Facts
- Kellogg Bridge Company contracted to construct an iron railroad bridge across the Maumee River in Toledo, Ohio.
- After beginning the project, including building portions of temporary supporting structure (falsework), Kellogg entered a written contract with Hamilton to complete erection of the bridge.
- Under the contract, Hamilton agreed to (1) furnish necessary falsework and erect the bridge materials as delivered, and (2) “assume and pay for” work and materials already performed or furnished, including piling, timber, and labor; Hamilton therefore paid for and took over existing falsework Kellogg had built.
- While erecting the first span, part of the Kellogg-built falsework sank under the load and Hamilton replaced it.
- During construction of the second fixed span, flooding and river ice caused the falsework to fail, and the iron material then in place fell into the river.
- Evidence indicated the falsework would have withstood the conditions if the piles had been driven more firmly; the insufficiency was not apparent on ordinary inspection and became evident only when tested under load and river conditions.
- Hamilton sued for unpaid contract amounts, compensation for extra work, and damages for increased expense and delay caused by the falsework’s insufficiency; Kellogg counterclaimed for alleged breaches by Hamilton.
- A jury returned a verdict for Hamilton and judgment was entered in his favor; Kellogg sought review.
Issues
- Whether a manufacturer-seller who transfers to a contractor previously constructed work and materials for a known specific purpose impliedly warrants that the work is reasonably fit for that purpose when defects are latent and not discoverable by ordinary inspection.
- Whether a contract clause requiring the buyer to “assume and pay for” existing work and materials negates such an implied warranty.
Decision
- The Supreme Court affirmed the judgment for Hamilton.
- The Court held that the law implied a warranty that the transferred falsework was reasonably sufficient for the known purpose of supporting bridge erection.
- The “assume and pay for” language addressed allocation of payment for prior work and materials and did not shift to Hamilton the risk of latent defects in Kellogg’s workmanship.
- Because the defect was latent and Hamilton necessarily relied on Kellogg’s skill as the builder, Kellogg was liable for damages flowing from the falsework’s insufficiency.
Legal Principles
- In ordinary sales where the seller is not the maker and the buyer can inspect, no warranty is implied merely from the sale when both parties have comparable lack of knowledge.
- When the seller is the manufacturer or originator of the work and supplies it for a particular purpose known to the seller, the law implies a warranty that the work is reasonably fit and sufficient for that purpose.
- An implied warranty is especially appropriate where defects are latent and not discoverable by reasonable inspection, so the buyer must rely on the manufacturer’s skill and judgment.
- Contract language shifting payment responsibility for existing work does not, without clearer risk-shifting terms, disclaim an implied warranty against latent defects attributable to the manufacturer’s workmanship.
Conclusion
The Court held that Kellogg, as the builder and transferor of the falsework for a specific known use, impliedly warranted its reasonable fitness despite the absence of an express warranty and despite Hamilton’s agreement to pay for existing work; because the defect was latent and caused the failure and resulting losses, the verdict for Hamilton was properly affirmed.