Natale v. Upjohn Company

• Citation: 356 F.2d 590
• Decision Date: 15 February 1966
• Docket Number: No. 15198.,15198.
• Parties: Anthony NATALE and Julia Natale, his wife, Appellants, v. The UPJOHN COMPANY and Lakeside Laboratories, Inc.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

356 F.2d 590 (1966)

Anthony NATALE and Julia Natale, his wife, Appellants, v. The UPJOHN COMPANY and Lakeside Laboratories, Inc.

No. 15198.

United States Court of Appeals Third Circuit.

Argued June 11, 1965.

Submitted September 4, 1965.^*

Decided February 15, 1966.

Joseph F. Mulcahy, Jr., James P. McHugh, Chester, Pa., Henry A. Wise, Jr., Wilmington, Del., for appellants.

Edmund N. Carpenter, II, Richards, Layton & Finger, Wilmington, Del., for appellee, The Upjohn Co.

F. Alton Tybout, Herbert L. Cobin, Wilmington, Del., for Lakeside Laboratories, Inc.

Before KALODNER, Chief Judge, and HASTIE and SMITH, Circuit Judges.

KALODNER, Chief Judge.

This appeal is from the District Court's dismissal of the plaintiffs' diversity action on the ground that it was barred by the Delaware Statute of Limitations which provides that actions for personal injuries, whether in contract or tort, must be brought within two years.¹

The action was brought in the District Court of Delaware April 29, 1964 — four years after the alleged cause of action accrued. The Complaint alleged that on April 29, 1960, there had been administered to the wife plaintiff in the course of her treatment, in a Pennsylvania hospital, for depressive disorders, the defendant Upjohn Company's drug Monase, and in May 1960, the defendant Lakeside Laboratories' drug Katron; that the drugs had caused her to suffer blurred vision, color-blindness and other ills, necessitating extensive medical care; and that the defendants had breached implied and express warranties that the specified drugs were "fit and safe for human use and consumption".

The plaintiffs contended below, as they do here, that the 2-year period in the Delaware statute of limitations does not bar their action for the reason that Section 2-725 of the Uniform Commercial Code, as enacted by Pennsylvania in 1953, 12A P.S.,² which prescribes a 4-year statute of limitations for the commencement of an action for breach of warranty, created a "built-in" "substantive right" which is given effect under the Delaware conflict rule as construed in Pack v. Beech Aircraft Corporation, 11 Terry 413, 50 Del. 413, 132 A.2d 54, 67 A.L.R.2d 207 (1957), later discussed.

The District Court chose to premise its dismissal of the action on its view that Section 2-725 of the Pennsylvania Code is "procedural" and not "substantive" for the reasons that the right to bring an action for breach of warranty was not created by the Code but existed prior to its enactment, and that "This alone prevents the four year statute of limitations which is embodied in the Code from having the status of a `built-in' statute which is a substantive part of a statutory right or liability", and further that "the legislature of Pennsylvania did not intend that the four year period of limitations should be a substantive part of the right." Natale v. Upjohn Company, 236 F.Supp. 37, 41, 42 (D.Del.1964).

While we are in accord with the view expressed by the District Court, as developed in its opinion, we prefer to affirm its dismissal of the instant action on the ground that the Delaware conflict of law rule, decisional and statutory, independently, so required, without more.

This is a diversity action and where a federal court has jurisdiction by virtue of diversity it must give effect to the conflict of law rule of the state in which the action is brought. Klaxon Company v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Hartwell v. Piper Aircraft Corporation, 186 F.2d 29, 30 (3 Cir. 1951).

The Delaware conflict rule is incorporated in its Borrowing Statute, 10 Del.C. § 8120, which became effective April 9, 1947. The Statute provides as follows:

"Cause of action arising outside State —

"Where a cause of action arises outside of this State, an action can not be brought in a court of this State to enforce such cause of action after the expiration of whichever is shorter, the time limited by the law of this State, or the time limited by the law of the state or country where the cause of action arose, for bringing an action upon such cause of action. Where the cause of action originally accrued in favor of a person who at the time of such accrual was a resident of this State, the time limited by the law of this State shall apply." (emphasis supplied)

In the instant case the action, as earlier stated, was brought after the 2-year period fixed in the Delaware Statute of Limitations had expired. Since the Delaware 2-year limitation is "shorter" than the 4-year limitation for the bringing of an action for personal injuries arising out of breach of warranty provided by the Pennsylvania Code, it prevails under the clear and explicit provisions of the Delaware Borrowing Statute.

The Borrowing Statute is consistent with the state's decisional law prior to its enactment.

In White v. Govatos, 1 Terry 349, 40 Del. 349, 10 A.2d 524 (Super.Ct.1939), which preceded by some eight years enactment of the Borrowing Statute, it was held that when a statute of limitations of the forum had expired, as in the instant case, an action was barred even though the period of limitation fixed by the statute of the state which created the right of action had not expired.

In White the plaintiff, as Superintendent of Banks of the State of New York, brought an action against the defendant as a stockholder of an insolvent New York bank, to recover the amount of the assessment levied against him by the plaintiff under Section 113-a of the New York Banking Law (Consol.Laws c. 2). The New York statute provided that an action to enforce such liability must be brought within six years after the cause of action accrued. The Delaware statute, section 5129, Rev.Code 1935, provided that no action on the case should be brought after the expiration of three years from the accrual of the cause of action. The White suit was brought within six years, but after the expiration of three years, of the accrual of the cause of action. Thus, the situation in White was four-square with that in the instant case where the suit was instituted after the expiration of the Delaware 2-year limitation but prior to the expiration of the 4-year limitation for the bringing of such an action fixed by Pennsylvania law.

In holding that the Delaware 3-year limitation barred the action even though in New York 6-year limitation had not expired, the court said in White:

"When * * * their own statute of limitation operates as a bar, they the courts of the forum do refuse the remedy for the reason that the principle of comity does not demand the surrender of the public policy of the state with respect to the time within which suits may be brought in its courts.

"The applicable statute in this State declares that no action on the case shall be brought after three years from its accrual. There is no exception with respect to a right of action created by statute of another state; and the Court is without power to create such exception." 10 A.2d 529, 530.³

Some eight years after the enactment of the Borrowing Statute, it was held in Gaffney v. Unit Crane and Shovel Corporation, 10 Terry 381, 49 Del. 381, 117 A.2d 237 (Super.Ct.1955) that it made applicable the Delaware 3-year statute of limitations for the bringing of an action for breach of contract although the statute of limitations of Pennsylvania, where the contract was entered into, fixed a 6-year period.

In so holding the Court said:

"The contract under consideration in this case arose in the state of Pennsylvania, where the statute of limitations is six years, but there seems to be no doubt that the Delaware statute of limitations three years applies. This appears from the * * Borrowing statute." 117 A.2d 238.

We do not regard Pack v. Beech Aircraft Corporation, supra, as reversing White and Gaffney, or as judicial interposition with respect to the force of the Borrowing Statute, even though it contains obiter dicta which has been recruited to support the contention that it does so.

In Pack the court was dealing with that part of the Borrowing Statute which relates to a cause of action which "originally accrued in favor of a person who at the time of such accrual was a resident of this State", and which provides that in such instance "the time limited by the law of this State shall apply."

It was not concerned with a situation such as here where the plaintiffs were residents of Pennsylvania seeking recovery for a cause of action which had accrued to them by reason of rights accruing in Pennsylvania.

The specific question which the court was called upon to decide was whether a cause of action which accrued to a Delaware resident under the Wrongful Death Act of New Jersey was subject to the general 3-year time limitation for the bringing of a wrongful death action in Delaware, or the shorter 2-year time limitation fixed for the institution of such an action by the Wrongful Death Act of New Jersey. The court held that since the New Jersey statute created a substantive right arising by reason of wrongful death, non-existent under the common law, the right expired when it was not pursued within the 2-year limitation for its exercise, and that consequently no right existed to bring such an action in New Jersey or elsewhere.

Assuming arguendo, that the dicta in Pack must be regarded as having engrafted upon the Delaware Borrowing Statute the principle that it is inapplicable in situations where the law of another state creates a substantive right to an action and fixes a longer limitation than that provided by Delaware law with respect to a similar cause of action, we hold, as the District Court did, that Pack is without impact in the instant case because the Pennsylvania Code did not create a substantive right to bring an action for breach of warranty and that the time limitation therein is only procedural.

Since no Pennsylvania court has decided whether the 4-year limitation for bringing a breach of...