Bishop v. Faroy Sales

• Decision Date: 10 September 1976
• Docket Number: CER--5
• Parties: Winifred Laatsch BISHOP et al. v. Faroy SALES et al. Div.
• Court: Alabama Supreme Court

Page 1340

336 So.2d 1340

Winifred Laatsch BISHOP et al. v. Faroy SALES et al.

Div. CER--5.

Supreme Court of Alabama.

Sept. 10, 1976.

Smith, Huckaby & Graves, Huntsville, for Winifred Laatsch Bishop, and others.

Neely, Freeman & Hawkins, and A. Timothy Jones and Alan F. Herman, Atlanta, Ga., for Van Horn-Hayward Co.

Troutman, Sanders, Lockerman & Ashmore and Stanley A. Coburn, Atlanta, Ga., for Faroy Sales.

ALMON, Justice.

This is a certified question from the United States District Court for the Northern District of Georgia, Atlanta Division. The sole issue is whether § 2--318 of Tit. 7A, Code of Alabama 1940, Recompiled 1958, eliminates the 'vertical privity' requirement in personal injury actions based on breach of warranty. We answer this question in the affirmative.

The question arose out of a suit brought by Winifred Laatsch Bishop and Marvin D. Bishop against Faroy Sales, a Georgia corporation, and Van Horn-Hayward Company, a Texas corporation, for personal injuries received by Mrs. Bishop when a candleholder allegedly ignited and burned her. Van Horn is the manufacturer of the candleholder; Faroy is the distributor.

The Bishops are principal shareholders, officers and employees of Bishop's Flower and Garden Center, Inc., a retail florist and gift shop in Huntsville, Alabama. Mrs. Bishop, who was buyer for the business, was introduced to the 'Number 23 Multi-Flame Clear 3' candleholder when she visited the Atlanta, Georgia, showroom of Faroy on a buying trip for Bishop's Flowers in 1968 or 1969. At that time she placed an order for several candleholders through Faroy, Van Horn's exclusive sales representative. Van Horn shipped and billed the candleholders directly to Bishop's Flowers.

Approximately three or four years after Mrs. Bishop first ordered the candleholders for Bishop's Flowers, she purchased a pair of candleholders for personal use in her home. From the time Mrs. Bishop brought them into her home until the time of the accident (approximately six months to one year), the candleholders were used continuously by the Bishop family.

On April 14, 1973, the Bishops were burning a candle in one of the candleholders without difficulty when it allegedly ignited and exploded, injuring Mrs. Bishop. The Bishops filed suit alleging that the fire occurred as a result of a defect in the candleholder. They are attempting to hold Faroy Sales and Van Horn responsible on two theories: negligence and breach of implied warranty.

On March 7, 1975, Faroy filed a Motion for Total Summary Judgment; on April 10, 1975, Van Horn filed a Motion for Partial Summary Judgment. On August 28, 1975, the United States Federal District Court for the Northern District of Georgia, Atlanta Division, finding that the law of Alabama requires privity in a suit for personal injuries in breach of warranty actions, granted partial summary judgment for Faroy and Van Horn by dismissing the breach of warranty action. Subsequently, appellants filed a motion to reconsider, in response to which the court granted the motion and certified the above question to this court.

Historically, vertical privity has been required for a suit in contract. See Cotton v. John Deere Plow Co., 246 Ala. 36, 39, 18 So.2d 727 (1944); Attalla Oil & Fertilizer Co. v. Goddard, 207 Ala. 287, 289, 92 So. 794 (1922); Birmingham Chero-Cola Bottling Co. v. Clark, 205 Ala. 678, 680, 89 So. 64, 17 A.L.R. 667 (1921). The last time this court addressed the question was in Harnischfeger Corp. v. Harris, 280 Ala. 93, 190 So.2d 286 (1966), where an employee was suing the manufacturer and the retailer who had sold a motor truck crane to plaintiff's employer:

'. . . Although this is a 'judge-made' rule (the requirement of privity of contract) which could be changed by another 'judge-made' rule, we entertain the view that, because of its long existence as a part of the jurisprudence of this State, it would be more appropriate for its demise to be effectuated by legislative action, if it is to be overturned.' Id. at 97, 190 So.2d 286, 290.

In 1965, prior to Harnischfeger, the Alabama Legislature enacted the Alabama Commercial Code, Tit. 7A, Code of Alabama 1940, Recompiled 1958, but did not make it effective until midnight, December 31, 1966, after Harnischfeger. Title 7A, § 2--318 (Act No. 549, General Acts of Alabama, Regular Session, Vol. 1 (1965) p. 836, approved August 23, 1965) reads as follows:

' § 2--318. Third party beneficiaries of warranties express or implied.--A sellers' warranty, whether express or implied, extends to any natural person 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.'

§ 2--318, as enacted differed from the proposed § 2--318 of the 1962 version of the Uniform Commercial Code. The proposed section read as follows:

'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.' ¹

The proposed § 2--318 loosened the privity requirements. Its intent was to place the buyer's family or household, or a guest in the buyer's home in the same shoes as the buyer with respect to injuries in person. Official Comment No. 3 to the section made it clear that '(b)eyond this, the section is neutral and is not intended to enlarge or restrict the developing case law on whether the seller's warranties, given to his buyer who resells, extend to other persons in the distributive chain.' The Official Comments to the 1962 version of the U.C.C. were placed in the Alabama Commercial Code immediately following § 2--318; however, comments numbered 2 and 3 are inappropriate to the section as enacted in view of Alabama's modified version.

§ 2--318, as enacted, excluded the words, 'who is in the family or household of his buyer or who is a guest in his home.' By removing these words, the legislature intended to remove the privity requirement horizontally from more situations than did the uniform version. However, the question here is whether the legislature by enacting a modified version of § 2--318 also eliminated the requirements of vertical privity. ²

Tit. 7A, § 2--103(1)(d) defines 'seller' as 'a person who sells or contracts to sell goods.' A 'buyer' is 'a person who buys or contracts to buy goods.' Tit. 7A, § 2--103(1)(a). Sellers and buyers are not limited by definition to retailers and consumers. By its terms, a seller is anyone who sells, including a manufacturer or distributor. Thus, a manufacturer's or distributor's warranty extends to 'any natural person 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 the breach of the warranty.' A manufacturer or distributor intends the products he sells to eventually arrive in the hands of consumers. Thus, by the terms of the statute, a manufacturer's or distributor's warranty would extend to the final buyer-consumer of the product (as well as to other possible parties horizontally) if he is injured in person by the breach of the warranty.

'The Alabama legislature refused to equivocate on the privity question in the manner of the 1962 edition of the Code. Before passing the Code it amended 2--318. Aside from immaterial matters of punctuation, its only change was to drop the limiting language, 'who is in the family or household of his buyer or who is a guest in his home.' The Alabama warranty thus runs to anyone sustaining personal injury 'if it is reasonable to expect that such person may use, consume or be affected by the goods.' In making this amendment, the legislature chose a privity provision similar to that contained in the pre-1962 drafts of the Code. Indeed, the language had its origins in a 1944 version of the Uniform Revised Sales Act. The Revised Sales Act subsequently became the basis for the sales articles of the Commercial Code, and the concept of extending warranty to anyone who could be reasonably expected to use, consume, or be affected by the goods was retained in the 1950 draft. The proposed comments to that version throw light on the intention of the drafters. They stated that the section was 'intended to broaden the right and the remedy of the consumer in warranty, to free them from any technical rules as to 'privity' and to make them, insofar as feasible, directly enforceable against the party ultimately responsible for any injury.' The comments further indicate that groups such as employees of the buyer are covered and that the consumer has the choice of proceeding directly against the party ultimately responsible for the injury.

'Comparing these early drafts and their comments with the 1962 edition and its comments, it is obvious that the scope of the earlier version is of a wholly different order. The original intent of the Code drafters was to abolish the privity concept entirely in both its horizontal and vertical aspects. . . .' McDonnell, The New Privity Puzzle: Products Liability under Alabama's Uniform Commercial Code, 22 Ala.L.Rev. 455, 481--482 (1970). ³

See also Sales--Proposed Uniform Commercial Code--Consumer Protection and Privity of Contract, 26 N.Y.U.L.Rev. 352 (1951).

The conclusion that § 2--318, as enacted, eliminates the vertical privity requirement has also been reached by courts of other states where their legislatures decided against enactment of the uniform version of § 2--318. Vermont's and Kansas' §§ 2--318 are substantially identical to ours. Vermont St.Anno., Tit. 9A, § 2--318, enacted 1966; K.S.A., Chapter 84, § 84--2--318. While the Vermont and Kansas Supreme Courts apparently have not yet addressed the question, federal...