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City of Stoughton v. Thomasson Lumber Co.12/23/2003
. The City of Stoughton filed this action for breach of implied warranty against Thomasson Lumber Company, claiming that 225 telephone poles the City purchased from the company were not merchantable at the time of delivery. After a trial to the court, the court entered judgment against Thomasson Lumber, and Thomasson Lumber appeals. We conclude: (1) the trial court did not erroneously decide that an implied warranty could contain a warranty on future performance of the poles, but rather properly considered the generally expected service life of like poles in determining whether these poles were merchantable at the time of delivery under Wis. Stat. ยง 402.314(2) (2001-02) ; (2) the trial court did not err in evaluating the expert testimony; (3) the trial court did not erroneously exercise its discretion in treating pleadings of Thomasson Lumber as admissions of a party opponent; (4) the evidence supported the trial court's findings that the poles did not meet the requirements for merchantability at the time of delivery; and (5) the evidence supported the trial court's finding that the City mitigated its damages. We therefore affirm the judgment against Thomasson Lumber.
. The City cross-appeals the trial court's decision to limit recovery for replacement costs to only 189 of the 225 poles replaced. This limitation was a sanction for the City's failure to mark for identification purposes poles it had to cut up for removal. For the reasons we explain below, we reverse and remand for further proceedings on this issue.
BACKGROUND
. In 1990 and 1991, the City purchased 225 utility poles from Thomasson Lumber. The poles were treated for Thomasson Lumber with copper/naphthenate (copper nap) at a facility owned by Olon Belcher Lumber Company. The purchase specifications drafted by the City required that the poles be southern yellow pine, be treated with copper nap to a .06 retention, meet the standards of the American National Standards Institute (ANSI) and American Wood Preservers Association (AWPA), and be independently inspected prior to delivery to the City. Thomasson Lumber selected McCallum Inspection Company to perform the independent inspection. The City installed the poles for use to support electrical lines for homes and businesses in the City.
. In January 1993, the Rural Electrification Administration, a United States government agency, sent a warning to electric utilities, including the City's electric utility, advising that the agency had received reports from three electric cooperatives that poles treated with copper nap were deteriorating after only two to three years; the agency advised purchasers of such poles since 1988 to visually inspect and sound the poles. The next month Thomasson Lumber sent its own alert to its copper nap pole customers recommending that they inspect their poles promptly because some customers had experienced premature decay in their poles. In June, a Thomasson Lumber employee performed an inspection of the City's copper nap poles, which consisted of sounding and boring approximately thirty to forty poles. He found one decayed pole and offered to refund the City the purchase price of the rotting pole.
. In April of 1994 three poles broke in a windstorm. They broke off about ten feet from the top of the poles, and the poles were rotten inside. The City notified Thomasson Lumber of this. That same month Hugh Thomasson of Thomasson Lumber inspected the poles, as did an employee of Olon Belcher. The substance of the conversations between Thomasson and the City and between the Olon Belcher employee and the City concerning these inspections was disputed at trial.
. On August 4, 1994, another copper nap pole
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