Sukljian v. Charles Ross & Son Co., Inc.

• Decision Date: 19 December 1986
• Citation: 511 N.Y.S.2d 821,69 N.Y.2d 89,503 N.E.2d 1358
• Parties: , 503 N.E.2d 1358, Prod.Liab.Rep. (CCH) P 11,292 Nubar SUKLJIAN, Individually and as Parent and Natural Guardian of Moses Sukljian, an Infant, Plaintiff, v. CHARLES ROSS & SON COMPANY, INC., Respondent-Appellant, and K.M. Equipment Corporation, Defendant and Third-Party Plaintiff-Respondent-Appellant. Alex Zeeve & Company, Inc., et al., Third-Party Defendants; Commercial Equipment and Machinery Company, Third-Party Defendant-Respondent; General Electric Company, Third-Party Defendant-Appellant-Respondent. (And Fourth-and Fifth-Party Actions.)
• Court: New York Court of Appeals Court of Appeals

Page 821

511 N.Y.S.2d 821

69 N.Y.2d 89, 503 N.E.2d 1358,

Prod.Liab.Rep. (CCH) P 11,292

Nubar SUKLJIAN, Individually and as Parent and Natural Guardian of Moses Sukljian, an Infant, Plaintiff, v. CHARLES ROSS & SON COMPANY, INC., Respondent-Appellant and K.M. Equipment Corporation, Defendant and Third-Party Plaintiff-Respondent-Appellant Alex Zeeve & Company, Inc., et al., Third-Party Defendants Commercial Equipment and Machinery Company, Third-Party Defendant-Respondent General Electric Company, Third-Party Defendant-Appellant-Respondent. (And Fourth-and Fifth-Party Actions.)

Court of Appeals of New York.

Dec. 19, 1986.

[69 N.Y.2d 90] Fred J. Hutchison, Albany, for third-party defendant-appellant-respondent.

[69 N.Y.2d 91] H. Neal Conolly and Michael J. Hutter, Albany, for defendant and third-party plaintiff-respondent-appellant.

[69 N.Y.2d 92] Donald W. Boyajian, Albany, for third-party defendant-respondent.

OPINION OF THE COURT

KAYE, Judge.

A corporation that sold a machine previously used in its own production as surplus property was not liable to remote purchasers either in strict products liability or in negligence, for injuries allegedly resulting from a defect in the machine, and should have been awarded summary judgment dismissing the complaint.

On February 26, 1978, plaintiff's son, employed in his father's business (Ardex Corporation), injured his hand while cleaning the rollers of a high-speed, three-roll grinding mill. The mill had been manufactured and sold by Charles Ross & Son Company, Inc. to the Missile and Space Department of General Electric Corporation in January 1962 for approximately $4,000. When General Electric purchased the mill, at its request the manufacturer added both a safety switch, which if tripped would bring the rollers to a stop, and a removable feed hopper, which permitted larger quantities of material to be fed into the mill and acted incidentally as a housing guard. Claimants' theory is that both of these added features made the mill safer to use. ^*

In June 1973, more than 11 years after its purchase of the mill, General Electric determined that the machine was no longer needed in its own production and included it as part of a sale of its surplus property, conducted with a sale of Government-owned surplus. There followed a series of transfers, ending some four years later with the mill back in production, in the hands of Ardex.

At the surplus sale in June 1973--the second surplus sale of the year--several hundred lots were offered, some of them items of equipment, some of them hardware and metals sold by weight. General Electric held two or three sales of its surplus equipment a year; there is no evidence that General Electric derived any profit from such sales. The terms of the June 1973 sale were "As Is, Where Is", and bidders were invited to inspect the property beforehand. The invitations to bid stated: "Seller makes no warranty, express or implied, as to quantity, quality, weight, size, character or description of any of the surplus property covered by this invitation." The only indication that the June 1973 sale--or any surplus sale--received publicity is the following incomplete statement in a General Electric memorandum relating to "Government Owned Surplus": "will be taken to advertise the sale through the various medias available, such as newspapers, trade magazines, trade papers, etc."

The mill--apparently the only piece of equipment of its kind in the sale--was sold to Semco Equipment Company (not a party to this action) for $35. Whether or not the machine was sold as scrap metal is disputed by the parties, General Electric in its affidavits and testimony stating its understanding that the machine was to be scrapped and reduced to molten metal. There is no evidence as to whether the mill was in operable condition when it was sold by General Electric. At all events, several weeks after General Electric's surplus sale, Semco resold the mill to Commercial, a dealer in new and used machinery, for $150. Commercial, in turn, sold the machine in February 1974 to K.M. Equipment Corporation, another dealer in new and used machinery, which purchased it together with two other mills for $850 under the name East Bay Industries, as a joint venture with Alex Zeeve and Company. Zeeve and East Bay owned the machine for approximately two years, during which time they reconditioned and rebuilt it to its original specifications by regrinding the rollers, recutting the gears, refitting the end plates, cleaning and painting. In April 1976, the machine was sold to Ardex, where it was installed by Charles W. Ashline Plumbing & Heating Inc. in 1977. At the time the mill was received by K.M., it had neither the safety switch nor the feed hopper.

Following his son's accident, plaintiff asserted claims in strict products liability, negligence and breach of warranty against Ross, the manufacturer, and K.M., the seller. K.M. then commenced a third-party action against Zeeve, Commercial, Ardex and General Electric; Ardex and Zeeve asserted cross claims for contribution and indemnity against General Electric; Zeeve impleaded East Bay; East Bay and K.M. impleaded Ashline. Upon the completion of discovery, General Electric sought summary judgment claiming that it did not sell the machine in the ordinary course of business and therefore owed no duty to plaintiff. Both lower courts granted the motion on this basis as to the strict liability claims, but denied summary judgment as to the negligence claims, finding issues of fact as to foreseeability that the machine would again be used in production. Special Term granted General Electric summary judgment on the breach of warranty claim because there was no privity of contract between the parties and because the sale was on an "as is" basis (Martin v. Dierck Equip. Co., 43 N.Y.2d 583, 403 N.Y.S.2d 185, 374 N.E.2d 97), and that ruling was not appealed. The Appellate Division granted General Electric, K.M. and East Bay leave to appeal to this court.

The issues before us are whether the Appellate Division correctly granted summary judgment dismissing the strict liability claims against General Electric, and whether it correctly denied summary judgment as to the negligence claims. We conclude that the claims against General Electric should have been dismissed in their entirety.

Turning first to the strict liability claims, a product may be defective by reason of a manufacturing flaw, improper design or failure to warn (see, Voss v. Black & Decker Mfg. Co., 59 N.Y.2d 102, 106-107, 463 N.Y.S.2d 398, 450 N.E.2d 204; Robinson v. Reed-Prentice, 49 N.Y.2d 471, 478-479, 426 N.Y.S.2d 717, 403 N.E.2d 440; see also, Lopez v. Precision Papers, 67 N.Y.2d 871, 501 N.Y.S.2d 798, 492 N.E.2d 1214).

Manufacturers of defective products may be held strictly liable for injury caused by their products, regardless of privity, foreseeability or due care (Voss v. Black & Decker Mfg. Co., 59 N.Y.2d 102, 106, 463 N.Y.S.2d 398, 450 N.E.2d 204, supra; Codling v. Paglia, 32 N.Y.2d 330, 342, 345 N.Y.S.2d 461, 298 N.E.2d 622; see also, PJI 2:141). Imposition of this onerous liability rests largely on considerations of public policy (Victorson v. Bock Laundry Mach. Co., 37 N.Y.2d 395, 401, 373 N.Y.S.2d 39, 335 N.E.2d 275; see also, Restatement [Second] of Torts § 402 A comment c; Prosser and Keeton, Torts § 98 [5th ed.] ). Given the increased complexity of modern products and modern production methods, most often only the manufacturer "can fairly be said to know and to understand when an article is suitably designed and safely made for its intended purpose"; by the same token, the manufacturer most often "alone has the practical opportunity, as well as a considerable incentive, to turn out useful, attractive, but safe products." (Codling v. Paglia, 32 N.Y.2d 330, 340, 341, 345 N.Y.S.2d 461, 298 N.E.2d 622, supra; see also, Caprara v. Chrysler Corp., 52 N.Y.2d 114, 123, 436 N.Y.S.2d 251, 417 N.E.2d 545; Micallef v. Miehle Co., 39 N.Y.2d 376, 383, 384 N.Y.S.2d 115, 348 N.E.2d 571.)

Policy considerations have also been advanced for the imposition of strict liability on certain sellers, such as retailers and distributors of allegedly defective products. Where products are sold in the normal course of business, sellers, by reason of their continuing relationships with manufacturers, are most often in a position to exert pressure for the improved safety of products and can recover increased costs within their commercial dealings, or through contribution or indemnification in litigation; additionally, by marketing the products as a regular part of their business such sellers may be said to have assumed a special responsibility to the public, which has come to expect them to stand behind their goods (see, Mead v. Warner Pruyn Div., 57 A.D.2d 340, 394 N.Y.S.2d 483; Kirby v. Rouselle Corp., 108 Misc.2d 291, 437 N.Y.S.2d 512; Vandermark v. Ford Motor Co., 61 Cal.2d 256, 37 Cal.Rptr. 896, 391 P.2d 168; see also, Restatement [Second] of Torts § 402 A comment c).

But not every seller is subject to strict liability. The policy considerations that have been advanced to justify the imposition of strict liability on manufacturers and sellers in the normal course of business obviously lack applicability in the case of a party who is not engaged in the sale of the product in issue as a regular part of its business. (See, Restatement [Second] of Torts § 402 A, comment f, concluding: "This Section is also not intended to apply to sales of the stock of merchants out of the usual course of business, such as execution sales, bankruptcy sales, bulk sales, and the like.") The casual or occasional seller of a product does not undertake the special responsibility for public safety assumed by those in the business of regularly supplying those products, nor is there the corollary element of forced reliance on that undertaking by purchasers of such goods. As a practical matter,...