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11/19/87 MCCLURE OIL CORPORATION AND EDWARD A.

Filed: November 19, 1987.

MCCLURE OIL CORPORATION AND EDWARD A. MCCLURE D/B/A E. A. MCCLURE REAL ESTATE, DEFENDANTS-APPELLANTS,
v.
MURRAY EQUIPMENT, INC., PLAINTIFF-APPELLEE



APPEAL FROM THE GRANT CIRCUIT COURT1, The Honorable Bruce Bade, Special Judge, Cause No. C-84-262.

Ratliff, C.j.

Author: Ratliff

RATLIFF, C.J.

STATEMENT OF THE CASE

McClure Oil Corp. and Edward McClure d/b/a E. A. McClure Real Estate appeal an adverse judgment in favor of Murray Equipment, Inc. We affirm.

FACTS

The facts most favorable to the judgment reveal that Ed McClure was the president of McClure Oil Corp. His brother, Rick, was the company's secretary-treasurer. McClure Oil was engaged in the business of selling gasoline, fuel oil, and other liquid petroleum products.

In May or June of 1983, Ed McClure contacted Tom Miller, a salesman for Murray Equipment, about a terminal or "tank farm" to be installed on property owned by Ed McClure in Grant County, Indiana.[Footnote 2] The tank farm was to consist of several large, above-ground storage tanks for gasoline and other petroleum products. Murray Equipment is a supplier of liquid handling equipment. Ed McClure inquired about Murray Equipment's capability to provide the necessary equipment. Tom Miller of Murray Equipment later talked with Ed McClure about the project and then went to the job site in August of 1983. At the time, the large storage tanks already were under construction. Ed McClure told Miller that he wanted the tank farm operational as soon as possible; Ed wanted it completed by the end of November of 1983. Ed McClure informed Miller that he needed four pumps capable of loading a tank truck at the rate of 750 gallons per minute. However, the rate of unloading a tank truck was never discussed. Ed McClure also told Miller that he wanted the tank farm completed as economically as possible.

During the Discussions about the tank farm's equipment, Miller told Ed McClure that Murray Equipment would furnish the required equipment but not installation. Furthermore, Miller did not agree to provide McClure Oil with drawings suitable for the equipment's installation or for McClure to solicit bids for the installation. The only drawings which Murray Equipment prepared for the project were for Murray Equipment to compile a material list, and also to assist in making the sale. Copies of these drawings were given to Ed McClure.

Ed McClure and McClure Oil undisputedly relied upon Murray Equipment's expertise to select the appropriate pumps and equipment.[Footnote 3] After talking to a pump manufacturer, Tom Miller determined that a 700 gallon per minute pump was more feasible than one which pumped 750 gallons per minute. Ed McClure approved Miller's recommendation about the proposed pumping capacity. At that time in October, neither Miller nor Ed McClure discussed the specific costs of the pumps; they just agreed that the pumps would be as cheap as possible. Since Ed wanted the project completed by late November, he told Miller to order all of the equipment immediately. Prior to ordering, however, Miller talked with Ed McClure about the "major items" such as the pumps and meters. Murray Equipment ordered most of the equipment in the first part of October, 1983. At that time, Miller ordered four (4) straight centrifugal pumps from the LaBour Pump Company (LaBour).

The ordered equipment arrived in late October through November, 1983. McClure Oil picked up some of the equipment in late October. This pick-up included the four (4) LaBour pumps at a total price of about $14,100. McClure Oil picked up the remainder of the equipment in November of 1983. All of the equipment was stored in McClure Oil's warehouse. On October 31, 1983, Murray Equipment sent an invoice to McClure Oil for the amount of $24,790.48. On December 7, 1983, Murray Equipment sent an invoice to McClure Oil for the amount of $49,944.10. The terms of those invoices, and all subsequent invoices, were net 15 days at 1 1/2 % per month thereafter. Additional invoices were sent for small parts and equipment, service charges, and interest charges, bringing the total principal amount to $75,701.49. At no time did McClure Oil object to the invoices' terms.

During the early months of 1984, Murray Equipment and McClure discussed two points in dispute -- payment and drawings. In January, 1984, the president of Murray Equipment, Steve Murray, talked to Ed McClure about the unpaid invoices. During the Discussion, Ed complained for the first time about the lack of detailed drawings. Ed claimed that he needed drawings suitable for assisting with installation and soliciting bids for installation. Tom Miller also talked with Ed and Rick McClure in January about payment. As with Steve Murray, this was the first time McClure Oil informed Miller of its demands for detailed drawings. Throughout the Discussions, Murray Equipment never agreed to furnish installation drawings. Steve Murray contacted McClure Oil again in February and March of 1984, but McClure still did not pay for the equipment.

The progress of these Discussions came to a pinnacle in April of 1984. Ed McClure testified that in April, he instructed his brother, Rick, to pay for the tank farm equipment. Rick's testimony and Steve Murray's testimony confirmed Ed's assertion. However, unbeknownst to Steve Murray, Murray Equipment's attorney filed suit against McClure Oil on the same day as Steve's conversation with Ed. A day or two later, Ed changed his mind and told Rick not to pay the invoices.

In the same month of April, McClure Oil hired one Kenny Wilson to install the tank farm equipment. McClure Oil agreed to pay Wilson $39,800 for the job despite Wilson's total lack of experience in installing equipment on a tank farm. In August of 1984, Kenny Wilson informed Ed that he had completed all which he was capable of doing without more detailed drawings. McClure Oil paid him a little more than the agreed price of $39,800 even though Wilson did not complete the job.

In July, 1984, Ed McClure contacted George Priest, a man with 34 years of experience in the petroleum construction business. At Ed's request,[Footnote 4] Priest agreed to complete the installation. Priest began work at the site in mid August, 1984. The LaBour pumps which Murray Equipment had supplied were operational and pumping product on September 12, 1984. However, the LaBour pumps did not unload a tank truck as quickly as Ed desired. Nine (9) days after the pumps became operational, Ed McClure ordered four (4) pumps manufactured by the Gorman-Rupp Company. The Gorman-Rupp pumps were capable of pumping 650 gallons per minute. The cost of these pumps to McClure Oil was $27,200, almost double the $14,100 cost of the LaBour pumps. McClure Oil used the LaBour pumps for eight (8) to ten (10) weeks. George Priest then replaced the LaBour pumps with the Gorman-Rupp pumps in November of 1984. Priest was able to complete the installation of the tank farm equipment without any drawings whatsoever, because he did not need them. McClure Oil paid Priest on an hourly basis for a total of about $50,000 for completing the job.

Murray Equipment's complaint sought damages in the principal amount of $75,701.49 plus interest at 18 % per annum. McClure Oil's answer contained a counterclaim for breach of implied warranty of fitness for a particular purpose. After a bench trial, the trial court entered extensive findings of fact and Conclusions of law and granted judgment in favor of the plaintiff, Murray Equipment, in the amount of $74,860.99[Footnote 5] with interest at the rate of 1 1/2 % per month starting January 15, 1984. Furthermore, the trial court denied McClure's counterclaim.

As of the date of the trial court's judgment, McClure Oil had never paid for any of the equipment supplied by Murray Equipment which is the subject of this suit. Additionally, McClure Oil has never returned any of the equipment to Murray Equipment. McClure Oil and Ed McClure appeal from the trial court's judgment.

ISSUES

Restated, the issues are as follows:

1. Whether there was substantial evidence to support the trial court's Conclusion that McClure Oil accepted the equipment and did not revoke its acceptance.

2. Whether there was substantial evidence to support the trial court's denial of the defendants' counterclaim for breach of implied warranty of fitness for a particular purpose.

3. Whether there was substantial evidence to support the trial court's award of prejudgment ...


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