Summary
adopting “reasonable settlement” requirement in context of indemnity claim by retailer against wholesaler for damages to consumer injured by banana with thermometer in it
Summary of this case from Vincent v. DevriesOpinion
Opinion Filed May 6, 1969
Appeal and Error. Indemnity. Sales.
1. Only the necessary inferences which could be drawn from the findings would be considered on appeal where case was tried on agreed statement of facts.
2. Where trial has been on agreed statement, on appeal the Supreme Court will not consider facts beyond those agreed upon.
3. Retailer's failure to discover presence of thermometer which wholesaler had inserted in banana before banana was sold to consumer who was injured while attempting to eat banana did not defeat retailer's right to idemnity against the wholesaler for sum which retailer paid to consumer in settlement of injury claim. 9 V.S.A. § 1501 et seq.
4. Sale of bananas, first by wholesaler and later by retailer, carried implied warranty that the fruit was wholesome and fit for human consumption at time of purchase by the consumer. 9 V.S.A. § 1501 et seq.
5. Retailer was entitled to hold wholesaler to its implied warranty that food was wholesome and fit for human consumption at time of purchase and to recover such loss as the retailer sustained from purchase and resale of banana in which wholesaler had inserted thermometer. 9 V.S.A. § 1501 et seq.
6. Fact that injured consumer had right of action against either wholesaler or retailer or both did not preclude retailer from indemnity from wholesaler for sum paid consumer in settlement of injury claim. 9 V.S.A. § 1501 et seq.
7. Whether consumer's action against retailer who sold consumer banana in which wholesaler had inserted thermometer was brought in contract or tort did not effect retailer's right to recover from wholesaler under implied warranty that banana was wholesome and good for human consumption at time of purchase. 9 V.S.A. § 1501 et seq.
8. Where retailer's fault in selling banana to injured consumer was secondary to initial negligence of wholesaler who inserted thermometer into banana, retailer's right to indemnity was not precluded by rule against contribution among wrongdoers.
9. Voluntary payment by idemnitee without notice to indemnitor may foreclose restitution.
10. Where retailer made written request to wholesaler to defend consumer's personal injury action and wholesaler's refusal to defend in first instance made it necessary for retailer to undertake the defense, retailer was entitled to proceed in good faith to reach reasonable settlement with consumer and payment of settlement did not preclude indemity of retailer by wholesaler.
11. Where retailer's recovery in indemnity action against wholesaler exceeded damages stipulated by the parties, Supreme Court would correct the error and enter judgment according to the agreed findings and within the ad damnum specified in complaint.
Action by retailer against wholesaler and its insurers for indemnity for sum paid by retailer in settlement of personal injury claim. Judgment for plaintiffs. Defendant wholesaler appealed. Chittenden County Court, September Term, 1968, Hill, J., presiding. Judgment for plaintiffs.
Black, Wilson, Curtis Bryan for the Plaintiffs.
A. Pearley Feen, Esq., and Paul D. Sheehey, Esq., for the Defendant.
February Term, 1969
Present: Holden, C.J., Shangraw, Barney, Keyser, JJ., and Larrow, Supr. J.
The plaintiffs, who operate the Quality Market in Burlington, purchased some bananas from the defendant Champlain Valley Fruit Company. One of the bananas contained a glass fruit thermometer which had been inserted by the defendant wholesaler. The fruit that contained the thermometer, or fragments of the instrument, was retailed by the plaintiffs to Mrs. Barbara Malloy who injured her teeth when she undertook to eat the banana. She later brought an action to recover for the injury against the plaintiffs, alleging breach of warranty and negligence. The plaintiffs called upon the defendant Champlain Valley Fruit Company to enter and defend the action. Upon its refusal, it became necessary for the plaintiffs to employ counsel to defend them. The Champlain Valley Fruit Company was later joined as a party defendant. The personal injury action was settled without trial. Of the amount paid to compromise the claim, the paintiffs contributed $300 and the defendant Champlain Valley paid $1,200.
On the strength of these facts, which were submitted as an agreed case, the plaintiffs seek to recover their contribution to the settlement and reasonable expenses. The lower court ordered judgment for the plaintiffs in the amount of $968.23. The defendants, whom we refer to in the singular, bring this appeal.
The defendant challenges the plaintiffs' right to contribution on the contention that the plaintiffs have only the standing of joint tort feasors, relying on Spaulding v. Administrator of Oakes, 42 Vt. 343. It seeks to support this position by stating that the evidence would have disclosed active fault by the plaintiffs had the Malloy action gone to full trial. The argument is based on facts beyond those agreed upon and entirely foreign to the record in this appeal. They are not available for consideration reviewing the result reached in the lower court. Only necessary inferences, that arise from the facts stated, can be drawn and the intendments are in favor of the party who prevailed below. Hoosier Engineering Co. v. Shea, 124 Vt. 341, 345, 205 A.2d 821; St. Albans Hospital v. City of St. Albans, 107 Vt. 59, 62, 176 A. 302.
In this light the most that can be said for the plaintiffs' misconduct is a failure to discover, in its retail operation, the presence of the thermometer which the defendant Champlain Valley had inserted in the banana. This shortage, of itself, will not defeat the plaintiffs' right to indemnity against the seller who put the harmful cause in motion. Boston Woven Hose and Rubber Co. v. Kendall, 178 Mass. 232, 59 N.E. 657, 51 L.R.A. 781 (opinion by Holmes, C.J.)
Under the Uniform Sales Act, the sale of the bananas — first by the defendant Champlain Valley Fruit Company and later by the paintiffs, as the Quality Market, carried an implied warranty that the food was wholesome and fit for human consumption at the time of purchase. O'Brien v. Comstock Foods, Inc., 125 Vt. 158, 161, 212 A.2d 69. The fact that the injured consumer had a right of action against either the wholesaler or retailer, or both, does not disrupt the defendant's undertaking with the plaintiffs. On the showing made in the stipulated facts, there is no policy of the law which prevents the plaintiffs from holding the defendant to its implied warranty for such damage as the plaintiffs sustained from the purchase and resale of the dangerous commodity. Manning Manufacturing Co. v. Hartol Products Corp. of New England, 2 Cir., 99 F.2d 813, 814.
In the framework of this appeal we are not concerned with the contributions among wrongdoers who have violated equivalent duties, as in Spaulding v. Administrator of Oakes, supra, 42 Vt. at 349. See also Oakes v. Spaulding, 40 Vt. 347, 352-353. We are dealing with successive warranties implied by law which attended the initial, as well as the subsequent sale of defective foodstuff. Both parties to this controversy, as sellers, had duties and obligations to the injured consumer. O'Brien v. Comstock Foods, Inc., supra, 125 Vt. at 161, 212 A.2d 69. The plaintiffs were also buyers. And the defendant's warranty and duty extended to them, as well as to the person injured. Whether the original action was brought in contract or tort is of no consequence. Manning Manufacturing Co. v. Hartol Products Corp., supra, 99 F.2d at 814; Appell v. Schneider Pomerantz Baking Co., 126 Conn. 16, 8 A.2d 529, 530; 35 Am.Jur.2d, Food § 97.
As between themselves, the parties to the present action are not in equal fault for the plaintiffs were entitled to rely on the defendant's warranty to them. In these circumstances indemnity is not precluded by the rule against contribution among wrongdoers. Town of Roxbury v. Central Vermont Railroad Co., 60 Vt. 121, 139, 14 A. 92; Town of Duxbury v. Vermont Central Railroad Co., 26 Vt. 751, 752; Manning Manufacturing Co. v. Hartol Products Corp., supra 99 F.2d at 814; Boston Woven Hose and Rubber Co. v. Kendall, supra, 59 N.E. at 657; John Wanamaker, N.Y., Inc. v. Otis Elevator Co., 228 N.Y. 192, 126 N.E. 718, 720; 42 C.J.S. Indemnity § 21; 41 Am.Jur.2d, Indemnity §§ 2, 25. Since it appears that the plaintiffs' fault in its duty to the injured person was secondary to the initial negligence of the defendant, its right to restitution is established. Restatement, Restitution §§ 76, 93(1).
The defense offers further resistance. It urges that the plaintiffs' defense of the personal injury action and its contribution to the settlement were voluntarily undertaken and not subject to indemnity. The findings do not support the argument.
To protect the indemnitor's right to defend against liability, a voluntary payment by an indemnitee, without notice to the person sought to be charged, may foreclose restitution. Peerless Casualty Co. v. Cole, 121 Vt. 258, 266, 155 A.2d 866. The letter from plaintiffs' counsel to Chapmlain Valley, which is incorporated in the findings, fully protected its right to defend action and called upon it to do so. According to the findings, the defendant's refusal to defend in the first instance, made it necessary for the plaintiffs to undertake the defense. At this point the plaintiffs were entitled to proceed in good faith to reach a reasonable settlement. Boston Maine Railroad v. Howard Hardware Co., 123 Vt. 203, 210, 186 A.2d 184.
The fact that the defendant finally participated in the compromise indicates its acquiescence in the result it achieved. There is nothing in the findings to indicate the plaintiffs' contribution was unreasonable. And we cannot infer from the facts presented that the joint compromise with the claimant discharged the defendant from the obligation of its warranty to the retailer.
The judgment on the issue of liability must be affirmed. However, since the amount of the recovery awarded by the court below exceeds the damages stipulated by the parties, we will correct the error and enter judgment according to the agreed findings and within the ad damnum specified in the complaint.
Judgment for the plaintiffs to recover $668.23, together with their costs.