocation

[ 282 Pa. Super. Page 511]

    of acceptance by appellees.*fn9 That notice expressed appellees' dissatisfaction with the condition of the home and stated that appellees would not be satisfied until they received a new two-bedroom home. Thus, by this correspondence and the attendant circumstances appellant had "reason to know" that appellees had revoked their prior acceptance.

Unreasonable Delay

Appellant next contends that appellees' revocation of acceptance violated U.C.C. section 2-608(2), which requires revocation to take place "within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in the condition of goods which is not caused by their own defects." Appellant alleges that the delay from August 1972 until May 1974 in revoking acceptance of the home constitutes an unreasonable delay as a matter of law.*fn10 We disagree.

Section 1-204 of the U.C.C. establishes that "a reasonable time for taking any action depends on the nature, purposes

[ 282 Pa. Super. Page 512]

    and circumstances of such action." What is a reasonable time is generally determined to be a question of fact to be resolved by the jury. See Land v. Huffman Manuf. Co., 420 F.Supp. 459 (M.D. Ala. 1976); Newton v. Burks, 139 Ga.App. 617, 229 S.E.2d 94 (1976); Lish v. Compton, 547 P.2d 223 (Utah 1976); cf. Necho Coal Co. v. Denise Coal Co., 387 Pa. 567, 128 A.2d 771 (1957) (interpreting reasonable time provision of Uniform Sales Act). Among the factors to be considered in determining the passage of a reasonable time for revoking acceptance is whether the seller attempted to correct the nonconforming nature of the goods. In such a situation, a buyer will not be penalized for affording the seller an opportunity to correct the defects and the time for revoking acceptance "should extend . . . beyond the time in which notification of breach must be given, beyond the time for discovery of non-conformity after acceptance and beyond the time for rejection after tender." U.C.C. section 2-608, comment 4. Applying this standard, delays in excess of two years have been held not to constitute an unreasonable delay for revoking acceptance. See Dopieralla v. Arkansas Louisiana Gas Co., 255 Ark. 150, 499 S.W.2d 610 (1973); Gramling v. Baltz, 253 Ark. 361, 485 S.W.2d 183 (1972); Fablok Mills, Inc. v. Cocker Machine & Foundry Co., 125 N.J.Super. 251, 310 A.2d 491, cert. denied, 64 N.J. 317, 315 A.2d 405 (1973).

In the instant case, appellees notified appellant of the defects in the trailer shortly after they began residing in the home in August 1972, and appellant's repairmen expended considerable effort to correct the defects until May 1973. Thereafter, appellant continued to be aware of appellees' dissatisfaction with the mobile home through 1973 and 1974 based upon appellees' refusal to sign the application for the certificate of title to the three-bedroom number 277 mobile home, and commencing in January 1974, appellees' attorney negotiated with appellant to placate appellees' objections and to cure the non-conformities in the home in return for appellees' agreement to execute the title application for the number 277 home. Thus, appellant continued to be made aware of appellees' dissatisfaction with the home. Moreover,

[ 282 Pa. Super. Page 513]

    the evidence was not so clear that the deteriorated condition of the goods was caused by the passage of time before revoking acceptance rather than as a result of damages stemming from the latent defects. As such, we cannot conclude as a matter of law that the twenty-one month delay from August 1972 until May 1974 before revoking acceptance was unreasonable within the meaning of U.C.C. section 2-608(2).

Tender After Revocation

Appellant next contends that appellees' failure to offer the return of the mobile home after any revocation of acceptance precludes recovery on that theory. While formerly an offer to return the consideration acquired from the other party was a condition precedent in an action to "rescind" a contract, this rule was equitable in nature and was not enforced to perpetrate an injustice. See Sloane v. Shiffer, 156 Pa. 59, 27 A. 67 (1893); Arbuthnot v. Smith, 18 Pa. Super. 22 (1901). Moreover, this rule has been changed by the Uniform Commercial Code. Under section 2-608(3) a buyer who revokes acceptance has the same rights and duties with respect to the goods as a buyer who has never accepted them and has rejected them under section 2-602. The duties specified under section 2-602(2)(b) require only that the buyer hold the goods with reasonable care to permit the seller to remove them, and there is no obligation to formally tender the goods back to the seller. McCormick v. Ornstein, 119 Ariz. 352, 580 P.2d 1206 (Ct.App.1978); Testo v. Russ Dunmire Oldsmobile, Inc., 16 Wash.App. 39, 554 P.2d 349 (1976). In addition, under section 2-711, a buyer who has rightfully revoked acceptance has a security interest in the goods in his possession to the extent of any payments made, and may retain the goods and even sell them to recover the value of his security interest. Therefore, appellees were not required to tender the mobile home back to appellant as a condition precedent to revoking acceptance.

Reacceptance After Revocation

Finally, appellant contends that appellees' actions subsequent to May of 1974 were inconsistent with its earlier

[ 282 Pa. Super. Page 514]

    revocation and established their dominion over the goods inconsistent with appellant's ownership thus effecting reacceptance of the home under sections 2-602(2)(a) and 2-606.*fn11 As previously stated, U.C.C. section 2-711 provides as a remedy for a buyer revoking acceptance the retention of the goods in his possession for the protection of his security interest. While the underlying purpose of section 2-711 could reasonably be construed as imposing a requirement that the buyer proceed expeditiously to sell the property and recover the value of his investment, see Bowen v. Young, 507 S.W.2d 600 (Tex.Ct.App.1974), courts in other jurisdictions have not imposed this requirement, E. g., Mobile Home Sales Management, Inc. v. Brown, 115 Ariz. 11, 562 P.2d 1378 (Ct.App.1977); Keen v. Modern Trailer Sales, Inc., 40 Colo.App. 527, 578 P.2d 668 (1978); Jorgensen v. Pressnall, 274 Or. 285, 545 P.2d 1382 (1976). Even retention and use of a mobile home through completion of litigation and absence of an effort to sell has been held not to establish conclusively a reacceptance. See Keen v. Modern Trailer Sales, Inc., supra, and cases cited therein. Thus, we must determine whether appellees' actions subsequent to revocation of acceptance went beyond a mere retention as protection for their security interest or conclusively established a reacceptance as a matter of law.

In Fablok Mills, Inc. v. Cocker Machine & Foundry Co., supra, plaintiff purchased ten manufacturing machines over a period from September 1964 until June of 1965. Defects were noted in the first two machines that were delivered, yet plaintiff accepted eight additional machines under an assurance from the defendant manufacturer that the defects would be corrected. Despite defendant's efforts, the defects remained. On May 23, 1967, plaintiff revoked its prior acceptance, demanded the return of its money and requested

[ 282 Pa. Super. Page 515]

    that the machines be repossessed, but the defendant refused. Thereafter, plaintiff continued to use some of the machines while replacing others and putting them in storage. In holding that plaintiff's continued use after revocation would not bar his claim for revocation of acceptance, the court noted that the actions of appellant were reasonable under the circumstances since defendant was the only domestic manufacturer of this type of machine and the "plaintiff-buyer was confronted with the grim choice of either continuing to use some of the machines or going out of business." Id. at 258, 310 A.2d at 495. Similarly, continued use of a mobile home after revocation of acceptance has been deemed a reasonable course of action when the revoking buyer does not have substitute accommodations. See Jones v. Abriani, 169 Ind.App. 556, 350 N.E.2d 635 (1976); Minsel v. El Rancho Mobile Home Center, Inc., 32 Mich.App. 10, 188 N.W.2d 9 (1971). Moreover, such continued use in the situations described would appear reasonable as a means of mitigating any incidental damages recoverable under section 2-714(2) if the revocation of acceptance is subsequently found to have been justified. It is only when the buyer's actions with respect to the chattels are deemed unreasonable that a court will invalidate a revocation of acceptance and deem the subsequent actions to be a reacceptance under section 2-606(1)(c).

An example of such unreasonable action is illustrated by the case of Fargo Machine & Tool Co. v. Kearney & Trecker Corp., 428 F.Supp. 364 (E.D.Mich.1977). In that case, machinery was delivered in August of 1971 at which time defendant paid $75,000 of the approximately $153,000 sale price. Defects were discovered immediately and plaintiff's repairman expended considerable time attempting to correct them. Defendant initially refused to make further payments on the machine until the defects were repaired, but in or about February 1972, agreed to pay approximately $28,000 on the outstanding balance in return for plaintiff's promise that it would continue to service the machines despite the expiration of the warranty period. Further

[ 282 Pa. Super. Page 516]

    repairs were attempted, the last on March 21, 1973, but to no avail. During this period from February 1972 until March 1973, defendant rejected all requests by plaintiff to make further payments on the outstanding principal. On April 6, 1973, plaintiff filed suit to collect the approximately $50,000 still owing under the contract. Defendant counter-sued alleging breach of warranty, but during the pre-trial stage amended its cause of action to allege a revocation of acceptance. In holding, inter alia, that defendant's actions subsequent to revocation of acceptance precluded recovery, the court noted that defendant never attempted to procure substitute machinery despite its availability, continued to make payments despite its protests as to defects, permitted additional service calls to be made after notice of revocation and continued to utilize the machines throughout the course of litigation. The court concluded by stating,

"Fargo did not merely temporarily delay discontinuing use because of exigent circumstances, but rather, appears to never have intended to take the [machinery] out of production." Id. at 378.

See Hays Merchandise, Inc. v. Dewey, 78 Wash.2d 343, 474 P.2d 270 (1970) (revocation of acceptance of toys in February untimely when buyer advertised and attempted to sell them during Christmas season); Wadsworth Plumbing and Heating Co. v. Tollycraft Corp., 277 Or. 433, 560 P.2d 1080 (1977) (acceptance of pleasure fishing boat cannot be revoked when buyer utilized boat until time of trial); Bowen v. Young, supra (revocation inoperative when buyer subsequently moved into mobile home, made repairs and later moved it to a new location).

Examining the record in the instant case, we find numerous actions by appellees that were inconsistent with their prior revocation of acceptance in May of 1974. First, although not conclusive, appellees' continued residence in the home is one factor to be considered in determining whether they intended to abide by their revocation or whether they intended to accept the home despite the defects and despite their earlier revocation claim. We find that other evidence clearly establishes the latter.

[ 282 Pa. Super. Page 517]

For example, appellees vacated their home in June of 1975,*fn12 not as a result of a repossession by appellant based upon appellees' revocation of acceptance, but as a result of appellant's eviction of appellees from the mobile home park as a consequence of appellees' violation of certain regulations governing the storage of trash at the park. When appellees were notified in March of 1975 that they were being evicted as a result of the infraction, they attempted to foreclose eviction by making advance rental payments. Moreover, in its March 1975 letter of eviction, appellant was apparently proceeding under the assumption that appellees were not abiding by their prior revocation and stated that appellees were free to remove the mobile home from the park contingent upon procuring the proper hauling permits. Thereafter, appellees vacated the home in June 1975, but continued to make payments to appellant until February 1976 at which time they made plans to remove the home from appellant's park. However, appellees discovered at that time that neither appellant nor the financing bank held the certificate of title to the home and thus appellees were

[ 282 Pa. Super. Page 518]

    unable to secure the required moving permits. Because no one had the certificate of title to the number 228 home, their suspicion was aroused that the monthly payments were being wasted, and it was upon that premise, and not on the basis of the defects, that appellees terminated their payments in February 1976.*fn13 Finally, testimony established that while appellees did not reside in the home after June 1975, they continued to store certain of their possessions there and resisted the repossession by appellant in October 1976.

In light of the above evidence, we conclude that appellees' May 29, 1974 revocation of acceptance does not entitle them to recover. Section 1-203 of the U.C.C. imposes an obligation of good faith upon all parties in the performance of any duty under the Code. Thus, when appellees revoked acceptance in May of 1974, they were under an obligation to act in a manner consistent with that action and had no greater right to retain the mobile home than as security for their earlier payments. When, however, appellees continued to

[ 282 Pa. Super. Page 519]

    live in the home and continued to make their monthly payments to appellant, they acted inconsistently with their claimed revocation and lulled appellant into a false belief that appellees would continue to retain and accept the home. Most importantly, appellees, by their continued payments, served only to increase the size of their "security interest" and ultimate judgment, and precluded appellant from taking action to protect its interest in the home.*fn14 Thus, we believe that appellees failed to display the requisite good faith required in a commercial transaction and by these actions clearly indicated that they would continue to accept the mobile home despite their earlier revocation. As such, appellees' second theory is not supported and judgment non obstante veredicto should have been entered for appellant.

[ 282 Pa. Super. Page 520]

Because we have decided that the trial court erred in dismissing appellant's motion for judgment n. o. v., we next determine the ultimate disposition of this appeal. In particular, we must decide whether to reverse and remand for a complete new trial or to decree judgment n. o. v. for appellant and remand for a new trial limited solely to the issue of damages. In Denby v. North Side Carpet Cleaning Co., 257 Pa. Super. 73, 85, 390 A.2d 252, 258 (1978), quoting Gagliano v. Ditzler, 437 Pa. 230, 233, 263 A.2d 319, 320 (1970), we summarized the applicable rule regarding a limited re-trial as follows:

"A new trial limited to the issue of damages is appropriate 'only where (1) the question of liability is not intertwined with the question of damages, and (2) the issue of liability is either (a) not contested or (b) has been fairly determined so that no substantial complaint can be made with respect thereto.'" (Emphasis in original).

See Stathas v. Wade Estate, 251 Pa. Super. 269, 380 A.2d 482 (1977).

In applying this test, we find no indication in the instant case that the liability and damage issues are in any way inextricably intertwined. See Lininger v. Kromer, 238 Pa. Super. 259, 358 A.2d 89 (1976). The jury apparently resolved the liability issue in favor of appellees and awarded the full amount of $6,404.98 that they had paid to appellant over the approximately four years of the transaction and denied appellant's claim for recovery of the outstanding balance on the installment purchase contract. Thus, the award was not a compromise of the liability and damage issues. Next, we must determine the status of the liability issue under the above test.

The criteria that liability be fairly determined excluding any substantial objections would be satisfied in a case in which the liability issue is clearly established by the jury and not seriously contested by the defendant, thus leaving the adequacy of the damages as the only basis for reversal. See, e. g., Sternberg v. Dixon, 411 Pa. 543, 192 A.2d 359 (1963); Gary v. Mankamyer, 253 Pa. Super. 306, 384 A.2d 1357 (1978);

[ 282 Pa. Super. Page 521]

(c) does any act inconsistent with the seller's ownership but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

12A P.S. § 2-606(1), Act of April 6, 1953, P.L. 3, § 2-606, eff. July 1, 1954. Reenacted October 2, 1959, P.L. 1023, § 2, eff. January 1, 1960 (emphasis added).*fn1

Judge PRICE finds "numerous actions by appellees that were inconsistent with their prior revocation of acceptance in May of 1974." (At 364) He then identifies these actions: 1) appellees' continued residence in the home even after revocation, and their use of the home for storage after they vacated it in June 1975; 2) appellees' making advanced rental payments to appellant for use of their home site after notice that appellant was terminating their lease; and 3) appellees' continued monthly payments to appellant on the home even after vacating, and their final decision to terminate payments after learning that appellants did not have title to the home. (At 364-365) None of these actions, however, was inconsistent with appellees' revocation of their acceptance.*fn2

In Keen v. Modern Trailer Sales, 40 Colo.App. 527, 578 P.2d 668 (1978), the Court of Appeals of Colorado, acknowledging settled authority, held that a mobile home buyer's continued residence in a home does not render his revocation of a prior acceptance of the home ineffective. In reversing a judgment denying the buyer's claim for rescission of a contract to buy the home, the court stated:

[ 282 Pa. Super. Page 523]

Numerous cases recognize that a purchaser's occupancy of a mobile home during the pendency of his suit for rescission does not affect the legitimacy of an attempted revocation of acceptance. E. g. Stroh v. American Recreation & Mobile Home Corp., 35 Colo.App. 196, 530 P.2d 989 (1975); Mobile Home Sales Management, Inc. v. Brown, 115 Ariz. 11, 562 P.2d 1378 (1977); Jorgensen v. Pressnall, 274 Or. 285, 545 P.2d 1382 (1976); Minsel v. El Rancho Mobile Home Center, Inc., 32 Mich.App. 10, 188 N.W.2d 9 (1971).

Indeed, since the timeliness of plaintiff's notice of revocation is not contested, the trial court's use of this factor to determine whether plaintiff's revocation was justifiable places the cart before the horse. For, if a revocation is justifiable, the Code vests the buyer with a security interest in the subject goods, Irrigation v. Motor & Pump Co. v. Belcher, 29 Colo.App. 343, 483 P.2d 980 (1971) . . . and such an interest authorizes continued possession to preserve the collateral . . . subject to the seller's right to an offset for the rental value of the possessed goods. Stroh v. American Recreation, supra; Jorgensen v. Pressnall, supra.

40 Colo.App. at 530, 578 P.2d at 670.*fn3

In Jorgensen v. Pressnall, one of the decisions cited by the Colorado court, the Supreme Court of Oregon affirmed a judgment in favor of mobile home buyers who revoked acceptance of their home in December 1972 but stayed in the home until November 1973. There the court said:

[ 282 Pa. Super. Page 524]

Continued occupancy was the most feasible method of protecting the mobile home from water damage. The alternative was to find covered storage which would have been expensive.

274 Or. at 292, 545 P.2d at 1385-86.

Thus, appellees' continued residence in the home, and their use of it for storage, after their revocation of their acceptance did not constitute a reacceptance of the home. Similarly, neither did appellees' continued monthly payments on the home constitute a reacceptance. The purpose of these payments was only to avoid loss of the home in repossession proceedings by the bank with which appellees had financed its purchase. And the same may be said regarding appellees' advance rental payments. Appellees made the payments only after receiving a letter from appellant terminating the oral month-to-month lease for the home site. It is clear that by making the payments in response to this letter, appellees did not reaccept the home but only acted to protect their interest in the homesite by keeping the home at its original location pending resolution of their disputes with appellant. After appellant refused to accept advanced rental, appellees tried to remove the home from appellant's park. In so doing, they discovered that neither appellant nor the financing bank, Valley Trust Company, held title to the home. A certificate of title was required for a moving permit. Unable to obtain legal title to the home, appellees finally terminated payments to appellant in February 1976. They continued to use the home for storage until October 1976, when appellant took repossession of it.

Judge PRICE also states that appellees by their conduct "lulled appellant into a false belief that appellees would continue to retain and accept the home." (At 366). I am unable to find any support for this statement in the record. Instead, the evidence supports the lower court's observation that:

It was almost undisputed that the first home given to the plaintiffs was not the home they were shown by the defendant's salesman. From the very beginning, the

[ 282 Pa. Super. Page 525]

    plaintiffs made frequent requests that they be given the home shown to them and or to have the defendant repair the defects in the home or homes they were given. The testimony discloses that a period of five (5) years went by with the plaintiffs constantly in contact with the defendant requesting that the non-conformity be cured.

(Slip op. of lower court at 3)

Neither am I able to find any support for Judge PRICE's statement that appellees "failed to display the requisite good faith." (At 366.). Again, the record supports an opposite conclusion-that appellees were doing all they could to protect the home and their security interest in the home, all with the hope that their disputes with appellant would be resolved. Consider, for example, the following testimony by appellee William Cardwell:

Q: [Bruce Grove, counsel for appellees]: And, following the hearing in the fall of 1973 [on the criminal charges brought by International Housing against Cardwell] did you continue to reside in this 228 home?

A: Yes, sir.

Q: And on whose advice?

A: Your advice.

Q: And at this point in time what was your understanding as to how the complaints you were trying to get resolved with International Housing would be resolved?

A: Well, I was still on their property and still trying to do the right thing, still trying to get them to fix the trailers up so I could live in them-be halfway decent with that kind of money. They wouldn't do anything.

(R.R. 86a)

Mr. Cardwell further testified that the only reason he eventually terminated payments on the home was that he learned that neither the bank nor appellant had title to the home, and feared that his payments were not protecting his security interest:

Q: [Grove]: Why did you stop paying the bank?

[ 282 Pa. Super. Page 526]

A: Because there was no title to the trailer I had. I figured I done lost enough money in the trailer. I couldn't get nothing done to it, so the only way I could get an action is to let it go.

(R.R. 88a)

In this regard, it should be noted that at least one court has acknowledged that a mobile home buyer who remains with a home after revoking his acceptance of it actually protects the right of the seller as well as himself:

The observation can be made at this point that plaintiffs by living in the home and maintaining it to the best of their ability were also preserving it for the benefit of the seller as well as holding it for their own security. Mobile Home Sales Management v. Brown, 115 Ariz. 11, 562 P.2d 1378, 1382 (1977) (footnotes omitted).

It is our obligation to view the evidence in the light most favorable to appellees, and to give appellees the benefit of all reasonable inferences from the evidence. Doing so, I find the evidence sufficient to support the jury's verdict in appellees' favor on the theory that they had accepted the home but revoked their acceptance because of defects in the home. Therefore, I should affirm the order of the lower court.


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