399 F. 2d 860 - Altec, Inc. v.

As pressed on us now the question in this case is one which is simply stated: May a seller of a motor vehicle who is liable under implied warranty to its purchaser for damage to the vehicle resulting solely from a defect in the vehicle, recover from the negligent manufacturer the amount of such damages the seller has voluntarily expended without suit or prior adjudication of such warranty liability? We say now pressed on us, for the District Court did not either face up to or answer this question. Rather, the Judge followed the will-of-the-wisp of title and concluding that title was in the purchaser, held that the seller could not recover despite unassailed findings of defects due to the manufacturer's negligence. To permit determination of that Alabama-Erie problem by the Trial Court we vacate the judgment and remand for further proceedings.

The facts of the case are likewise simple. They involve a negligent Manufacturer-- FWD, an innocent Seller-- Altec, and an innocent Purchaser-- City of Gainesville. FWD through its distributor sold a negligently manufactured truck to Altec, who installed special utility hydraulic derrick equipment, and pursuant to a sale of a completed, altered vehicle delivered it to the City of Gainesville, the Purchaser. Employees of Purchaser took possession of the vehicle at Altec's plant and proceeded to Gainesville. En route the truck left the road due to a defective steering mechanism, turned over and was heavily damaged.

As this followed closely on the heels of like steering difficulty about a day before delivery with all parties assuming that repairs had been satisfactorily performed, this wreck convoked extended investigation into the probable cause. The councils of war included representatives of Seller, experts of Manufacturer as well as representatives of repairer.1 This investigation soon revealed, as the Judge, with ample basis passing muster easily under F.R.Civ.P. 52(a) was later to find that the wreck and ensuing damage was due 'solely' to 'a defect in the steering mechanism' which 'was caused by the negligence of the (Manufacturer) in the manufacture or design' of the vehicle. Additionally, it was to anticipate the Judge's further express declaration with like support that Seller 'was not guilty of contributory negligence' and the implied holding that the employees of Purchaser were not negligent in the actual driving of the vehicle.2

Although Manufacturer-- apparently unmoved by the investigation to admit its basic liability-- does not, cannot, now seriously assert that if it is ever pursued timely by one having an ownership in the vehicle it would have any defense on the merits of the claim of negligent defect and usual seller-warranty, that is not what brings about this struggle. This comes about because, as one might not expect, Seller, recognizing its common-law and Alabama statutory warranty liability3 did not deny liability to Purchaser, did not refuse to repair the vehicle, and did not force Purchaser to sue. And therein lies the problem. Seller did none of these things. Instead, it retrieved, repaired, and returned the vehicle. And, judging by the results so far, this was its mistake.

We say mistake because had Seller forced Purchaser to sue, to adjudicate its liability, there is no doubt that Seller could have impleaded Manufacturer, or after vouching notice and judgment for Purchaser later sued Manufacturer on one or more of the now prevalent theories of indemnity.4 Should the result be irretrievably different because Seller admitted liability, recognized its duty, and repaired the vehicle? We emphasize irretrievably because, having followed this somewhat strange course in a world of litigious contentiousness-- albeit one which the law surrounded itself with overpowering, exploding dockets5 ought to encourage, not discourage or condemn outright-- seller does have some added burdens as a consequence. In doing so all of the objections urged by Manufacturer will be overcome or at least adequately cared for.

Thus, Seller must establish as a legal fact, essential to recovery from Manufacturer, that Seller was legally liable to Purchaser. And since Seller seeks to translate the liability declaration into a money judgment, this burden will include establishing the dollar amount of damage sustained by Purchaser at least to the extent of the amount for which Seller seeks reimbursement. Doing this, Seller overcomes altogether Manufacturer's beguiling assertion that the procedure now followed is unlike the supposed suit by Purchaser against Seller with impleader of Manufacturer, insinuating somehow that Manufacturer is being cast with no real right to defend.6 For as to (1) and (3) the liability of Seller to Purchaser is to be litigated as well as the liability of Manufacturer to Seller or Purchaser, or both. As to (2), damages will likewise be proved and (4) being actually a real party at interest problem, F.R.Civ.P. 17(a), the Court has ample powers to protect against double payment, not the least of which would be requiring a complete or partial disclaimer by Purchaser or suitable indemnity by Seller.

The problem then is what to do about this. We are importuned by Seller to declare now that under Alabama law and the Trial Court's findings on culpable negligence (going to defects in the manufacture or design of the vehicle) Seller has a warranty liability to Purchaser and, moreover, Manufacturer has a similar liability (a) to Seller as its immediate vendee from Manufacturer's distributor, and, most likely (b) to Purchaser as one known to be in the chain of exposure.

Thus far we agree with Seller. The District Court found every fact necessary to make Seller liable to Purchaser. These include the sale of a vehicle not reasonably fit for its intended use, no contributory negligence by the Purchaser and recognition by Alabama of the implied sales warranty.7 And to these may be added the Court's articulate determination through amended findings that Seller incurred expenses of $7,046.88 all of which impliedly constituted Purchaser's damages as well. We therefore hold, as a matter of law, that Seller was liable to Purchaser for breach of the implied warranty of fitness. It likewise follows that Manufacturer was liable to Purchaser under the Manufacturer's Liability Doctrine8 which Alabama recognizes.9

But we cannot, at this stage, go the next and final step to direct rendition of judgment against Manufacturer for these damages. For-- without even so much as intimating a possible whisper of a suggestion of the conclusion required-- strong as are the indemnity-subrogation claims-over, this is to ignore our limited role and to deprecate to the point of extinction the vital role of the District Court. For the simple truth is, that so mesmerized did the Judge's gaze apparently become on the elusive game of 'Title, title, who's got the title?' that he wholly failed to make either express findings on any critical facts or conclusions of law on this very precise legal issue of claims-over.

But this is the trial court's function. This was a legal issue-- indeed the key issue-- not really tried and certainly not adjudicated.10 It is not for us on our own to explore Alabama law on a record which may well be quite deficient on critical facts which would tip the scale one way or the other.

This means that the case must go back for a further limited retrial. The Court must determine for Alabama whether payment or reimbursement by Seller without compelling Purchaser to get a judgment declaring a liability now judicially determined to exist on the record between Seller and Manufacturer alters or affects Seller's right of recoupment (on subrogation, indemnity or otherwise) from the really culpable party, (Manufacturer). Much has been litigated and factually little remains.11

But judgment-- that precious consummation of the ordeal of trial-- is yet to come, yet to come on matters of concern to Alabama and for which Alabama trained Judges are certainly the best starting place.

Affirmed in part; reversed and remanded in part.

HOOPER, District Judge (concurring).

I concur in the result reached by the two Circuit Court Judges with whom I have the honor to sit in this case, but I can not concur in all that is said in the opinion.

Simply stated, and omitting all matters which in my opinion are not necessary to a decision in this case, I base my concurrence on the following:

The case was tried in the District Court upon different contentions than those relied upon after findings of fact, conclusions of law and final judgment were entered by the trial judge. The complaint does not make it clear whether plaintiff is relying upon the theory of implied warranty, or negligence, as both are incorporated. Negligence, however, was definitely charged against FWD, the manufacturer, and was found to exist by the trial judge. The trial judge decided the case as being an action under an implied warranty, and in doing so apparently was taking the stronger of two theories at which plaintiff had hinted. He found against plaintiff on that theory, however, because he found that Altec, the party suing for damages, was not the owner of the vehicle when the damages occurred. Appellant in its brief now virtually concedes that the judge was correct in that finding, or at least is willing to abandon any contention that title was in Altec at the time of the accident.1 Altec asserted in its brief that it had sufficient right to recover for its loss under conventional concepts of indemnity or subrogation. That contention, however, was not made before the trial court until after judgment rendered. The trial judge after allowing certain amendments to meet the evidence in the case, refused to change his judgment or to grant a new trial. While there is a serious question in my mind as to whether there was any duty on the trial judge, after rendering judgment, to reopen the case and decide it on a different theory, in the interest of justice I am going along with my distinguished brethren, as the District Judge did see fit to allow some amendments to the pleadings. I feel fairly confident, however, that had the case been originally tried in the District Court on the contentions now belatedly offered to this Court, there would have been different findings of fact and different conclusions of law made by the trial court.

Because of the fact that Altec was under the law bound to deliver to the City of Gainesville a vehicle that was merchantable, and because it was unable to do so because of defects attributable to FWD, the damages suffered by Altec under the theory of subrogation would be the same whether the accident occurred before delivery, or after delivery, of the vehicle to the City of Gainesville. In either event FWD had breached its implied warranty, resulting in the amount of damages found by the trial judge, and the only question left open is whether or not under Alabama law Altec had the right to suffer the expenses to comply with its contract with the City of Gainesville, then sue FWD on its breach of warranty 'without suit or prior adjudication of such warranty liability.'