John R. Dudley Const., Inc. v. Drott Mfg. Co.

• Decision Date: 19 January 1979
• Citation: 66 A.D.2d 368,412 N.Y.S.2d 512
• Parties: JOHN R. DUDLEY CONSTRUCTION, INC., Respondent, v. DROTT MANUFACTURING COMPANY, J. I. Case Company and Case Power & Equipment, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 512

412 N.Y.S.2d 512

66 A.D.2d 368

JOHN R. DUDLEY CONSTRUCTION, INC., Respondent, v. DROTT MANUFACTURING COMPANY, J. I. Case Company and Case Power & Equipment, Appellants.

Supreme Court, Appellate Division, Fourth Department.

Jan. 19, 1979.

Costello, Cooney & Fearon, Syracuse, for appellants; Raymond D'Agostino, Syracuse, of counsel.

Bogart, Andrews & Huffman, Syracuse, for respondent; William S. Andrews, Syracuse, of counsel.

Before MOULE, J. P., and SIMONS, DILLON, HANCOCK and SCHNEPP, JJ.

HANCOCK, Justice:

We must decide whether, on the facts pleaded, a cause of action in strict products liability against a manufacturer may be sustained where the damages pleaded relate solely to physical injury to the product itself.

On July 24, 1975 a Drott Model 2500 Cruz Crane owned by the plaintiff while being operated within its capacity suffered a sudden structural failure. Certain turntable bolts connecting the superstructure (from which a 62 foot boom extended) to the undercarriage broke. The superstructure, which contained the engine and cab, came off its mounting and crashed to the ground along with the attached boom and load. There were no personal injuries and no damage to the load or to surrounding structures or personal property. The crane was heavily damaged. Plaintiff had purchased the crane on November 15, 1974 used and "as is" under a disclaimer of warranty from J. I. Case Credit Corporation (Case Credit), a separate corporate entity independent of the other defendants. The crane had been manufactured in 1970 by the defendant Drott Manufacturing Company (Drott), a division of defendant J. I. Case Company (Case Company) and had been serviced by the defendant Case Power and Equipment Corp. (Case Power). It is conceded that the plaintiff's purchase from Case Credit was a transaction with which the defendants Drott, Case Company and Case Power had no connection and that there was no contractual relationship between plaintiff and any one of these defendants pertaining to the purchase.

In its complaint alleges four causes of action: 1) strict products liability in tort against Drott and Case Company; 2) negligence in design and manufacture against Drott and Case Company; 3) negligence in servicing the crane against Case Power; and 4) breach of warranty against Case Credit. Special Term denied the motion of defendants Drott and Case Company to dismiss the first cause of action for failure to state a cause of action (CPLR 3211, subd. (a), par. 7) and denied the motions of Drott, Case Company and Case Power for summary judgment as to the second and third causes of action because the record presented triable factual issues (CPLR 3212). The defendants Drott, Case Company and Case Power appeal. The fourth cause of action against the seller, Case Credit, for breach of warranty has been dismissed. There is no appeal by the plaintiff.

We consider the question of whether plaintiff's first cause of action may stand even though the only property damage was to the crane itself. There appears to be little doubt that in New York strict products liability is a proper remedy for redress of injuries to property caused by defective manufacture and that if the load or other property had been injured or damaged by the crane's collapse, such damage would have been recoverable. (Potsdam Welding & Mach. Co. v. Neptune Microfloc, 57 A.D.2d 993, 394 N.Y.S.2d 744; All-O-Matic Ind. v. Southern Specialty Paper Co., 49 A.D.2d 935, 374 N.Y.S.2d 331. See Victorson v. Bock Laundry Mach. Co., 37 N.Y.2d 395, 400-401, 403, 373 N.Y.S.2d 39, 41-42, 43, 335 N.E.2d 275, 276-277, 278; DeCrosta v. Reynolds Constr. & Supply Corp., 49 A.D.2d 476, 478-479, 375 N.Y.S.2d 655, 657-658, aff'd 41 N.Y.2d 1100, 396 N.Y.S.2d 357, 364 N.E.2d 1129; Infante v. Montgomery Ward & Co., 49 A.D.2d 72, 74-75, 371 N.Y.S.2d 500, 501-502; Accord, Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965); Hiigel v. General Motors Corp., 544 P.2d 983 (Colo.Sup.Ct.1975); Santor v. A and M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965). See Prosser, The Assault Upon The Citadel (Strict Liability To The Consumer), 69 Yale L.J. 1099, 1143-1146 (1960); Restatement of Torts (Second) § 402A (1966).)

Appellants Drott and Case Company had suggested no logical reason why, under the circumstances of the accident as alleged, the law should allow recovery for injuries to plaintiff's property beyond the limits of the crane (assuming there had been some) and disallow damages for the parts of the crane damaged or destroyed when it collapsed. In either case the damages could be said to have resulted from the same tortious conduct by appellants in supplying a crane that was dangerously susceptible to collapse because of the defective bolts. Nor are the considerations of public policy favoring recovery in the case of damage to property other than the crane any more compelling than those in the case of resultant damages to plaintiff's property in the crane itself. An action for strict products liability "seeks to provide a remedy for an individual injured because of another's violation of an obligation imposed not by contract, but by law." (Martin v. Dierck Equip. Co., 43 N.Y.2d 583, 589, 403 N.Y.S.2d 185, 188, 374 N.E.2d 97, 100.) The legal duty stems from an awareness that in today's advanced technological society it is in the public interest that an increased responsibility be cast "upon the manufacturer, who stands in a superior position to recognize and cure defects, for improper conduct in the placement of finished products into the channels of commerce." (Micallef v. Miehle Co., Div. of Miehle Goss Dexter, 39 N.Y.2d 376, 385, 384 N.Y.S.2d 115, 121, 348 N.E.2d 571, 577). Thus in New York, for causes of action arising prior to September 1, 1975, ¹ a manufacturer is liable for placing a defective product into the stream of commerce "to any person injured or damaged if the defect was a substantial factor in bringing about his injury or damages; provided: (1) that at the time of the occurrence the product is being used (whether by the person injured or damaged or by a third person) for the purpose and in the manner normally intended, (2) that if the person injured or damaged is himself the user of the product he would not by the exercise of reasonable care have both discovered the defect and perceived its danger, and (3) that by the exercise of reasonable care the person injured or damaged would not otherwise have averted his injury or damages." (Codling v. Paglia, 32 N.Y.2d 330, 342, 345 N.Y.S.2d 461, 469-470, 298 N.E.2d 622, 628-629.)

We hold therefore that defendants Drott and Case Company in manufacturing and marketing the crane owed a duty to plaintiff under the doctrine of strict products liability as defined in Codling v. Paglia, 32 N.Y.2d 330, 345 N.Y.S.2d 461, 298 N.E.2d 622, supra not to place into the stream of commerce a crane containing defective bolts the failure of which would create a danger of physical injury resulting to plaintiff's property whether it be injury to property extrinsic to the crane or to portions of the crane itself consequentially damaged as a result of the bolts' failure.

In reaching this decision, contrary to appellants' assertions, we need not embrace a rule that would allow recovery in manufacturer's liability cases where the essential claim is that the plaintiff has been deprived of the benefit of his bargain as in Santor v. A and M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305, supra. There the New Jersey Supreme Court upheld the use of the strict products liability theory in a suit by the ultimate consumer against the manufacturer of carpeting containing a flaw which marred its appearance and diminished its value. In Santor (unlike the case at bar) there was no physical injury and it could not be claimed that defendant had committed the tort of marketing a product which contained a defect that made it, when properly used, dangerous to life or limb or property. The total damages in Santor were measured by the difference between the price paid for the carpeting (i. e., its represented value without the flaw) and the market value of the carpeting with the flaw. Here, by contrast, the damages measured solely by the difference in value of the product with and without the defective parts (i. e. due to the defective bolts exclusive of the physical damage sustained in the crane's collapse) are insignificant. Rather, the damages sought here flow proximately from defendants' breach of its legal duty in manufacturing and marketing a large and complex machine containing a defect in a key structural part which gave way resulting in physical damages to extensive portions of the machine which were not defective and which would have been unharmed but for the crane's collapse. The Supreme Court in California, although recognizing that strict products liability in tort may properly be applied to physical injuries to the product itself of the type suffered here, would not have applied the doctrine to plaintiff's claim in Santor that the carpeting did not match his economic expectations. In explaining the difference in the policy considerations underlying the two theories of recovery, Chief Justice Traynor, writing for the majority in Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965), supra stated with respect to the Santor decision:

Only if someone had been injured because the rug was unsafe for use would there have been any basis for imposing strict liability in tort.

The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the "luck" of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical...