Dutchmen Manufacturing Inc., a manufacturer of recreational vehicle travel trailers and fifth wheels, leased a facility in Goshen, Indiana from April 1992 to February 1999 from Chapman Realty Inc. At some point during its tenancy, Dutchmen, without notifying Chapman or obtaining its consent, installed scaffolding that was affixed to the ceiling beams.
Shortly before Dutchmen's lease expired, Chapman began negotiating to lease the facility to Keystone RV Inc. Although Dutchmen's lease required it to remove all personal property and trade fixtures before vacating the premises, Keystone said that it wanted the scaffolding. Dutchmen offered to give the scaffolding to Keystone if Chapman would not charge Dutchmen for its removal.
Dutchmen left the premises on February 28, 1999, leaving the scaffolding in place. Two weeks later, Keystone signed a lease with Chapman that stated it accepted the premises "as is."
In December 1999, as Chad Reynolds, a Keystone employee, was installing electric wiring in a trailer under assembly, the scaffolding broke loose from its mounting and struck Reynolds paralyzing him from the neck down. Keystone's engineers determined that an inner steel tube in the scaffolding had fractured due to lack of lubricant and improper welding.
Reynolds filed a lawsuit against Dutchmen and Chapman. He argued that Dutchmen was liable for his injuries because it had constructed and installed defective scaffolding in the building that it had formerly leased from Chapman. According to Reynolds, the scaffolding was a " chattel" — movable or transferable property — within the meaning of Sec. 388 of the Restatement (Second) of Torts. This statute states that one who supplies defective chattel can be held liable for injuries caused by the chattel.
Dutchmen asked the Indiana trial court to grant summary judgment arguing that it did not owe Reynolds any duty and that it was not negligent because Keystone was aware of the dangers of the scaffolding and accepted the premises and scaffolding "as is."
The trial court ruled that Reynolds was entitled to a trial, but the state Court of Appeals ruled for Dutchmen, holding that the scaffolding had merged into the real estate at the end of Dutchmen's lease and was not a defective chattel.
Reynolds appealed to the Indiana Supreme Court, which ruled that he had a right to take his claim against Dutchmen to trial. The court concluded that the scaffolding was a chattel, and was subject to the law regarding defective chattel. Although Dutchmen argued that the scaffolding "merged" into the realty and Chapman became the owner of the scaffolding when it vacated the premises, the court stated that it appeared that Chapman was never the owner of the scaffolding, and that title was transferred directly from Dutchmen to Keystone. Regardless of who owned the scaffolding, the court stated, Dutchmen was still the supplier of the scaffolding and Reynolds had a right to have a jury decide whether Dutchmen negligently welded the scaffolding. The court said the fact that Keystone rented the premises "as is" from Chapman did not exonerate Dutchmen from any liability it might have to Reynolds.
Dutchmen Manufacturing Inc. v. Reynolds,