Court Opinion

ID: 8911222
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:05:31.35795+00
Date Added: 2024-06-11T17:08:32.932366
License: Public Domain

FIELD, Senior Circuit Judge,
concurring and dissenting:
I agree with the disposition of these appeals except for the judgment obtained by Edwards against Celotex based upon its alleged breach of warranty, which, in my opinion, was time-barred. Concededly, Edwards’ direct cause of action on the warranty claim was barred by the U.C.C. statute of limitations, N.C.Gen.Stat., 25-2-725, as amended, since its third-party complaint was filed over four years after the last delivery by Celotex in 1969. The majority, however, concludes that Edwards’ liability to Dickerson entitled it to indemnity from Celotex, and that the statute of limitations did not commence to run against the indemnity claim until Edwards was required to pay damages to Dickerson.
In reaching this conclusion, the majority observes that “[t]he U.C.C. was not intended to shield manufacturers of defective products from indemnity claims made by their purchasers more than four years from the date of sale by the manufacturer.” I think, however, it is necessary to emphasize that the liability of Celotex in this case was not based upon negligence nor upon the existence of any defect in its product. Liability was based solely upon the breach of warranty of merchantability and/or fitness of the roofing felt which was sold and delivered to Edwards. This narrow basis of liability is important to bear in mind in considering the indemnity approach of the majority. >
We, of course, are not concerned here with any express contract of indemnity, and if Edwards has a basis for recovery from Celotex, it must be under what is sometimes termed “common law indemnity”. Such a right of indemnity arises by operation of law where, for example, a person who, without fault on his own part, has been compelled to pay damages occasioned by the primary negligence of another is entitled to indemnity from the latter. Unquestionably, if Celotex had furnished a product to Edwards which had been negligently manufactured and by reason thereof caused injury to a customer of Edwards, Edwards would be entitled to recover from Celotex under this principle of common law indemnity for any damages which it was required to pay to the injured customer. And in such a case Edwards’ cause of action would accrue and the statute of limitations would commence to run only from the time when Edwards suffered a loss by paying the injured customer. However, as I have stated, we are not dealing here with any charge of negligence on the part of Celotex, but solely with the issue of its liability for a breach of warranty under the U.C.C.
The courts which have had occasion to consider the question have been careful to differentiate between claims for common law indemnity based upon the alleged negligence of a party as contrasted to his liability for a' breach of warranty under the U.C.C. In PPG Industries, Inc. v. Genson, 135 Ga.App. 248, 217 S.E.2d 479 (1975), the original plaintiff alleged that his decedent had fallen through a glass wall negligently maintained on the defendant’s premises. The defendant-owner filed a third-party complaint against PPG Industries, the glass sub-contractor, alleging both negligence and breach of implied warranty of merchantability. Speaking to the breach of warranty claim, the court observed:
The applicable statute of limitation on the contract claim against PPG is four years, which began to run when the alleged breach occurred. Uniform Commercial Code § 109A-2-725. The breach occurred, if at all, when the glass was installed and accepted. * * * Since *312more than four years elapsed between the date of installation and acceptance and the filing of the third-party complaint, the contract claim is barred by the statute. (Citations omitted).
217 S.E.2d at 480. The court did, however, recognize the viability of the negligence count and addressed itself to the merits of that claim.
This distinction between a negligence claim and one based upon breach of warranty was also recognized by the First Circuit in Wolverine Insurance Co. v. Tower Iron Works, Inc., 370 F.2d 700 (1966). In that case the third-party defendant, Tower, had designed and installed a swimming pool on premises owned by Families. A young man, Duckworth, was injured while diving into the pool and brought suit against Families on the ground that the pool was negligently designed. Families’ insurer, Wolverine, settled the principal lawsuit and filed an action, as subrogee, against Tower. Two counts of the complaint charged Tower with breach of warranty of fitness and merchantability, while the remaining two counts charged it with negligent design and installation. The court held that the counts of the complaint charging breach of warranty were barred by the U.C.C. statute of limitations, stating, “[i]t is clear that a cause of action for breach of a sales contract, express or implied, accrues when delivery is made, regardless of the buyer’s knowledge of the breach.” 370 F.2d 702. On the other hand, like the court in PPG Industries, the First Circuit recognized that the negligence counts stated a cause of action for common law indemnity.
A similar conclusion was reached in Raymond-Dravo-Langenfelder v. Microdot, Inc., 425 F.Supp. 614 (D.Del.1977). In that case, Raymond-Dravo-Langenfelder (RDL) was the prime contractor for the construction of a bridge and purchased a number of steel pier forms from Maryland Liquidating Company (MLC). Microdot, the parent corporation of MLC, guaranteed the performance of the contract by MLC. MLC entered into a sub-contract with Maryland Shipbuilding under which Maryland Shipbuilding fabricated one of the pier forms and delivered it to the construction site. Shortly thereafter the pier form collapsed and RDL instituted an action against MLC. The court held that any claim of RDL against MLC based upon breach of warranty was barred by the U.C.C. statute of limitations involving the sale of goods. In so holding, the court made the following observations:
The Code clearly states that a cause of action for breach of warranty accrues when tender of delivery is made. Whether or not the buyer at that time ‘accepts’ the goods, as that term is used in the Code, or, on the other hand, withholds acceptance until he or she has had an opportunity to fully inspect for defects, does not affect when the buyer must institute suit for breach of warranty. This is so even if the defect does not appear until after the limitations period has run. (Footnotes omitted).
425 F.Supp. at 617.
The difficulty of determining conformity with a warranty at the time of delivery is a problem common to many situations involving warranties by description. Such difficulties have not been regarded as controlling, however, in the absence of contract language explicitly warranting future performance. The drafters of the UCC decided that the seller’s need to have some clearly defined limit on the period of its potential liability outweighed the buyer’s interest in an extended warranty and reserved the benefits of an extended warranty to those who explicitly bargain for them.
425 F.Supp. at 618. Microdot filed a third-party action against Maryland Shipbuilding, seeking to hold it liable for any damages RDL might recover from Microdot. The court held that the third-party complaint presented a breach of warranty theory for recovery which was barred by the four-year statute of the U.C.C. since the warranty *313action had accrued when Maryland Shipbuilding tendered the pier for delivery. The court went on to observe, however, that if MLC and/or Microdot could establish that their liability was occasioned by the negligence of Maryland Shipbuilding, they would have a claim for common law indemnity against Maryland.
The majority places considerable reliance upon Hager v. Brewer Equipment Company, 17 N.C.App. 489, 195 S.E.2d 54 (1973). As they note, however, the original cause of action in that case was based upon negligence, and while the third-party action seeking indemnity from the seller of the elevator was stated to be upon both negligence and breach of warranty, it occurs to me that the basis of decision in that case was the established common law right of indemnity where the indemnitee has been compelled to pay damages occasioned by the primary negligence of another.
The purpose of this period of limitations in the U.C.C. was stated as follows:
Purposes: To introduce a uniform statute of limitations for sales contracts, thus eliminating the jurisdictional variations and providing needed relief for concerns doing business on a nationwide scale whose contracts have heretofore been governed by several different periods of limitation depending upon the state in which the transaction occurred. This Article takes sales contracts out of the general laws limiting the time for commencing contractual actions and selects a four year period as the most appropriate to modern business practice. This is within the normal commercial record keeping period.
Uniform Commercial Code, § 25-2-725 Official Comment. The statute was designed to apply to the myriad of ordinary mercantile transactions such as the case at hand which take place every day throughout the country and to provide a degree of uniform finality to them. Such an application of the statute will not insulate a manufacturer from liability for injury to consumers resulting from the negligent manufacture of a product or the failure to warn of dangers incident to its intended use;1 nor will it, under such circumstances, shield manufacturers of defective products from indemnity claims made by their purchasers.
In L. E. Talcott & Sons, Inc. v. Aurora Corporation, 176 F.Supp. 783, 786 (D.Del.1959), aff’d 280 F.2d 128 (3 Cir. 1960), the court, in rejecting the theory advanced by Edwards and adopted by the majority in the present case, stated:
Unless the original contract so provided, it would be difficult to determine that a vendee holding under an implied warranty of fitness could retain the article beyond any statute of limitations and then sell it with his own warranty of fitness and, having made good on his own warranty, hold his original vendor upon a claim of indemnity and not upon the warranty of fitness. Such result would imply that the vendee could make inoperative any statute of limitations or create and control his own limitation.
I agree with this observation for in my opinion such a theory of indemnity will in many cases read the statute of limitations out of the U.C.C. and destroy the uniformity and finality which the Code was designed to achieve.

. See, e. g., Gardner v. Q. H. S., Inc., 448 F.2d 238 (4 Cir. 1971); Spruill v. Boyle-Midway, Incorporated, 308 F.2d 79 (4 Cir. 1962); 2 Restatement of Torts, 2d §§ 388, 394 and 395 (1965 Ed.).