Collins v. Uniroyal, Inc.

• Decision Date: 04 February 1974
• Citation: 315 A.2d 16,64 N.J. 260
• Parties: , 14 UCC Rep.Serv. 294 Elizabeth V. COLLINS, General Administratrix and Administratrix Ad Prosequendum of the Estate of Martin L. Collins, Deceased, Plaintiff-Respondent, v. UNIROYAL, INC., Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 260

64 N.J. 260

315 A.2d 16, 14 UCC Rep.Serv. 294

Elizabeth V. COLLINS, General Administratrix and Administratrix Ad Prosequendum of the Estate of Martin L. Collins, Deceased, Plaintiff-Respondent, v. UNIROYAL, INC., Defendant-Appellant.

Supreme Court of New Jersey.

Argued Dec. 3, 1973.

Decided Feb. 4, 1974.

Burtis W. Horner, Newark, for defendant-appellant (Stryker, Tams & Dill, Newark, attorneys).

Michael H. Hochman, Jersey City, for plaintiff-respondent (Miller, Hochman, Meyerson & Miller, Jersey City, attorneys).

PER CURIAM.

We affirm essentially for the reasons stated in the opinion of the Appellate Division, 126 N.J.Super. 401, 315 A.2d 30 (1973). However, we add the following to address the concept of our dissenting colleague that the adverse verdict on the strict liability count implies there was no defect in the tire and that where a tire is without defect it is not Prima facie unconscionable for the manufacturer to limit his damages for breach of express warranty against a blowout to a replacement of the tire even where personal injuries or death ensue as a result of the breach.

1. The dissent does not dispute that N.J.S.A. 12A:2--719(3) is applicable to claims for breach of express warranty. On the face of the statute, that section renders Prima facie unconscionable a contractual limitation of damages in the case of consumer goods where the claim of damages pertains to injury to the person, as here. A cause of action for breach of express warranty, as the Legislature of course knew, does not depend upon a defect in the goods. Indeed, the affirmative establishment by the defendant of freedom from defect would be irrelevant in such an action. It therefore appears highly unlikely that the legislative declaration of Prima facie unconscionability in the instance of contractual limitation of damages for personal injury was intended to be negated in a case of breach of express warranty merely because a defect in the product could not be established. We are clear that an issue of freedom from defect could not be injected by a defendant into an action for breach of express warranty for any purpose at all.

2. If the foregoing proposition is sound, and the question of defect consequently irrelevant on the issue of damages as well as that of liability in an action solely for breach of express warranty, it should be immaterial in this case that the plaintiff joined a count on strict tort liability in her complaint and that the jury found against her on that count (assuming, Arguendo, that such a finding establishes freedom from defect in the product, as the dissent posits, rather than mere failure of plaintiff to carry her burden of persuasion on the strict liability count). Clearly the plaintiff should not stand in a worse posture for having joined a claim in strict liability than had she sued only on the express warranty.

3. Part of the rationale by which the dissent concludes that 'the Prima facie unconscionability contemplated by the Code has been overcome,' and that unconscionability does not otherwise appear, is the thesis that defendant by its warranty, even as limited, gave plaintiff's decedent more than he was otherwise entitled to by law and that it would foster such offers by businessmen in the future to permit them to restrict consequential damages as in this case. We deem this position not consonant with the commercial and human realities.

A tire manufacturer warrants against blowouts in order to increase tire sales. Public advertising by defendant relative to these tires stated: 'If it only saves your life once, it's a bargain.' The seller should be held to realize that the purchaser of a tire buying it because so warranted is far more likely to have made the purchase decision in order to protect himself and the passengers in his car from death or personal injury in a blowout accident than to assure himself of a refund of the price of the tire in such an event. That being the natural reliance and the reasonable expectation of the purchaser flowing from the warranty, it appears to us patently unconscionable for the manufacturer to be permitted to limit his damages for a breach of warranty proximately resulting in the purchaser's death to a price refund or replacement of the tire. We consequently agree with the determination of the Appellate Division that the statutory presumption of unconscionability was not here overcome and that the trial court ruled correctly on the issue.

Judgment affirmed.

Page 275

For affirmance: Acting Chief Justice JACOBS, Justices HALL, SULLIVAN and PASHMAN and Judges CONFORD and COLLESTER--6.

For reversal: Justice CLIFFORD--1.

CLIFFORD, J. (dissenting).

The essential question posed by this case comes down to this: whether, as a matter of law, a manufacturer can limit its liability where there is an express warranty that goes beyond a defect in the product, even though it could not benefit from such a limitation if the case were based upon defect alone. The Appellate Division's answer, accepted by the majority, is in the negative. I disagree. The response to that question should, it seems to me, be in the affirmative, particularly as a matter of statutory interpretation under the Uniform Commercial Code (hereinafter Code), enacted in New Jersey as N.J.S.A. 12A:1--101 et seq., L.1961, c. 120, but also for reasons of sound business practice, to serve as an inducement to giving guarantees above the bare minimum which the law requires. I find in neither our statutory and case law nor in public policy any basis for denying to the manufacturer in the circumstances before us the right to hinge its giving of that 'extra' guarantee upon the condition that the remedy for breach thereof be limited to repair or replacement of the product or part of the purchase price.

Defendant, Uniroyal, Inc., issued a written guarantee with the sale of its tires to plaintiff's decedent. Parts of the guarantee are so basic and fundamental as to be merely an explication of the implied warranty of merchantability which the law imposes, regardless of any writing--this by virtue of the Code. See, E.g., Newmark v. Gimbels, Inc., 54 N.J. 585, 258 A.2d 697 (1969). In addition, the guarantee contains language going beyond the standard of merchantability. Hence, it has been construed by both parties to this case and by all the courts which have examined it as an express warranty which the Code permits the parties to establish as part of the obligation, in the manner provided by N.J.S.A. 12A:2--313. The express warranty in parts here pertinent reads as follows:

ROAD HAZARD--In addition, every such U.S. Royal Master tire, when used in normal passenger car service, is guaranteed during the life of the original tread against blowouts, cuts, bruises, and similar injury rendering the tire unserviceable. Tires which are punctured or abused, by being run flat, improperly aligned, balanced, or inflated, cut by chains or obstructions on vehicle, damaged by fire, collision or vandalism, or by other means, and 'seconds' are not subject to the road hazard provision of this Guarantee.

This 'Road Hazard' guarantee undertook to give the consumer something more than that to which the law says he is entitled. At the same time the defendant sought to limit the damages which would flow from the breach of the warranty by agreeing to repair the tire or provide a new one if the tire was 'eligible for adjustment' under the guarantee. ¹ A chart indicated the percentage of the purchase price which the customer would have to pay depending upon the extent of the tire wear. The guarantee also contained, in italicized print, the following clause purporting to limit damages This Guarantee does not cover consequential damage, and the liability of the manufacturer is limited to repairing or replacing the tire in accordance with the stipulations contained in this Guarantee. No other guarantee or warranty, express or implied, is made.

The guarantee was admitted into evidence but prior to summation the limitation clause was excised. ² Defendant's counsel objected and argued that if the exhibit was to go to the jury, it should see the entire document. The trial judge disagreed, allowed the limitation clause to be deleted, and instructed the jurors to disregard testimonial references to the clause in their deliberations. It is in the interpretation of the law reflected in this ruling that I find error.

The majority upholds the trial court's excision of that limitation clause, agreeing with its view that the removal was mandated by N.J.S.A. 12A:2--719(3), reading as follows:

(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

Since I believe that on the facts of this case the prima facie unconscionability ³ for which the Code provides has been overcome and the clause in question is not otherwise unconscionable, I reach a different result.

Central to my approach to the case and to my ultimate conclusion are what I understand the findings of fact by the jury to be. The trial court's charge focused on two theories of liability, namely, strict liability in tort and breach of express warranty as contained in the 'Road Hazard' guarantee. The instructions would have allowed a verdict on either theory or on both. The trial judge required the jury to indicate the theory upon which it allowed any recovery; it rejected the strict liability in tort ground and rested the verdict of $125,000 on breach of warranty alone. It is noteworthy that none of the three experts who testified for the respective parties at trial could identify specifically the defect in the tire, or, unlike the situation in Sabloff v. Yamaha Motor Co. Ltd., 59 N.J. 365, 283 A.2d 321 (1971), even suggest a possible...