
    MARITIME TRADING CO., Inc., v. J. M. PRESTON CO.
    District Court, E. D. Michigan, S. D.
    May 6, 1926.
    No. 6918.
    I. Sales <§=273(I) — Seller of tile for grain bin, agreeing to furnish design and detailed drawings for construction, held to have Impliedly warranted fitness of bins and design for use intended.
    Seller, specializing in tile bins and material therefor, engaging to furnish design and detailed drawings, as well as material, for construction of certain grain bins, helA to have impliedly warranted fitness of tile bins and design for the use to which they were to be put by purchaser.
    2. Sales <§=440(2) — Court, determining question of implied warranty, may inquire into cir-mi instances surrounding execution of sales contract.
    In determining whether or not there is an implied covenant of warranty in sale of goods, court is not limited in its consideration to exact terms of contract,, but may inquire into circumstances surrounding its execution.
    At Law. Action by the Maritime Trading Company, Inc., against the J. M. Preston Company.
    Judgment for plaintiff.
    Simon Floischmann and Martin Clark, both of Buffalo, N. Y., for plaintiff.
    Goodonough, Yoorhies, Long & Ryan, of Detroit, Mich., for defendant.
   SIMON'S, District Judge.

This is a suit for damages arising out of a contract for furnishing tile bins for the storing of grain. The ease was tried before a jury, hut at the conclusion of the evidence motions were made for a directed verdict by both parties, and it was stipulated that the court should decide all disputed questions of law and fact, as though the case had been tried by the court without a jury.

In so far as the facts of the ease seem undisputed, it appears that the plaintiff is a milling company located in Buffalo, engaged in the manufacturing of feed from various lands of grain, and desired to secure a grain elevator consisting of a cluster of bins. The defendant is a Michigan company, specializing in tile bins and material for the same, and holding itself out by circular and otherwise that it would supply a full set of plans and instructions on how to build a silo when the material is shipped, and that it was ready to prepare complete working plans, if awarded order for material. In August, 1920, through a firm of building contractors, the Huntley & Derdenger Corporation, the defendant was asked to submit estimates on tile bins, and furnished estimates for tile for four circular bins and for various connector walls, and furnished blueprints showing the design of a cluster bin and detailed drawings of the connection between the walls of the circular bins and the connector walls. Subsequently a written contract was entered into between the parties, which contract contained, among other provisions, the following:

“Above con tract is for steel and all blocks necessary for job, as your letter to Huntley & Derdenger Company, dated August 12, 1920, tile bins to pass bureau of building, Buffalo.”

Following tbe execution of tbis contract tbe plaintiff employed a mason contractor in Buffalo by the name of Ryan to build tbe cluster bins, in accordance with blueprints and detailed drawings furnished by tbe defendant, and in accordance with specifications prepared by plaintiff’s architect. After tbe construction of tbe foundation, and before beginning tbe laying of tile, a representative of tbe defendant company brought a mason to tbe job, who laid out the first courses of tile, and subsequently an engineer of tbe defendant company inspected tbe job, although testimony of any conversations bad with tbe engineer was excluded by tbe court, when it was found that tbis engineer bad since died. Plaintiff paid for all tile and reinforcing rods furnished by tbe defendant, and paid for tbe construction of tbe bins. After being put into use, tbe bins failed. Leaks developed between tbe connector walls and tbe main bins; a portion of one of tbe connector walls collapsed, and it became necessary for tbe plaintiff to restore it. Subsequently various efforts of tbe plaintiff to shore up the bins by steel reinforcing rods proved inadequate. Plaintiff presented evidence of damage to include the original cost of tbe tile and reinforcing steel, tbe cost of construction both of foundation and bins, and various items of extras expended for waterproofing and efforts to repair tbe bins and make them serviceable, together with loss of tbe use of tbe bins.

Before considering the questions of law involved, it is necessary to make certain findings of fact in reference to such matters as are disputed.

Findings of Fact.

(1) I find from tbe evidence that defendant was fully informed as to tbe use to which tbe plaintiff wished to put tbe bins, and that such use contemplated tbe storing of different grains in respective bins without allowing the grains to mix.

(2) That tbe defendant held itself out to be experienced in the designing of tile bins, and that tbe plaintiff relied, upon such special knowledge.

(3) That tbe bins were constructed by tbe contractor, Ryan, in accordance with tbe plans submitted to tbe plaintiff by tbe defendant, and in good, workmanlike manner.

(4) That tbe bins as planned and constructed were not suitable to tbe use to which tbe plaintiff desired to put them, and that tbe device in material respects failed after being put in' use.

(5) That, if there, was a breach of contract by tbe defendant for which tbe plaintiff could recover damages, tbe plaintiff’s damage, including tbe amount paid for tile and reinforcing rods, for construction, for repairing bins, for loss of tbe use of tbe bins, and for all items of damage proved by tbe plaintiff, except, only tbe amount claimed by tbe plaintiff for delay in shipment, is tbe sum of $38,181.54.

Conclusions of Law.

Tbe important legal question to be determined in tbis case is whether, under all of tbe circumstances of the case and in tbe construction of tbe contract between tbe parties, there was an implied warranty of tbe fitness of tbe tile bins for tbe use to which they were to be put by tbe plaintiff. It is contended by tbe defendant that tbe only thing it undertook to do was to furnish material, being tile of specified quality and reinforcing rods of specified size, and that it did not undertaké to construct or superintend tbe construction of tbe bins, or to be responsible for tbe design. If defendant’s contention as to tbe proper construction of its contract is correct, no warranty of fitness can, of course, be implied, because there is no claim upon tbe part of tbe plaintiff that intrinsically there was‘any fault either in tbe individual tile, or in the material from which tbe connecting rods were made. It is tbe plaintiff’s contention that tbe entire design was faulty, and that it relied, and bad a right to rely, upon tbe integrity of tbe plans submitted for tbe construction of tbe bins by tbe defendant.

A careful consideration of tbe contract as finally executed, together with 'a consideration of tbe plans submitted by tbe defendant company, and its reply to tbe Huntley & Derdenger letter, all of which were incorporated into tbe contract by reference, indicates clearly that tbe defendant obligated itself to do something more than to merely furnish material. It undertook to furnish a design and detailed drawings for construction. It knew tbe use to which tbe plaintiff expected to put tbe bins, and it undertook to furnish tbe design for tbe construction of such bins and tbe material necessary, so that tbe bins when constructed would be fit for tbe use intended. There can be no other construction of tbe contract, even when we exclude all testimony as to representations of tbe defendant, than that it undertook to guide tbe plaintiff in tbe construction of tbe bins by tbe submission of plans and detailed drawings, and that it undertook a further obligation that the bins, when constructed, would pass the bureau of building of the city of Buffalo.

In determining whether or not there was an implied covenant of warranty, it is my opinion that the court is not limited in its consideration to the exact terms of the contract, but may inquire into the circumstances surrounding its execution. This is clearly the holding of the United States Supreme Court in the leading case upon the subject, Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 3 S. Ct. 537, 28 L. Ed. 86, where the general principles underlying the law of implied warranties of fitness are ably discussed by Justice Harlan.

Of the many authorities referred to by counsel on both sides on the subject of implied warranty, the ease that comes nearest to the case at bar seems to be that of Bird & Son v. Guarantee Construction Co., 295 F. 451, decided by the Circuit Court of Appeals of the First Circuit, and following the holding of the Supreme Court in Kellogg Bridge Co. v. Hamilton, supra. There, as here, it was contended that there was an express warranty which excluded all possibility of implied warranty, a contention which was held to be unsound. There, as hero, it was contended that the employment of expert engineering advice by the plaintiff relieved the defendant of any responsibility which might be found to arise out of an implied warranty as to the functional efficiency of the thing sold. This contention was there hold to be equally unmeritorious.

I find, therefore, as a matter of law, that the plaintiff is entitled to a judgment against the defendant for damages in the sum as found above, and judgment may be entered accordingly.  