Buckeye Union Fire Ins. Co. v. Detroit Edison Co.

• Citation: 38 Mich.App. 325,196 N.W.2d 316
• Decision Date: 22 February 1972
• Docket Number: No. 1,Docket No. 9274,1
• Parties: , 10 UCC Rep.Serv. 977 BUCKEYE UNION FIRE INSURANCE COMPANY et al., Plaintiffs-Appellants, v. The DETROIT EDISON COMPANY, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 316

196 N.W.2d 316

38 Mich.App. 325, 10 UCC Rep.Serv. 977

BUCKEYE UNION FIRE INSURANCE COMPANY et al., Plaintiffs-Appellants, v. The DETROIT EDISON COMPANY, Defendant-Appellee.

Docket No. 9274.

Court of Appeals of Michigan, Division No. 1.

Feb. 22, 1972.

Released for Publication April 24, 1972.

Albert A. Miller, Garan Lucow & Miller, Reginald S. Johnson, Johnson, Campbell, Campbell & Moesta, Detroit, for plaintiffs-appellants.

David G. Barnett, Fischer, Sprague, Franklin & Ford, Bloomfield Hills, for defendant-appellee.

Before V. J. BRENNAN, P. J., and J. H. GILLIS and T. M. BURNS, JJ.

T. M. BURNS, Judge.

On April 17, 1963, fire destroyed a building at 275 East Ferry Street in the city of Detroit. The building was insured for $45,000 by two insurance companies who paid a total of $40,000 to the owners of the destroyed building.

Both insurance companies and the owners then brought this action against the defendant. The complaints contained two counts: first, that the fire was caused by defendant's negligence in supplying electricity to the house; and second, that the fire resulted from defendant's breach of the implied warranties of fitness and merchantability of the electricity supplied. ¹

At the close of plaintiffs' proofs, defendant moved for a directed verdict. The motion was taken under advisement by the court at that time, and it was renewed again at the close of defendant's proofs. The trial judge then denied the motion as to the count based on negligence and granted the motion as to the count based on the warranty theory.

In granting the directed verdict for the defendant on the warranty count, the trial court held that because of the properties or character of electricity, it is not a good or commodity to which an implied warranty would attach. The court held that the sale of electricity is a service and, therefore, Article 2 of the Uniform Commercial Code and the implied warranties contained therein ² do not apply.

The case went to the jury on the negligence theory, and a verdict of no cause for action was returned. Plaintiffs do not appeal from the jury verdict but do appeal as of right from the decision of the trial court granting defendant's motion for directed verdict on the count based upon the theory of implied warranty.

While we are inclined to agree with the trial court that electricity is not a 'good' as that term is defined by the Uniform Commercial Code, ³ the product liability of sellers is not restricted to those situations covered in the Code.

'In the judicial development of the consumer's direct remedy against the manufacturer, several dozen legal theories were coalesced in justification and rationalization of the results which the courts reached. Some of these concepts have been enacted into statutes, such as the uniform sales act, and later the uniform commercial code. But, as the UCC draftsmen acknowledged, the remedy is not statutory, but essentially one fashioned by the courts.' Cova v. Harley, Davidson Motor Co., 26 Mich.App. 602, 610, 182 N.W.2d 800, 805 (1970)

We are of the opinion that the implied warranties, as defined by the courts of this state, should apply to the sale of services as well as to the sale of goods. We see no reason upon which a logical distinction can be based, especially when, as here, we are dealing with the production and sale of a form of energy which, under certain circumstances, can be inherently dangerous.

There have been very few cases in this country dealing with the question of whether or not the implied warranties of fitness and merchantability should be held applicable to the sale of a service. Two recent cases are, however, helpful in analyzing the instant question.

In Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970), the court was confronted by an action for damages resulting from a death which had been allegedly caused by a transfusion of impure blood by the defendant hospital. The trial court had granted the defendant a summary judgment holding that the implied warranties did not attach to a situation involving essentially a service. The Pennsylvania Supreme Court reversed, however, holding that the implied warranties applied to services as well as sales of goods.

In Newmark v. Gimbel's Inc., 54 N.J. 585; 258 A.2d 697 (1969), a patron of a beauty salon was allegedly injured by the application of a product used in giving the patron a permanent wave. An action was brought based upon both negligence and implied warranty, but the trial court submitted the case to the jury on the negligence issue only. The New Jersey Supreme Court reversed, refusing to apply a highly artificial distinction between the sale of a good and the sale of a service in deciding what situations are covered by implied warranties.

We are in accord with the approach taken by the New Jersey and Pennsylvania Courts. We see no reason why the concepts of implied warranty should depend upon a distinction between the sale of a good and the sale of a service. We therefore hold that the trial court's reason for directing the verdict in defendant's favor is in error.

However, rather than make any sweeping generalizations by holding that implied warranties attach to the rendering of all services, we prefer to limit the scope of this decision to the sale of electricity. We are sure that sellers of some services, such as here when a dangerous force is involved, should give the warranties, while others should not. For the present, we feel that the expansion of the law in this area should proceed on a case by case basis at least until some general principles can be evolved.

Although we have held that the trial court's reason for granting the summary judgment in defendant's favor was wrong, in a difficult case of first impression, we...