Court Opinion

ID: 9845861
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:29:37.694609+00
Date Added: 2024-06-11T09:16:23.848998
License: Public Domain

PETERS, J., Concurring and Dissenting.
I concur in the affirmance of the judgment, but on grounds different from the *20majority. The majority permit recovery on the theory that there was a breach of an express warranty. Then the majority say, unnecessarily and gratuitously, that plaintiff cannot recover on the theory of strict liability. Both the holding and the dicta are, in my opinion, incorrect.
There was no breach of express warranty. It is fundamental that no one is liable for the breach of an express warranty unless the buyer relies upon that warranty (former Civ. Code, § 1732) or unless the warranty constitutes “part of the basis of the bargain” (Com. Code, § 2313). Here, the undisputed facts show that plaintiff did not rely on White being responsible under the warranty, and it is clear that White’s responsibility was not “part of the basis of the bargain.” The uncontradicted evidence demonstrates that plaintiff had no idea that White was a party to the warranty and that he relied solely on Southern’s responsibility.1 The majority say that the statute requires only that plaintiff rely on “the warranty,” and not that he be aware of who made it. But one does not rely upon a mere scrap of paper which calls itself a warranty. He relies on the fact that a certain responsible party (which he may know as “the manufacturer” rather than by name) will “stand behind” the product and perform in accordance with the terms of the warranty. Here plaintiff admits that he relied on Southern’s responsibility under the warranty, but not on White’s.
The majority, having found in favor of the plaintiff on the theory of an express warranty, completely decided the case. There was no need to discuss the strict liability doctrine. Everything said by the majority on that subject is obviously dicta. The problem of what damages may he recovered in an action based on strict liability is a most important question of first impression in this state. It is too important to be decided in a mere “advisory opinion.” But because the majority have elected to discuss it, and have done so, I submit, erroneously, I cannot allow the erroneous dicta to go unchallenged.
*21Given the rationale of Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 63 [27 Cal.Rptr. 697, 377 P.2d 897], it cannot properly be held that plaintiff may not recover the value of his truck and his lost profits on the basis of strict liability. The nature of the damage sustained by the plaintiff is immaterial, so long as it proximately flowed from the defect. What is important is not the nature of the damage but the relative roles played by the parties to the purchase contract and the nature of their transaction.
Recently in Santor v. A & M Karagheusian, Inc. (1965) 44 N.J. 52 [207 A.2d 305], the Supreme Court of New Jersey held that the strict liability theory California adopted in Greenman applies to “economic loss” as well as to personal injury damages. There plaintiff bought carpeting from a local retailer. When the carpeting became useless because of certain defects, plaintiff sued the manufacturer. In allowing plaintiff to recover the difference between the price he paid and the actual market value of the carpeting, the court expressly disapproved the concept that the strict liability doctrine should be restricted to personal injury claims. " [A] lthough the doctrine has been applied principally in connection with personal injuries sustained by expected users from products which are dangerous when defective,.. . the responsibility of the maker should be no different where damage to the article sold or to other property of the consumer is involved.” (207 A.2d at p. 312.) It should be noted that there, as here, the court was faced with a statutory scheme covering implied warranties. Unlike the majority here, however, the New Jersey court expressly refused to draw an arbitrary distinction between different types of damage in order to give effect to those statutes in a greater number of situations.
Of course, the application of the strict liability theory to property damage (including “economic loss”) will limit the applicability of several sections of the recently enacted Commercial Code dealing with implied warranties (see, e.g., Com. Code, §§2607, 2719). But this result, even if unfortunate, follows from the rationale of Greenman, which limited the effect of a statute requiring the purchaser to give defendant notice of a breach of warranty within a reasonable time (former Civ. Code, § 1769). In the present case, it is not necessary to “extend” Greenman in order to reach the proper result. All that is required is that we apply its reasoning to *22a factual situation which cannot be distinguished analytically from that case.
In Greenman we allowed recovery for “personal injury” damages. It is well established that such an award may include compensation for past loss of time and earnings due to the injury (Storrs v. Los Angeles Traction Co., 134 Cal. 91, 93 [66 P. 72]), for loss of future earning capacity (Bonneau v. North Shore R.R. Co., 152 Cal. 406, 414 [93 P. 106, 125 Am.St.Rep. 68]), and for increased living expenses caused by the injury (Kline v. Santa Barbara etc. Ry. Co., 150 Cal. 741, 748-749 [90 P. 125]). There is no logical distinction between these losses and the losses suffered by plaintiff here. All involve economic loss, and all proximately arise out of the purchase of a defective product. I find it hard to understand how one might, for example, award a traveling salesman lost earnings if a defect in his car causes his leg to break in an accident but deny that salesman his lost earnings if the defect instead disables only his car before any accident occurs. The losses are exactly the same; the chains of causation are slightly different, but both are “proximate.” Yet the majority would allow recovery under strict liability in the first situation but not in the second. This, I submit, is arbitrary.2
The “history” of products liability law does not compel a dichotomy between “economic loss” and other types of damage. Although the various products liability doctrines developed in the field of personal injury claims, the overwhelming majority of courts today make no distinction between personal injury damages and property damages (including “economic loss”) in products liability cases.3 If *23no such distinction was made under the products liability-doctrines in use before Greenman, then such a distinction under Greenman’s strict liability doctrine may be reasonably (though not necessarily) made only on the basis that protection of life and limb is of greater social value than protection against financial loss. But, as money damages do not replace the life or limb lost, this basis is sound only to the extent that allowing recovery for personal injuries on a strict liability theory operates as a deterrent (vis-a-vis the theories formerly used) which induces manufacturers to be more careful in their production methods. But it is highly doubtful that Greenman’s imposition of strict liability does furnish such a deterrent, in view of the fact that, at the time Greenman was rendered, the doctrine of res ipsa loquitur and the weakening of the “privity” requirement in implied warranty actions would have often subjected the manufacturer to liability, or at least to litigation, in any event, whenever a defect in his product caused an injury. (See, e.g., Escola v. Coca Cola Bottling Co., 24 Cal.2d 453 [150 P.2d 436], and Peterson v. Lamb Rubber Co., 54 Cal.2d 339 [5 Cal.Rptr. 863, 353 P.2d 575].) “A skeptic may well question whether the callous manufacturer, who is unmoved by the prospect of negligence liability, plus res ipsa loquitur, and by the effect of any injury whatever upon the reputation of his goods, will really be stimulated by the relatively slight increase in possible liability to take additional precautions against defects which cannot be prevented by only reasonable care.” (Prosser, The Assault upon the Citadel (1960) 69 Yale L.J. 1099, 1119.)4 The purpose of the strict liability *24rule as expressed in Greenman is not to deter, but “to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves.” (Greenman v. Yuba Power Products, Inc., supra, 59 Cal.2d 57, at p. 63.) The initial breakthroughs in products liability law may well have operated as deterrents when measured against the former status of the law, which gave the consumer little protection against the manufacturer’s carelessness. At that time, a distinction between personal injuries and other types of damage might have been justified. But given the equal treatment of all types of damage under the law as it existed just before Greenman, it makes no sense to adopt a new doctrine (strict liability in tort) for reasons other than deterrence and then hold that this doctrine is limited by a distinction which can be justified only if the doctrine were a deterrent. The New Jersey Supreme Court responded to this historical argument in Santor, “True, the rule of implied warranty had its gestative stirrings because of the greater appeal of the personal injury claim. But, once in existence, the field of operation of the remedy should not be fenced in by such a factor.” (Santor v. A & M Karagheusian, Inc., supra, 207 A.2d 305, at p. 309.)
The majority suggest that the manufacturer should bear (and spread) the risk of personal injury damages because “the cost of an injury and the loss of time or health may be an overwhelming misfortune to the person injured....” This is no reason to distinguish between personal injury damages and other types of damage. Such “overwhelming misfortune” may not be present in a given personal injury case, but the majority do not indicate that they would deny recovery in a personal injury ease if this element were lacking. Conversely, an economic loss might be an “overwhelming misfortune” in a given case, but I doubt that any court *25would allow recovery in such a case and deny it in other economic loss cases. “Overwhelming misfortunes” might; occur more often in personal injury cases than in property damage or economic loss cases (although the majority cite no evidence to this effect), but this is no reason to draw the line between these types of injury when a more sensible line is available. Suppose, for example, defective house paint is sold to two home owners. One suffers temporary illness from noxious fumes, while the other’s house is destroyed by rot because the paint proved ineffective (a loss generally uninsured). Although the latter buyer may clearly suffer the greater misfortune, the majority would not let him recover under the strict liability doctrine because his loss is solely ‘ ‘ economic,' ’ while letting the first buyer recover the minimal costs and lost earnings caused by his illness.
The majority unduly fear that, if the strict liability rule is applied to economic loss, “The manufacturer would be liable for damages of unknown and unlimited scope.” This would not be so if the notion of “defective” in the strict liability doctrine is viewed as coextensive with the concept of “unmerchantable” in the implied warranty field. This term has been well defined by ease law and has been deemed to be certain enough for use in our recently enacted Commercial Code (see §2314). Equating “defective” with “unmerchantable” comports with the purpose of Greenman, which was not to expand the notion of when the manufacturer has breached his initially implied duty to the purchaser, but only to eliminate the sales law’s restrictions on recovery for that breach of duty (the privity and notice requirements and the operation of disclaimers) where the buyer is an ordinary consumer.
The majority also point to Mr. Barefield’s alleged success with the truck and state that “If under these circumstances defendant is strictly liable in tort for the commercial loss suffered by plaintiff, then it would be liable for business losses of other truckers caused by the failure of its trucks to meet the specific needs of their businesses, even though those needs were communicated only to the dealer. ’' Here the majority seem to equate strict liability and the implied warranty of fitness for a particular purpose. (See Com. Code, § 2315.)5 No authority *26is cited for this proposition, and I have found none. So far as I know, no proponent of the concept of manufacturers’ strict liability has ever seriously argued that the manufacturer should be liable for the product’s inability to serve specific needs which the buyer communicates only to the retailer, except insofar as those needs conform to what the product is ordinarily expected (by the manufacturer and the consuming public) to do. Mr. Barefield’s testimony went only to show that the truck could do “the jobs for which it was built” (Greenman v. Yuba Power Products, Inc., supra, 59 Cal.2d 57, 64), i.e., that it was merchantable. Apparently he did not convince the trial court. I fail to see how this testimony tends to support the majority’s “horrible consequences” argument, for there is no indication that the trial court relied on plaintiff’s or Barefield’s communications of their needs to the dealer in finding the truck to be “defective.”
The majority recognize that the rules governing warranties were developed to meet the needs of “commercial transactions.” If this is so, then why not look to the transaction between the buyer and the seller and see if it was a ‘ ‘ commercial ’ ’ transaction rather than a sale to an ordinary consumer at the end of the marketing chain? How can the nature of the damages which occur later, long after the transaction has been completed, control the characterization of the transaction? Any line which determines whether damages should be covered by warranty law or the strict liability doctrine should be drawn at the time the sale is made.
In Greenman, we relied to some degree upon Henningsen v. Bloomfield Motors, Inc. (1960) 32 N.J. 358 [161 A.2d 69, 75 A.L.R.2d 1], Henningsen held a manufacturer liable by holding privity to be unnecessary in an implied warranty action and held that the manufacturer’s disclaimer of all warranties was contrary to public policy and therefore void. This was based upon a realistic appraisal of the “freedom of contract” commonly vested in the consumer in today’s economy, where gross inequality of bargaining power is pervasive. “The traditional contract is the result of free bargaining of parties who are brought together by the play of the market, and who meet each other on a footing of approximate economic equality. In such a society there is no danger that freedom of contract will be a threat to the social order as a whole. But in present-day commercial life the standardized mass contract has appeared. It is used primarily by enterprises with strong bargaining power and position. ‘The weaker party, in need of the goods or services, is frequently not in a position *27to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood in a vague way, if at all.’ ” (Henningsen v. Bloomfield Motors, Inc., supra (N.J. 1960) 161 A.2d at p. 86.)
I am not concerned over the fact that if damages on the strict liability theory are allowed here, this may limit the application of some of the restrictive statutory provisions relating to warranty. In my opinion those restrictive provisions should not apply to the ordinary consumer, who is usually unable to protect himself from insidious contractual provisions such as disclaimers, foisted upon him by commercial enterprises whose bargaining power he is seldom able to match, and who “ ‘is seldom “steeped in the business practice which justifies the notice requirement (Greenman v. Yuba Power Products, Inc., supra, 59 Cal.2d 57, at p. 61), and who should not be barred by the privity requirement (see fn. 3, supra). The purpose of the strict liability rule adopted in Greenman was to protect people who are “powerless to protect themselves.” (Id. at p. 63.) This does not mean, however, that the implied warranty sections of the code should not apply within the world of commerce, where parties generally bargain on a somewhat equal plane and may be presumed to be familiar with the legal problems involved when defective goods are purchased.6
Although this is a close case, I would find that plaintiff was an ordinary consumer insofar as the purchase involved here was *28concerned, even though he bought the truck for use in his business. Plaintiff was an owner-driver of a single truck he used for hauling and not a fleet-owner who bought trucks regularly in the course of his business. He was the final link in the marketing chain, having no more bargaining power than does the usual individual who purchases a motor vehicle on the retail level.
I recognize that this “ordinary consumer” test needs judicial definition. This should be done on a case-by-case basis as is customarily done with any new doctrine. It is, however, the best resolution of the dilemma facing this court. I assume that the majority do not wish to overrule Greenman. On the other hand, neither the majority nor I wish to extend Greenman so as to completely deny any effect to the disclaimer and notice provisions of the Commercial Code. Thus, a line must be drawn somewhere. The line drawn by the majority is arbitrary and artificial, there being no sound basis for distinguishing between the types of damage assigned to opposite sides of the majority's line. The line I suggest would seem to fit squarely within the reasons for the strict liability rule.
The majority object to applying the strict liability doctrine to economic loss because they feel that the manufacturer should be able to sell its product “as is.” But this objection overlooks the fact that the strict liability rule would allow the manufacturer to do this in certain cases. The strict liability rule, for example, permits the defense of assumption of risk. “Here, as elsewhere, the plaintiff will not be heard to complain of a risk which he has encountered voluntarily, or brought upon himself with full knowledge and appreciation of the danger.” (Prosser, Torts (3d ed. 1964) p. 539.)7
*29To sum up, all the strict liability rule does to implied warranty law is abolish the notice requirement, restrict the effectiveness of disclaimers to situations where it can be reasonably said that the consumer has freely assumed the risk, and abolish the privity requirement, where ordinary consumers are involved. It does not introduce a notion of “defective” which is different from that of ‘‘ unmerchantable ’ ’ in implied warranty law. These changes properly adapt traditional sales law to the marketing position of today’s ordinary consumer. Under the majority dicta, which would deny plaintiff the price of his truck as well as his lost profits on a strict liability theory, the housewife who buys a new refrigerator with such a serious defect as to make it useless cannot recover for the loss of her purchase price from the manufacturer (unless there is an express warranty), because of the privity doctrine (Burr v. Sherwin Williams Co., 42 Cal.2d 682, 695-696 [268 P.2d 104]). Should the privity doctrine be abolished, the manufacturer’s disclaimer of implied warranties would bar her, even if she could not buy a new refrigerator without a similar disclaimer. Further, if there were no disclaimer, her failure to give the manufacturer reasonable notice of the defect would bar her effort to recover. These results cannot be reconciled with the holding and rationale of Greenman.
Thus, although I would affirm, I would do so on the basis of the strict liability doctrine.
The petition of the defendant and appellant for a rehearing was denied July 21, 1965. Peters, J., was of the opinion that the petition should be granted.

Plaintiff had read a warranty provision on a copy of the contract that was not used. He did not read the warranty provision in the contract that was used, but assumed it was identical to the provision he had read (which it apparently was). He was asked at trial:
”Q. Well, you understood from the other warranty which you read that the warranty that was made was made to you by the White Motor Company, did you not? A. No, I didn’t understand that at all.
( (
“You understood from that White Motor Company was the one that was making the warranty to you, didn’t you? A. No, sir.”

The majority make another arbitrary distinction when they state that they would allow recovery in strict liability for the damage caused to plaintiff’s truck in his accident, if plaintiff had proved that the defect caused the accident. Unlike the majority, I can attribute no significance to the fact that these damages sought by plaintiff were not caused by a collision with an external object in a sudden accident. I cannot rationally hold that the plaintiff whose vehicle is destroyed in an accident caused by a defective part may recover his property damage under a given theory while another plaintiff who is astute or lucky enough to discover the defect and thereby avoid such an accident cannot recover for other damages proximately caused by an identical defective part. The strict liability rule should apply to both plaintiffs or to neither. They cannot be validly distinguished.

 Approaching our strict liability doctrine, the following eases have held that "privity” is not necessary in an action for breach of implied warranty and have applied this rule to allow recovery against a manufacturer for property damage: Duckworth v. Ford Motor Co. (D.C.E.D.Pa. 1962) 211 F.Supp. 888; Picker X-Ray Corp. v. General Motors Corp. (Mun.Ct.App.D.C. 1962) 185 A.2d 919; State Farm Mut. Auto. Ins. Co. v. Ander*23son-Weber, Inc. (1961) 252 Iowa 1289 [110 N.W.2d 449]; Morrow v. Caloric Appliance Corp. (Mo. 1963) 372 S.W.2d 41; Pabon v. Hackensack Auto Sales, Inc. (1960) 63 N.J.Super. 476 [164 A.2d 773]; 50 New Walden, Inc. v. Federal Ins. Co. (Sup.Ct. 1963) 30 Misc.2d 460 [241 N.Y.S.2d 128]; Jarnot v. Ford Motor Co. (Pa. 1959) 191 Pa.Super. 422 [156 A.2d 568]. The following cases have abolished privity in permitting recovery for damages involving the loss of (or reduced value of) the purchased product itself, where no "accident” occurred: Gladiola Biscuit Co. v. Southern Ice Co. (5th Cir. 1959) 267 F.2d 138; Hoskins v. Jackson Grain Co. (Fla. 1953) 63 So.2d 514; Continental Copper & Steel Industries, Inc. v. E. C. “Red” Cornelius, Inc. (Fla.App. 1958) 104 So.2d 40. Nor was privity required in Mazetti v. Armour & Co. (1913) 75 Wash. 622 [135 P. 633, Ann.Cas. 1915C 140, 48 L.R.A. N.S. 213], where plaintiff sought and recovered damages for loss of profits and loss of goodwill only.

See Plant, Strict Liability of Manufacturers for Injuries Caused by Defects in Products—An Opposing View (1957) 24 Tenn.L.Rev. 938, where it is said (at p. 945): " [W]hat is probably a more powerful incentive to make products as safe as possible lies in the desire of manufacturers to avoid the danger that their products will develop a reputa*24tion for being unsafe or defective and therefore be unacceptable to the purchasing public. Every manufacturing executive with whom the writer has discussed this matter regards it as a potential commercial disaster when one of its products is found to be defective and the cause of an injury. The element which is most disturbing to manufacturers is not the potential judgment of legal liability but the injury which is done to the reputation of the product and its producer. While it may be conceivable that the imposition of strict liability could increase in some small measure the pressure upon a few backward manufacturers to make their product safe, it is doubtful that it will add very much to existing pressures. ’ ’
See also Bogert and Fink, Business Practice Regarding Warranties in the Sale of Goods (1930) 25 Ill.L.Rev. 400, 415-416.

 ‘‘Where the seller at the time oí contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is ... an implied warranty that the goods shall be fit for such purpose.” (See also former Civ. Code, § 1735, subd, (1).)

See Note, Disclaimers of Warranty in Consumer Sales (1963) 77 Harv.L.Rev. 318, 327-328: “A thwarting of the policies behind warranty need not attend recognition of disclaimers in the commercial world. There the buyer may be just as able to absorb and administer the inevitable risks of the seller’s operations. Indeed, the seller may be an essential experimental or otherwise marginal entrepreneur who would be unable profitably to bear the recurrent costs of strict liability. There is common recourse to insurance. The size of the transactions and the access to technical knowledge make attempts to prove negligence more feasible. Buyers may even dictate the design, and thus be in a position to prevent the losses to which they are exposed. They are more capable of protecting themselves by caution and testing, and their own manufacturing processes and quality control systems stand between the object and ultimate users or bystanders.
“In sales by mass producing and marketing enterprises to individual consumers, however, the reasons for recognition of disclaimers are rarely applicable. When they are, recognition of the disclaimers they support is usually not compatible with realization of the policies behind warranties. The comparative helplessness of the modem consumer generally eliminates the possibility of a free and informed choice to assume a risk, of a course *28of negotiations which may be evidenced in a contract, or of a true bargain. And whenever the cost of an inevitable risk is borne by the consumer, it cannot be administered to those who benefit from it or serve as an incentive to improvement. ’ ’
See also Llewellyn, On Warranty of Quality, and Society (1936) 36 Colum.L.Rev. 699, 712-713, 721; Prosser, The Assault upon the Citadel, supra (1960) 69 Yale L.J. 1099, 1133.

Where some manufacturers of a given product disclaim liability and others do not, then a consumer who buys from a disclaiming manufacturer, knowing of the disclaimer, has ‘ ‘ assumed the risk. ’ ’ He has a "’reasonable alternative ’ ’ (id. at p. 540), buying from a manufacturer who did not disclaim (and perhaps paying a higher price for the manufacturer to retain these risks). When all manufacturers disclaim, however, then it can hardly be said that a buyer assumes the risk imposed by such a disclaimer when he buys that product. Of course, even if all manufacturers have disclaimers, if the consumer buys a product raising a greater risk of injury (economic or personal) than those of the other manufacturers (perhaps because the product is cheaply made or of an experimental design), knowing of this increased risk, then the buyer has assumed the added risk. He could have purchased a safer product. Under *29the facts involved in this ease, of course, we need not be concerned with this problem, for the majority properly found that White’s attempt to limit its liability was ineffective, for White failed to perform even its limited obligation to plaintiff.