February 1953 Radio-Electronics
[Table of Contents]
Wax nostalgic about and learn from the history of early electronics.
See articles from Radio-Electronics,
published 1930-1988. All copyrights hereby acknowledged.
Most of us probably never give
much thought to how vulnerable we could be in a lawsuit related to our professional activities
- until it's too late. That is particularly true if you are not directly involved in
the sales or service business. Even when it is reasonable to believe that there is no
way a jury or judge could find you liable for a charge levied against you, the skill
of a talented lawyer and/or whims and prejudices of judges and/or jurors can doom you.
Although a bit dated, the legal cases cited in this Radio-Electronics article
give a little insight into why you would do well to give some thought to what the consequences
of your actions and/or statements might invite if someone decides you have offended him
or her. Remember that settled legal cases are regarded as precedence when a similar case
comes before a court. Interestingly, I was able to find on legal websites (and link
to) a few of the cases cited here.
Servicing - Test Instruments, Who Is Liable?
Service technicians and dealers: These recent court decisions may help safeguard you
By Leo T. Parker
A reader recently asked: "If a purchaser signs a contract with a dealer for the installation
of a television set, can the dealer recover damages if the purchaser rescinds the contract,
and, if so, how much damages may the contractor receive? If the customer denies that
he signed the installation contract what is the proper legal procedure for the contractor?"
The answers to these legal questions are given in a recent higher-court decision and
should help TV and appliance dealers, technicians, and distributors to win suits of this
In the case of
Krumholz v. Rusak, 41 N.W. (2d) 177, the testimony showed that a
dealer signed a contract with a purchaser to install certain equipment in his home.
The purchaser later refused to allow the seller to install the equipment, and the
seller sued to recover the profit he would have earned on the job had the purchaser not
rescinded the contract.
The jury considered all testimony and held the purchaser liable for $840, the profit
the seller would have earned had the contract been completed.
If a purchaser breaches a contract for installation of a television set, the dealer
may sue and recover the anticipated profits which he would have earned by fulfilling
his part of the contract.
Another reader asked this question:
"Very often I lease out television sets with privilege of purchase by the customer.
By this plan I get the customer to tryout my set without any financial loss. How can
I protect myself against theft or other damage to a television set I lease to a customer
under a 'privilege-of-purchase' contract?"
A new higher-court decision clearly answers this question:
Perreault v. Circle Club, 95 N.E. (2d) 204, the testimony showed
the following facts: A dealer leased the Circle Club a television set for one month at
a rental of $150 a month, with an option to buy it for $1,721.25. The lease contained
the following provision: "The lessee shall pay for any damage to the equipment during
the term hereof or while the same is in his actual possession or constructive possession,
which may be due otherwise than to ordinary wear and tear incident to the normal use
thereof, and at the termination of this agreement, by the expiration of the terms hereof
or otherwise, the lessee shall surrender to the lessor the said equipment in good order,
repair and condition in all respects, reasonable wear and tear excepted."
A few days after the set was installed some one broke into the premises of the Circle
Club and stole the set, without negligence or other fault on the part of the Club.
The dealer sued the Club to recover $1,571.25, ($1,721.25 less the one-month rental
of $150 already paid).
The higher court held the Club liable to the dealer for $1,571.25.
The court explained that if the Circle Club had not signed a contract containing the
clause above, it would not have been liable to the dealer for any payment unless the
dealer had convinced the court that the theft of the set resulted from some fault or
negligence of the Circle Club.
Therefore, dealers who lease sets, or place them in homes on approval, should protect
themselves against loss, damage, or theft of the sets by having the customers sign an
agreement containing the full text of this damage clause plus any other protective clauses
your attorney thinks necessary.
According to a late higher-court decision, a television technician is liable for all
losses resulting from his negligent installation of television sets and other equipment.
Russell v. Union Company, 191 S.W. (2d) 278, a property owner sued
a technician to recover damages for the destruction of his dwelling by fire. The property
owner proved that after the technician had installed the television equipment, together
with the necessary wiring and electrical connections, his house caught fire and burned
down. The technician had cut the power-line insulation, exposing the wire, and then used
uninsulated, sharp-edged staples in securing the wiring to the parts of the interior
of the dwelling. The jury held the technician liable for the full value of the dwelling
and its contents, and the higher court approved the verdict.
Law of Partnership
Modern higher courts consistently hold that a valid partnership never exists unless
the partners agree to share both losses and profits.
For illustration, in Nuland v. Pruyn, 222 Pac. (2d) 261, the testimony brought out
these facts: Pruyn owned a radio and television repair service business. Nuland represented
that he was an expert radio service technician. They made an agreement that Nuland was
to devote his services to the business; that Pruyn's equipment and stock was worth $2,500;
that 50 per-cent of the gross receipts of the business would be deposited in a bank account
until Pruyn received $2,500 as repayment; that thereafter a fund of at least $1,000 was
to be maintained, and that the excess was to be divided equally between Pruyn and Nuland.
The higher court held that no valid partnership agreement existed because the testimony
did not prove conclusively that Pruyn and Nuland were to share both profits and losses.
Generally speaking, the law is well settled in all states that a properly recorded
chattel mortgage is superior to a technician's mechanic's lien on a television set. However,
a higher court recently held that a mechanic's lien is superior to a mortgage which was
not recorded, and where the technician had no knowledge of the existence of the mortgage.
In Christian v. Boyd, 222 S.W. (2d) 157, a purchaser gave a dealer a note and chattel
mortgage for the balance due on the equipment purchased. This mortgage was not recorded.
Some time later a technician repaired the equipment, and the purchaser failed to pay
the bill for materials and labor.
Since the testimony showed that the technician had no knowledge that the mortgage
existed, the higher court held that the technician could take possession of the equipment
to secure payment of his bill.
The court explained that if the mortgage had been recorded, it would have been superior
to the technician's lien, and the technician could not have taken possession of the equipment.
A recorded chattel mortgage constitutes legal notice to the public that a lien exists.
Many small-loan companies require that the borrower execute a chattel mortgage on his
household possessions, and if you have any doubt about the set-owner's ability to pay,
it is advisable to check up before you undertake any expensive repair jobs.
What Lien Must Cover
Considerable discussion arises from time to time over the legal question: "What charges
does a mechanic's lien cover?" According to a higher-court decision - Eastex Finance
Company v. Bryant, 42 So. (2d) 418 - a technician cannot have a valid mechanic's lien
to secure payment of any charges, unless the amount of the bill includes both labor and
A technician filed a mechanic's lien against equipment to recover $350. Since the
bill was for accessories, and did not include a labor charge, the higher court held the
lien void and said:
"The Service Station could have no lien for the price or value of any items or any
accessories sold by the said Service Station in the regular course of business, where
no labor was both performed and charged for in the installation of such accessories."
For comparison, see Funchess v. Pennington, 39 So. (2d) 1. Here the court held that
a technician claiming a lien for labor and materials furnished in repairing a television
set has the burden of proving that he supplied both labor and materials. This court explained
that if the technician made a charge for installing repair parts and accessories he can
have a valid mechanic's lien on the set to secure payment for the parts, plus the labor
A higher court recently decided that the Federal Communications Com mission has jurisdiction
to extend the time allowed for construction of a television station. In other words,
failure of a company to complete construction of a station within the time specified
in the permit will not forfeit its right to complete the work where the Commission grants
an extension of time.
For example, in United v. Federal Communications Commission, 178 Fed. Rep. (2d) 700,
it was shown that the United Detroit Theatres Corporation applied for a six-month construction
permit for a television station in Detroit, Michigan. The corporation found it would
not be able to complete the station in six months and applied for an extension of time.
The Commission granted the application without a hearing.
In the meantime another company applied to the Commission for a permit to operate
a television station on the same channel previously awarded the United Detroit Theatres
In subsequent litigation the higher court upheld the Commission's decision in retaining
the channel for the United Detroit Theatres Corporation, saying:
"The failure of the Commission to consider appellant's (United Detroit Theatre Corporation's)
application in its normal routine turn was within permissive administrative discretion
... if there remain available (television) channels to which the applicant may be assigned."
Posted August 22, 2018