Stang v. Hertz Corp.

• Decision Date: 10 September 1971
• Docket Number: No. 626,626
• Citation: 1971 NMCA 132,83 N.M. 217,490 P.2d 475
• Parties: , 9 UCC Rep.Serv. 794 Sister Mary Assunta STANG, Personal Representative and Acillary Administratrix with the Will Annexed In the Matter of the Last Will and Testament of Catherine Lavan, Deceased, et al., Plaintiffs-Appellants, v. HERTZ CORPORATION, a corporation, Defendant-Appellee. Sister Mary Assunta STANG, Personal Representative for Catherine Lavan, Deceased, Plaintiff-Appellant, v. HERTZ CORPORATION, a corporation, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

Page 475

490 P.2d 475

83 N.M. 217, 9 UCC Rep.Serv. 794

Sister Mary Assunta STANG, Personal Representative and

Acillary Administratrix with the Will Annexed In the Matter

of the Last Will and Testament of Catherine Lavan, Deceased,

et al., Plaintiffs-Appellants,

v.

HERTZ CORPORATION, a corporation, Defendant-Appellee.

Sister Mary Assunta STANG, Personal Representative for

Catherine Lavan, Deceased, Plaintiff-Appellant, v. HERTZ CORPORATION, a corporation, Defendant-Appellee.

No. 626.

Court of Appeals of New Mexico.

Sept. 10, 1971.

Certiorari Granted Oct. 20, 1971.

[83 NM 218] Richard E. Ransom, Smith, Rasom & Deaton, Albuquerque, for plaintiffs-appellants.

Bruce D. Hall, James C. Ritchie, Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, for defendant-appellee.

OPINION

WOOD, Chief Judge.

The automobile accident involved in this case occurred when a tire blew out. The tire, manufactured by Firestone Tire & Rubber Company, was mounted on a car belonging to Hertz Corporation. The car had been rented by a nun, and Catherine Lavan, also a nun, was a passenger in the car when the blowout occurred. Catherine Lavan suffered injuries in the accident resulting in her death. Prior appellate decisions were concerned with damages in wrongful death actions. Stang v. Hertz Corporation, 81 N.M. 69, 463 P.2d 45 (Ct.App.1969), aff'd 81 N.M. 348, 467 P.2d 14 (1970). Subsequent to the appellate decisions, the case was tried and submitted to a jury as against Firestone. The verdict was in favor of Firestone. There is no appeal from this verdict. The trial court directed a verdict in favor of Hertz. The dispositive issues in this appeal concern the liability of Hertz. Plaintiffs contend there were issues for the jury concerning: (1) an express warranty and (2) strict liability in tort.

Express warranty.

Plaintiffs assert the rental agreement contains an express warranty. They rely on a statement that the 'vehicle' was in good mechanical condition. Defendant contends that 'vehicle' does not include tires because twice in the rental agreement 'tires' were referred to in a sense separate from 'vehicle.'

Apart from the rental agreement, a Hertz representative, in a conversation with one of the nuns, stated: 'you have got good tires.' Plaintiffs contend this statement was also an express warranty as to the tires. Defendant asserts this statement was no more than 'puffing.' See § 50A--2--313(2), N.M.S.A.1953 (Repl.Vol. 8, pt. 1).

It is not necessary to answer these contentions. Section 50A--2--313(1), N.M.S.A.1953 (Repl.Vol. 8, pt. 1) reads:

'Express warranties by the seller are created as follows:

'(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

'(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

'(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.'

We assume there is no distinction between 'seller,' as used in the statute, and defendant's status as lessor. See Uniform Laws Annotated, Uniform Commercial Code § 2--313, official comment 2 (1962). Under § 50A--2--313(1), supra, the affirmation of fact (the rental agreement) creates an express warranty if it 'becomes part of the basis of the bargain.' Similarly, the description of the goods (the reference to good tires) creates an express warranty if the description 'is made part of the basis of the bargain.' Compare the comments concerning representations made for the purpose of inducing a sale in Vitro Corp. of America v. Texas Vitrified Supply Co., 71 N.M. 95, 376 P.2d 41 (1962).

There is no evidence that any of the nuns relied on, or in any way considered, the terms of the rental agreement before agreeing to the rental. See Speed Fastners, Inc. v. Newsom, 382 F.2d 395 (10th Cir. 1967). The comment concerning 'good tires' was made after the car had been rented. See Terry v. Moore, 448 P.2d 601 (Wyo.1968). There is no evidence that either the terms of the rental agreement or the reference to 'good tires' were part of the basis of the bargain. There was insufficient evidence for the question of express warranty to be submitted to the jury.

Strict liability in tort.

Plaintiffs assert: 'Strict liability for one who places a defective product in the stream of commerce is now a fact of law. * * *' They urge this court to adopt this concept in New Mexico, and apply it to a lessor. Evidence pertaining to this contention is that tire failure was the cause of the accident; this failure resulted from impact damage to the tire; the impact damage existed at the time the car was rented; and the impact damage was not discoverable by normal inspection procedures. The rule sought is that stated in 2 Restatement Torts 2d, § 402A (1965). See Schrib v. Seidenberg, 80 N.M. 573, 458 P.2d 825 (Ct.App.1969); Moomey v. Massey Ferguson, Incorporated, 429 F.2d 1184 (10th Cir. 1970). Section 402A, supra, reads:

'(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

'(a) the seller is engaged in the business of selling such a product, and

'(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

'(2) The rule stated in Subsection (1) applies although

'(a) the seller has exercised all possible care in the preparation and sale of his product, and

'(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.'

Section 402A, supra, applies to sellers; the defendant in this case is a lessor. If we apply strict liability against a seller we see no basis in logic for distinguishing a lessor because the practical effect is the same. The strict liability rule has been extended to lessors. Bachner v. Pearson, 479 P.2d 319 (Alas.1970); Price v. Shell Oil Company, 2 Cal.3d 245, 85 Cal.Rptr. 178, 466 P.2d 722 (1970); Stewart v. Budget Rent-A-Car Corporation, 470 P.2d 240 (Hawaii 1970); Cintrone v. Hertz Truck Leasing, etc., 45 N.J. 434, 212 A.2d 769 (1965); see German, Seller Beware--Strict Liability But Not Absolute Liability, XXXVII Insurance Counsel Journal 44 (1970).

Although we see no logical basis for distinguishing a lessor from a seller in connection with the concept of strict liability, nevertheless the Restatement Torst 2d makes such a distinction. Sections 407 and 408 state rules of liability against lessors in terms of negligence. The comment to § 407 states liability under that section is the same as that stated in 2 Restatement Torts 2d, § 388 (1965). The New Mexico Supreme Court applied § 388 in Villanueva v. Nowlin, 77 N.M. 174, 420 P.2d 764 (1966). Compare Barham v. Baca, 80 N.M. 502, 458 P.2d 228 (1969). We have found no New Mexico decision which considered the relationship of § 402A to §§ 407 and 408. In Speyer, Inc. v. Humble Oil & Refining Company, 275 F.Supp. 861 (W.D.Pa.1967), cert. denied 394 U.S. 1015, 89 S.Ct. 1634, 23 L.Ed.2d 41 (1969), the restatement distinction was applied.

A choice between these conflicting Restatement Torts sections is a choice of policy. As we see it, the same policy is involved in determining whether § 402A is to be adopted as New Mexico law. As stated in Bachner v. Pearson, supra:

'* * * (Strict) (l)iability is attached, as a matter of policy, on the basis of the existence of a defect rather than on the basis of the defendant's negligent conduct. * * *'

If the policy decision is that § 402A, supra, applies, then that same policy decision would carry over and make liability for negligence under §§ 407 and 408 inapplicable. If § 402A is not applicable, then no conflict exists with §§ 407 and 408.

The issue presented, then, is whether § 402A, supra, is applicable in New Mexico. Plaintiffs candidly present the question as one of public policy. The point out that more than half the states have adopted some form of strict liability. See citation of cases in 1 Hursh, American Law of Products Liability, 1961, § 5A:2 (Supp.1971). They urge us to play follow the leader.

In determining whether to do so, we are concerned with the policy reasons for adopting strict liability, and rejecting liability based on negligence, as against a supplier of a defective product. Comment c to § 402A supra, states:

'* * * the justification for the strict liability has been said to be that the seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public who may be injured by it; that the public has the right to and does expect, in the case of products which it needs and for which it is forced to rely upon the seller, that reputable sellers will stand behind their goods; that public policy demands that the burden of accidental injuries caused by products intended for consumption be placed upon those who market them, and be treated as a cost of production against which liability insurance can be obtained; and that the consumer of such products is entitled to the maximum of protection at the hands of someone, and the proper persons to afford it are those who market the products.'

The decisions and the articles concerning strict liability of a supplier have little variation from Comment c, supra. Our summary of the 'justifications' for imposing strict liability, taken from decisions cited in Hursh, supra, and articles hereinafter cited, is: as an incentive to guard against defects; to spread the risk of loss as a cost of doing business (insurance is included as an aspect of risk-spreading); to avoid...