Herbstman v. Eastman Kodak Company

• Decision Date: 01 July 1975
• Citation: 68 N.J. 1,342 A.2d 181
• Parties: CLIFFORD N. HERBSTMAN, PLAINTIFF-RESPONDENT, v. EASTMAN KODAK COMPANY, A CORPORATION, DEFENDANT-APPELLANT.
• Court: New Jersey Supreme Court

68 N.J. 1

342 A.2d 181

CLIFFORD N. HERBSTMAN, PLAINTIFF-RESPONDENT, v. EASTMAN KODAK COMPANY, A CORPORATION, DEFENDANT-APPELLANT.

The Supreme Court of New Jersey.

Argued April 29, 1975.

Decided July 1, 1975.

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Mr. Edwin K. Large, Jr. argued the cause for the appellant (Messrs. Large, Scammell & Danziger, attorneys; Messrs. Stryker, Tams & Dill, of counsel).

Mr. Clifford N. Herbstman argued the cause pro se.

The opinion of the court was delivered by SCHREIBER, J.

Clifford N. Herbstman, a member of the bar of this State who appeared pro se, filed a complaint in the Hunterdon County District Court in which he charged that the defendant Eastman-Kodak Company ("Kodak") sold him a new Kodak Pocket Instamatic No. 40 camera through a retail dealer, and that the defendant impliedly warranted the camera was merchantable and reasonably fit for the purposes for which it was to be used. In its answer the defendant denied the implied warranties and asserted that it had made an express warranty only to repair the camera within one year after purchase and had disclaimed any other warranties.

When the case came on for trial, the court saw no "real necessity for taking any testimony." Based on the colloquy among counsel and the trial court, it appears that the stipulation reached between the parties was as follows:

In October 1972 the plaintiff purchased a Kodak camera from Deuclers Pharmacy in Sussex, New Jersey. The camera was manufactured by the defendant. It was "sold through" Deuclers Pharmacy and thereafter purchased by the plaintiff. Within the camera package was a little catalogue. On the outside back page was a statement entitled "Warranty". The plaintiff was not aware of the "warranty" until after he took the camera home and unwrapped the package. Subsquently the plaintiff ascertained that the camera had a mechanical defect, namely, the film advance mechanism was jammed. The plaintiff thereafter purchased another Kodak Pocket Instamatic No. 40 camera.

The "warranty" and the two Kodak cameras were admitted into evidence.

On this record the District Court assumed that the Uniform Commercial Code applied. Turning to N.J.S.A. 12A:2-316 (3) (c) which provides that an "implied warranty can also be excluded ... by course of dealing or course of performance or usage of trade", the trial court took judicial notice that the usage of trade "indicated that the camera can be returned for repair" and that the implied warranties were accordingly excluded. It opined that had the camera been returned for repair and then not satisfactorily serviced, as opposed to "simply buying another camera for the sake of convenience," the plaintiff would have had an appropriate action for damages. Since the plaintiff refused to return the camera for repair and the defendant never had the opportunity to fix it, the court dismissed the complaint without prejudice.

Subsequently, the trial court signed a judgment which, after referring to numerous facts not in the trial stipulation or in evidence, dismissed the complaint subject to the right of the plaintiff to return the camera to the defendant for repair; if the defendant failed to repair or replace the camera, then the plaintiff might have a judgment for $68.19.

The parties enlarged the stipulation of facts before the Appellate Division. It was agreed that the plaintiff had opted for Kodak reliability and simplicity of operation as expressed in its "numerous advertising campaigns." Plaintiff had purchased the camera to use on a trip in Israel. Before the trip the camera performed satisfactorily when he shot a roll of film. However, in Israel the film advance mechanism jammed after he took six photographs. After returning home plaintiff purchased the second camera and then asked Kodak to refund the purchase price of the first. Kodak refused, although it was willing to fix the camera.

The Appellate Division determined that the issue was whether the plaintiff was bound by the defendant's attempt to limit the remedies available to him for breach of warranty under the Uniform Commercial Code. It held that no effective limitation was made and that the plaintiff was entitled to the remedy of returning the defective camera for a cash refund.

We granted the defendant's petition for certification. 67 N.J. 94 (1975).

The issues have been obfuscated because of the inadequate trial record and the positions taken by the parties. At the oral argument before this Court the plaintiff asserted that he did not claim that there was a manufacturing defect in the camera and that he had read and understood the "warranty". The plaintiff stated he "wanted to pick a fight with Kodak" because it would not pay him the price he had paid Deuclers Pharmacy for the camera.

The plaintiff's theory is that the manufacturer had impliedly warranted the merchantability and fitness of the camera even though there was no defect when it left the manufacturer or the seller, and that the implied warranty arose because Kodak had manufactured and sold the camera or because of the "warranty" on the booklet he found enclosed in the camera package. It read in part as follows:

We will repair your camera at no charge within one year after purchase, except for damage caused by accident or abuse. This warranty applies only to the camera itself, and Kodak cannot be responsible for other losses or damages of any kind resulting from equipment failure.

For picture-making help write to Eastman Kodak Company, Photo Information, 343 State Street, Rochester, New York, 14650. For service on your camera during or after the warranty period, contact your dealer in Kodak products for assistance or send your camera to one of the Kodak Equipment Service Centers listed on page 24. A note enclosed with the equipment giving details and date of purchase will help us to get it back to you promptly.

Except as mentioned above, no other warranty, express or implied, applies to this camera.

Eastman Kodak Company

The plaintiff's rationale with respect to the express warranty seems to be that, since the defendant agreed to repair the camera within one year after purchase, it impliedly warranted the camera was fit for use and merchantable during that period. The plaintiff contends that upon breach he was entitled to a refund of the purchase price paid to Deuclers Pharmacy even though Kodak was not given the opportunity to repair it.

Responsibility of a manufacturer to a consumer purchaser for economic losses, as opposed to personal injury or property damage claims, due to defective products, may arise in three ways: under the doctrine of strict liability, the Uniform Commercial Code, or by agreement between the parties.

At oral argument the plaintiff expressly disavowed reliance upon the doctrine of strict liability in tort. This principle was initially declared in Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358 (1960), in terms of an implied warranty of reasonable suitability of the article for its intended use. In Santor v. A & M Karagheusian, Inc., 44 N.J. 52 (1965), we renamed that concept strict liability in tort. It is founded on the premise that when the manufacturer presents his goods to the public for sale, he represents they are suitable for their intended use. To invoke this doctrine it is essential to prove that the product was defective when placed in the stream of commerce. Moraca v. Ford Motor Co., 66 N.J. 454 (1975); Scanlon v. General Motors Corp., 65 N.J. 582, 590 (1974); Jakubowski v. Minnesota Mining and Manufacturing, 42 N.J. 177, 182 (1964). Since the plaintiff did not prove that the defect existed when the manufacturer or even the pharmacy sold the camera, a cause of action predicated upon strict liability is not maintainable.

The plaintiff relies upon two provisions of the Uniform Commercial Code, namely, N.J.S.A. 12A:2-314(1) and 12A:2-314(2) (c). These sections provide that unless excluded or modified a warranty that the goods shall be merchantable is implied in a contract for sale, and that to be merchantable goods must be fit for the ordinary purpose for which such goods are used.

There are numerous difficulties with respect to the plaintiff's Code contentions. First, the implied warranties referred to in the Code contemplate that the defect or condition which causes nonmerchantability or nonfitness existed at the time the seller transferred the product. Hursh & Bailey in American Law of Products Liability § 3.7 at 436 (2d ed. 1974) state:

"It is a general rule that a manufacturer's or seller's implied or express warranty respecting his product has reference to the product's condition at the time it left the possession or control of the warrantor."

White and Summers, in their treatise Uniform Commercial Code § 9.6 at 286 (1972) write:

"... Under 2-314, a plaintiff must prove (1) that a merchant sold goods, (2) which were not `merchantable' at the time of sale, and (3) injury and damages to the plaintiff or his property (4) caused proximately and in fact by the defective nature of the goods, and (5) notice to seller of injury."

The requirement that a defect exist when the product leaves the manufacturer is identical to that referred to above in connection with strict liability.

Second, the plaintiff insists that his purchase price be refunded — not from the seller of the camera, but from its manufacturer. N.J.S.A. 12A:2-608 of the Code provides that a buyer may revoke his acceptance of a "commercial unit whose non-conformity substantially impairs its value to him if he has accepted it ... without discovery of such non-conformity ..." (Emphasis supplied). Revocation results in rescission of the transaction.

Under principles of contract law, rescission was not warranted unless the contractual breach was material. 12 Williston, Contracts § 1455 at 14 (3d ed. 1970); 5 Corbin, Contracts § 1104 at 562 (1964); Miller and Sons Bakery Co., Inc. v. Selikowitz, 4 N.J....