Case Name: Kenneth M. PETERSON, Plaintiff-Appellant, v. The IDAHO FIRST NATIONAL BANK, Defendant-Respondent
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 1990-05-10
Citations: 117 Idaho 724
Docket Number: No. 17991
Parties: Kenneth M. PETERSON, Plaintiff-Appellant, v. The IDAHO FIRST NATIONAL BANK, Defendant-Respondent.
Judges: JOHNSON, BOYLE and McDEVITT, JJ., concur.
Reporter: Idaho Reports
Volume: 117
Pages: 724–734

Head Matter:
791 P.2d 1303
Kenneth M. PETERSON, Plaintiff-Appellant, v. The IDAHO FIRST NATIONAL BANK, Defendant-Respondent.
No. 17991.
Supreme Court of Idaho.
May 10, 1990.
Ringert, Clark, Harrington, Reid, Christenson & Kaufman, Boise, for plaintiff-appellant. Andrew M. Harrington, argued.
Hall, Farley, Oberrecht & Blanton, Boise, for defendant-respondent. Phillip S. Oberrecht, argued.

Opinion:
BAKES, Chief Justice.
This is a products liability action. The appellant (Peterson) brought suit against respondent Idaho First National Bank (IFNB), claiming that the used mobile home he had purchased from IFNB was in a defective condition and unreasonably dangerous and, as such, caused Peterson and his wife to suffer illness (the illness stemmed from an alleged emission of a high formaldehyde concentration from the mobile home). The district court entered summary judgment in favor of IFNB on the grounds that a commercial seller of used products is not subject to strict liability- in tort.
In March of 1984, the plaintiff, Kenneth M. Peterson, and his wife purchased on credit from IFNB a used mobile home which IFNB had financed and then repossessed. Prior to selling the repossessed mobile home to Peterson, the bank repaired the exterior skirting, cleaned the interior, and checked and winterized the water pipes. There is no evidence that it performed any repair, reconditioning or modification which would affect the level of formaldehyde emissions in the home. There also is no evidence to show that the bank was aware that the home had an unacceptable level of formaldehyde emissions or that the bank performed any inspection or tests that would show the presence of formaldehyde emissions.
After paying for two years, Peterson defaulted on the payments on the note he gave to purchase the mobile home, and the bank sued on Peterson's note and foreclosed its security interest in the mobile home. In defending that action, Peterson alleged failure of consideration due to alleged high formaldehyde levels in the mobile home which made it uninhabitable. The district court entered judgment in the court trial for the bank in the foreclosure action, finding that the contractual defenses of revoca tion of acceptance and failure of consideration were not proven by Peterson. No appeal was taken by Peterson from the judgment entered in that case.
On August 11, 1987, the plaintiff filed the instant action, alleging various physical ailments which were caused by the "uninhabitable condition of the mobile home purchased from defendant." The plaintiff alleged the mobile home had been tested and found to contain a high concentration of formaldehyde. The plaintiff alleged he suffered "illness, lingering weakness, and emotional distress caused by the uninhabitable condition of the mobile home purchased from defendant."
On May 12,1988, the district court granted partial summary judgment in favor of the bank on the plaintiff's claims for breach of implied warranties and denied summary judgment with respect to the plaintiff's remaining tort theory of strict product liability. The bank subsequently renewed its motion for summary judgment on the strict liability theory, and the district court granted the bank's renewed motion for summary judgment on the grounds that a commercial seller of used products is not subject to strict liability in tort in Idaho. The district court predicated its decision upon decisions from California and Oregon which hold that the relevant policy considerations do not justify imposition of strict liability for dangerously defective products on dealers in used goods. Wilkinson v. Hicks, 126 Cal.App.3d 515, 179 Cal.Rptr. 5 (1981); Tillman v. Vance Equipment Co., 286 Or. 747, 596 P.2d 1299 (1979).
The single issue in this appeal is whether under either the statutes or the common law in Idaho a commercial seller of used products is subject to strict liability for the products it sells. This is the first occasion for this Court to address this question.
Respondent Idaho First National Bank argues, in support of the trial court's judgment in its favor, that both the common law of Idaho, and the statutes of the State of Idaho preclude the imposition of strict liability in tort upon the seller of used products. Respondent particularly points to the Idaho Product Liability Reform Act, I.C. § 6-1402(1), which specifically provides that, "The term 'product seller' does not include: . (b) a commercial seller of used products____" The appellant, on the other hand, argues that common law liability should be extended to commercial sellers of used products and that the statute is inapplicable.
We look first to the common law claim. In Shields v. Morton Chemical Co., 95 Idaho 674, 518 P.2d 857 (1974), this Court first applied the concept of strict liability adopted in the Restatement (Second) of Torts, Section 402A. In Shields, a seed company brought suit against the manufacturer of a defectively manufactured pesticide it had used to treat seeds. Recognizing that strict liability applied to the manufacturer of the pesticide, our holding did not go on to discuss the applicability of strict liability of a non-manufacturer-seller of a used product.
In Rindlisbaker v. Wilson, 95 Idaho 752, 519 P.2d 421 (1974), we extended the concept of strict liability in tort to the defective design of a product, as distinguished from the defective manufacturer claims in Shields. However, as in Shields, we did not address in Rindlisbaker the application of 402A beyond the confines of the facts of that case, which was the liability for defective design of a product. Since Shields and Rindlisbaker were decided, no subsequent case in Idaho has raised the issue of whether strict liability extends to the sellers of used products.
Not having addressed this issue in Idaho, we turn to the rulings of our sister states for guidance. There is currently a split of authority on the question. On the one hand, some jurisdictions have imposed strict liability on sellers of used products. See, e.g., Turner v. International Harvester Co., 133 N.J.Super. 277, 336 A.2d 62 (1975); Hovenden v. Tenbush, 529 S.W.2d 302 (Tex.App.1975); Jordan v. Sunnyslope Appliance Propane & Plumbing Supplies Co., 135 Ariz. 309, 660 P.2d 1236 (App.1983); and Thompson v. Rockford Machine Tool Co., 49 Wash.App. 482, 744 P.2d 357 (Wash.1987). Conversely, other courts have refused to extend strict liability to sellers of used products. See, e.g., Wilkinson v. Hicks, 126 Cal.App.3d 515, 179 Cal.Rptr. 5 (1981); Tillman v. Vance Equipment Co., 286 Or. 747, 596 P.2d 1299 (1979).
Despite the conflicting results obtained by the various jurisdictions, most states generally concur that, in the absence of a statute resolving the issue, the resolution of this question hinges upon a common law analysis of the policies that underpin the doctrine of strict liability and whether those policies are promoted by applying the doctrine to sellers of used products. In Tillman v. Vance Equipment Co., 596 P.2d 1299 (Or.1979), the Oregon Supreme Court identified three justifications for adoption of strict liability. They are: (1) compensation or ability to spread the risk (enterprise liability); (2) satisfaction of the reasonable expectations of the purchaser or user (implied representational aspect); and (3) overall risk reduction (the impetus to manufacture a better product). With respect to the concept of spreading the risk, the Tillman court stated:
While dealers in used goods are, as a class, capable like other businesses of providing for the compensation of injured parties and the allocation of the cost of injuries caused by the products they sell, we are not convinced that the other two considerations . weigh sufficiently in this class of cases to justify imposing strict liability on sellers of used goods generally.
596 P.2d at 1303. Appellant argues that the concept of spreading the risk expressed in comment c to Section 402A, Restatement (Second) of Torts, is the primary policy behind strict liability, and that this Court, in applying Section 402A in Shields and Rindlisbaker necessarily adopted comment c. We disagree. The application or adoption of any section of the Restatement in a given case does not necessarily include all the comments thereto. As pointed out in Toner v. Lederle Laboratories, 112 Idaho 328, 732 P.2d 297 (1987), we will review each comment on a case by case basis, as the occasion arises, to determine if such comment warrants incorporation into the common law of Idaho. We have expressly rejected portions of the Restatement when it did not fit the needs of Idaho jurisprudence. Idaho Bank & Trust v. First Bancorp, 115 Idaho 1082, 1084, 772 P.2d 720, 722 (1989) ("We decline to adopt the Restatement standard," [regarding liability of a professional for negligent misrepresentation].). Moreover, while spreading the risk may have been one of the policy considerations in the Restatement Second's adoption of strict liability, we did not declare that to be our reason for adopting strict liability in Shields and Rindlisbaker.
With respect to the implied representational aspect of strict liability, we think it apparent that, unlike the market for new products, the prevailing custom in the used product industry is that the seller does not offer, and the buyer does not expect, either express or implied representations of quality. As the Oregon court in Tillman explained:
Those markets, generally speaking, operate on the apparent understanding that the seller, even though he is in the business of selling such goods, makes no particular representation about their quality simply by offering them for sale. If a buyer wants some assurance of quality, he typically either bargains for it in the specific transaction or seeks out a dealer who routinely offers it____
596 P.2d at 1303. Appellant urges us to find fault in the aforementioned analysis, and follow the contrary reasoning set forth by the court in Turner v. International Harvester Co., 336 A.2d 62 (N.J.1975). The Turner court stated:
As suggested by the court in Realmuto [v. Straub Motors, 65 N.J. 336, 322 A.2d 440 (1974) ] . realistic expectations of quality and durability will be lower for used goods, commensurate with their age, appearance and price. However, safety of the general public demands that when a used motor vehicle, for example, is sold for use as a serviceable motor vehicle (and not as junk parts), absent special circumstances, the seller be responsible for safety defects whether known or unknown at the time of sale____
336 A.2d at 69. In our view the foregoing statement of the New Jersey court in Turner is internally inconsistent, unrealistic and inaccurate. If the purchaser of a used product has a lowered expectation as to the quality and durability of the product, how can it be reasonable to expect no reduction in the standard of safety demanded? A purchaser of used products from a person other than the manufacturer expects that the seller of the used product will not have personal knowledge of the product's design or manufacture, and will not have the same ability as the manufacturer to guard against those kinds of defects. Additionally, the purchaser of a used product will recognize that the commercial seller of such used products may have no information regarding how the product was used or whether it has been abused in its prior use. The average consumer is doubtless aware that products erode through use and the inevitable passage of time, and that the quality, durability, and safety of the product undergo a corresponding decline. But foremost, the purchaser of a used product will not expect that the commercial seller of the used products will be informed either as to the safety of the design or of defects in the manufacturing process.
Finally, regarding the risk reduction policy behind strict liability, the position of the seller of used products is not, like the manufacturer, distributor, and retailer, part of the original distribution chain of the product. As the Tillman court stated,
The dealer in used goods generally has no direct relationship with either manufacturer or distributors. Thus, there is no ready channel of communication by which the dealer and the manufacturer can exchange information about possible dangerous defects in particular product lines or about actual and potential liability claims.
596 P.2d at 1304. Theoretically, of course, a used dealer could obtain indemnity from the manufacturer, where the manufacturer is known and the defect in question can be traced to the manufacturer. But as the Tillman court stated with respect to this possibility, "[A]s a practical factor [the] risk prevention is considerably diluted where used goods are involved due to such problems as statutes of limitation and the increasing difficulty as time passes of locating a still existing and solvent manufacturer." 596 P.2d at 1304.
We therefore conclude that the policy considerations underlying the doctrine of strict liability do not justify imposing that doctrine as a common law rule on commercial sellers of used goods.
We next turn to the question of whether I.C. § 6-1401 et seq., the Idaho Product Liability Reform Act (IPLRA), has any bearing on this issue.
Respondent argues that the IPLRA expressly precludes the imposition of strict liability on the sellers of used products. Respondent bases his argument on the definition of product seller set forth in I.C. § 6-1402(1). That section reads:
(1) "Product seller" means any person or entity that is engaged in the business of selling products, whether the sale is for resale, or for use or consumption. The term includes a manufacturer, wholesaler, distributor, or retailer of the relevant product____ The term "product seller" does not include:
(b) A commercial seller of used products who resells a product after use by a consumer or other product user, provided the used product is in essentially the same condition as when it was acquired for resale
(Emphasis added.) The district court concluded that the statute was not applicable, but nevertheless arrived at the same result on the basis of the court's common law analysis. The district court based its conclusion that the statute was inapplicable upon its comparison of the Idaho Act with the Uniform Products Liability Act, upon which the Idaho Act was modeled for the most part. The district court stated that the Idaho Act "is not intended to affect the liability of sellers of used products under the common law of the individual states," based upon the following excerpt from the comments of the drafters of the UPLA contained in 44 Fed.Register 62718 (1979):
It is also the intent of the drafters that this Act include manufacturers and other product sellers of new or remanufactured products, but not ordinary commercial sellers of used products . Therefore, the issue of the potential liability of sellers of used products is left for resolution not under this Act, but rather under the other law of the state.
The statement in the comment that it is "the intent of the drafters that this Act include manufacturers and other product sellers of new or remanufactured products, but not ordinary commercial sellers of used products," is inconsistent with the next statement that "[therefore, the issue of the potential liability of sellers of used products is left for resolution not under this Act, but rather under the other law of the state." We find the contradiction in the drafting comment unexplained and inexplicable. However, we need not attempt to reconcile the inconsistency within the comment. The language which the Idaho legislature considered and adopted was the language contained in the statute, I.C. § 6-1402(l)(b), not the language in the comment in the Federal Register. The language in I.C. § 6-1402(l)(b) is clear and unambiguous and excludes the "commercial seller of used products" from the definition of a product seller under the Idaho Act. Thus, even though our primary holding today is that, under the common law of Idaho, there is no strict liability in tort to a commercial seller of used products, that conclusion is supported by the obvious intent of the Idaho legislature when it enacted I.C. § 6-1402(l)(b).
I.C. § 6-1401, entitled "Scope," states: "The previous existing applicable law of this state on product liability is modified only to the extent set forth in this act." As already noted, there was no "previous existing law" with respect to the liability of sellers of used products, and therefore the Idaho Act was not modifying the existing common law in Idaho even though I.C. § 6-1401 contemplates that existing common law would be modified to the extent that it was inconsistent with the Act. The previous existing law, i.e., strict liability and its embodiment in Section 402A, had only been applied to the manufacturer, distributor, and retailer. Accordingly, the IPLRA neither expands nor limits the scope of the common law. We simply conclude that under the Act, a "commercial seller of used products" is not a "product seller." From this statement it is clear that legislative policy recognizes that dealers of used goods are not in the same position and should not be treated the same as sellers of new products, i.e., manufacturers, distributors and retailers. This interpretation of I.C. § 6-1402(l)(b) is consistent with our holding that, under the common law of Idaho, strict liability does not extend to the commercial seller of used products who sells the used product "in essentially the same condition as when it was acquired for resale."
The judgment of the district court is therefore affirmed. Costs to respondent.
JOHNSON, BOYLE and McDEVITT, JJ., concur.
. We are reluctant to attach too much significance to the comments to the UPLA because our legislature did not adopt the uniform act in its entirety, but only selected provisions therefrom. The aforementioned contradiction stems from a provision analyzing the UPLA; however, as Idaho did not adopt the Act in its entirety, the comments to the UPLA are not dispositive in interpreting the IPLRA.