Title: Milbank Mut. Ins. Co. v. Proksch
Citation: 244 N.W.2d 105
Docket Number: 45278
State: Minnesota
Issuer: Minnesota Supreme Court
Date: June 11, 1976

244 N.W.2d 105 (1976) MILBANK MUTUAL INSURANCE COMPANY, et al., Respondents, v. Charles PROKSCH, Appellant. No. 45278. Supreme Court of Minnesota. June 11, 1976. *106 Cousineau, McGuire, Shaughnessy &amp; Anderson and Robert J. McGuire, Minneapolis, for appellant. Robins, Davis &amp; Lyons and James D. Steiner and Robert M. Wattson, Minneapolis, for respondents. Considered and decided by the court en banc without oral argument. KELLY, Justice. Defendant appeals from an order of the district court denying his motion for judgment notwithstanding the verdict or for a new trial following a special verdict awarding plaintiffs damages for injury to property. We affirm. In December 1968, Harold B. Baltzer owned a dwelling at 4222 East 59th Street in Minneapolis which was insured by plaintiff Milbank Mutual Insurance Company, appearing here in the role of subrogee, and leased to plaintiff Anver M. Larson. On December 14, Larson's daughter, Judelle Larson, and a friend, Diane Hall, purchased a Christmas tree at defendant's tree lot from an employee of defendant. Both women testified that the employee represented that the Christmas tree they purchased was fire-retardant. Ms. Larson testified: Ms. Hall testified: Defendant staunchly denied that he or his employees had made any such representation. Another witness, however, who had purchased a tree at defendant's lot a few days before the two women did, testified that the salesperson had told her that the tagged trees were "fireproof trees" and that they had been "treated for fireproofing." Ms. Larson testified that she would not have paid two dollars more for the tree if it had not been treated for fireproofing. She took the tree home and told her father that she had purchased a fireproof tree. While the Larsons normally took their tree down immediately after Christmas, after discussing the matter Judelle and Anver Larson decided to keep the tree up longer because of its fireproofing treatment. On New Year's Eve, Ronald Larson, Anver Larson's son, had a party in the Larson home for some school friends. While the party was in progress, two of the young people were throwing a pillow back and forth when it struck a lower branch of the *107 tree. A small flame immediately appeared in the lower branches and the tree went up in flames in a matter of seconds. The jury found by special verdict that (1) defendant's employee stated to Ms. Larson that the tree had been treated with an element which created more likelihood that the tree would not catch fire; (2) the employee's statement became a part of the basis of the bargain for the tree. The trial court ordered judgment on the verdict for plaintiff Milbank Mutual Insurance Company in the amount of $9,098.02 and for plaintiff Anver M. Larson in the amount of $5,818, which amounts represented the parties' agreement as to the property damage resulting from the fire. Defendant raises two issues on this appeal: (1) May a buyer recover for breach of an express warranty when that buyer's testimony as to the content of the seller's representation differs from the jury's finding on that issue? (2) May plaintiffs recover property damage for breach of express warranty notwithstanding the provisions of Minn.St.1967, § 336.2-318? 1. Defendant's position on the first issue is plainly without merit. It is axiomatic that a reviewing court must view the evidence in the light most favorable to the jury's verdict. There is credible evidence on the record, in the form of the testimony of Diane Hall, which fully supports the jury's finding as to the content of the representation. There is further credible evidence that the Larsons relied on the representation as made. As the trial court stated in responding to defendant's argument: The jury, properly instructed, found representation and reliance. An experienced and able trial judge has upheld those findings. They will not be overturned on appeal. 2. As to the second issue, defendant argues that recovery for property damage to a member of the family of the buyer is barred by Minn.St.1967, § 336.2-318, the law in effect at the time of the fire. We disagree. That statute was not intended to restrict the development of Minnesota common law relating to third-party beneficiaries of warranties. The statute provided: On its face, the above section extends the seller's warranty to an additional class of persons; it does not restrict the warranty to that class or impair the ability of the courts to extend the warranty to other classes in appropriate cases. This interpretation is directly supported by the official Uniform Commercial Code and Minnesota Code Comments to the section. The official comment provides in part: The Minnesota comment provides: These comments make it clear that the section is a liberal one, intended to expressly enlarge the class of third-party beneficiaries. Beyond this express enlargement, however, the section intimates nothing further and courts are free to continue the development of the common law of warranty. This court recognized its ability to further that development in Froysland v. Leef Bros. Inc., 293 Minn. 201, 197 N.W.2d 656 (1972). Froysland involved, in part, an action for breach of an express warranty made by a supplier to an employer with regard to the flame-resistant quality of clothing purchased by the employer for his employees. Plaintiff, one of those employees, had been severely injured when the clothing caught fire and brought an action against the supplier. Although an employee is not within the class of beneficiaries in Minn.St.1967, § 336.2-318, we nonetheless allowed recovery: Thus, in Froysland, we relied on our prior decisions in expanding the common law to permit recovery to a third-party beneficiary not within Minn.St.1967, § 336.2-318. Although some courts have indicated disagreement regarding the scope of this section,[2] the bulk of the cases and comments squarely support a court's authority to expand the class of third-party beneficiaries beyond the face of the section. 1 Anderson, Uniform Commercial Code (2 ed.) § 2-318:6; 3 Bender's U.C.C. Service, Duesenberg &amp; King, Sales and Bulk Transfers, § 7.05[4], 7-66, 7-70; Hawkland, Limitation of Warranty Under the Uniform Commercial Code, 11 How.L.J. 28, 45; Lauer, Sales Warranties Under the Uniform Commercial Code, 30 Mo.L.Rev. 259, 277; Skilton, Some Comments on the Comments to the Uniform Commercial Code, 1966 Wis.L.Rev. 597, 617; Berry v. G. D. Searle &amp; Co., 56 Ill. 2d 548, 309 N.E.2d 550, 556 (1974); Salvador v. Atlantic Steel Boiler Co., 457 Pa. 24, 319 A.2d 903 (1974); Kassab v. Central Soya, 432 Pa. 217, 246 A.2d 848 (1968); Speed Fastners, Inc. v. Newsom, 382 F.2d 395, 398 (10 Cir. 1967); Picker X-Ray Corp. v. General Motors Corp., 185 A.2d 919, 923 (D.C.App.1962); Thompson v. Reedman, 199 F. Supp. 120, 121 (E.D.Pa.1961).[3] Another court allowed recovery in a third-party beneficiary situation where leakage of an aerosol can caused property damage, but no personal injury. Rhodes Pharmacal Co. v. Continental Can Co., 72 Ill.App.2d 362, 219 N.E.2d 726 (1966). 3. If the statute permits further expansion of beneficiaries, the question remains whether such an expansion is appropriate to cover the instant case, in which a member of the buyer's family suffered serious property damage but no personal injury. Under the logic and policy underlying our prior cases, the answer is clearly yes. Prior to 1940, this court had not squarely faced the issue of whether lack of privity should be a defense to breach-of-warranty actions because our cases were most often decided on the alternative theory of negligence. See, Note, 25 Minn.L.Rev. 83, 96. In the context of that theory, we have been liberal in allowing recovery in the absence of privity. For example, in Ellis v. Lindmark, 177 Minn. 390, 225 N.W. 395 (1929), we held that a poultry farmer could recover directly from a drug company for property damage to his flock caused by delivery of linseed oil instead of code liver oil. We noted that the distinction between property damage and personal injury would not bar recovery. 177 Minn. 396, 225 N.W. 397. In Beck v. Spindler, 256 Minn. 543, 557, 99 N.W.2d 670, 679 (1959), we discussed our prior negligence cases and other developments in the law of privity and determined that a purchaser could recover from a manufacturer regardless of privity for breach of an implied warranty of fitness. Then, in McCormack v. Hankscraft Co., Inc., 278 Minn. 322, 154 N.W.2d 488 (1967), we upheld recovery for breach of an express warranty in the absence of privity in a personal injury case. We commented in that case as follows: The result of McCormack was to bring warranty, negligence, and strict tort liability[4] theories of product liability into harmony to protect consumers and ultimate users from dangerous and defective products. An important part of the harmony thus achieved was the abolition of privity as a defense in actions involving any of those theories. The Froysland case, discussed above, built on prior developments in holding that an employee was entitled to benefit from an express warranty to his employer when breach of that warranty had caused him to suffer personal injury. Based on Froysland and our other cases, we now extend the common law to allow recovery in this case.[5] The destruction of a home and physical damage to personal property is no less an injury to one who sustains them than a bodily injury. When a seller offers a Christmas tree with an express warranty concerning its flame-retardant qualities, he has every reason to expect that all members of the buyer's household will enjoy the benefits of the tree and that a natural and probable consequence of a breach of his warranty is fire and consequent damage to their property. Because a jury has found facts which support recovery under this extension of the common law, we affirm. Affirmed. [1] For a discussion of the importance of the comments, see Skilton, Some Comments on the Comments to the Uniform Commercial Code, 1966 Wis.L.Rev. 597, 619. Regarding Comment 3 to U.C.C. § 2-318, Professor Skilton states: "While comment 3 to section 2-318 is thus ambiguous in some respects, on the main point it is clear: section 2-318 should not be read with a negative inference. Any such reading would be restrictive, regressive, and contrary to the direction of modern law." [2] See, Note, 31 Brooklyn L.Rev. 367. [3] Cases declining to extend recovery usually do so on the ground that the common law in those jurisdictions traditionally denies recovery in the absence of privity. See, e. g., Henry v. John W. Eshelman &amp; Sons, 99 R.I. 518, 209 A.2d 46 (1965); compare Kelly v. Ford Motor Co., 110 R.I. 83, 87, 290 A.2d 607, 610 (1972) (dicta). See, also, Kenney v. Sears, Roebuck &amp; Co., 355 Mass. 604, 246 N.E.2d 649 (1969); Eli Lilly &amp; Co. v. Casey, 472 S.W.2d 598 (Tex.Civ.App.1971). [4] We adopted Restatement, Torts 2d, § 402A, in McCormack v. Hankscraft Co., Inc., 278 Minn. 322, 337, 154 N.W.2d 488, 499 (1967). [5] A further persuasive reason for extending the common law is the current public policy of Minnesota, as embodied in Minn.St. 336.2-318, which was amended in 1969 to allow recovery to one "who is injured" by the breach of warranty and thus would cover the property damage sustained here. In that statute, our legislature adopted Alternative C of U.C.C. § 2-318, which was first promulgated by the Uniform Commercial Code Commission after the adoption in 1965 of the statute at bar.