Spence v. Three Rivers Builders & Masonry Supply, Inc.

• Decision Date: 12 June 1958
• Docket Number: No. 26,J,26
• Citation: 90 N.W.2d 873,353 Mich. 120
• Parties: Helen W. SPENCE, Plaintiff and Appellant, v. THREE RIVERS BUILDERS & MASONRY SUPPLY, Inc., Defendant and Appellee. anuary Term.
• Court: Michigan Supreme Court

Page 873

90 N.W.2d 873

353 Mich. 120

Helen W. SPENCE, Plaintiff and Appellant, v. THREE RIVERS BUILDERS & MASONRY SUPPLY, Inc., Defendant and Appellee.

No. 26, January Term.

Supreme Court of Michigan.

June 12, 1958.

Carroll B. Jones, Marcellus, for appellant.

Lloyd R. Fayling, Vicksburg, for appellee.

Before the Entire Bench.

VOELKER, Justice.

Plaintiff owned several cottages in a lakeside resort area, one of which was built from cinder blocks manufactured and sold for building purposes by the defendant. A few months after the cottage was built many of the blocks started to crack, chip and also to pit and explode into a popping series of minute craters, followed by numerous flakings and powdery deposits and exuding unsightly travelling red and yellow stains known as 'bleeding.' These strange phenomena occurred and were apparent both inside and outside the cottage, the blocks forming most of the interior wall surface. Some fruitless efforts were made by plaintiff to correct the situation, and she finally brought suit for damages against the manufacturer of the cinder blocks, grounding her claim upon breach of an express warranty and also upon breach of an implied warranty that the blocks were of merchantable quality under the statute hereafter cited.

The case was tried before the court without a jury. After hearing the testimony, pro and con, the court found that there was no express warranty and further found that while the blocks were indeed defective and constituted a breach of an implied warranty, it nevertheless held against plaintiff because of lack of privity of contract between plaintiff and the defendant manufacturer. Plaintiff appeals here claiming that there was privity and that in any event she was entitled to maintain her action despite any lack of privity.

The question of privity arose in this case out of the fact that one Forrest Cook was to a disputed degree and capacity active on behalf of plaintiff in the purchase of the defective blocks and in the building of the cottage. Both plaintiff and Cook testified below (Cook by deposition taken in Florida) that he was merely her agent and employee in ordering the blocks and erecting the cottage, and plaintiff now urges that therefore the court was wrong in finding and holding that there was in fact any lack of privity between her and defendant. Defendant for its part claims and offered testimony beolw tending to show that Cook was not such an employee or agent but was an independent building contractor who had himself purchased the blocks from defendant, thus insulating the latter from all liability to plaintiff. Defendant further urges that regardless of any privity or lack of it, under Michigan law there can be no recovery by plaintiff against it in these circumstances.

Plaintiff offered proofs below that the blocks were defective as indicated but that none of such defects were apparent to her or to Cook when they were delivered to her or erected into the cottage. She testified that on one side of the cottage alone she counted over 1200 pitted imperfections in the blocks measuring from one-quarter of an inch to three inches, besides many smaller ones. There is no serious dispute but that the blocks were defective, as claimed, although the defendant does dispute the extent and consequences thereof. Proofs were also offered that the defendant failed adequately to test and examine the materials that went into the blocks or properly to inspect or test the completed blocks.

There was expert testimony offered on behalf of plaintiff by the head of the engineering department of Midwest university that 'before-and-after' inspection could and should have been made of the blocks and of the materials that went into them; that about 25% of the blocks were cracked internally; and that the deterioration was largely internal and progressive in character. The trial court sustained a defense objection to an opinion by this expert as to the rapidity of the deterioration and how long it would take before the wall would be open because of the defects.

On cross-examination a defense witness and general manager of defendant company testified that defendant made a claim against its supply complay (which in turn had furnished materials for cinder blocks made by it) for failing to furnish proper materials, and that thereafter his company (defendant here) stopped making cinder blocks.

As noted, the trial court found that the cinder blocks were defective and that this constituted a breach of an implied warranty that the goods were of merchantable quality, contrary to subsection 2 of section 15 of the uniform sales act (C.L.1948, § 440.15 [Stat.Ann. § 19.255]) creating under certain circumstances an implied warranty that goods sold shall be of merchantable quality; and also that it nevertheless found against the plaintiff because of lack of privity. In other words the trial court applied to this case the socalled 'general rule' that a manufacturer is not liable for negligence or otherwise to a remote vendee with whom it had no direct contractual relations.

There appears to be competent if conflicting testimony in this record to sustain the court's finding that Forrest Cook was not the agent or employee of the plaintiff in purchasing the blocks; that there was no express warranty made by defendant to plaintiff; and that the blocks were defective as claimed. We cannot say that the testimony preponderates the other way and we therefore think we are bound by those factual findings. By the same token we think we are likewise bound by the court's finding that the defects in the blocks constituted a breach of an implied warranty as to their fitness for the purposes sold and used. Whether we are also to be bound by the court's holding that the plaintiff is barred from her action by lack of privity of contract with defendant will constitute the major concern of the balance of this opinion.

It is plain from the record and the opinion of the court below that it would doubtless have found for the plaintiff if it had not also found a fatal lack of privity. Under its view the facts that an intervening person (Cook) bought the blocks from defendant served completely to insulate the defendant from any liability to the plaintiff because of lack of contractual rapport.

Thus we find that our case is classic in its simplicity: plaintiff was near and yet so far; if she had only gone and bought the blocks herself or through an unquestioned agent or employee she would doubtless have recovered; but the court's finding on disputed testimony that Cook was instead a contractor barred her recovery for fatal lack of privity. Despite the oblique suggestion made here by defendant that plaintiff might have sued Cook or that Cook should have sued it, the fact is that plaintiff's dilemma is complete: she cannot now turn around and sue her man Cook; she is committed under oath on that one far past the point of no return (moreover he is in Florida); nor can Cook sue defendant; aside from his presumable lack of interest he is likewise nicely committed by his deposition below that he was merely plaintiff's agent and employee in purchasing the blocks. While all this is likewise no reason why she should prevail, it would appear rather plaint that the plaintiff must lose both her appeal and any chance of ever being made whole unless we squarely hold that the court below was wrong in its law in holding that privity of contract was a necessary condition to recovery in these circumstances. We shall presently consider that issue, but before doing so shall devote a paragraph to considering some other related issues.

Defendant suggests that, privity or no, the defects in the blocks do not impair the safeness or inhabitability of the cottage. We have noted that this was by testimony disputed by plaintiff, but even granting the correctness of defendant's position (and disregarding the fact that the widowed plaintiff here appears to make at least part of her living in that great American competitive sweepstakes: The care and housing of migrant tourists) we do not hesitate to hold (the issue of privity aside) that in these circumstances and in this day and age appearance as well as structural safety and durability is an important factor in determining the merchantable quality and fitness of these particular products as used in this case. Moreover there is expert testimony in this record that the deterioration of the blocks is internal and progressive and will at some undefined future time probably endanger the structure. As for defendant's contention that plaintiff nevertheless appears by the proofs to be renting her 'bleeding' cottage at good rates, that would still be no defense on the merits (privity again aside), whatever factor it might properly be in the determination or possible mitigation of damages. We now proceed to face up to the big issue in this case: Should lack of privity bar this action as a matter of law?

As the court below correctly observed, there is little doubt that in the past our Court has for the most part devotedly followed the 'general rule' and been reluctant to permit a third person 'not in privity' to recover from a manufacturer on a theory of negligence or implied warranty. And it has correspondingly been reluctant to extend recovery--beyond what may loosely be termed 'food' cases involving personal injuries--to other defective products, regardless of whether they involved personal injuries or injuries to property. Smolenski v. Libby, 280 Mich. 329, 273 N.W. 587.

In fact, in the past in these situations we have not only tended to severely limit the factual area of recovery but we have shown an equally ready disposition to adopt and embrace the whole dreary legal apparatus and rhetoric so long employed in these situations to narrow or prevent any recovery at all. Some of these open sesame phrases are: whether there was privity or the lack of it; whether the defect was...