Court Opinion

ID: 9657764
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:37:03.853267+00
Date Added: 2024-06-11T18:13:48.140293
License: Public Domain

STEINMETZ, J.
(concurring). This court should not make the doctrine of strict products liability applicable to sellers of used products. Also, it is clear under the facts of this case that the new rule of law created by the majority should not be applied against the defendant hardware store. The real upshot of the majority opinion will be to harm those individuals who, often as a matter of necessity, rely upon the used goods market for their consumer goods purchases. Moreover, many individuals employed in the used goods sector will be hurt by the majority opinion. However, as to the alleged negligence of the defendant, I agree with the majority that there remain certain issues of fact that need to be tried.
The majority's decision concerning the applicability of the doctrine of strict liability is entirely inconsistent with precedent and the policies which heretofore have defined Wisconsin products liability law. To illustrate, I need only refer to our recent decision in Rolph v. EBI Cos., 159 Wis. 2d 518, 529, 464 N.W.2d 667 (1991). In Rolph, we held as a matter of law that a reconditioner of a used machine is not subject to strict liability in tort for defects in the machine. We stated that our objective in the area of strict products liability is to:
ixnpos[e] the risk of loss associated with the use of defective products on the party that created and *711assumed the risk, reaped the profit by placing it in the stream of commerce, impliedly represented that the product was safe and fit for use by placing it in the stream of commerce, and had the ability to implement procedures to avoid the distribution of defective products in the future.
citing Kemp v. Miller, 154 Wis. 2d 538, 556-57, 453 N.W.2d 872 (1990). This policy rationale simply does not support application of the doctrine of strict liability to used product sellers, and we stated so in Kemp.1
In Kemp, we held that a commercial lessor could be held strictly liable for product defects that arise at or subsequent to manufacture or design. Specifically with regard to sellers of used goods, however, we said that:
[T]he imposition of strict liability on a seller of used products, for defects that arise after manufacture and before the product reaches the seller,2 places the risk of loss associated with the use of the defective products on one who has neither created nor assumed the risk and on one who is not in a position to implement *712procedures to avoid the distribution of defective products in the future. Defects in a used product typically arise before the product reaches the seller and while the product was in the hands of an unknown previous owner. The used product seller is rarely familiar with the prior history of the products he or she sells and can discover and correct latent defects in those products only at great cost by means of individual inspection.

Id.

Kemp, referred specifically to Burrows v. Follett & Leach, 115 Wis. 2d 272, 340 N.W.2d 485 (1983), in which we held as a matter of law that the seller of a used cornpicker was not subject to the doctrine of strict product liability where a product defect that occurred subsequent to design and manufacture was obvious at the time of the second-hand sale. The holding of Burrows and the language of Kemp should be applicable to used sellers generally.
By definition, a used product seller such as the defendant hardware store, does not "create" the risk. The risk has resulted from a defect that occurred before the product ever reached the seller. Nor does a used product seller "assume" the risk. The idea of assumption of the risk involves the parties' reasonable expectations surrounding the sale. As we explained in Kemp, "the used goods market generally operates on the understanding that the seller makes no particular assurance as to quality simply by offering a product for sale." 154 Wis. 2d at 557, citing Tillman v. Vance Equipment Co., 286 Or. 747, 755, 596 P.2d 1299, 1303 (1979). As another court has stated, a reasonable buyer of a used product does not expect to pay the price of a new product and cannot expect the quality and warranties available with the purchase of a new product. Rix v. Reeves, 23 Ariz. *713App. 243, 532 P.2d 185 (1975). Where a reasonable buyer of a used product has no particular expectations of product quality,3 it simply cannot be said that the used product seller "assumes" any risk. Thus, having neither created nor assumed any risk, a used product seller should not be subject to the doctrine of strict product liability.
In addition, as we stated in Kemp, a used product seller normally is not in a position to avoid distribution of defective used goods in the future. It is the product designer or manufacturer that is primarily responsible for the distribution of any product defective in design or manufacture. A used product seller typically has no formal or direct relationship with the designer or manufacturer of the used product. It thus has no ready channel of communication by which it might exchange information with a designer or manufacturer as to any danger or defect related to the product which might be neutralized or corrected by design or manufacturing modification. Moreover, unlike a commercial lessor such as in Kemp, a used product seller such as the defendant hardware store typically has not gained a high degree of familiarity with the product such as results to a commercial lessor from numerous dealings with the same particular kind of product oyer an extended period.
Moreover, as we noted in Kemp, a used product seller can discover and correct latent defects in its products only at great cost by means of individual inspection. *714As a rule, used product sellers such as the defendant do not have what Kemp, 154 Wis. 2d at 555, referred to as "the physical facilities and the technical competence and expertise" on hand that is necessary to discover and correct latent defects. As a result of the preoccupation with possible latent defects essentially now required of used goods sellers by the majority, the price of used goods surely will rise. In addition, the time necessary to carry out such individual inspections for product defects will deprive the used goods markets of desirable fluidity and flexibility. See J. Vargo, Products Liability Practice Guide, § 8.03(2) at 8-30 (1990).
The majority would apparently assert that used goods sellers should simply purchase insurance coverage against possible strict product liability claims that might be brought against such sellers. This "solution" fails to recognize that the ability of an enterprise to insure itself is predicated on the availability of insurance. The majority position would assume such insurance is available and affordable. There is no clear basis for such an assumption. In fact, there is strong evidence to the contrary.4
*715Where product liability insurance is available, its cost will be higher to used product sellers because of the majority's decision. Many used product sellers may not have the financial wherewithal needed to purchase the insurance. Assuming they can afford insurance, it will obviously increase their cost of doing business. Those sellers who will face the brunt of the unfavorable impact of the majority's decision are those who are least able to absorb and pass on the increased cost of doing business. Specifically, the majority decision will have an adverse impact on used product sellers which operate on a nonprofit basis and which therefore cannot absorb the higher costs.
Generally, insofar as the majority decision increases their cost of doing business, used product sellers will pass *716on those higher costs to their customers in the form of higher prices. I submit that many if not most of those customers are individuals who have relatively low disposable incomes and who, because of the low prices of used goods relative to new goods, tend to choose used goods when purchasing basic household necessities. These people, who are already at some disadvantage in terms of being able to purchase their basic needs in the marketplace, will suffer disproportionately greatly as a result of the majority decision because they will have to pay higher prices for the goods they buy.5
The increased prices of used goods, in turn, will make those goods less attractive to potential purchasers, who will be encouraged to prefer new goods, all other things equal. Thus, those organizations which primarily sell used goods will be particularly hard hit; as their customers move to the new goods market; many may be induced to close down their operations entirely. As a result, at least some employees of stores selling used products will be in serious risk of losing their jobs. Again, it is those already disadvantaged in society who will suffer disproportionately as a result of the majority decision.6
*717In rural areas in particular, entire communities will be hurt to the extent that stores such as the defendant hardware store, which by dabbling in used goods arguably presents as much a service to the remote community as it does a source of revenue to the owner, cut back their operations. In fact, even such "dabbling" often means the difference to such stores in being able to stay afloat as a business. The result of the majority decision may well be to push marginally profitable but societally useful enterprises over the cliff. Such organizations may consider it no longer worth the risk and effort required to stay in business.7
To the extent trade in used goods continues, it will increasingly tend to take place on a private and individual basis through, for example, the classified advertisements of local newspapers. Indeed, the used goods trade may flourish within such an informal market. Insofar as transactions in this informal market go unreported to the authorities, unfavorable tax revenue consequences are likely to result to state and local units of government. Moreover, it is possible if not likely that the goods that private individuals sell will be more defective, and hence *718more dangerous, than the used goods that enterprises such as the defendant's formerly sold. See P. Huber, Liability: The Legal Revolution and Its Consequences 165 (1988).
Furthermore, insofar as concerns of fairness remain important, it is worth noting that there is little opportunity for most used product sellers to "spread the risk" by means of indemnification against the designer and manufacturer of a defective product. See Sukljian v. Charles Ross & Son Co., 499 N.Y.S.2d 466 (App. Div. 1986).8 With respect to the case at bar in particular, there was no indemnification agreement between the defendant and the designer and manufacturer of the shotgun, Savage Industries. Moreover, Savage Industries is in a Chapter 11 bankruptcy proceeding and is not a party to this action. At oral argument of this case, it was stated that, at best, any claim by the defendant against Savage might be paid at a few cents to the dollar.
The majority’s decision is at odds with the view of most other jurisdictions of the country. See J. Vargo, Products Liability Practice Guide, § 8.03(2) at 8-29. See, e.g., Tillman; Rix; Wilkinson v. Hicks, 126 Cal. App. 3d 515, 179 Cal. Rptr. 5 (1981); Sukljian, 499 N.Y.S.2d 466; Sell v. Bertsch & Co., 577 F. Supp. 1393 (D. Kan. 1984); Masker v. Smith, 405 So. 2d 432 (Fla. Dist. Ct. App. 1981); Pridgett v. Jackson Iron & Metal Co., 253 So. 2d 837 (Miss. 1971). As these cases indicate, the economic result of the majority's decision will be fewer sellers of *719used goods; those that remain will raise the prices of the used goods they have for sale.
Even assuming that there is some legitimate policy rationale upon which to make sellers of used products subject to the doctrine of strict products liability, the doctrine should not be applied in this particular case. We based our conclusion in Rolph on the language of Restatement (Second) of Torts, sec. 402A (1965), adopted in Wisconsin in Dippel v. Sciano, 37 Wis. 2d 443, 460, 155 N.W.2d 55 (1967), in which this court held that a seller of a product in a defective condition unreasonably dangerous to the user could be liable in strict tort. In Dippel, we set forth the following elements as necessary for a defendant to be subject to a strict product liability claim:
[T]he plaintiff must prove (1) that the product was in a defective condition when it left the possession or control of the seller, (2) that it was unreasonably dangerous to the user or consumer, (3) that the defect was a cause (a substantial factor) of the plaintiffs injuries or damages, (4) that the seller engaged in the business of selling such product or, put negatively, that this is not an isolated or infrequent transaction not related to the principal business of the seller, and (5) that the product was one which the seller expected to and did reach the user or consumer without substantial change in the condition it was in when he sold it.
There is nothing to indicate that the defendant sold firearms — let alone used ones — as anything related to a principal part of its business. Rather, the transaction in the case at bar was an "isolated or infrequent transaction" as that term was used in Dippel. The defendant evidently did not even stock new firearms in its store. Instead, it would procure the particular new firearms *720desired by its customers through catalog orders. Occasionally, the defendant would take used firearms in trade. The fact that the used firearm at issue in the instant case was not purchased by anyone until well over a year after it was taken in trade by the defendant when the plaintiff purchased it, is strong evidence of the fact that the defendant's transactions in used firearms were "isolated" and "infrequent" and thus that the defendant should not be subject to strict liability in tort in the instant case. Under the facts of this case, the defendant was not a "seller of a defective product unreasonably dangerous to the user" as that term is used in Dippel.9 The plaintiff has not met his burden of alleging facts necessary to show otherwise.
Indeed, sentimentally, one cannot argue with the outcome of the majority decision insofar as it will favor the plaintiff who has suffered an injury. However, I *721believe that doctrinally and in policy terms the majority decision with regard to the issue of strict liability is without merit.10
With respect to the question of negligence, I agree with the majority that there are material issues of fact that remain unresolved concerning the actions of the defendant hardware store. While as a matter of law the inspection of the firearm made by the defendant hardware store was made in the exercise of due care11 and was not unreasonable and even a reasonable examination would not have revealed the gun's "defect," there is a disputed question of fact as to whether the defendant hardware store representative made any representation as to the gun's safety and whether any misrepresentation constituted negligence on the part of the hardware store employee. This issue must be tried.
I concur in only the result reached by the majority to remand the case to the trial court but not with its reasoning.

It makes no practical difference whatsoever that in Rolph, 159 Wis. 2d at 529-32, the defendant was said not to have "sold" the product in question and not to have "placed [it] into the stream of commerce." Rolph rests on its underlying policy justifications, not on the fact that, in a particular manner of speaking, Busch could be said not to have introduced the product at issue into the stream of commerce. An objective reading of Rolph shows that in reaching our decision we attached no absolute significance to the "stream of commerce" distinction but rather related the defendant's actions to the policy considerations at stake.

It is irrelevant that in the case at bar the alleged defect is considered one that occurred at, and not subsequent to, design or manufacture. What matters in the case at bar is that the defect arose before the product came into the used seller's possession.

A reasonable buyer's expectations of quality are even lower where the product he is purchasing is relatively old and outmoded. In the instant case, a reasonable buyer would have seriously contemplated the fact that the firearm in question was at least ten years old when offered for sale by the defendant hardware store and that later model firearms incorporating design and manufacturing advances in product safety might be worth any corresponding higher purchase price.

Many insurance companies, in response to heavy losses, are cutting back on the areas of coverage they are willing to extend to consumers. See generally Insurance Giants no Longer Ask to be All Things to All People, N.Y. Times, Feb. 7, 1991, at 1, col. 1. In particular, because of product liability tort litigation, many insurance enterprises have been driven from the market. See Smith and Cuzmanes, Insurance Protection — Product Liability, 40 Food Drug Cosm. L.J. 112, 125 (1985). In 1984 and 1985 alone, at least forty liability insurers became insolvent, and more recent trends indicate difficulties for those that remain. R. Berger, The Impact of Tort Law Development on Insurance: The Availability/ Affordability Crisis and Its Potential Solutions, 37 Am. U.L. Rev. 285, 315-318 (1988). Indeed, in significant part because of an exponentially increasing number of products liability suits and *715increasing awards associated with them, the very viability of private insurance as a staple of the tort system's compensation function has been called into question. Id. at 315-16.
As Berger has recognized, enterprises and their insurers do not "have the ability to 'spread the risk' indefinitely." Berger at 288. Berger notes:
In fact, there [are] certain limits to the ability of the tort system to function as a societal insurance mechanism. Limits are established, in reality, by the nature of the mechanism upon which insurance itself is predicated: risk must be predictable and be spread among a very large, generally homogenous group of insurance units that incur loss responsibility independently of each other.

Id.

Today, and for the foreseeable future, the risks facing used product sellers are anything but predictable. Nobody knows for example, if and when this court will extend the doctrine of strict products liability to situations where the defect in the used product occurs subsequent to design or manufacture. Nobody knows if and when this court will extend the doctrine of strict products liability to consignment sellers. There being no predictability and certainty, products liability insurance will be in shorter supply.

Moreover, the less affluent, in addition to making more of their purchases in the used goods market, are less likely than the relatively more affluent of society to bring a successful strict product liability action and reap any direct benefit from the majority decision.

Goodwill stores, for example, employ handicapped people to repair used goods for sale in their stores. See generally, Yastine, Recycling: Watching Our Wastelines, Southwest Florida Business Journal, Dec. 1989, at 6. In certain sales regions, the number of handicapped people employed by Goodwill stores runs well into the hundreds. See generally, Becker, D. Who Needs Goodwill? Many of Your Neighbors, Washington Post, June 15, 1989, at *717M2. In Wisconsin, individuals similarly situated will be in jeopardy of losing their jobs as a result of the decreased demand for used goods caused by the majority opinion.

The majority decision contributes to something of a "vicious circle" for used product sellers: There are already not a large number of enterprises which are in the business of selling used goods in general and used firearms in particular. In light of the majority's decision, there will be even fewer sellers of such used goods to comprise the sort of large and independent group of insureds that make up the sort of "homogenous group" necessary for a viable insurance market. Berger at 312. Without there being a viable insurance market, any remaining sellers of used goods will be further encouraged to throw in the towel.

The practical difficulty of indemnification from the manufacturer has prompted some commentators to declare in absolute terms that "used product retailers cannot recover against manufacturers and would bear the entire cost if strict liability were imposed on them." See C. Ausness, Strict Liability for Chattel Leasing, 48 Univ. Pitt. L.R. 273, 334 (1987).

This court could also hold as a matter of law that the plaintiff has failed to allege a "defect" that rendered the ten-year-old shotgun "unreasonably dangerous" to the user that was a substantial cause of the injury. The "defect" alleged to have been present in the shotgun was "identified" by plaintiffs expert witness by dropping the shotgun from distances of from four to 12 feet. When thrown down on its butt from such distances, the shotgun discharged into the air, although the safety was on. I would submit that this does not show a defect. It certainly does not show one that is unreasonably dangerous. The shotgun, after all, was a firearm the use of which involved gunpowder, the volatility and explosiveness of which is well known. It is not unreasonable to figure that gunpowder will explode when a gun containing it falls from unsafe heights. The force of the impact from the plaintiffs dropping of the gun onto the hard cement floor of the barn quite naturally destabilized the gunpowder. The majority might as well argue that the alleged "defect" in the gun sold by Nelson Hardware was that it was not immune to the force of gravity and impact.

In the final analysis, the majority would use the civil justice system to provide overall social welfare. Underlying any interest the majority may have in this regard might be the fact that, over the past decade, social welfare benefits in the United States have been largely frozen and in some cases diminished. G. Priest, Strict Products Liability: The Original Intent, 39 Defense L.J. 279, 280 (1990).

 Reasonably, was a Nelson Hardware employee expected to test the shotgun as plaintiffs' expert did, i.e., by dropping it from a height of 12 feet to see if the safety worked or the gun fired unexpectedly?