Court Opinion

ID: 9647811
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:51:13.2708+00
Date Added: 2024-06-11T18:11:53.678749
License: Public Domain

John A. Fogleman, Justice, dissenting. I respectfully dissent because the majority opinion extends the provisions of the Uniform Commercial Code to leases of personal property. I find nothing in the Commercial Code which remotely suggests that it has any such application. The definitions in the Chapter on Sales, from which the majority has applied certain sections, would definitely eliminate leases. See Ark. Stat. Ann. §§ 85-2-103, 85-2-106 (Add. 1961). I agree with the majority that the transaction here involves a lease and I think that this conclusion is inescapable. Yet, I cannot justify using the Uniform Commercial Code as a vehicle merely to reach what would seem to be a desirable result in this ease. The majority, in making this application, cites comments and authorities as to the desirability of extending to leases the doctrine of implied warranty of quality, so long and well associated with sales transactions. I would find no great fault with this extension of the common law doctrine. Such an extension would not reach the result reached by the majority, however, because under the common law the disclaimer in this contract would exclude any implied warranty. It is only by resort to the code that the requirement that such an exclusion must be “conspicuous” can be applied. By doing this, I feel very strongly that the court is acting legislatively. I fear the problems that will arise in the future when the application of other sections of the Commercial Code to leases is sought. The draftsmen of the code did not have in mind that the provisions thereof would be extended to leases, and it may well be that the application of other sections will be somewhat clumsy. See, e. g., %% 85-2-701 to 85-2-725, both inclusive. I do not take the case of Cintrone v. Hertz Truck Leasing and Rental Service, 45 N. J. 434, 212 A. 2d 769, cited by the majority, to extend the Uniform Commercial Code to leases. It seems to me that the Supreme Court of New Jersey there extended the common law doctrine of implied warranty in sales to leases. Reference was there made to a comment by the draftsmen of the code. That reference to this comment (also quoted in the majority opinion) was made solely to demonstrate that the Uniform Commercial Code did not limit the court in applying case law doctrines of implied liability to transactions other than sales. It is interesting to note that the courts of New Jersey have refused to extend the doctrine in the Cintrone case in subsequent cases. Magrine v. Krasnica, 94 N. J. Super. 228, 227 A. 2d 539 (1967); Jackson v. Muhlenberg Hospital, 96 N. J. Super. 314, 232 A. 2d 879 (1967); Conroy v. 10 Brewster Ave. Corp., 97 N. J. Super. 75, 234 A. 2d 415 (1967). It is significant that when there is an intention that a lease be covered by any of the provisions of the Uniform Commercial Code, that intention is given expression. In Ark. Stat. Ann. § 85-9-102(2) (Add. 1961) it is specifically stated that the Article on Secured Transactions applies to security interests created by lease intended as security. I have not been able to find any other mention of leases in the code, nor have I found any definition of terms in the statute that would include leases other than the definition of “security interest” [§ 85-1-201(37)] and “security agreement” [§ 85-9-105(1) (h)]. These sections only make a lease subject to the code provisions on “Secured Transactions” when it is intended as security. This seems to be a very strong indication that no other code provisions were intended to apply to leases under any circumstances. In Victor v. Barzelski, 19 Pa. Dist. & Co. R. 2d 698 (Pa. 1959), it was held that the “merchantability” warranty of Uniform Commercial Code § 2-314 (Ark. Stat. Ann. § 89-2-314) and the “fitness” warranty of UCC § 2315 (Ark. Stat. Ann. § 89-2-315) depend upon a “contract of sale” made by a “seller” for applicability. There an apartment owner sought to recover damages from one who contracted to install a heater in the apartment, alleging breaches of these warranties. The contractor purchased the unit from a supplier and installed it. The evidence showed that the owners made known to the contractor that they were relying on his skill and judgment to furnish a suitable heating unit. The court said that the agreement did not create the buyer-seller relationship necessary to bring it within these code provisions. The parallel between these cases is close. "While the authority may not be one entitled to the greatest weight, the reasoning by which the conclusion was reached is certainly applicable. The majority opinion implies that its effect is only to apply one isolated section of a chapter of the Uniform Commercial Code to leases rather than to sales. This particular section (85-2-316) relates, however, only to warranties defined in §§ 85-2-313 and 85-2-314. These sections refer only to warranties by a “seller” to a “buyer.” The meaning of these terms is that given in § 85-2-103(1) (a) & (d) unless the context otherwise requires. The warranties mentioned are also connected with contracts for sale. “Sale” and “contract for sale” are also clearly defined in § 85-2-106. None of these definitions remotely fit the situation before the court, principally because no passing of title from the seller to the buyer is contemplated here. The inapplicability of § 85-2-316 is further demonstrated by reason of the limitation of implied warranties to “contracts for * * * sale if the seller is a merchant with respect to goods of that kind.” Appellee cannot be said, even by the wildest stretch of the imagination, to be a merchant with respect to ice machines. It seems singular to me that this court, in holding this section applicable, would place reliance upon an argument with reference to this section made before, but not decided by, a trial court in New York. The majority opinion attempts to confine its application of the code section to leases analogous to a sale. I cannot tell, and it is not suggested, when a lease of personal property is analogous to a sale. Is the length of the term significant? Are the courts to examine a lessor about his intentions with reference to the disposition of the property at the end of the term? Is the requirement that the lessee shall repair (not unusual in leases) to be the decisive factor? I am unable to discern how we will be able to decide the application of code provisions to leases on a section by section basis in the absence of clear statutory intent. Nor do I see any guide to the trial bench or bar, much less to the business community, in making these decisions. The purpose of clarifying, stabilizing and making uniform the commercial laws of the various states is tlms defeated by creating an atmosphere of confusion about the whole thing. I would affirm the judgment.