R.O.W. Window Co. v. Allmetal, Inc. ( 2006 )

No. 3--05--0643
___________________________________________________________________
Filed October 6, 2006.
IN THE APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2006
R.O.W. WINDOW COMPANY f/k/a ) Appeal from the Circuit Court
ROCKDALE SALES & TRIM, INC., its ) of the 12th Judicial Circuit,
predecessor-in-interest, ) Will County, Illinois
)
Plaintiff-Appellant, )
) No. 03-L-601
v. )
)
ALLMETAL, INC., ) Honorable
) Amy M. Bertani-Tomczak,
Defendant-Appellee. ) Judge, Presiding.
_________________________________________________________________
JUSTICE CARTER delivered the Opinion of the Court:
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________
The plaintiff, R.O.W. Window Company, brought suit against the defendant, Allmetal,
Inc., for breach of implied warranty of fitness for a particular purpose and breach of implied
warranty of merchantability. The trial court found that the implied warranties had been
disclaimed and granted the defendant=s motion to dismiss the suit with prejudice. The
plaintiff appeals and argues: (1) that the disclaimer was invalid because it was not
conspicuous, (2) that the disclaimer was ineffective because it was not part of the sales
contract, and (3) that the employee making the purchase orders did not have authority to
waive the implied warranties. We affirm.
FACTS
The facts as determined from the pleadings and other documents filed in the trial
court are as follows. Plaintiff is a corporation that manufactures insulated glass windows to
be used in new construction. Defendant is a corporation that sells corner keys and spacers
to be used in the manufacture of insulated glass. From 1994 through 1998, plaintiff
purchased corner keys and spacers from defendant to be used in plaintiff=s insulated glass
windows. Those windows were sold to plaintiff=s customers with a ten year warranty.
During the warranty period, the glass in the windows failed at an abnormally high rate due
to a problem with the corner keys and spacers. The plaintiff incurred losses as a result of
having to replace the failed pieces of insulated glass, loss of profits from the sales of those
replacement units, and costs incurred for the payment of an installer to replace the units.
In October of 2003, plaintiff brought suit against defendant for breach of implied
warranty of fitness for a particular purpose and breach of implied warranty of
merchantability. The plaintiff sought more than $1 million in damages.
In April of 2005, the defendant filed a motion to dismiss the complaint with prejudice
pursuant to section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9)
(West 2004)) alleging that it had disclaimed the implied warranties that the plaintiff had
sought to recover upon. Attached to the motion were numerous supporting documents.
Two of which were copies of a portion of the defendant=s yearly product catalog from 1989
and 1994. 1 The portion of the catalogs that was attached was the section entitled ATerms &
1
A copy of the disclaimer from the 1989 and 1994 product catalogs are attached to this
order as Attachment #1 and Attachment #2.
2
Conditions of Sale@. Along with other conditions of sale, that section contained the
following disclaimer:
ATHE SELLER HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. PRODUCTS
ARE SOLD >AS IS= AND ON THE CONDITION THAT THE
PURCHASERS SHALL MAKE THEIR OWN TESTS TO
DETERMINE THE MERCHANTABILITY OF SUCH
PRODUCTS AND THEIR FITNESS FOR ANY PARTICULAR
PURPOSE. THE LIABILITY OF ALLMETAL, INC. FOR
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES FOR
INJURY TO A PROPERTY FOR ANY REASON OR FOR ANY
OTHER LOSS RESULTING FROM A PRODUCT DEFECT OR
FAILURE SHALL BE LIMITED TO THE PURCHASE PRICE
OF THE PRODUCT.@
The disclaimer was the only text on the page to be listed in all capital letters, other
than the company name at the top of the page. The print size for the disclaimer was not
noticeably larger or smaller than the print size used for all of the other text on the page. In
the first copy of the catalog section, the disclaimer was listed in the bottom left corner of the
page in a separate text box surrounded by a square border. In the second copy of the
catalog section, the disclaimer was listed in the bottom right corner of the page in a
separate shaded text box. Although in both copies of the catalog, the disclaimer was set off
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in its own text box, the box did not contain a heading. The catalog itself was over 200
pages long with a table of contents at the front. The first section of the table of contents
entitled AGeneral Information@ contained the subsection, ATerms and Conditions@ (noted
above).
Also attached to the defendant=s motion to dismiss was a copy of the defendant=s
standard invoice. 2 Almost all of the invoice was printed in all capital letters. In the center of
the invoice, the following disclaimer was listed:
ATHE SELLER HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. PRODUCTS
ARE SOLD >AS IS= AND ON THE CONDITION THAT THE
PURCHASERS SHALL MAKE THEIR OWN TESTS TO
DETERMINE THE MERCHANTABILITY OF SUCH
PRODUCTS AND THEIR FITNESS FOR ANY PARTICULAR
PURPOSE. THE LIABILITY OF ALLMETAL, INC. FOR
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES FOR
INJURY TO PROPERTY OR ANY PERSON OR FOR ANY
OTHER LOSS RESULTING FROM A PRODUCT DEFECT OR
FAILURE SHALL BE LIMITED TO THE PURCHASE PRICE
OF THE PRODUCT.@
2
A copy of the standard invoice is attached to this order as Attachment #3.
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There was no heading above the disclaimer and it was listed in fine print, which was
somewhat smaller than the print size used on the rest of the invoice. Like most of the text
on the invoice, the disclaimer was printed in all capital letters. There was a small area of
open space both above and below the disclaimer.
The defendant=s motion also had attached to it the affidavit of Phillip Collin, the
president of defendant corporation. In the affidavit, Collin averred that since 1989, the
above noted disclaimer had been provided to defendant=s customers in the yearly product
catalog. Collin also averred that every invoice for products purchased since 1989 by the
plaintiff had contained the above noted disclaimer.
The plaintiff filed a written response to the motion to dismiss. In support of its
response, the plaintiff attached the affidavit of Glen Brooks, the president of plaintiff
corporation. Brooks averred as follows. Plaintiff located and purchased defendant=s corner
keys and spacers based on the recommendation of the designer of plaintiff=s window
system, not based upon the defendant=s product catalog. The purchase orders were
produced from plaintiff=s computer and were not based on the defendant=s catalog. As
former sales manager and president, Brooks was not aware of any disclaimer or limitation
of warranty in defendant=s catalog or invoices. Chuck Dzarnowski, the employee who had
ordered the corner keys and spacers until his retirement in 2000, did not have the authority
to waive any warranty for items that he had purchased. Only William Gebhardt, the former
general manager and current vice president of the corporation, had the authority to do so.
The defect in the corner keys and spacers was not discoverable upon reasonable
inspection upon delivery of defendant=s products. The windows failed months or years after
they were manufactured and installed in new construction when the spacer slipped off of
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the corner key in thousands of windows.
After reviewing the court filings and hearing the arguments of the parties, the trial
court granted the defendant=s motion to dismiss. This appeal followed.
ANALYSIS
The plaintiff argues that the trial court erred in granting the motion to dismiss. Our
review of this issue is de novo. Van Meter v. Darien Park Dist., 207 Ill. 2d 359, 367-368,
799 N.E.2d 273, 278 (2003) (dismissal pursuant to section 2-619 is reviewed de novo). In
conducting such a review, we must construe all of the pleadings and supporting documents
in the light most favorable to the non-moving party. Van Meter, 207 Ill. 2d at 367-68, 799
N.E. 2d at 278.
In support of its argument, the plaintiff first asserts that the disclaimer
was invalid because it was not conspicuous. As the plaintiff
notes, section 2-316 of the Uniform Commercial Code (810
ILCS 5/2-316(2)) requires that all written disclaimers of the
implied warranties of merchantability or fitness must be
conspicuous. The purpose of this rule is to protect the buyer
from surprise. Bell Fuels, Inc. v. Lockheed Electronics Co.,
Inc., 130 Ill. App. 3d 940, 944-945, 474 N.E. 2d 1312, 1316-
1317 (1985). The UCC defines Aconspicuous@ as follows.
AA term or clause is conspicuous when it is so written
that a reasonable person against whom it is to operate ought to
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have noticed it. A printed heading in capitals (as: NON-
NEGOTIABLE BILL OF LADING) is conspicuous. Language in
the body of a form is >conspicuous= if it is in larger or other
contrasting type or color. ***@ 810 ILCS 5/1-201(10).
The determination of whether a particular term or clause is conspicuous is to be
made by the court. 810 ILCS 5/1-201(10). The court should make that determination by
asking if attention can reasonably by expected to be called to the term or clause. Bell
Fuels, Inc., 130 Ill. App. 3d at 946, 474 N.E. 2d at 1317.
Applying the above legal principles to facts of the present case, we find that the
written disclaimers contained in the product catalog and in the invoices are conspicuous. In
the catalog, the written disclaimer was contained in a section entitled, ATerms and
Conditions of Sale@. That section was listed in the table of contents at the front of the
catalog. As for the disclaimer itself, it was printed in all capital letters and was set off in a
separate text box that was either surrounded by a border or was shaded. The language
used very specifically disclaimed the implied warranties in question. In the invoice,
although smaller, fine print was used, the disclaimer was again listed in all capital letters.
The plaintiff tries to minimize the significance of this by arguing that almost all of the text on
the invoice was in capital letters. However, the disclaimer was essentially the only textual
paragraph on the invoice, was set off by open space above and below it, and was located
in the center of the page. As with the catalog, the language used in the invoice very
specifically disclaimed the implied warranties in question. While it may be true that the
defendant could have made the disclaimers more conspicuous, that is not the test before
this Court. The disclaimers were presented in a manner reasonably sufficient to draw
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attention to them. See Bell Fuels, Inc., 130 Ill. App. 3d at 946, 474 N.E. 2d at 1317. We
are not persuaded by the cases cited by the plaintiff to the contrary. They simply do not
address the factual situation that we are confronted with in the present case. Nor do we
accept the plaintiff=s invitation to find that a disclaimer written in fine print can never be
conspicuous. See Clements Farms, Inc. v. Ben Fish & Son, 120 Idaho 185, 189, 814 P. 2d
917, 921 (1991) (fine print of itself does not render a disclaimer inconspicuous); Sierra
Diesel Injection Service, Inc. v. Burroughs Corp., Inc., 890 F. 2d 108, 114 (9th Cir. 1989)
(whether a disclaimer is conspicuous is not simply a matter of measuring the type size or
looking at the placement of the disclaimer within the contract). In reaching this conclusion,
we are mindful that the transactions before us are between two business entities. The
courts are less reluctant to hold businessmen to the terms of contracts to which they have
entered than consumers dealing with skilled corporate sellers. Bowers Mfg. Co., Inc. v.
Chicago Mach. Tool Co., 117 Ill. App. 3d 226, 233, 453 N.E.2d 61, 66 (1983).
We turn now to the plaintiff=s second assertion--that it was not bound by the
disclaimers because the disclaimers were not a part of the sales contract. As the plaintiff
suggests, it is generally true that a disclaimer sent with goods when they are shipped is
insufficient. Gideon Service Division v. Dunham-Bush, Inc., 80 Ill. App. 3d 633, 637-638,
400 N.E. 2d 89, 92 (1980)). However, an implied warranty may be excluded by course of
dealing. 810 ILCS 5/2-316(3)(c) (West 2004). A course of dealing is a sequence of
previous conduct between the parties to a particular transaction which is fairly to be
regarded as establishing a common basis of understanding for interpreting their
expressions and other conduct. 810 ILCS 5/1-205(1) (West 2004). A course of dealing
between parties gives particular meaning to and supplements or qualifies the terms of the
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agreement. 810 ILCS 5/1-205(3) (West 2004).
The record before us in the present case indicates that the plaintiff was a customer
of the defendant for several years. The plaintiff and the defendant had business dealings
going back to 1989. During that period, all of the invoices that the defendant sent to the
plaintiff had a conspicuous disclaimer of implied warranties printed on them in the center of
the page. In addition, the product catalog that the defendant sent out to its customers each
year, also contained a conspicuous disclaimer of the implied warranties.
This is not a case such as Gideon Service Division v. Dunham Bush Inc., cited by
the plaintiff, where the buyer and seller were involved in a single transaction. See Gideon
Service Division, 80 Ill. App. 3d at 634-635, 400 N.E. 2d at 89-90. Rather, in the present
case, there was a course of dealing that took place over several years. That course of
dealing supplements the terms of the parties= agreement and establishes that the exclusion
of implied warranties was a part of the bargain. See Capitol Converting Equipment, Inc. v.
LEP Transport, Inc., 965 F.2d 391, 396 (7th Cir. 1992) (course of dealing established that
liability limitation contained on transportation company=s invoice was part of agreement);
Tolmie Farms, Inc. v. J.R. Simplot Co., Inc., 124 Idaho 607, 612, 862 P.2d 299, 304 (1993)
(course of dealing between parties over several years--during which time seller of farm
chemical had sent buyer numerous invoices containing warranty disclaimers and had each
year posted label containing disclaimer on distribution tank at plaintiff=s farm--established
that seller had effectively disclaimed implied warranties of merchantability and fitness); J. D.
Pavlak, Ltd. v. William Davies Co., Inc., 40 Ill. App.3d 1, 4, 351 N.E.2d 243, 246 (1976)
(contract terms and prior dealings of parties were sufficient to exclude any implied warranty
that meat would not have a fat content of more than 15%). Contrary to the plaintiff=s
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argument, the affidavit of Brooks denying knowledge of the disclaimers, standing alone, is
not sufficient to create a material issue of fact regarding whether a course of dealing as to
an exclusion of implied warranties existed between the defendant and the plaintiff. See
Capitol Converting Equipment, Inc., 965 F.2d at 395 (affidavit of company president
denying knowledge of liability limitation, standing alone, was not sufficient to create a
genuine factual dispute over whether a course of dealing as to a liability limitation existed
between the two companies).
Having determined that the disclaimers were conspicuous and that they were made
a part of the parties= agreement by the course of dealing, we must consider the plaintiff=s
third and final assertion--that its purchasing employee did not have authority to waive the
implied warranties.
An agent's authority to bind a principal may be actual or apparent. Progress Printing
Corp. v. Jane Byrne Political Committee, 235 Ill. App. 3d 292, 307, 601 N.E. 2d 1055, 1066
(1992). Actual authority is authority that is derived from a specific grant of authorization to
perform a particular act (express) or that is inherent in the agent=s position (implied).
Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at 1066. Apparent authority is
that authority which a reasonably prudent person, in view of the principal's conduct, would
naturally suppose the agent to possess. Progress Printing Corp., 235 Ill. App. 3d at 308,
601 N.E. 2d at 1066. Apparent authority arises where a principal creates, through words or
conduct, the reasonable impression that the putative agent has been granted authority to
perform certain acts. Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at 1066.
The principal, having created the appearance of authority, is estopped to deny it to the
detriment of a third party. Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at
10
1066. In the present case, the record before us shows that the plaintiff=s purchasing
employee had ordered spacers and corner keys from the defendant over the course of
several years. The plaintiff accepted and used those products, paid out on the invoices,
and allowed the purchasing employee to order more products without objection and without
ever communicating any limitations to the defendant. The facts establish that the
purchasing employee had, at the very least, apparent authority to enter into transactions
with the defendant. See Progress Printing Corp., 235 Ill. App. 3d at 308, 601 N.E. 2d at
1066. Thus, we conclude that the plaintiff=s third assertion is without merit.
For the foregoing reasons, we affirm the order of the Circuit Court of Will County
dismissing the plaintiff=s suit with prejudice.
Affirmed.
SLATER and O=BRIEN J. J. concurring.
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