Source: https://h2o.law.harvard.edu/collages/2379
Timestamp: 2019-04-21 14:10:15+00:00

Document:
In the earlier case of Biakanja v. Irving (1958) 49 Cal. 2d 647, 320 P.2d 16, 65 A.L.R.2d 1358, we had held that a notary public who negligently failed to direct proper attestation of a will became liable in tort to an intended beneficiary who suffered damage because of the invalidity of the instrument. In that case, the defendant argued that the absence of privity deprives a plaintiff of a remedy for negligence committed in the performance of a contract. In rejecting this contention we pointed out that the inflexible privity requirement for such a tort recovery has been virtually abandoned in California. . . .
Applying the Biakanja criteria to the facts of Lucas, the court found that attorneys incur a duty in favor of certain third persons, namely, intended testamentary beneficiaries. In proceeding to discuss the contractual remedy of such persons as the plaintiffs in Lucas, we concluded that "as a matter of policy, . . . they are entitled to recover as third-party beneficiaries." (56 Cal. 2d at p. 590, 15 Cal. Rptr. at p. 825, 364 P.2d at p. 689.) The presence of the Biakanja criteria in a contractual setting led us to sustain not only the availability of a tort remedy but of a third-party beneficiary contractual remedy as well. This latter theory of recovery, however, is conceptually superfluous since the crux of the action must lie in tort in any case; there can be no recovery without negligence. . . .
When an attorney undertakes to fulfill the testamentary instructions of his client, he realistically and in fact assumes a relationship not only with the client but also with the client's intended beneficiaries. The attorney's actions and omissions will affect the success of the client's testamentary scheme; and thus the possibility of thwarting the testator's wishes immediately becomes foreseeable. Equally foreseeable is the possibility of injury to an intended beneficiary. In some ways, the beneficiary's interests loom greater than those of the client. After the latter's death, a failure in his testamentary scheme works no practical effect except to deprive his intended beneficiaries of the intended bequests. Indeed, the executor of an estate has no standing to bring an action for the amount of the bequest against an attorney who negligently prepared the estate plan, since in the normal case the estate is not injured by such negligence except to the extent of the fees paid; only the beneficiaries suffer the real loss. We recognize in Lucas that unless the beneficiary could recover against the attorney in such a case, no one could do so and the social policy of preventing future harm would be frustrated.
The duty thus recognized in Lucas stems from the attorney's undertaking to perform legal services for the client but reaches out to protect the intended beneficiary. We impose this duty because of the relationship between the attorney and the intended beneficiary; public policy requires that the attorney exercise his position of trust and superior knowledge responsibly so as not to affect adversely persons whose rights and interests are certain and foreseeable. . . .
Id. at 226-229, 449 P.2d at 163-165, 74 Cal. Rptr. at 227-229. Judge Tobriner concluded that the plaintiff's complaint stated "a cause of action in tort under the doctrine of Lucas." Would you view Heyer as an affirmation or repudiation of the contract beneficiary theory advanced in the Lucas case? Does it make any difference whether we treat the plaintiff's claim in Lucas as one that sounds in tort or contract?
The assault upon the citadel of privity is proceeding in these days apace. How far the inroads shall extend is now a favorite subject of juridical discussion (Williston, Liability for Honest Misrepresentation, 24 Harv. L. Rev. 415, 433; Bohlen, Studies in the Law of Torts, pp. 150, 151; Bohlen, Misrepresentation as Deceit, Negligence or Warranty, 42 Harv. 1. Rev. 733; Smith, Liability for Negligent Language, 14 Harv. 1. Rev. 184; Green, Judge and Jury, chapter Deceit, p. 280; 16 Va. Law Rev. 749). In the field of the law of contract there has been a gradual widening of the doctrine of Lawrence v. Fox (20 N.Y. 268), until today the beneficiary of a promise, clearly designated as such, is seldom left without a remedy (Seaver v. Ransom, 224 N.Y. 233, 238). Even in that field, however, the remedy is narrower where the beneficiaries of the promise are indeterminate or general. Something more must then appear than an intention that the promise shall redound to the benefit of the public or to that of a class of indefinite extension. The promise must be such as to "bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost" (Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, 164;  American Law Institute, Restatement of the Law of Contracts, §145). In the field of the law of torts a manufacturer who is negligent in the manufacture of a chattel in circumstances pointing to an unreasonable risk of serious bodily harm to those using it thereafter may be liable for negligence though privity is lacking between manufacturer and user (MacPherson v. Buick Motor Co., 217 N.Y. 382; American Law Institute, Restatement of the Law of Torts, §262). A force or instrument of harm having been launched with potentialities of danger manifest to the eye of prudence, the one who launches it is under a duty to keep it within bounds (Moch Co. v. Rensselaer Water Co., supra, at p. 168). Even so, the question is still open whether the potentialities of danger that will charge with liability are confined to harm to the person, or include injury to property (Pine Grove Poultry Farm v. Newton B.-P. Mfg. Co., 248 N.Y. 293, 296; Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303; American Law Institute, Restatement of the Law of Torts, supra). In either view, however, what is released or set in motion is a physical force. We are now asked to say that a like liability attaches to the circulation of a thought or a release of the explosive power resident in words.
Three cases in this court are said by the plaintiff to have committed us to the doctrine that words, written or oral, if negligently published with the expectation that the reader or listener will transmit them to another, will lay a basis for liability though privity be lacking. These are Glanzer v. Shepard (233 N.Y. 236); International Products Co. v. Erie RR. Co. (244 N.Y. 331), and Doyle v. Chatham & Phoenix Nat. Bank (253 N.Y. 369).
In Glanzer v. Shepard the seller of beans requested the defendants, public weighers, to make return of the weight and furnish the buyer with a copy. This the defendants did. Their return, which was made out in duplicate, one copy to the seller and the other to the buyer, recites that it was made by order of the former for the use of the latter. The buyer paid the seller on the faith of the certificate which turned out to be erroneous. We held that the weighers were liable at the suit of the buyer for the moneys overpaid. Here was something more than the rendition of a service in the expectation that the one who ordered the certificate would use it thereafter in the operations of his business as occasion might require. Here was a case where the transmission of the certificate to another was not merely one possibility among many, but the "end and aim of the transaction," as certain and immediate and deliberately willed as if a husband were to order a gown to be delivered to his wife, or a telegraph company, contracting with the sender of a message, were to telegraph it wrongly to the damage of the person expected to receive it (Wolfskehl v. Western Union Tel. Co., 46 Hun, 542; DeRuth v. New York, etc., Tel. Co., 1 Daly, 547; Milliken v. Western Union Tel. Co., 110 N.Y. 403, 410). The intimacy of the resulting nexus is attested by the fact that after stating the case in terms of legal duty, we went on to point out that viewing it as a phase or extension of Lawrence v. Fox (supra), or Seaver v. Ransom (supra), we could reach the same result by stating it in terms of contract (cf. Economy Building & Loan Assn. v. West Jersey Title Co., 64 N.J.L. 27; Young v. Lohr, 118 Iowa, 624; Murphy v. Fidelity, Abstract & Title Co., 114 Wash. 77). The bond was so close as to approach that of privity, if not completely one with it. Not so in the case at hand. No one would be likely to urge that there was a contractual relation, or even one approaching it, at the root of any duty that was owing from the defendants now before us to the indeterminate class of persons who, presently or in the future, might deal with the Stern company in reliance on the audit. In a word, the service rendered by the defendant in Glanzer v. Shepard was primarily for the information of a third person, in effect, if not in name, a party to the contract, and only incidentally for that of the formal promisee. In the case at hand, the service was primarily for the benefit of the Stern company, a convenient instrumentality for use in the development of the business, and only incidentally or collaterally for the use of those to whom Stern and his associates might exhibit it thereafter. Foresight of these possibilities may charge with liability for fraud. The conclusion does not follow that it will charge with liability for negligence.
Id. at 180-183, 174 N.E. at 445-446. Does Lucas v. Hamm reject the approach adopted in Ultramares or are the two cases distinguishable and reconcilable?
3. Cases like Lucas v. Hamm, Heyer v. Flaig, and Ultramares are characterized by a recurrent interplay between contract and tort theory. Another area in which the uneasy alliance between contract and tort makes its appearance is that of a manufacturer's liability to remote consumers or users of a defective product. In recent years a great many courts have adopted a rule, sometimes referred to as one of "strict liability," under which the manufacturer may be held liable even though it was not in "privity" of contract with the injured plaintiff and even though it was not chargeable with negligence in the manufacture of the goods. The California Court announced such a rule in Greenman v. Yuba Power Products, Inc., 59 Cal. 2d 57,377 P.2d 897, 27 Cal. Rptr. 697 (1963), and reaffirmed it in Seely v. White Motor Co., 63 Cal. 2d 9,403 P.2d 145,45 Cal. Rptr. 17 (1965). The New York Court of Appeals followed suit in Goldberg v. Kollsman Instrument Corp., 12 N.Y.2d 432, 191 N.E.2d 81 (1963) (held that the administratrix of a passenger killed in an airplane crash could recover on a theory of implied warranty from the manufacturer of the airplane). For excellent discussions of these developments, see R. Epstein, Modern Products Liability Law 1-67 (1980); Priest, The Invention of Enterprise Liability: A Critical History of the Intellectual Foundations of Modern Tort Law, 14 J. Legal Stud. 461 (1985).
Could it plausibly be argued that the "strict liability" products cases, which abolish the manufacturer's defenses based on theories of privity and negligence, foreshadow a further expansion of the range of interests protected by third party beneficiary doctrine? In the context of the New York case law, is not the Goldberg case (1963) ultimately inconsistent with the Ultramares case (1931)?
A seller's warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.
In the California version of the Uniform Commercial Code, §2-318 was deleted, apparently on the theory that the California case law (e.g., the 1963 Greenman case referred to above) had already gone beyond the position taken in §2-318.
5. In his opinion in Lucas v. Hamm, Chief Justice Gibson refers to a California statutory provision (Civil Code §1559) on third party beneficiaries. For the text oft he statute, see Note 2, infra p. 1427.

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