The opinion of the court was delivered by: LEONARD D. WEXLER
1. In May 1984, pursuant to public bidding, plaintiff Eugene Iovine Inc. ("Iovine") was awarded a prime electrical contract by the New York City Health and Hospitals Corporation ("HHC") in the sum of $ 2,274,113 to, inter alia, modernize the HHC Kings County Hospital (the "Hospital") electrical system from the existing direct current ("DC") system to an alternating current ("AC") system (the "HHC Electrical Contract").
3. Iovine contacted defendant Rudox Engine and Equipment Co. ("Rudox") to provide a proposal for the 26 new AC to DC MG Sets. To develop a proposal, Rudox's authorized agent, Adolf Liefke ("Liefke"), visited Iovine's offices to review the applicable specifications in the HHC Electrical Contract, and inspected the jobsite.
4. Thereafter, Rudox sent Iovine a quotation, dated July 13, 1984, for 26 new AC to DC MG Sets, which included DC generators of various kilowatt power ("KW") to meet applicable performance specifications. Rudox knew that Iovine required the new MG Sets to replace the existing DC to DC MG Sets, and that the new MG Sets were required to meet applicable performance specifications of the HHC Electrical Contract. Liefke testified that Rudox determined the necessary KW ratings for the new DC generators from the nameplates on the existing DC generators at the Hospital.
5. In response to the quotation, Iovine issued Rudox a purchase order dated July 31, 1984, calling for Rudox to supply 26 new MG Sets: one 10 KW MG Set, seven 15 KW MG Sets, eleven 20 KW MG Sets, and seven 25 KW MG Sets. The purchase order contained eleven enumerated conditions. Condition 1 provides: "Supplier has examined the Specifications and Drawings applicable in the above referenced Project, and agrees that all items to be supplied by him will conform to them, and will gain Owner's timely approval." Condition 5 provides: "All warranties are to start with Owner acceptance of our completed work, and not with date of delivery of the materials."
6. By cover letter dated August 14, 1984, Rudox submitted documents to Iovine for approval of Rudox's MG Sets (the "Initial Submittal"). Iovine transmitted the Initial Submittal to HHC's engineer, Pope Engineers ("Pope"), for approval. On or about October 15, 1984, Pope approved the Initial Submittal "subject to corrections noted." These corrections, handwritten on a dimensional drawing of the MG Sets in the Initial Submittal, read: "GENERAL COMMENTS: 1. MOTORS SHALL COMPLY WITH SPECIFICATIONS SECTION 16402 PAR. 3.13 INCLUDING ALL APPLICABLE SUB-PARAGRAPHS. 2. D.C. GENERATOR SHALL BE SUITABLE FOR ELEVATOR SERVICE." A similar handwritten correction was noted by Pope in the Initial Submittal on a catalog cut of Kato Engineering Company ("Kato"), the eventual supplier of the DC generator: "GENERAL COMMENTS: 1. GENERATORS SHALL BE SUITABLE FOR ELEVATOR SERVICE."
7. By cover letter dated November 13, 1984, Rudox sent a resubmittal to Iovine for approval (the "Resubmittal"). The cover letter to the Resubmittal stated that the "D.C. Motor Generator Set will comply with specifications section 16402 PAR 3.13 including all applicable submittals [sic], with one exception, the motor will be code F instead of code D. Code F is suitable for this class of service and KATO D.C. Generator is suitable for elevator service." A "Bill of Material" included in the Resubmittal also included the above-quoted language. On December 3, 1984, Pope approved the Resubmittal. By letter dated December 11, 1984, Iovine notified Rudox of Pope's approval.
8. Following Pope's approval, Kato supplied the DC generators and Marathon Electric supplied the AC motors to William I. Horlick Co. ("Horlick") for assembly. Horlick assembled the MG Sets by in or about October 1985, and delivered them to Rudox.
10. In 1987, HHC awarded Republic Elevator Co. ("Republic") a contract to do certain upgrade work on six passenger elevators in buildings A, B, and C at the Hospital. Under its contract with HHC, Republic agreed to provide elevator "controllers" for these elevators. These six elevators were among the 26 for which Iovine had already agreed to provide new AC to DC MG Sets.
11. During January and February 1988, Rudox had the 26 new MG Sets delivered to the jobsite, with instruction manuals for their installation. Iovine, however, had not engaged the services of an elevator company as required by the HHC Electrical Contract for installation of the Rudox MG Sets. Indeed, ...