Bulova Watch Co., Inc. v. Celotex Corp.

• Decision Date: 03 April 1979
• Citation: 389 N.E.2d 130,415 N.Y.S.2d 817,46 N.Y.2d 606
• Parties: , 389 N.E.2d 130, 26 UCC Rep.Serv. 934 BULOVA WATCH COMPANY, INC., Appellant, v. CELOTEX CORPORATION, et al., Respondents, et al., Defendant.
• Court: New York Court of Appeals Court of Appeals

Page 817

415 N.Y.S.2d 817

46 N.Y.2d 606, 389 N.E.2d 130, 26 UCC

Rep.Serv. 934

BULOVA WATCH COMPANY, INC., Appellant, v. CELOTEX CORPORATION, et al., Respondents, et al., Defendant.

Court of Appeals of New York.

April 3, 1979.

Marvin A. Bass, New York City, and Renee L. Gabor, Great Neck, for appellant

Michael S. Torre, New York City, for respondents.

OPINION OF THE COURT

FUCHSBERG, Judge.

At issue on this appeal is the timeliness of a suit brought to recover damages for a roofing materials supplier's failure to live up to its express promise to repair its so-called "bonded" roof for a period of 20 years from the date of sale. We hold that a cause of action accrues upon each breach of that undertaking which occurs within the 20-year period and that the Statute of Limitations runs after six years from the date when the particular breach for which any such suit is brought has taken place.

In 1952, plaintiff Bulova Watch Company contracted for the installation of a roof on its factory in Jackson Heights, Queens. As per its obligations under a construction agreement, the contractor purchased roofing materials from defendant Barrett Division, Allied Chemical & Dye Corporation, which issued two "20-Year Guaranty Bond(s)" to Bulova, one for its "Barrett Specification Pitch and Felt", limited to the recovery of sums up to $8,000 and the other for its "Barrett flashing materials", with a ceiling of $700. The bonds, which recited that they were effective as of February 20, 1953 and that the materials had "been applied in the matter specified by Barrett", expressly guaranteed that Barrett would "at its own expense make any repairs (excepting repair of injury to said Roof caused by the roof base over which it is applied, or from any cause other than ordinary wear and tear by the elements) that may become necessary to maintain said Roof * * * in a water-tight condition". In the event this obligation was not performed after due notice by Bulova, the instruments imposed liability on both Barrett and its surety, defendant Continental Casualty Company, which not only countersigned the bonds but permitted these imposingly inscribed documents to be captioned with its name. Defendant Celotex has since assumed Barrett's obligation under the bonds.

In effect, Bulova has alleged that the guaranteed roof turned out to be no more waterproof than a sieve. The first evidence of leakage purportedly came to light at least as early as September 6, 1955, and, despite repeated demands that the bonds' terms be fulfilled, Barrett's intermittent and allegedly inadequate attempts at repair did not prevent the defects from persisting throughout the balance of the 20 years. Even as the guarantee period was about to expire Celotex, on February 14, 1973, found it necessary to respond to the recurring complaints by sending Bulova a letter acknowledging its responsibility to repair leaks present in the roof during the fall and winter of 1972-1973.

Not much later, on July 10, 1973, Bulova brought this action to recover $65,000 in damages, the amount it would cost to replace the roof, on two theories, one for breach of an implied warranty of fitness for use and the other for breach of the express terms and conditions of the guarantee bonds. Perhaps because the two theories though discernible, were intermingled in the pleadings, Special Term, on defendants' motion for summary judgment, treated the suit as though it were premised on implied warranty alone. It then proceeded to dismiss on the ground that it was barred by the Statute of Limitations. The Appellate Division affirmed, without opinion (59 A.D.2d 831, 398 N.Y.S.2d 831), and we granted leave to the plaintiff to appeal from so much of the order as dismissed the afore-mentioned causes of action. ¹ For the reasons that follow, we believe there should be a reversal.

Preliminarily, however, we acquiesce in the conclusion that Bulova's implied warranty theory does not hold water. Even assuming that a warranty of fitness would arise under the original combined sale and services contract (but see Milau Assoc. v. North Ave. Dev. Corp., 42 N.Y.2d 482, 398 N.Y.S.2d 882, 368 N.E.2d 1247), the claim would be barred by the Statute of Limitations. For to determine whether such a claim is contractual rather than tortious in nature, we must look to the form of the remedy sought. And, since here Bulova asked only for recovery of the cost of the defective roof and not for any consequential damages, and therefore its warranty count is to be deemed one in contract alone, the cause of action arose at the time of the sale (see Sears, Roebuck & Co. v. Enco Assoc., 43 N.Y.2d 389, 394-395, 401 N.Y.S.2d 767, 769-770, 372 N.E.2d 555, 557; Victorson v. Bock Laundry Mach. Co., 37 N.Y.2d 395, 403, 373 N.Y.S.2d 39, 43, 335 N.E.2d 275, 278; Citizens Utilities Co. v. American Locomotive Co., 11 N.Y.2d 409, 416, 230 N.Y.S.2d 194, 197, 184 N.E.2d 171, 174). Moreover, the discovery rule of subdivision (2) of section 2-725 of the Uniform Commercial Code does not apply to transactions entered into prior to the code's enactment in 1964 (Uniform Commercial Code, § 2-275, subd. (4); § 10-102, subd. (2); Mendel v. Pittsburgh Plate Glass Co., 25 N.Y.2d 340, 342, n. 1, 305 N.Y.S.2d 490, 492, n. 1, 253 N.E.2d 207, 208, n. 1 (overruled in Victorson, supra); Great Atlantic & Pacific Tea Co. v. Rust Eng. Co., 75 Misc.2d 920, 349 N.Y.S.2d 243).

Thus, insofar as suit was posited on a warranted theory, whether the transaction here is looked at as a sale of goods or a services contract or a combination of both, in 1953 it was governed by the six-year contract Statute of Limitations. ² So measured, it was correctly held to be time-barred.

Nevertheless, plaintiff's rights under the bonds enable its suit to weather the storm of defendants' attacks. The bonds embody an agreement distinct from the contract to supply roofing materials. The former expressly promise to furnish whatever labor and materials are required for future repairs; the latter deals only with those provided at the time of the installation. The...