Sharp Bros. Contracting Co. v. American Hoist & Derrick Co.

• Decision Date: 15 January 1986
• Docket Number: No. 67090,67090
• Citation: Sharp Bros. Contracting Co. v. American Hoist & Derrick Co., 703 S.W.2d 901, 72 A.L.R.4th 1 (Mo. 1986)
• Court: Missouri Supreme Court
• Parties: , 54 USLW 2420, 42 UCC Rep.Serv. 1246, Prod.Liab.Rep. (CCH) P 10,845 SHARP BROTHERS CONTRACTING COMPANY, et al., Plaintiffs/Respondents/Cross-Appellants, v. AMERICAN HOIST & DERRICK COMPANY, Defendant/Appellant/Respondent.

Page 901

703 S.W.2d 901

72 A.L.R.4th 1, 54 USLW 2420, 42 UCC

Rep.Serv. 1246,

Prod.Liab.Rep. (CCH) P 10,845

SHARP BROTHERS CONTRACTING COMPANY, et al Plaintiffs/Respondents/Cross-Appellants, v. AMERICAN HOIST & DERRICK COMPANY, Defendant/Appellant/Respondent.

No. 67090.

Supreme Court of Missouri En Banc.

Jan. 15, 1986.

Rehearing Denied Feb. 18, 1986.

Jeffrey J. Kalinowski, Richard P. Sher, Joseph J. Simeone, St. Louis, for defendant/appellant/respondent.

Gordon N. Myerson, J. David Bowers, Kansas City, for plaintiffs/respondents/cross-appellants.

DONNELLY, Judge.

Appellant, American Hoist and Derrick Company, is the manufacturer and seller of a crane, the counterweight of which broke from its place and crushed the crane's cab. There was no personal injury or other damage. The crane was rendered useless and was sold for salvage.

Respondent Donald E. Sharp, Sr., was purchaser of the crane. Sharp Brothers was lessee of the crane.

Respondents submitted their case to a jury in Jackson County on a theory of strict liability in tort. The jury awarded respondents a total of $631,000 damages for loss of the value of the crane and for loss of the use of the crane. On appeal the Court of Appeals, Western District, affirmed the damages for loss of the crane but reversed the award for lost use, remanding the cause with orders to reduce the damage award by $263,578.54. This Court granted transfer to consider whether the cause should have been submitted on a theory of strict liability in tort.

In Morrow v. Caloric Appliance Corp., 372 S.W.2d 41 (Mo. banc 1963), an implied warranty case, this Court embraced a concept of strict liability, without negligence and without privity, as to the manufacturers of products.

In Keener v. Dayton Electric Mfg. Co., 445 S.W.2d 362 (Mo.1969) this Court eliminated the shackles of warranty language altogether by recognizing strict liability in tort.

The opinions in Morrow and Keener were motivated by the belief that in certain circumstances "[t]he public interest in human safety requires the maximum possible protection for the user of the product, and those best able to afford it are the suppliers of the chattel." Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn.L.Rev. 791, 799 (1966).

In Keener, this Court said:

The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by injured persons who are powerless to protect themselves. * * *

445 S.W.2d at 364 [citations omitted].

In sum, Keener (1) acknowledged the overwhelming misfortune of personal injury and shifted the risk of it to manufacturers to be distributed among the buying public as a cost of doing business; and (2) provided injured consumers "who are powerless to protect themselves" redress. The adoption of strict liability in tort was considered necessary in such circumstances.

At issue in the present case is whether, under Keener, recovery may be had by consumers for damage to the product sold. The authorities diverge on this issue. Compare, e.g. Santor v. A. & M. Karaghensian, Inc., 44 N.J. 52, 207 A.2d 305 (1965), Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965), Mid Continent Aircraft Corp. v. Curry County Spraying Service, Inc., 572 S.W.2d 308 (Tex.1978). Other authorities impose strict liability depending on whether the damage resulted from an "accident" or "sudden and calamitous" event. E.g., Cloud v. Kit Mfg. Co., 563 P.2d 248 (Alaska 1977). The latter approach is urged by respondents.

Essentially, the issue here is one of policy as was our adoption of strict liability in the first place. The policy question was succinctly considered by Dean Keeton as follows:

It has been held that if a dangerously defective product causes an accident, then any loss resulting from that accident, including damage to the product itself, should be recoverable on a theory of strict liability in tort. Although this is a reasonable position, the risk of harm to the product itself due to the condition of the product would seem to be a type of risk that the parties to a purchase and sale contract should be allowed to allocate pursuant to the terms of the contract. This is especially so as regards transactions involving commercial or industrial products. Therefore, contract law and the rules pertaining to contract restrictions on warranty liability should control rather than the rules and principles of tort law. * * * The policy considerations dictating strict liability in tort for dangerously defective products are not subverted so long as the seller is held strictly accountable for physical harm to persons and tangible things other than the defective product itself.

Making liability depend upon whether or not the loss results from an "accident" creates a difficult issue and arguably an irrelevant issue with respect to the validity of contract provisions allocating the risk of loss for harm to the defective product itself to the purchaser.

Prosser and Keeton on the Law of Torts, § 81(3), (5th Ed.1984). (Footnotes omitted.)

We find Dean Keeton persuasive and deny recovery on a theory of strict liability in tort, as a matter of policy, where the only damage is to the product sold. Dictum to the contrary in Crowder v. Vandendeale, 564 S.W.2d 879, 881 (Mo. banc 1978) should no longer be followed. The judgment based on a theory of strict liability in tort cannot stand.

We note that respondents' amended petition had three counts: one on a negligence theory, one on a breach of warranty theory, and one on a theory of strict liability in tort. Before trial, on appellant's motion, the negligence and warranty counts were dismissed by the trial court and respondents have cross-appealed from such dismissals. The points raised in the cross-appeal were not addressed in this Court and can most appropriately be addressed in the Court of Appeals. We, therefore, in the exercise of the discretion conferred on us by Mo. Const. art. V, § 10, advise the Court of Appeals that appellant's Point I demonstrates "ground for reversal and retransfer the case for its consideration of the remaining points." State v. Spivey, 700 S.W.2d 812, 815 (Mo. banc 1985).

ROBERTSON, J., concurs.

WELLIVER, J., concurs in separate concurring opinion filed.

BLACKMAR, J., concurs and concurs in separate concurring opinion of WELLIVER, J.

HIGGINS, C.J., dissents in separate opinion filed.

BILLINGS and RENDLEN, JJ., dissent and concur in separate dissenting opinion of HIGGINS, C.J.

WELLIVER, Judge, concurring.

I concur in the principal opinion and write separately to emphasize that, instead of carving out an exception to Keener v. Dayton Electric Mfg. Co., 445 S.W.2d 362 (Mo.1969), the principal opinion properly refuses to expand strict liability for product liability to situations where it is not warranted. The architects of § 402(a), Judge Traynor, William Prosser and others, recognized the need to allow injured consumers or remote parties the ability to sue suppliers, sellers or manufacturers absent the technical requirements of privity in a contract action or without the need to prove negligence in a tort action. The rationale for such a doctrine was that consumers and remote parties are not on an equal footing with the manufacturer or seller to bargain effectively for the allocation of risk. However, when commercial parties of equal bargaining power enter into a contract which either expressly allocates the risk or by omission is allocated under the terms of the Uniform Commercial Code, the policy behind strict liability does not apply. Either the contract or the U.C.C. governs the allocation of risk. See generally Spring Motors Dist., Inc., v. Ford Motor Co., 489 A.2d 660 (N.J.1985).

In the case at bar, the respondents and appellant are both commercial parties who were on an equal footing during the sale of the crane. Respondents, the buyer, had the benefit of the U.C.C. when it purchased the crane. Had it desired an extended warranty it could have bargained for such a warranty. It might be noted that it did take out insurance and, in fact, has already received the benefit of its insurance policy and subrogated its rights in this suit to its carrier. This is not the type of situation warranting the extension of strict liability in product liability. Instead, the parties should look to the U.C.C.

HIGGINS, Chief Justice, dissenting.

I dissent from the principal opinion because I believe it conflicts with and carves out an exception to application of the law of products liability in Missouri as expressed in section 402A of the Second Restatement, Law of Torts, adopted in Keener v. Dayton Electric Mfg. Co., 445 S.W.2d 362 (Mo.1969).

Donald E. Sharp, Sr., and Sharp Brothers Contracting Company sued American Hoist and Derrick Company for damages incurred when a defect in a crawler crane manufactured by defendant caused the bolts supporting the counterweight to fail. The jury returned a verdict in favor of the plaintiffs; defendant appealed and the Court of Appeals, Western District, affirmed the verdict for damages for loss of value of the crane. This Court granted transfer to consider the application of the law of strict liability in tort in an action to recover damages for damage to the product itself.

The crane was purchased from defendant by plaintiff Donald E. Sharp, Sr., who transferred it to Sears Crane Rental, which in turn leased it to Sharp Brothers Contracting Company. Sears is a wholly owned Sharp subsidiary. Sharp Brothers operated the crane for more than four years and was using the crane when the accident occurred.

In September 1980 the bolts that secured the 135,000 pound counterweight failed and the weight collapsed forward partially crushing the crane cab and causing the 200-foot crane boom to fall to the ground. Fortuitously, no workman was injured and no property...