Brown v. Western Farmers Ass'n

• Decision Date: 26 April 1974
• Citation: 268 Or. 470,521 P.2d 537
• Parties: Duane BROWN and Maudean Brown, husband and wife, Appellants, v. WESTERN FARMERS ASSOCIATION, d/b/a Western Farmers Association, Inc., a corporation, Respondent, and Wilbur King, d/b/a Prairie City Feed Store, Defendant.
• Court: Oregon Supreme Court

Page 537

521 P.2d 537

268 Or. 470

Duane BROWN and Maudean Brown, husband and wife, Appellants, v. WESTERN FARMERS ASSOCIATION, d/b/a Western Farmers

Association, Inc., a corporation, Respondent,

and

Wilbur King, d/b/a Prairie City Feed Store, Defendant.

Supreme Court of Oregon, In Banc.

Argued and Submitted Feb. 6, 1974.

Decided April 26, 1974.

Thomas M. Mosgrove of Yokom & Mosgrove, John Day, argued the cause and filed briefs for appellants.

James C. Van Voorhees, Prineville, argued the cause for respondent. With him on the brief were Bodie, Minturn, Van Voorhees & Larson, Prinville.

TONGUE, Justice.

This is an action against the manufacturer and retailer of chicken feed for damages because the feed was defective. The complaint seeks recovery on a theory of strict liability. ¹ In addition to seeking damages for loss of eggs caused to taste bad, for loss of chickens caused to become valueless and which had to be replaced, and for the cost of the defective feed, the complaint seeks to recover lost profits from plaintiffs' egg business in the sum of $11,000.

The court, on motion by defendant Western Farmers Association, the manufacturer, struck the allegations of loss of profits. Plaintiffs refused to plead further and the court entered an order dismissing the case as to that defendant. ² Plaintiffs appeal. We affirm.

By their appeal in this case plaintiffs contend that strict liability under Section 402A of the Restatement of Torts 2d (1965), as previously adopted by this court, ³ should be extended to economic loss, including loss of profits from inability to use property damaged by a defective product. Plaintiffs recognize that this question has not yet been decided by this court and submit various cases and authorities in support of that contention.

It is contended by defendant, however, that regardless of whether recovery under Section 402A should be extended to economic loss, including loss of profits, there can be no recovery under Section 402A because, by its terms, that rule is limited to products which are not only 'in a defective condition,' but are also 'unreasonably dangerous to the user or consumer or to his property.' Defendant contends that plaintiffs' complaint does not allege an 'unreasonably dangerous' defect.

Because of the importance of this question and because it was not raised by defendant until oral argument we called for supplemental briefs on this point.

In their supplemental brief plaintiffs state the recognized rule that when a question whether a complaint states a cause of action is raised for the first time on appeal, the complaint will be liberally construed in favor of the plaintiffs. Plaintiffs point out that the complaint, after alleging that the chicken feed was fed to the laying hens, goes on to allege:

'That the said feed so purchased was defective and such defect in the feed was such that when the feed was fed to the plaintiffs' chickens, the chickens were affected adversely and damaged thereby.'

Plaintiffs contend that:

'The obvious inference from these allegations is that the feed was defective and in damaging the chicks to which it was fed it obviously was not fulfilling the reasonable expectations of the plaintiffs, because chicken feed is not expected to damage one's chickens so that their eggs taste had and they quit laying eggs, as is also alleged in paragraph V.'

Plaintiffs then quote from our decision in Heaton v. Ford Motor Co., 248 Or. 467, 471, 473, 435 P.2d 806 (1967), in which we expressly adopted the rule as stated in Restatement of Torts 2d § 402A, and contend that:

'What this seems to be saying is that if a product does not meet the reasonable expectations of an ordinary consumer it is defective and in a condition unreasonably dangerous to the user.'

Similarly, plaintiffs construe Comment I under Section 402A as follows:

'What this is obviously saying is that if a product has a defect and because thereof it is in a condition not reasonably contemplated by the ordinary consumer, the product is by definition unreasonably dangerous.' ⁴

Based upon this reasoning, plaintiffs conclude as follows:

'We submit that under the Restatement and the Heaton case law this complaint has alleged facts, i.e. a defect and a condition not reasonably contemplated by the ultimate consumer which in effect says the product was unreasonably dangerous. That certainly is to be inferred from the language of the complaint. In construing it for the first time on appeal the plaintiffs should have the benefit of all reasonable inferences to be drawn from the facts alleged.'

Defendant responds to these contentions as follows:

'A material and necessary element of strict liability under Section 402A of the Restatement of Torts 2d is that the property be 'unreasonably dangerous' to its user or consumer or to the user or consumer's property. Restatement of Torts 2d, Section 402A. Heaton v. Ford Motor Co., 248 Or. 467, 470--471, 435 P.2d 806 (1967).

'* * *

'The defect in the feed is not specified. If the defect was, for example, ground glass, the court could state without any question that the feed itself because of the defect was unreasonably dangerous to the chickens. On the other hand, if the defect was too much of an ingredient, the feed itself might not be unreasonably dangerous, except in the manner in which it was fed or eaten by the chickens.

'Therefore, from the plaintiff's complaint it is not clear whether or not the plaintiff is claiming that the defective chicken feed was 'unreasonably dangerous' or merely that the feed was defective. Both elements are required.'

In considering these opposing contentions we recognize that some authorities go even further than plaintiffs and take the position that recovery on a theory of strict liability by a consumer or user of defective goods is not dependent upon proof that such goods are 'unreasonably dangerous.' ⁵ This court, however, in its development of a theory of strict liability for application in cases involving defective products, has proceeded on the basis of quite different underlying assumptions.

In the first of these cases, Wights v. Staff Jennings, 241 Or. 301, 405 P.2d 624 (1965), a personal injury case, we reviewed the authorities and quoted (at 306--309, 405 P.2d 624) from Prosser on Torts (3d ed. 1964) 673--74, § 97; James, General Products--Should Manufacturers be Liable Without Negligence?, 24 Tenn.L.Rev. 923 (1957); and the concurring opinion of Justice Traynor in Escola v. Coca Cola Bottling Co. of Fresno, 24 Cal.2d 453, 150 P.2d 436, 440--441 (1944). We then agreed with the proposition that the justification for the imposition of strict liability upon suppliers of defective products was the resulting hazard to human life and health and held (241 Or. at 310, 405 P.2d at 629) that strict liability should be imposed 'for physical harm resulting from the sale of a product which creates an ultrahazardous condition.'

On the same date, in Price v. Gatlin, 241 Or. 315, 405 P.2d 502 (1965), we affirmed the dismissal of an action to recover for economic loss resulting from the purchase of a defective tractor by a farmer, a 'nonprivity' purchaser, in the absence of proof of 'fault,' holding (at 318, 405 P.2d at 503) that:

'* * * (T)he social and economic reasons which courts elsewhere have given for extending enterprise liability to the victims of physical injury are not equally persuasive in a case of a disappointed buyer of personal property. See Seely v. White Motor Company, (63 Cal.2d 9), 45 Cal.Rptr. 17, 403 P.2d 145 (1965).'

Two years later, in Heaton v. Ford Motor Co., Supra, a personal injury case, we stated (248 Or. at 470--471, 435 P.2d at 808) that:

'* * * In the case at bar, we now adopt Section 402A and hold that if the product is in fact unreasonably dangerous the manufacturer is liable for the harms caused by such a defect. It is not necessary to prove that the product is 'ultrahazardous,' nor that it was placed on the market 'negligently.' It is necessary, however, to prove that it is Dangerous defective.

'An article is dangerously defective when it is in a condition Unreasonably dangerous to the user. Restatement (Second) of Torts § 402A. Unreasonably, in this context, means Dangerous to an extent beyond that which would be contemplated by the ordinary purchaser. * * *' (Emphasis added)

Since our decision in Heaton we have consistently held that our adoption of Section 402A as the basis for an action in strict liability in tort includes its requirement that the defect be 'unreasonably dangerous to the user or consumer or to his property.' See Anderson v. Klix Chemical, 256 Or. 199, 202, 472 P.2d 806 (1970); Cornelius v. Bay Motors, 258 Or. 564, 484 P.2d 299, 54 A.L.R.3d 340 (1971); Askew v. Howard-Cooper Corp., 263 Or. 184, 502 P.2d 210 (1972); Markle v. Mulholland's, Inc., 265 Or. 259, 509 P.2d 529 (1973). See also State ex rel. Western Seed v. Campbell, 250 Or. 262, 267, 442 P.2d 215 (1968), and separate opinion by O'Connell, J., at 276--77; McGrath v. White Motors, 258 Or. 583, 596, 484 P.2d 838 (1971). And see Annot., 54 A.L.R.3d 352 (1973).

After reviewing our previous decisions in cases involving actions in strict liability by the purchasers of defective goods, as well as other cases and authorities on this subject, ⁶ we reaffirm our belief that when an action for damages by the purchaser of defective goods is brought on a theory of strict liability, rather than fault or warranty, such an action is proper only when the defective goods are 'unreasonably dangerous to the user or consumer or to his property.'

The complaint in this case does not, in our judgment, allege facts from which it appears, either directly or by inference, that the chicken feed involved in this case was 'unreasonably dangerous,' rather than merely 'defective' in some manner that would not make it 'unreasonably dangerous.' ⁷ We do not agree with plaintiffs' contention that 'if a product has a defect and...