Ford Motor Co. v. Lonon

• Citation: 217 Tenn. 400,398 S.W.2d 240,21 McCanless 400
• Parties: , 217 Tenn. 400 FORD MOTOR COMPANY et al. v. Glenn LONON.
• Decision Date: 05 January 1966
• Court: Tennessee Supreme Court

Page 240

398 S.W.2d 240

21 McCanless 400, 217 Tenn. 400

FORD MOTOR COMPANY et al. v. Glenn LONON.

Supreme Court of Tennessee.

Jan. 5, 1966.

Everett Gibson, Memphis, for Ford Motor Co., Armstrong, McCadden, Allen, Braden & Goodman, Memphis, of counsel.

L. W. Morgan, and C. Thomas Hooper, III, Brownsville, for Haywood Tractor Co.

Lyle Reid, Brownsville, for Glenn Lonon.

BURNETT, Chief Justice.

The plaintiff, a farmer, needed a large tractor which would carry a four row planter and cultivator, and which would have live power take-off and other specific features. Since he had used tractors manufactured by the defendant Ford Motor Company almost exclusively in the past and found them satisfactory, he visited the Ford dealerships in Brownsville and in Jackson. At each of these places he obtained sales literature in the form of a brochure describing a series of Ford tractors, with a picture of a Ford tractor on it. He took this sales literature with him and testified that he read every page of it. The brochure included material about the tractor he purchased, in February 1962, a large Fordson Major Diesel. It contained information about the live power take-off on this tractor, the power steering lift, full specifications, and 'just all about the tractor'. The plaintiff further testified that the brochure was not signed by the Haywood Tractor Company, the party from whom he made the purchase of the tractor.

It further appears that prior to purchasing the tractor he talked about the matter with Lon Lindsey, manager of Haywood Tractor Company, and with Lindsey's mechanic, Marcial Overton. Lindsey testified that his statements about the qualities and characteristics of the tractor were based on the Ford sales literature, with the name Ford Motor Company on it, which was supplied to him by the Ford distributor, Dealers Tractor & Equipment Company. Lindsey further testified that the approximate sales price of the tractor was $4,243.10 and that no written warranty was given to the plaintiff when he purchased the tractor. It further appears from a deposition by Lindsey that the Ford Motor Company carries on an extensive advertising program promoting the sale of its products in farm magazines, on TV and other media addressed to prospective purchasers of its products.

Although the tractor was operated by an experienced driver, who had operated similar tractors for the plaintiff without difficulty for several years, trouble developed the second or third day on which this tractor was used. Much of this trouble could not be corrected, with the result that the plaintiff failed to obtain the live power take-off and other features he had been led to expect from the sales literature. The principal difficulties experienced with the tractor are indicated in the opinion of the Court of Appeals as follows:

'The tractor which the plaintiff purchased was mechanically defective and never functioned properly. Repeatedly the tractor was in the shop and repeatedly mechanics from Haywood Tractor Company were out to the farm trying to get the tractor to work. A field man for Ford Motor Company, Mr. Ray Lambert, was called and attempted to assist mechanics of Haywood Tractor Company in getting the tractor to function properly. The power lift failed to work; one or more clutches were installed; the live power takeoff never functioned properly; the plaintiff lost many days work in the field during planting season because of breakdowns. The more serious defect was that the tractor leaked oil from the crank shaft almost continuously from the time it was bought and this defect could never be corrected by mechanics from the Haywood Tractor Company. A representative of Ford Motor Company stated to employees of Haywood Tractor Company that they were having the same trouble with other Ford tractors of that same series or model.'

After failing to secure any satisfactory adjustment on account of the deficiencies in this tractor the plaintiff brought suit against Ford Motor Company, Dealers Tractor & Equipment Company, and Haywood Tractor Company. It appears that Dealers Tractor & Equipment Company is the distributor for the Ford Motor Company in the Memphis area and the instrumentality employed by the Ford Motor Company to sell Ford tractors and tractor equipment to authorized or franchised dealers in that area. In this case Dealers Tractor & Equipment Company made the sale, apparently without any written warranty, to the Haywood Tractor Company, the retailer from which the plaintiff made his purchase. Likewise there is no evidence of any written warranty in the sale from Ford Motor Company to the distributor, Dealers Tractor & Equipment Company.

At the end of the trial, the jury were instructed that they could find for the plaintiff and against all three defendants, or for all three defendants. They were instructed that there could be no liability for breach of express warranty against any defendant unless it made a false representation of fact or promise relating to the tractor which induced the plaintiff to make the purchase. The trial judge also instructed the jury that they could find a breach of an implied warranty if the plaintiff made known to the seller a special purpose for which the tractor was to be used, and the plaintiff reasonably relied on the seller's judgment in purchasing the property for that use, and the tractor was not in fact fit for such use. The jury awarded damages in the amount of four thousand ($4,000.00) dollars against Ford Motor Company and returned a verdict in favor of the defendants, Dealers Tractor & Equipment Company and Haywood Tractor Company.

Ford Motor Company and the plaintiff appealed. It was necessary for the plaintiff to appeal to keep all parties before the court. The Court of Appeals found that Ford Motor Company could be held liable without privity of contract but considered it necessary to reverse and remand the case for a new trial on the ground that the verdict was inconsistent in holding Ford Motor Company liable and at the same time exonerating Haywood Tractor Company, the plaintiff's immediate vendor. The Ford Motor Company then petitioned for certiorari to this Court, on the ground that the courts below were in error in refusing to grant its motion for a directed verdict because of the absence of privity of contract between the Ford Motor Company and the plaintiff. The Haywood Tractor Company also filed a petition for certiorari, assigning as error the ruling of the Court of Appeals that any verdict against Ford Motor Company must also be against the Haywood Tractor Company. Under these circumstances certiorari was granted.

The basic issue presented in this case is whether the manufacturer of a product that has been found to be seriously defective and unsuitable for use should be liable for a resulting commercial loss to the purchaser where there are no direct contractual relations between the purchaser and the manufacturer, in a situation where the purchaser has relied on the manufacturer's booklets and tradename in making the purchase.

We have concluded that the manufacturer should be liable in this situation. While this holding represents some development in the law, we believe that this development is needed to keep pace with modern conditions, and is supported by substantial legal authority throughout the country. While most of the decisions in other states holding the manufacturer liable without privity of contract have related to physical injury, a number of the more recent cases have applied the same principle to commercial losses resulting from a defectively manufactured product.

The concept that a manufacturer should be held liable to the retail purchaser of his product for misrepresentations made with reference to its quality or safety began with a holding by the Supreme Court of Washintgton more than thirty years ago. Baxter v. Ford Motor Co., 168 Wash. 456, 12 P.2d 409, 15 P.2d 1118, 88 A.L.R. 521 (1932), on second appeal, 179 Wash. 123, 35 P.2d 1090 (1934). There the plaintiff purchased a new Ford car from a retailer. He relied on representations in the manufacturer's sales literature that all of the new Fords had 'a shatter-proof glass windshield'. While the plaintiff was driving his car, a pebble struck the windshield, causing a piece of glass to fly in his eye, destroying its sight. In the trial court both the dealer and the manufacturer were absolved of liability. The Supreme Court affirmed as to the dealer, on account of disclaimer clauses in the sales contract, but reversed as to the manufacturer. It was found that the plaintiff had a right to rely on the manufacturer's representations 'even though there was no privity of contract.' After a second trial, a judgment against the manufacturer was upheld. In its second opinion the court emphasized the concept of misrepresentation rather than that of warranty. In that connection it was found to be immaterial that the manufacturer did not know that its representations were false, so long as the plaintiff relied on them to his injury.

An authoritative writer states that the Baxter case 'has now been accepted in some twenty jurisdictions, and there have been no contrary decisions since 1938'. Wade, Strict Liability of Manufacturers, 19 Sw.L.J. 5, 13 (1965). A leading New York decision, in following this view, goes on to apply it to a situation where simply a commercial type of loss resulted from erroneous representations by the manufacturer that its product would render cloth shrink proof when that was not the case. Randy Knitwear, Inc. v. American Cyanamid Co., 11 N.Y.2d 5, 226 N.Y.S.2d 363, 181 N.E.2d 399 (1962). In that decision the status of the Baxter decision and the reasons in support of this view are well indicated as follows:

'And in the 30 years which have passed since that decision, not only have the courts throughout the country shown a marked, and almost uniform, tendency to discard the privity...