Citizens Utilities Co. v. American Locomotive Co.

Per Curiam. We agree with the disposition made by Special Term as to eight of the nine causes of action pleaded. The exception, the fifth cause of action, was found to be valid and the motion to dismiss was denied as to it. It is our opinion that no cause of action is alleged, and while some facts are stated from which it may be deduced that a cause of action might be alleged, at the least a new pleading is required. To explain this position it is necessary to refer to the remaining causes of action. The first eight causes of action refer to the purchase and installation of four generating sets which defendant built and installed in plaintiff’s plant in Nogales, Arizona, in 1948. The ninth cause of action deals with a generating set similarly built and installed in plaintiff’s plant at Newport, Vermont, in 1946. We agree with Special Term’s decision that this last cause of action is barred by the Statute of Limitations. The first eight causes of action are for breach of warranty and misrepresentation based on claimed defects in the generators. As to all of these claims, except those embraced in the third and fifth causes of action, a settlement agreement was made between the parties, and we are in accord with Special Term that this agreement is a complete bar to suit. The fifth cause of action alleges that in August, 1952, a date subsequent to the settlement agreement, certain difficulties arose and defendant recommended that steel rails be installed and the generating sets mounted thereon, and defendant represented that with these steel rails the generating sets would have a life span of 30 years [474] and would operate with a certain efficiency. A contract was made for the installation of the rails. However, it is not alleged that the rails were installed pursuant to that contract and it is conceded that due to a strike in defendant’s plant that contract was cancelled and the rails were installed by some other contractor. The third cause of action which pleads these facts as a warranty was held to he defective in that it pleads a warranty without pleading a sale — a conclusion with which we agree. The fifth cause of action pleads these facts as a basis for an action for fraud and/or misrepresentation. However, the falsity that is alleged is not that the installation of the rails would cure the defects but that the sets were not so designed and constructed that they could last 30 years and operate at the alleged efficiency. There is no allegation as to the effect of installing the rails and for all that appears it could be that the rails accomplished all that they were represented to be able to do. What is pleaded is that the generating sets were not up to the original specifications. As we have seen, this is the matter that was the subject of prior suit, and settlement and claim for it has been released. We may deduce that what plaintiff might want to assert in these circumstances is that defendant, when it made the representations in regard to the rails knew that the installation would be ineffective because it knew either that the installation would be no cure or that the sets were incurable, and that the representations were made fraudulently or recklessly to induce a sale. Naturally, the resultant damage would be the cost of installing the rails. If plaintiff intended such a pleading, the intent has not been realized. But we believe it fitting to allow such a pleading if plaintiff deems that the facts permit it and plaintiff so desires. The order should be modified, on the law, by striking the fifth cause of action with permission to serve an amended complaint consisting of the fifth cause of action repleaded as indicated and, as so modified, affirmed, with costs to respondent-appellant.