Court Opinion

ID: 5086961
Source: CourtListenerOpinion
Date Created: 2021-10-01 14:19:23.029875+00
Date Added: 2024-06-11T08:20:27.682193
License: Public Domain

LAMBERT, Justice.
The issue presented is whether KRS 355.2-607(3)(a) makes pre-litigation notice a condition precedent to a civil action for breach of warranty of title, or whether service of the summons and complaint satisfies the notice requirement. As this issue appears to be of first impression, we granted discretionary review.
The facts are uncomplicated. On or about May 20, 1988, appellee Wyatt purchased a 1984 Chevrolet Corvette automobile from appellant Mullins for the sum of $15,000. Prior to the purchase, Wyatt searched the title in the appropriate Kentucky County Court Clerk’s office and in the states of Indiana and Ohio. The examination revealed no title defect. About eighteen months after the purchase, however, the Kentucky State Police seized the automobile from Wyatt as a stolen motor vehicle.1
Wyatt attempted to contact Mullins but learned that he had moved to the State of Florida. With the assistance of an attorney and an investigator in Florida, Mullins was promptly located. According to the evidence, Wyatt learned Mullins’ whereabouts in January of 1990, but for the next ten months, Wyatt did not notify Mullins or take any other action by which Mullins would have learned of the motor vehicle seizure. Notice was first given in November of 1990 when Wyatt filed a civil action against Mullins and caused a summons and complaint to be served on him. After service of the summons and complaint, Mullins brought a third-party claim against his vendor, appellee Danny L. Meade.2
In due course, Mullins moved for summary judgment on the grounds that Wyatt had not complied with KRS 355.2-607(3)(a) by failing to give pre-litigation notice of breach of war*357ranty of title. The motion was sustained and judgment was rendered in favor of Mullins. Wyatt’s complaint was dismissed with prejudice. Wyatt appealed to the Court of Appeals.
A divided panel of the Court of Appeals reversed. The issue was stated as follows:
... whether the service of a summons and an accompanying complaint can satisfy the notice requirement of KRS 355.2-607(3)(a). If not, no notice was given, and there is no issue as to whether or not the notice was reasonably timely. Consequently, Wyatt’s complaint would be deficient, and Mullins would be entitled to a judgment in his favor on that complaint as a matter of law. However, if the complaint can serve as notice under KRS 355.2-607(3)(a), then whether such notice was given within a reasonable time would be a genuine issue of a material fact, making summary judgment improper under the standard announced in Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476 (1991).
Reasoning appropriately from our decision in Leeper v. Banks, Ky., 487 S.W.2d 58 (1972), the Court of Appeals held that notice by means of litigation was sufficient, for if Leeper had intended to exclude the commencement of litigation as notice, whether it was given in a reasonable time would have been superfluous. It concluded that as timeliness was addressed and held to be decisive, failure to give pre-litigation notice was not fatal to the claim.
The statute before the Court, KRS 355.2-607(3)(a), is as follows:
(3) Where a tender has been accepted
(a) the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; ...
At the outset, we observe that the statutory requirements are inexplicit and probably ambiguous. At best there is an implication that notice must be given prior to the commencement of litigation, but the statute is silent as to the content of the notice or even whether it must be in writing. The major emphasis seems to be upon notice “within a reasonable time,” the construction given in Leeper v. Banks, supra. In sum, there is a dissonance between the casual tone of the statute and a result so draconian as dismissal.
In contrast to the statute here is KRS 376.010, the mechanic’s and materialman’s lien statute, a true pre-litigation notice statute. In unmistakable terms, acquisition of a lien and an action for its enforcement must follow the particularity of the statute and there could be no legitimate doubt that the notice provisions represent conditions precedent. Laferty v. Wickes Lumber Co., Ky. App., 708 S.W.2d 107 (1986). In Laferty, the court analyzed the purpose of notice requirements and its conclusions are worthy of repetition here. First, observance of the requirements of the mechanic’s lien statute permits a creditor to convert an unsecured debt into one secured by a lien upon the owner’s real property even though they have not dealt with one another. Such a structural change alone is sufficient to justify the requirement of pre-litigation notice. Second, the purpose of the notice statute is to inform the owner of the nature and amount of the claim so that he may protect himself in future dealings with the middle man, usually a contractor, and retain funds with which to pay the supplier or require the middle man to discharge the indebtedness. Neither of these reasons for pre-litigation notice is applicable when the claim is for breach of warranty of title.
We are well aware that text writers and most decisional law treat pre-litigation notice as a condition precedent to the bringing of a civil action for breach of warranty. An examination of the authorities reveals that the only substantial reason for the requirement is the opportunity for settlement, sometimes expressed as performance or cure. This is stated in Leibson and Nowka, Kentucky Uniform Commercial Code (2d ed.) § 2.4(b)(2) as follows:
Filing of a lawsuit should not ordinarily suffice as a section 2 — 607(3)(a) notification even if done within a reasonable time after the buyer discovers the breach. Even though claims are often settled after suit is filed, the underlying goal of the notice requirement of section 2-607(3)(a) is to facilitate performance or settlement. The *358filing of a lawsuit does not ordinarily accomplish this goal.
A similar view appears in 67A AmJur2d, Sales § 1258, and 3 Williston on Sales (4th ed.) § 22-11.
In our view, an opportunity for pre-litigation settlement is simply insufficient to justify holding claims for breach of warranty without pre-litigation notice to be barred, particularly when proponents of the requirement acknowledge that it could be met by a mere telephone call immediately before the suit is filed. Moreover, the views frequently expressed in legal text and decisional law naively assume that all parties to sales transactions act only in good faith. Experience teaches that some sellers of goods wish to evade answering breach of warranty claims and actually leave their place of residence to avoid service of a summons or conceal themselves so that a summons cannot be served upon them. CR 4.05(d). The circumstances which prevailed here (sale of a stolen vehicle and departure from the state) might well have suggested to the purchaser that the seller would not welcome notice of the breach and that he would have resisted recovery by the purchaser. In any event, it is understandable that the purchaser may have feared that pre-litigation notice to his vendor would be to his detriment.
This Court is always reluctant to depart from the mainstream of American law, but in circumstances where the majority rule lacks convincing textual foundation and the reasons for it are unpersuasive, it is our duty to question the rule and consider whether it may be in error. With respect to KRS 355.2-607, there is simply an insufficient basis in text or in logic to require peremptory application of a pre-litigation notice rule. When this is considered beside what may be good and valid reasons in a proper case to refrain from pre-litigation notice, it must follow that failure to give the notice is not fatal to a civil action for breach of warranty.
The Court of Appeals remanded this cause to the trial court. It held that whether the litigation notice given here was “within a reasonable time” should be determined as an issue of fact. Inasmuch as the reasonable time requirement is in derogation of an otherwise applicable statute of limitations, it should be determined upon equitable principles with Mullins being required to show that the delay in giving him notice was unreasonable and prejudicial.
We affirm the Court of Appeals and remand to the trial court for further proceedings consistent herewith.
LEIBSON, REYNOLDS and WINTERSHEIMER, JJ., concur.
STEPHENS, C.J., dissents by separate opinion in which SPAIN and STUMBO, JJ., join.

. It is uniformly held that a seizure by police of goods sold to a buyer on the ground that the goods were stolen establishes a breach of the seller's warranty of title. This is so because at a minimum, the seizure casts a substantial doubt over the purchaser’s title regardless of the outcome of litigation. 67A AmJur2d, § 809, Sales.

. To prevent any implication to the contrary, it should be stated that none of the parties to this litigation have alleged that the other knew the vehicle was stolen. It is agreed that these parties were all innocent purchasers of the stolen motor vehicle.