Van Wyk v. Norden Laboratories, Inc.

• Decision Date: 15 February 1984
• Docket Number: No. 68922,68922
• Parties: 37 UCC Rep.Serv. 1489 Vernon VAN WYK and Kenneth Smith, Partners; Hauser Farms, Inc.; and Porter Farms, Inc., Appellees, v. NORDEN LABORATORIES, INC., Appellant.
• Court: Iowa Supreme Court

Page 81

345 N.W.2d 81

37 UCC Rep.Serv. 1489

Vernon VAN WYK and Kenneth Smith, Partners; Hauser Farms, Inc.; and Porter Farms, Inc., Appellees, v. NORDEN LABORATORIES, INC., Appellant.

No. 68922.

Supreme Court of Iowa.

Feb. 15, 1984.

H. Richard Smith and Wade R. Hauser, III of Ahlers, Cooney, Dorweiler, Haynie & Smith, Des Moines, for appellant.

Richard K. Updegraff and Jill Thompson Hansen of Brown, Winick, Graves, Donnelly & Baskerville, Des Moines, for appellees.

Considered by McGIVERIN, P.J., and LARSON, SCHULTZ, CARTER, and WOLLE, JJ.

LARSON, Justice.

A large number of cattle owned by the plaintiffs became sick shortly after injection of a vaccine produced by the defendant Norden Laboratories, Inc. and this suit followed. While several theories of liability were asserted by the plaintiffs, the court submitted only one: the implied warranty of fitness for a particular purpose (Iowa Code section 554.2315). The defendant appeals from a judgment for the plaintiffs, arguing that the court erred in submitting this theory under the facts of the case. It contends the implied warranty of fitness did not fit, so to speak. The plaintiffs cross-appeal, complaining that it was error to exclude certain expert evidence and to refuse submission of their alternative theories of strict liability and implied warranty of merchantability. We reverse on both appeals and remand.

In the fall of 1978, three groups of the plaintiffs' cattle, totaling about 750, were treated with a live-virus vaccine, manufactured by the defendant and called Resbo-3, serial 54. Some of the cattle had been raised by the plaintiffs, and some had been shipped in. Some were treated on the farm and some in a sale barn. The cattle were given other treatments such as worming, castration, and dehorning, simultaneously with the series 54 vaccine, but not all of them received the same combination of treatments. Yet, the incidence of bovine viral diarrhea (BVD) appeared, to a large extent, in all three herds. (BVD is one of the illnesses which the series 54 vaccine was designed to prevent.) Within a week of their injection, most of the cattle were sick. Almost 50 died. Plaintiffs' veterinarian witnesses testified that the sickness had been caused by the vaccine. They testified that before and after this incident they had used serial 54 vaccine without similar problems and that while it is reasonable to expect a few cattle to have an adverse reaction, they had never seen anything like the extent of sickness in this case. In view of this common denominator among the separate herds of cattle--their treatment with series 54 vaccine--a strong circumstantial case is claimed by the plaintiffs that the illness was in fact caused, or at least exacerbated by, the vaccine. No direct evidence of a defect was produced, however.

I. The Implied Warranty of Fitness.

The only theory of liability submitted by the court was breach of implied warranty of fitness for a particular purpose, Iowa Code § 554.2315 (Uniform Commercial Code § 2-315). That section provides:

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

The implied warranty of fitness for a particular purpose under section 554.2315 is perhaps better understood when viewed with the implied warranty of merchantability, or fitness for ordinary purposes. Iowa Code section 554.2314 sets out the latter:

(1) Unless excluded or modified (section 554.2316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

(2) Goods to be merchantable must be at least such as

(a) pass without objection in the trade under the contract description; and

(b) in the case of fungible goods, are of fair average quality within the description; and

(c) are fit for the ordinary purposes for which such goods are used; and

(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and

(e) are adequately contained, packaged, and labeled as the agreement may require; and

(f) conform to the promises or affirmations of fact made on container or label if any.

(3) Unless excluded or modified (section 554.2316) other implied warranties may arise from course of dealing or usage of trade.

(Emphasis added.)

The official comment to the Uniform Commercial Code illustrates the difference between "ordinary" and "particular" purposes under the respective warranties:

A "particular purpose" differs from the ordinary purpose for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question. For example, shoes are generally used for the purpose of walking upon ordinary ground, but a seller may know that a particular pair was selected to be used for climbing mountains.

U.C.C. § 2-315, Comment 2, 1 U.L.A. 483 (1976).

The warranty of merchantability, Iowa Code § 554.2314, is based on a purchaser's reasonable expectation that goods purchased from a "merchant with respect to goods of that kind" will be free of significant defects and will perform in the way goods of that kind should perform. It presupposes no special relationship of trust or reliance between the seller and buyer. In contrast, the warranty of fitness for a particular purpose, Iowa Code § 554.2315, is based on a special reliance by the buyer on the seller to provide goods that will perform a specific use envisaged and communicated by the buyer. Thus, any recovery under warranty for a specific purpose is predicated on a showing that (1) the seller had reason to know of the buyer's particular purpose; (2) the seller had reason to know the buyer was relying on the seller's skill or judgment to furnish suitable goods; and (3) the buyer in fact relied on the seller's skill or judgment to furnish suitable goods. Semler v. Knowling, 325 N.W.2d 395, 399 (Iowa 1982); J. White and R. Summers, Handbook of the Law Under the Uniform Commercial Code § 9-9 at 358 (2d Ed.1980). See also Farm Bureau Mutual Insurance Co. v. Sandbulte, 302 N.W.2d 104, 111 (Iowa 1981).

The warranty of fitness under section 554.2315 is said to turn on the "bargain-related" facts as to what the seller had reason to know about the buyer's purpose for the goods and about his reliance on the seller's skill or judgment in selecting them. Jacobson v. Benson Motors, Inc., 216 N.W.2d 396, 404 (Iowa 1974). In this case the vaccine was not purchased by the veterinarians to treat these particular cattle but to keep in stock for their general veterinary practice. The plaintiffs, as owners of the cattle, and the defendant, had no direct dealing with regard to the vaccine. The decision as to what vaccine to use was made by the buyers' veterinarians, not by the defendant. There was no evidence that the seller had reason to know of any purpose for the plaintiffs' use of the vaccine, other than its ordinary use, or that the buyer was relying on the seller's skill and judgment in providing it. The implied warranty of fitness for a particular purpose would appear, therefore, to be inapplicable by its terms. See Iowa Code § 554.2315; Semler v. Knowling, 325 N.W.2d at 399; Jacobson v. Benson Motors, Inc., 216 N.W.2d at 404.

The plaintiffs argue, however, that if the buyer's particular purpose is the same as its general use, a warranty of fitness arises, especially when the product has a specific and limited use. In that case, the other elements of the fitness warranty, i.e., the knowledge of the buyer's purpose, knowledge of the buyer's reliance, and the buyer's actual reliance, are apparently to be presumed. The plaintiffs cite only one case, Tennessee Carolina Transportation Inc. v. Strick Corp., 283 N.C. 423, 196 S.E.2d 711 (1973), in support of this theory. That case involved the sale of truck trailers which proved to be faulty. There the court held that because the buyer's "specific use" was the same as the "general use" to which trailers are usually put, hauling cargo, the warranty of fitness would apply. It rejected the general rule that a "particular" use must be a use not normally expected to be made of the goods, a rule recognized by our cases, e.g., Madison Silos v. Wassom, 215 N.W.2d 494, 499-500 (Iowa 1974); Peters v. Lyons, 168 N.W.2d 759, 763 (Iowa 1969), and by the Uniform Commercial Code. See U.C.C. § 2-315, Comment 2, 1 U.L.A. 483 (1976).

Cases such as Tennessee Carolina, moreover, have been criticized as enlarging the fitness warranty beyond the intent of the drafters of the Uniform Commercial Code. See J. White and R. Summers, supra, § 9-9 at 357, n. 122.

In this case, written material furnished with the vaccine stated that "[f]or reducing the economic loss associated with these viruses, vaccination of healthy animals is recommended before or upon entering the feedlot or dairy herd. Vaccination of stressed animals should be delayed." Use of the vaccine on healthy, unstressed cattle, in accordance with these instructions, is the "ordinary" use for warranty purposes, according to the defendant, and the plaintiffs' evidence was aimed at showing a use in compliance with the instructions, in other words, an "ordinary" use. While there was contradicting evidence presented by the defendant that the cattle were stressed and perhaps not healthy at the time they were vaccinated, there is no claim by the...