Stang v. Hertz Corp.

Decision Date26 May 1972
Docket NumberNo. 9324,9324
Parties, 52 A.L.R.3d 112, 10 UCC Rep.Serv. 1010 Sister Mary Assunta STANG, Personal Representative and Ancillary Administratrix with the Will Annexed in the Matter of the Last Will and Testament of Catherine Lavan, Deceased, et al., Petitioners, v. HERTZ CORPORATION, a corporation, Respondent.
CourtNew Mexico Supreme Court
OPINION

McMANUS, Justice.

The automobile accident involved in this case occurred when a tire blew out. The tire, manufactured by Firestone Tire & Rubber Company, was mounted on a car belonging to Hertz Corporation. The car had been rented by a nun; Catherine Lavan, also a nun, was a passenger in the car when the blowout occurred. Catherine Lavan suffered injuries in the accident resulting in her death. Prior appellate decisions were concerned with damages inwrongful death actions. Stang v. Hertz Corporation, 81 N.M. 69, 463 P.2d 45 (Ct.App.1969), aff'd 81 N.M. 348, 467 P.2d 14 (1970). Subsequent to the appellate decisions the case was tried and submitted to a jury as against Firestone. The verdict was in favor of Firestone. There is no appeal from this verdict. The trial court directed a verdict in favor of Hertz. The dispositive issues in this appeal concern the liability of Hertz. Plaintiffs contend there were issues for the jury concerning (1) an express warranty and (2) strict liability in tort. On appeal, the Court of Appeals affirmed the trial court on the basis that there was no evidence of express warranty to be submitted to the jury and that strict liability is not applicable in New Mexico. Stang v. Hertz Corporation, 83 N.M. 217, 490 P.2d 475 (1971). We granted certiorari and now affirm on the issue of express warranty and reverse on the issue of strict liability.

Historically, the buyer of a defective product had two possible theories of recovery against the seller. The first was the basic theory of negligence and in order to recover, the buyer had to establish that the seller 'had a duty of care, breached that duty, and that the breach was the cause of the plaintiff's injury.' 2 L. Frumer and M. Friedman, Products Liability § 16A(1) (1970). The second theory based recovery on a breach of warranty. This theory did not involve a concept of fault as found in negligence but, rather, required an agreement entered into by the seller.

The main problem with the negligence theory was the practical one of establishing the failure to exercise due care. Breach of warranty, on the other hand, involved the need of privity of contract between parties. That is, there existed a contractual relationship between the parties. The elimination of the privity requirement extended the usefulness of the breach of warranty action to a larger group of parties and the liability for breach did not involve an element of fault as required in negligence. The law involving an action for breach of warranty was hampered, however, by contract and sales rules and other factors, such as the 'necessity for a sale, for notice of breach, and disclaimers,' Frumer & Friedman, supra, § 16A(2), which restricted the use of the theory of warranty in product liability cases.

Because of the shortcomings of the early theories, the courts developed a third theory of recovery which combined the strict liability of warranty with the broad reach of negligence. This theory is known as strict liability in tort and has been applied throughout the country to products liability cases.

New Mexico has had very little litigation in the area of products liability. In the very early case of Wood v. Sloan, 20 N.M. 127, 148 P. 507 (1915), we recognized the rule that privity of contract is not required in establishing liability where the product involved is imminently dangerous or where it is rendered dangerous by defect and the defendant knew or should have known of the defect.

In 1968 this Court declared that in cases involving questions of manufacturer or supplier liability, the old factor of privity would no longer be recognized in the State of New Mexico where liability is considered on a negligence theory. Steinberg v. Coda Roberson Const. Co., 79 N.M. 123, 440 P.2d 798 (1968).

Steinberg, supra, was followed by Schrib v. Seidenberg, 80 N.M. 573, 458 P.2d 825 (Ct.App.1969). In that case the Court of Appeals discussed the merits of Restatement (Second) of Torts, § 402A (1965), as follows:

'(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

'(a) the seller is engaged in the business of selling such a product, and

'(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

'(2) The rule stated in Subsection (1) applies although

'(a) the seller has exercised all possible care in the preparation and sale of his product, and

'(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.'

The court did not decide whether the rule applied in New Mexico but did recognize the merits of the rule if it should apply.

Following the language in Schrib, supra, the 10th Circuit Court of Appeals affirmed Judge Bratton's assumption that the New Mexico courts would adopt and apply the rule of strict liability under § 402A to questions concerning the sufficiency of the evidence, assumption of risk, misuse and contributory negligence. See Moomey v. Massey Ferguson, Inc., 429 F.2d 1184 (10th Cir. 1970).

With the above history before it, the New Mexico Court of Appeals, in Stang v. Hertz, supra, rejected Judge Bratton's assumption and decided the case on Restatement (Second) of Torts, §§ 407, 408 (1965). The court then made the point that if New Mexico wished to adopt the Restatement view as to strict liability then the legislature could properly do so. We agree with this contention but we are of the opinion that we should decide whether or not strict liability is properly applicable to sellers and, as an extension, to lessors.

Since New Mexico has little to offer in the area of strict products liability we must turn to other jurisdictions and their development of the law.

The picture of products liability law in this country was first viewed as a result of Winterbottom v. Wright, 10 M. & W. 109, 152 Eng.Rep. 402 (Ex.1842), which held that only the express terms of the contract could provide a basis for recovery for injury resulting from a defect in the product. This was better known as the 'privity rule,' and persons not parties to the initial contract could not recover for injuries caused by one or the other contracting party. The first case to consolidate the decisions citing the exceptions to the privity rule was MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916). It recognized that not only was privity unnecessary in cases involving things which were implements of destruction but the rule requiring privity did not apply to cases dealing with certain products that were dangerous because of negligent manufacturing. After a thorough discussion of these cases, the court, in MacPherson, supra, concluded that, under the same principles, the manufacturer of an automobile was liable for negligence even in the absence of privity.

The next step was to hold the manufacturer and the retailer strictly liable under some theory of implied warranties. Privity was still required, however, under these theories. See 8 Williston on Contracts, § 995A (3rd Ed.1964). See also Products Liability at the Threshold of the Landlord-Lessor 21 Hastings L.J. 458, 462 (1970). An exception to the above was the risk distribution rationale which was developed in order that a third party, not in privity with the manufacturer or retailer, might recover. See Spence v. Three Rivers Builders & Masonry Supply, Inc., 353 Mich. 120, 90 N.W.2d 873 (1958).

In the majority of cases, however, the implied warranty approach continued to be the rule of law until the California court abandoned the theory of implied warranty and adopted a theory of strict liability in tort. The case was Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1962), and the court finally settled on a risk distribution approach that had first been enunciated by Justice Traynor in Escola v. Coca Cola Bottling Co., 24 Cal.2d 453, 461, 150 P.2d 436 (1944) (concurring opinion). The basis of risk distribution was that the loss should be placed on those most able to bear it and they could then distribute the risk loss to users of the product in the form of higher prices. Finally, in Elmore v. American Motors Corp., 70 Cal.2d 578, 75 Cal.Rptr. 652, 451 P.2d 84 (1969), the California court refined the doctrine to the point that implied warranty no longer existed. In that case, the manufacturer was held liable to a bystander for injury from a defective automobile that left the road and injured the plaintiff. California has developed a theory of strict liability in tort where defective products are at issue and has completely eliminated the need for implied warranties.

While California was maturing toward a strict liability in tort approach, as applied to manufacturers and retailers, other states were extending either the MacPherson doctrine of negligence or the concept of strict liability in tort to defendants other than manufacturers and retailers. The culmination of the extension of strict liability to those other than manufacturers and retailers was Cintrone v. Hertz Truck Leasing and Rental Service, 45 N.J. 434, 212 A.2d 769 (1965), which applied the doctrine...

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