## Facts

- Everett Figgins owned a grocery store and needed refrigerated display cases to store and display cuts of fresh meat.
- Figgins agreed to obtain two display cases from Transcontinental Refrigeration Co. under documents labeled as a “lease,” requiring periodic payments and providing that ownership would pass to Figgins after the payment term.
- Figgins initially ordered gravity-coil, non-air-circulation meat cases, which are generally used for fresh-meat display.
- Transcontinental later told Figgins the ordered units were unavailable and supplied substitute cases using forced-air circulation, assuring Figgins they would be suitable for displaying fresh meat.
- The cases were installed on September 7, 1975, and Figgins immediately observed that meat in the cases dehydrated unusually quickly and became unsalable.
- On October 6, 1975, Figgins’s attorney wrote Transcontinental that the cases were not suitable and stated that Figgins had ordered replacement cases from another supplier; at trial, Figgins testified he did not actually order replacements until November 1, 1975.
- On October 10, 1975, at the manufacturer’s suggestion, condensation pans were installed in an attempt to correct the problem, but the meat continued to dry out.
- Transcontinental did not send a representative to inspect the cases on-site.
- Figgins replaced the cases on November 15, 1975, and on November 17, 1975, sent Transcontinental notice of cancellation and rescission.
- Transcontinental sued Figgins for breach of contract based on nonpayment; Figgins counterclaimed seeking rescission and damages.
- At trial, Figgins presented testimony that forced-air refrigeration is unsuitable for fresh meat because air movement increases evaporation and drying.
- The district court concluded the transaction was a sale, found the cases unfit for the purpose for which they were obtained, rescinded the agreement, and awarded Figgins a refund of his down payment plus damages and attorney fees.
- Transcontinental appealed.

## Issues

1. Whether the “lease” documents should be treated as a contract for sale of goods governed by UCC Article 2.
2. Whether the substituted forced-air display cases breached the implied warranty of fitness for Figgins’s particular purpose (fresh-meat display), given Transcontinental’s assurances and Figgins’s reliance.
3. Whether Figgins’s notice, the opportunity provided for correction, and the timing of cancellation supported rescission as a remedy.
4. Whether the district court properly awarded return of the down payment, incidental/consequential damages, and attorney fees.

## Decision

- The Montana Supreme Court affirmed the district court’s judgment for Figgins.
- The court agreed the transaction, though labeled a “lease,” functioned as a sale, relying in part on prior Montana authority construing identical documents as a sale.
- The court upheld the finding that the forced-air cases were not fit for the purpose of displaying fresh meat and that Transcontinental’s assurances supported liability under warranty principles applicable to sales.
- The court held the record supported that Figgins gave notice, allowed attempted correction, and rescinded within a reasonable time when the problem persisted and Transcontinental failed to take meaningful steps to fix it.
- The court upheld the monetary awards, including return of the $918 down payment, $563.80 in damages/expenses, and $585 in attorney fees.

## Legal Principles

- Courts may treat an agreement labeled a “lease” as a sale when the payment structure and end-of-term ownership provisions show a financed purchase, making UCC Article 2 applicable.
- Under UCC § 2-315, an implied warranty of fitness for a particular purpose arises when the seller has reason to know the buyer’s particular purpose and the buyer relies on the seller’s judgment to furnish suitable goods.
- Substituting different goods and assuring suitability can support a finding that the buyer relied on the seller and that a warranty of fitness was breached if the goods fail in the buyer’s intended use.
- A buyer who gives notice of nonconformity and allows a reasonable chance for correction may rescind (or revoke acceptance) when the nonconformity substantially impairs the value and remains uncured.
- Appellate courts generally defer to trial-court findings of fact when supported by substantial evidence.
- Attorney fees may be awarded when authorized by contract or applicable law and supported by the record.

## Conclusion

Transcontinental Refrigeration Co. v. Figgins affirmed rescission and damages after Transcontinental supplied forced-air meat cases as substitutes for gravity-coil units, assured they would work for fresh-meat display, and the cases instead caused rapid dehydration of meat; treating the “lease” paperwork as a sale governed by the UCC, the Montana Supreme Court upheld findings of unfitness, adequate notice and opportunity to correct, and awards returning the down payment and granting damages and attorney fees.


Transcontinental Refrigeration Co. v. Figgins, 585 P.2d 1301 (1978)