Owens v. Patent Scaffolding Co.--Division of Harsco

Citation354 N.Y.S.2d 778,77 Misc.2d 992
Parties, 14 UCC Rep.Serv. 610 Walter OWENS and Catherine Owens v. PATENT SCAFFOLDING CO.--DIVISION OF HARSCO, etc.
Decision Date08 March 1974
CourtUnited States State Supreme Court (New York)

Levy & Levy, New York City, for plaintiffs by Allen Levy.

Townley, Updike, Carter & Rodgers, New York City, for defendants by Richard J. Codding, New York City.

JOHN A. MONTELEONE, Justice.

In these personal injury and loss of service actions, arising out of breach of warranties of fitness for use and merchantability, defendant moves to dismiss the complaint (CPLR 3211) on the ground that they are time barred.

Plaintiff Walter Owens was allegedly injured on July 1, 1969 by a fall from malfunctioning scaffolding equipment (owned by defendant and leased to plaintiffs' employer), delivered to the construction site on June 20, 1969 under a rental agreement. The summons and complaint were served on June 27, 1973--4 years and 7 days after delivery of the equipment.

Uniform Commercial Code (Sec. 2--725(1)) limits actions for breach of contract to four years. The cause accrues when the breach occurs (2--725(2) UCC) regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made. However, where a warranty explicitly extends to future performance of the goods, and discovery must await performance, the cause accrues when the breach is, or should have been, discovered.

Plaintiffs reject the contention that their causes are subject to the four year limitation, asserting that in any event if they are, the warranty 'explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance' and therefore the cause accrued on July 1, 1969, date of the accident, when the breach was discovered.

Two issues are presented: (1) Are the causes subject to the four year time limitation of Sec. 2--725(1) UCC and if they are, (2) did they accrue on June 20, 1969 when tender of delivery of the goods was made or at the time of the accident on July 1, 1969, when the breach was discovered (Sec. 2--725(2) UCC).

Both parties agree that the scaffolding transaction involves an equipment lease, not a sale. But they disagree as to the effect of that fact, plaintiffs contending tht therefore Article 2 (Sec. 2--725 UCC) does not apply because that Article and its sections deal only with sales transactions, while defendant argues that chattel lease transactions are also covered.

'Unless the context otherwise requires, this Article (2) applies to transactions in goods' (Sec. 2--102 UCC). May we properly regard the scaffold equipment lease as 'transaction(s) in goods' without doing violation to the context. Sec. 1--102 tells us to liberally construe the Code 'to promote its underlying purposes . . . to simplify, clarify and modernize the law governing commercial transactions . . . permit continued expansion of commercial practices through custom, usage . . . (and) make uniform the law among the various jurisdictions.'

Extension of UCC's implied warranties to chattel leases is facilitated by pre-code decisions imputing such warranties to lessors (Murray, analogy of Article 2 of the Uniform Commercial Code, 39 Fordham Law Review, pp. 447, 449). The warranty sections of Article 2 in no way disturb those lines of case law growth which recognize that warranties need not be confined to sales contracts. They may arise in other circumstances also (Sec. 2--313 UCC, official comment 2).

In Hertz v. Transportation Credit, 59 Misc.2d 226, 298 N.Y.S.2d 392, reversed on other grounds, 64 Misc.2d 910, 316 N.Y.S.2d 585, an action for breach of warranty of equipment leases, the court determined that those leases come under Article 2. It said: 'It would be anomalous if this large body of commercial transactions (equipment leases) (was) subject to different rules of law than other commercial transactions which tend to the identical economic result' (p. 229, 298 N.Y.S.2d p. 395). In reaching that conclusion the court reasons that the term 'transactions' encompasses wider activities than 'sales' and was not carelessly chosen in making Article 2 applicable to 'transactions in goods.' (2--102 UCC) The 1955 Report of the Law Revision Commission (p. 363) reveals that 'property' or 'title' concepts are of negligible importance under Article 2. The Code considers the duties, rights and remedies arising from transactions as of primary importance relegating 'title' concept to lesser status than under common law and the Uniform Sales Act. The use in some sections, of the words 'contract for sale', and in others of the word 'contract' may mean that the scope of Article 2 is not limited solely to 'sales' transactions with 'title' and 'property' as their symbols. (Hertz v. Transportation, Supra.)

Citing Hertz, the court, in United States Leasing v. Franklin, 65 Misc.2d 1082, 319 N.Y.S.2d 531, an action on a chattel lease, applied the provisions of 2--302 UCC, (permitting the court to refuse to enforce an unconscionable contract) to the lease by denying plaintiffs' motion for summary judgment and calling for a trial so that the parties 'shall be afforded a reasonable opportunity to present evidence as to (contract's) commercial setting, purpose and effect to aid the court in facilitating a determination.'

In Sawyer v. Pioneer Leasing, 244 Ark. 943, 428 S.W.2d 46 (1968), an action on an ice machine lease, the court held that 2--316 UCC (requiring exclusion of implied warranty of merchantability to be mentioned in language and if in writing to be conspicuous) is applicable to the lease agreement.

Those cases applied the warranty sections of Article 2 because they found the transactions to be analogous to sales. However, the scaffold transaction in this case is clearly intended as a lease transaction.

Defendant rented and delivered to, and installed for, plaintiff's employer scaffolding equipment for use at a construction site while the job was in progress. The equipment was at all times to remain defendant's property and upon completion of use was to be dismantled and made available to defendant for removal. Because the transaction in this case is solely a lease transaction, must we therefore conclude that the warranty sections of Article 2 do not apply?

Conscious that frequently assertions of implied warranties are rejected where goods have been supplied under conditions not amounting to a sale, with the explanation that since the transaction is not technically a sale, no warranty could be implied, the UCC draftsmen state in Official Comment (2) that the warranty sections of Article 2 in no way impair the line of case law growth which recognize that warranties need not be confined to sales contracts but may also arise in other appropriate circumstances such as in the case of bailments for hire.

Professor E. Allen Farnsworth (Columbia University Law School) considered the matter of implied warranties in non-sales cases (57 Columbia Law Review 653 (1957)) concluding that a non-sales contract (bailment) is very like a sale in regard to reliance upon the supplier of goods and that a warranty for fitness has been implied in a variety of such non-sales cases. The supplier's obligation is in many respects similar to that of sellers. Just as the mass production of goods gave momentum to the growth of modern law obligating sellers for the quality of their goods, so too the boom in chattel rental enterprises from automobiles and floor waxers to linens and diapers portend a similar increase in obligations of such suppliers. He concludes: 'There is a respectable authority for the extension of implied warranties to non-sales cases'.

Profs. Willier and Hart (Boston Law School College) Forms and Procedures under Uniform Commercial Code express a similar view (par. 12.02, subd. 1, p. 1--64): 'The warranty question is an example of application of Code provisions by analogy. While rented goods are not 'sold', a property interest short of 'title' is transferred as in a sale and the transaction is in the nature of a bargain. Thus, express warranties, * * * could as well be a basis of the bargain under section 2--313 as in a sale, and implied warranties, collateral to the transfer aspect, could logically accompany the transaction. More specifically * * * the lessee may rely upon the lessor's skill and judgment in supplying goods suitable for a particular purpose to the lessor (Sec. 2--315). How much simpler and more certain it is for courts, counsel and parties if they can apply the rules of Article 2 by analogy to determine their obligations and their remedies.' The authors, pointing out that sec. 2--101 applies to Transactions in goods and that section 2--202 omits direct reference to Sales transactions, state that Article 2 warranties 'should apply to a lease of goods--a transaction in goods--by this simple construction of statutory language'.

In Div. of Triple T. v. Mobil, 60 Misc.2d 720, 304 N.Y.S.2d 191 an action on a non-sales contract (franchise agreement) plaintiffs argue that UCC requires defendant to exercise 'good faith' in terminating the agreement, and that the clause permitting defendant to terminate it without cause is unconscionable. Defendant for its part does not question Code applicability, arguing instead that its rights are not affected. Recognizing that it was dealing with a non-sales contract, the court said 'At first blush one might assume that the Uniform Commercial Code does not reach franchise or distributorship agreements (citing authorities). However, the courts have not been reluctant to enlarge the type of commercial transactions clearly encompassed within the spirit and intendment of the statute (see Agar v. Orda, 264 N.Y. 248, 190 N.E. 479, holding that under the former Personal Property Law (Uniform Sales Act)--the predecessor to the Uniform Commercial Code--a sale of corporate stock certificates constituted a sale of...

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