Court Opinion

ID: 9535225
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:47:00.634144+00
Date Added: 2024-06-11T13:33:11.828406
License: Public Domain

RATLIFF, Judge,
concurring in part, dissenting in part, and concurring in result.
I concur in the result reached in this case on the ground that Margaret A. Lane, the plaintiff, was not a third-party beneficiary entitled to maintain an action for damages for personal injuries for breach of implied warranty under the narrow scope of the version of the Uniform Commercial Code pertaining to such third-party beneficiaries adopted in Indiana. I agree with the majority that Lane could not have been a third-party beneficiary of any contract for the sale of goods entered into by Lane’s daughter, but I base my opinion upon the specific language of the third-party beneficiary provision of the U.C.C. which is not sufficiently broad in scope to include Lane.
I do not agree that lack of privity of contract deprives a person such as Lane from pursuing a claim for damages for personal injuries arising out of an alleged breach of implied warranty of merchantability against a remote seller or supplier, such as a manufacturer or distributor. I dissent from the majority opinion insofar as it would require privity as essential to recovery in such a situation.
I. Privity of Contract Not Required
The majority opinion held that Lane could not succeed in an action of breach of implied warranty against Holloway House, Owens-Illinois, and Venus because of the lack of privity between Lane and any of those defendants, relying primarily upon Neofes Robertshaw Controls Co., (S.D.Ind. 1976) 409 F.Supp. 1376; and Withers v. Sterling Drug, Inc., (S.D.Ind.1970) 319 F.Supp. 878. Withers, supra, does say at 882:
“A suit for breach of implied warranty which sounds in contract is an action which arises out of the agreement of the parties, and only a party to the contract, *1177one in privity with him, or one within the coverage of § 19-2-318 of Burns’ Indiana Statutes Annotated (1964) repl.) [IC 26-1-2-318], may enforce the implied warranty. . . . ” (Emphasis added.)
(Our insertion.)
The quoted statement for Withers, would seem to extend warranty protection to a third-party beneficiary in the absence of privity. Neofes, supra, says that privity is not necessary in an implied warranty action sounding in tort but “[i]f the warranty action is based on contract, privity is still a necessary element under Indiana law. (Citations omitted.)” 409 F.Supp. at 1379. Much of the court’s discussion in Neofes pertains to the fact that Indiana adopted Alternative A of the third-party beneficiary provisions suggested by the U.C.C. rather than either of the more liberal Alternatives B or C. I do not believe Withers, supra, or Neofes, supra, to be authoritative statements of existing Indiana law which we are bound to follow. Further, it is my opinion that we should clearly hold the law in Indiana to be that lack of privity of contract does not preclude the bringing of an action for personal injuries based upon breach of implied warranty by one who can qualify as a third-party beneficiary under the Indiana version of that U.C.C. provision against a remote seller, manufacturer, bottler, distributor, or supplier.
Two Indiana cases dealing with the privity concept are worth nothing. In Richards v. Goerg Boat & Motors, Inc., (1979) Ind. App., 384 N.E.2d 1084, the plaintiff sued the dealer and manufacturer of a used boat for breach of warranties, both express and implied, seeking damages for defects rendering the boat less than as warranted. Judge Hoffman wrote at 384 N.E.2d 1092:
“Generally privity extends to the parties to the contract of sale. It relates to the bargained for expectations of the buyer and seller. [Citation omitted.] Accordingly, when the cause of action arises out of economic loss related to the loss of the bargain or profits and consequential damages related thereto, the bargained for expectations of buyer and seller are relevant and privity between them is still required. [Citation omitted.]
“Implied warranties of merchantability and fitness for a particular use, as they relate to economic loss from the bargain, cannot then ordinarily be sustained between the buyer and a remote manufacturer. [Citation omitted.]” (Emphasis added.)
Richards, supra, found there to be sufficient factors in the dealings between the buyer and the manufacturer to consider the manufacturer as being a seller.
In Barnes v. MacBrown & Co., Inc., (1976) 264 Ind. 227, 342 N.E.2d 619, our Supreme Court extended the benefit of implied warranty of fitness for habitation to a subsequent purchaser of a new dwelling in the case of latent defects which become manifest after the purchase and are not discoverable by the subsequent purchaser’s reasonable inspection. The Supreme Court there said “[t]he traditional requirement of privity between a builder-vendor and a purchaser is an outmoded one.” 264 Ind. at 229, 342 N.E.2d at 620. We followed the rule of Barnes, supra, in Wagner Construction Co., Inc. v. Noonan, (1980) Ind.App., 403 N.E.2d 1144.
The question of the requirement of privity in cases such as this has been the subject of much litigation. The decisions are in conflict. The question of the necessity of privity in breach of warranty actions is treated in 63 Am.Jur.2d, Products Liability, §§ 159-172. Some courts have held steadfast to the principle that privity is required. Neofes v. Robertshaw Controls Co., supra; Schuessler v. Coca-Cola Bottling Co. of Miami, (1973) Fla.App., 279 So.2d 901; and perhaps Withers v. Sterling Drug, Inc., supra.
Other cases have held that privity is not a requirement when a plaintiff seeks to recover damages for personal injuries from a remote manufacturer based upon breach of the U.C.C. implied warranties. Berry v. G.D. Searle & Co., (1974) 56 Ill.2d 548, 309 N.E.2d 550. See also: Sheeskin v. Giant Food, Inc., (1974) Md.Sp.App., 20 Md.App. 611, 318 A.2d 874; Piercefield v. Remington
*1178Arms Co., (1965) 375 Mich. 85, 133 N.W.2d 129 (under the Uniform Sales Act). The modern trend is to reject the privity requirement. 63 Am.Jur.2d, Products Liability, § 159; 2 R.D. Hursh & H.J. Bailey, American Law of Products Liability 2d (1974) § 10:12. Berry v. G.D. Searle & Co., supra, disposes of privity in these words: “ . . . [Pjrivity is of no con sequence when a buyer who purportedly has sustained personal injuries predicates recovery against a remote manufacturer for breach of an implied warranty under the Code.” 309 N.E.2d at 556. We should do likewise.
II. Lane was not a Third-Party Beneficiary Entitled to Benefit of the Warranty
As stated at the beginning of this opinion, I do not believe Lane comes within the protection of the third-party beneficiary provision of the U.C.C. as adopted in Indiana, and for that reason cannot succeed in this action, and summary judgment was properly entered against her on that ground. The applicable provision is IC 26-1-2-318 (§ 2-318 of the U.C.C.) which provides:
“A seller’s warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.”
This provision is generally designated as Alternative A of the U.C.C. third-party beneficiary clauses. (See Judge Steckler’s discussion of Alternatives A, B, and C in Neofes v. Robertshaw Controls Co., supra; and 2 R.D. Hursh & H.J. Bailey, American Law of Products Liability 2nd, §§ 10:4, 10:20, 10:43.)
There are no facts shown here which would bring Lane within the coverage of Alternative A (the Indiana statute). Lane was not in the family or household of her daughter — they had separate families and residences, the daughter was emancipated and married; nor was Lane a guest in her daughter’s home at the time of her injury. Perhaps Lane would have been covered under Alternative B or C, but Indiana has not adopted them. It is not the function of the court to adopt by decision an alternative statute which the legislature declined to enact.
Therefore, I concur in the result reached by the majority for the reasons which I have stated.