Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 11637

• Decision Date: 31 December 1975
• Docket Number: No. 11637,11637
• Citation: 544 P.2d 306,97 Idaho 348
• Parties: SALMON RIVERS SPORTSMAN CAMPS, INC., an Idaho Corporation, Plaintiff-Appellant, v. CESSNA AIRCRAFT COMPANY, a Kansas Corporation; and Boise Aviation, Inc., an Idaho Corporation, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 306

544 P.2d 306

97 Idaho 348

SALMON RIVERS SPORTSMAN CAMPS, INC., an Idaho Corporation, Plaintiff-Appellant, v. CESSNA AIRCRAFT COMPANY, a Kansas Corporation; and Boise Aviation, Inc., an Idaho Corporation, Defendants-Respondents.

No. 11637.

Supreme Court of Idaho.

Dec. 31, 1975.

Robert L. Bilow of Hawley, Troxell, Ennis & Hawley, Boise, Charles W. Mertel, of Guttormsen, Scholfield & Stafford, Seattle, Wash., for plaintiff-appellant.

Mark S. Geston of Eberle, Berlin, Kading, Turnbow & Gillespie and Charles W. Hosack of Moffatt, Thomas Barrett & Blanton, Boise, for defendants-respondents.

McFADDEN, Justice.

Salmon Rivers Sportsman Camps, Inc., (hereinafter 'Salmon Rivers') instituted this action to recover damages allegedly sustained when its aircraft suffered a mechanical failure. Salmon Rivers predicated its action against respondents Cessna Aircraft Company (hereinafter 'Cessna') and Boise Aviation, Inc., (hereinafter 'Boise Aviation') on an alleged breach of implied warranty. Salmon Rivers appealed to this court following the district court's grant of summary judgment in favor of each of the respondents. We affirm.

On December 19, 1967, the appellant purchased a 1968 Cessna aircraft from Boise Aviation. Cessna manufactured the airplane which was sold to Skyways Aircredit Corporation (hereinafter 'Skyways') who in turn delivered it to Boise Aviation. On May 25, 1968, the aircraft suffered an engine failure during takeoff, crash landed, and was extensively damaged. The airplane had been flown approximately 200 hours between the purchase and the crash. Representatives of Boise Aviation visited the crash site within a short time after the accident to examine the aircraft. Delbert McNees, a maintenance supervisor employed by Boise Aviation at the time, examined the aircraft there and discovered a failure of the 'waste gate linkage assembly,' which allegedly caused the accident. The airplane was transported to the shop of Boise Aviation for repairs, which the appellant paid without protest. The Cessna aircraft was returned to service with the appellant and, from all indications, performed satisfactorily until its sale to a third party.

It is undisputed that at no time did the appellant serve upon either of the respondents any written notice of a defect or claim for damages, prior to the institution of this action. Albert Tice, the appellant's chief pilot and the pilot of the Cessna at the time of the accident, stated in his affidavit: 'During the initial examination of the aircraft at the place of the accident I specifically advised Don Watkins of Boise Aviation that I expected Cessna to stand behind their product and would hold them accountable for this incident.' The statement by Tice comprises the sole notice given by the appellant with regard to the mishap.

Salmon Rivers filed this action on April 25, 1972, almost four years after the accident. In its action Salmon Rivers proceeded against both Cessna and Boise Aviation, seeking recovery for the cost of the airplane's removal and repair, and for the loss of the use of the aircraft during its repair. No claim for personal injuries is involved in this action, nor is any claim for damage to property other than the airplane itself.

Following the submission of answers to interrogatories, depositions, and affidavits, the district court granted the respondents' motions for summary judgment in favor of Cessna and Boise Aviation. The district court, in its memorandum decision and orders, ruled that the appellant was barred from any recovery based on a tort action by I.C. § 5-218(3), which provides that an action for injury to goods or chattels must be brought within three years after the cause of action accrues. The district court next concluded that the appellant consequently was relegated to its contract rights and then held that the appellant had failed to establish the necessary privity of contract between it and Cessna to recover against Cessna on those rights. The court also concluded that the appellant failed to comply with the notice provision of the Uniform Sales Act, I.C. § 64-309 (which was in force at the time of the sale), ¹ and therefore it could not recover from Boise Aviation. Salmon Rivers appealed from those summary judgments.

The different lengths of time provided by the two pertinent statutes of limitations, I.C. § 5-218(3) providing three years for an action in tort and I.C. § 5-217 providing four years for an action in contract, force this court to examine the basic concept of a breach of warranty, whether it is based in tort or contract, and if the latter basis requires privity of contract.

Privity of Contract

On appeal the appellant challenges the district court's holding that privity of contract must exist between it and Cessna before it could recover from the latter. The role of privity in products liability actions remains an unsettled legal issue, demonstrating an ambiguity which derives partly from a failure to delineate precisely the context in which courts make statements regarding privity. A products liability action varies in fortune depending upon the type of recovery sought, the legal basis upon which the desired recovery is grounded, and the applicable statute of limitations. A plaintiff can seek recovery of damages in a products liability action for personal injury, property damage, and economic loss. Although personal injuries stand distinctly apart from the other two categories, a delineation between the latter two is necessary. Property damage encompasses damage to property other than that which is the subject of the transaction. Economic loss includes costs of repair and replacement of defective property which is the subject of the transaction, as well as commercial loss for inadequate value and consequent loss of profits or use. See, e. g., J. White & R. Summers, Uniform Commercial Code, 329-35 (1972); ² W. Prosser Torts, § 101 (4th ed. 1971); Note, 'Economic Loss in Products Liability Jurisprudence,' 66 Colum.L.Rev. 917 (1966); Comment, 114 U.Pa.L.Rev. 539, 541 (1966). A potential products liability action, moreover, must tie the type of recovery sought to the legal ground for the action: negligence, strict liability in tort, or breach of express or implied warranty. See, e. g., R. Hursh & H. Bailey, 1 American Law of Products Liability 2d, §§ 2-4 (1974). A plaintiff bringing a products liability action finally must tie the type of recovery sought and the legal ground for that recovery within the time limitations of the applicable statute. I.C. §§ 5-216-5-219.

The record discloses that the case at bar is an action by a plaintiff, not in privity of contract with the manufacturer, to recover an economic loss on the ground of breach of implied warranty and within the period of limitations for an 'action upon a contract, obligation or liability not founded upon an instrument of writing.' I.C. § 5-217.

Such a characterization divorces the following discussion of privity of contract from products liability actions regarding other types and grounds of recovery and other statutes of limitations. The instant case consequently is not governed by, nor in turn affects, the law regarding the role of privity in recovery for personal injuries or property damage. Within the category of recovery for economic loss, this case is not an appropriate vehicle for deciding whether a plaintiff must demonstrate privity of contract as a prerequisite to recovery in tort on the grounds of breach of express ³ or implied warranty, negligence, or strict liability. If any such grounds of recovery did exist in the case at bar, they were precluded by the three-year statute of limitations for injury to goods or chattels, I.C. § 5-218(3). Neither is this case an appropriate vehicle for deciding whether a plaintiff must demonstrate privity of contract to recover for economic loss under a contract action grounded on breach of express warranty, ⁴ because Salmon Rivers failed to establish any express warranty from Cessna. ⁵ All we can decide in this case is whether a plaintiff may maintain an action against a manufacturer, with which it is not in privity of contract, to recover economic loss on the ground of breach of implied warranty within the contract statute of limitations, I.C. § 5-217. ⁶

The posture of Salmon Rivers' action against Cessna, as characterized above, is based on the conclusion that privity of contract indeed is absent between these two parties. Slamon Rivers argues that it presented to the district court the issue of fact concerning the existence of privity between Cessna and itself, through the business relationship of Cessna, Skyways, and Boise Aviation, and that summary judgment was therefore improper. We disagree.

This court agrees with appellant's contention that summary judgment should be granted only when the pleadings, depositions, admissions, and affidavits, liberally construed in favor of the party opposing the summary judgment, show that no genuine issue as to any material fact exists. I.R.C.P. 56(c); Garner v. Crater Farms, inc., 96 Idaho 383, 529 P.2d 779 (1974). However, a full review of the record in this proceeding fails to disclose any basis for the contention that the issue of the existence of privity was presented to the district court. Cessna, in support of its motion for summary judgment, submitted the affidavit of H. S. Nester. The affiant therein specifically denied that Cessna had any financial interest or control in the Skyways operation, and stated that Skyways and Boise Aviation were neither subsidiaries nor agents of Cessna. This affidavit was not answered by Salmon Rivers as contemplated by I.R.C.P. 56(e). The district court therefore properly concluded that no genuine issue as to any material fact existed between these two parties and, concluding that privity was a prerequisite to recovery under I.C. § 5-217, the court properly granted summary judgment in behalf of Cessna. Stewart...