Greeno v. Clark Equipment Company

• Decision Date: 15 January 1965
• Docket Number: Civ. No. 1377.
• Citation: 237 F. Supp. 427
• Parties: George GREENO, Jr., Plaintiff, v. CLARK EQUIPMENT COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Indiana

237 F. Supp. 427

George GREENO, Jr., Plaintiff, v. CLARK EQUIPMENT COMPANY, Defendant.

Civ. No. 1377.

United States District Court N. D. Indiana, Fort Wayne Division.

January 15, 1965.

Sam Fogel, Stamm & Fogel, Fort Wayne, Ind., for plaintiff.

Otto E. Grant, Jr., Barrett, Barrett & McNagny, Fort Wayne, Ind., for defendant.

ESCHBACH, District Judge.

This products liability action was commenced by the filing of an original complaint in three counts, federal jurisdiction being based on diverse citizenship. Plaintiff's original three counts were grounded in breach of implied warranty, negligence, and breach of express warranty, respectively. Thereafter, with leave of Court, plaintiff amended his original complaint by the addition of Counts Four and Five. Bared of the usual formalities, plaintiff's additional counts are grounded upon theories of strict liability and wilful and wanton misconduct, respectively. Defendant has filed timely motions to dismiss Counts Four and Five from plaintiff's complaint on the grounds that each fails to state a claim upon which relief can be granted. Addressing first the defendant's motion to dismiss Count Four, the precise question involved has never been presented to the Indiana courts, and state guidelines are not easily ascertainable in this rapidly developing field of the law, commonly designated "Products Liability."

Plaintiff, in Count Four, contends essentially that the defendant designed, manufactured and sold a fork lift truck which was defective. The specific defects allegedly existing are not relevant to the question now before the Court. In Count Four it is alleged that Materials Handling Equipment Corporation, an Indiana corporation not a party in this litigation, leased to Dana Corporation, plaintiff's employer, a certain fork lift truck, designed, manufactured and sold by defendant, Clark Equipment Company. There is no allegation as to how Materials Handling Equipment Corporation acquired the truck nor any alleged relationship between it and Clark Equipment Company. The fork lift truck in question is alleged to have been sold by defendant in a "defective condition," and that while using it in the normal course of his employment, plaintiff received serious permanent injuries as a proximate result of an industrial accident caused by one or another of the alleged defects. Unlike Count One, based on implied warranty, Count Four contains no allegation of privity of contract or of any other relationship between Clark Equipment Company and Materials Handling Equipment Corporation or between Clark and plaintiff, except that Clark manufactured and plaintiff used the equipment. In his brief, plaintiff contends that Count Four as alleged is sufficient in law to support recovery upon the theory of "Strict Liability" in the field of products liability and as recognized by the Restatement (Second), Torts § 402A (Approved May 1964). Unquestionably, the allegations of Count Four of plaintiff's complaint meet the standards imposed by the Restatement, supra. The remaining and more difficult question is whether "Strict Liability", so-called, as understood by this court and explained infra, is properly the law of Indiana. This court now concludes that it is.

While strict liability in certain forms is not a stranger to the law of Indiana, notably in workmen's compensation and as ultra hazardous activity following Rylands v. Fletcher, 3 H.C. 774 (1865); L.R. 1 Ex. 265 (1866); L.R. SH.L. 330 (1868), it is of recent vintage in the area of products liability. This opinion will consider the theory of strict liability only in the context of products liability. When so confined, its least ambiguous definition appears in Restatement (Second), Torts § 402A (Approved May 1964), set out as follows:

"§ 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer.

"(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property, is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

"(a) the seller is engaged in the business of selling such a product, and

"(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

"(2) The rule stated in Subsection (1) applies although

"(a) the seller has exercised all possible care in the preparation and sale of his product, and

"(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller."

Without attempting an exhaustive explanation, it may fairly be said that the liability which this section would impose is hardly more than what exists under implied warranty when stripped of the contract doctrines of privity, disclaimer, requirements of notice of defect, and limitation through inconsistencies with express warranties. Greenman v. Yuba Power Prods., Inc., 59 Cal.2d 67, 27 Cal.Rptr. 697, 377 P.2d 897 (1963); Putman v. Erie City Manufacturing Co., 338 F.2d 911 (5th Cir., November 30, 1964), approving of Judge Traynor's concurring opinion in Escola v. Coca-Cola Bottling Co., 24 Cal.2d 453, 150 P.2d 436 (1944); Restatement, supra, comment at 349. The conditions of liability which may not be self-evident in the above text are a "defective condition" at the time the product leaves the seller's control and which causes harm to a user or consumer. A "defective condition" is a condition not contemplated by the consumer/user and which is "unreasonably dangerous" to him or his property, that is, more dangerous than would be contemplated by the ordinary consumer/user with the ordinary knowledge of the community as to its characteristics and uses. Restatement, supra, comment at 351-52. An axe is not unreasonably dangerous because, as in negligence law, users would contemplate the obvious dangers involved. But a farm combine with a weak lid over the auger would constitute an unreasonable danger because such a danger is beyond the contemplation of ordinary users. The same basis applies in Indiana negligence law for the determination of whether a latent defect exists. J. I. Case Co. v. Sandefur, 197 N.E.2d 519 (Ind. 1964). The difference between strict liability and the law of Sandefur is that in the former the care or lack of care of the manufacturer in causing a defect is irrelevant. But the plaintiff-user's conduct is very much in question under the doctrine of strict liability. Recovery in strict liability is not conditioned on privity of contract, or reliance or notice to the seller of a defect, and the seller cannot disclaim or by contract alter a duty which the law would impose upon him. Nor can inconsistent express warranties dilute the seller's duty to refrain from injecting into the stream of commerce goods in a "defective condition." Greenman v. Yuba Power Prods., Inc., supra; Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69, 75 A.L.R.2d 1 (1960); Restatement, supra, comment at 355-56. Neither would contributory negligence constitute a defense, although use different from or more strenuous than that contemplated to be safe by ordinary users/consumers, that is, "misuse," would either refute a defective condition or causation. "Misuse" would include much conduct otherwise labeled contributory negligence and would constitute a defense. Incurring a known and appreciated risk is likewise a defense. Restatement, supra, comment at 356.

This is the doctrine of strict liability which this Court understands the plaintiff to champion and which Count Four alleges. This court, sitting with diversity jurisdiction, is committed to Indiana law. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). But there are no reported Indiana decisions on the question of strict liability, or even on the necessity of privity to recovery in implied warranty. After a discussion of the Indiana authorities and what they were purported to have held, this court, in Hart v. Goodyear Tire & Rubber Co., 214 F.Supp. 817, 819 (N.D.Ind.1963), stated, "The conclusion, therefore, is inescapable that Indiana has never directly or by fair implication committed itself to the absolute principle * * * that privity is essential to sustain a recovery for breach of warranty." Therefore, the court must look to all available data and adopt the rule which it believes the Indiana Supreme Court would choose. West v. American Telephone & Telegraph Co., 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940); See Putman v. Erie City Manufacturing Co., supra, 338 F.2d at 917-918. Indiana would unquestionably adopt the best reasoned and most intrinsically fair position, and presumably a determination by this court on such a basis would find approval with the Indiana Supreme Court. See Deveny v. Rheem Manufacturing Co., 319 F.2d 124, 129-130 (2nd Cir. 1963).

While at one time the relevant law of Indiana generally required privity of contract in product liability cases based on negligence of the manufacturer or seller, Travis v. Rochester Bridge Co., 188 Ind. 79, 122 N.E. 1 (1919), privity was not required where the product was "imminently dangerous." Travis v. Rochester Bridge Co., supra; Holland Furnace Co. v. Nauracaj, 105 Ind.App. 574, 14 N.E.2d 339 (1938). The concept of "imminently dangerous" was an amorphous one, and even included the undrained pipes of a discontinued heating system which caused extensive water damage to the property of an adjoining tenant when ice burst the pipes. Peru Heating Co. v. Lenhart, 48 Ind.App. 319, 95 N.E. 680 (1911). Privity in negligence actions was finally put to rest in Coca-Cola Bottling Works of Evansville v. Williams, 111 Ind.App. 502, 37 N.E.2d 702 (1941), and J. I. Case Co. v. Sandefur, supra. Elliott v. General Motors Corp., 296 F.2d 125 (7th Cir. 1961); McCloud v. Leavitt Corp., 79 F.Supp. 286, 291 (E.D.Ill.1948). While the Indiana Supreme Court in Sandefur noted the hidden nature...