Whitaker v. Lian Feng Mach. Co.

• Court: Appellate Court of Illinois
• Writing for the Court: WHITE
• Citation: Whitaker v. Lian Feng Mach. Co., 509 N.E.2d 591, 156 Ill.App.3d 316, 108 Ill.Dec. 895 (Ill. App. 1987)
• Decision Date: 27 May 1987
• Docket Number: No. 86-2196,86-2196
• Parties: , 108 Ill.Dec. 895, 4 UCC Rep.Serv.2d 444, Prod.Liab.Rep. (CCH) P 11,498 Timothy A. WHITAKER, Plaintiff-Appellant, v. LIAN FENG MACHINE CO., Equipment Importers, Inc., Valley Supply & Tool Co., Inc., and W.R. Brown Company, Defendants-Appellees.

Page 591

509 N.E.2d 591

156 Ill.App.3d 316, 108 Ill.Dec. 895,

4 UCC Rep.Serv.2d 444,

Prod.Liab.Rep. (CCH) P 11,498

Timothy A. WHITAKER, Plaintiff-Appellant, v. LIAN FENG MACHINE CO., Equipment Importers, Inc., Valley Supply & Tool Co., Inc., and W.R. Brown Company Defendants-Appellees.

No. 86-2196.

Appellate Court of Illinois First District, Third Division.

May 27, 1987.

Halfpenny, Hahn & Roche, Chicago (Michael T. Reid, James F. Flanagan, of counsel), for plaintiff-appellant.

O'Connor & Schiff, Chicago (Daniel J. Kaiser and Kevin F. Donohue, of counsel), for defendant-appellee Valley Supply.

Ross & Hardies, Chicago (William D. Serritella and David C. Bohrer, of counsel), for defendant-appellee Equipment Importers.

Justice WHITE delivered the opinion of the court.

Plaintiff Timothy A. Whitaker brought suit to recover for injuries he sustained while working with a bandsaw which belonged to his employer, DuPage Precision Products Company (DuPage). He alleged that defendant Lian Feng Machine Company manufactured the bandsaw and sold it to defendant Equipment Importers, Inc., who imported it to the United States and resold it to defendant Valley Supply & Tool Company (Valley Supply), who sold it to DuPage. In counts III and IV of his amended complaint plaintiff sought to recover on the basis of breach of warranties of merchantability and fitness for a particular purpose. Defendants Equipment Importers, Inc. and Valley Supply moved to dismiss counts III and IV on grounds of the lack of privity between plaintiff and defendants. The trial court granted defendants' motions and plaintiff appeals.

Plaintiff alleged in his complaint that on June 29, 1984, he used the bandsaw in the course of his employment with DuPage. The saw cut his left hand, amputating three fingers. He alleged that defendants knew DuPage sought a suitable bandsaw for its employees to use to cut bar stock.

Plaintiff asks us to resolve a single question in this appeal: can the employee of the ultimate purchaser of a product recover from the seller for breach of warranty? Our research indicates that this question has not been squarely decided by the state courts of Illinois. In Knox v. North American Car Corp. (1980), 80 Ill.App.3d 683, 35 Ill.Dec. 827, 399 N.E.2d 1355, this court stated in dicta that employees of purchasers may be able to sue sellers for breach of warranty under section 2-318 of the Uniform Commercial Code (UCC). (Ill.Rev.Stat.1985, ch. 26, par. 2-318; Knox, 80 Ill.App.3d 683, 689, 35 Ill.Dec. 827, 399 N.E.2d 1355.) The dissent agreed with this dicta. (Knox, 80 Ill.App.3d 683, 699, 35 Ill.Dec. 827, 399 N.E.2d 1355, Rizzi, J., dissenting.) In Boddie v. Litton Unit Handling Systems (1983), 118 Ill.App.3d 520, 74 Ill.Dec. 112, 455 N.E.2d 142, the court indicated, again in dicta, that it agreed that employees of ultimate purchasers should be allowed to sue on grounds of breach of warranty. 118 Ill.App.3d 520, 532, 74 Ill.Dec. 112, 455 N.E.2d 142.

Federal courts in Illinois have addressed this question in three published decisions which have been brought to our attention. In In the Matter of Johns-Manville Asbestosis Cases (N.D.Ill.1981), 511 F.Supp. 1235, the court held that the right to recover for breach of warranty is limited in Illinois to purchasers and the narrow class of persons listed in section 2-318 of the UCC. (Ill.Rev.Stat.1985, ch. 26, par. 2-318.) Since that section does not mention employees of purchasers, the court dismissed suits brought by employees of ultimate purchasers for the seller's breach of implied warranties. (511 F.Supp. 1235, 1239-40.) Similarly in Hemphill v. Sayers (S.D.Ill.1982), 552 F.Supp. 685, the district court held that the purchaser's employees could not sue the seller for breach of warranty. (552 F.Supp. 685, 692.) In Eisenmann v. Cantor Bros., Inc. (N.D.Ill.1983), 567 F.Supp. 1347, on the other hand, the court indicated that it would allow employees of purchasers to sue for breach of warranty as third-party beneficiaries of the contract, following Knox. (567 F.Supp. 1347, 1356.) However, in that case the cause of action was barred by the applicable statute of limitations.

Defendants, relying on Johns-Manville and Hemphill, contend that plaintiff has no right to recover for breach of warranty because he does not fall within the class of persons listed in section 2-318 of the UCC as exceptions to the requirement of privity. According to section 2-318 of the UCC:

A seller's warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this Section.

(Ill.Rev.Stat.1985, ch. 26, par. 2-318.) Section 2-318 does not, on its face, state any limitation on the rights of persons to recover for breach of warranty. Our supreme court has held that section 2-318 does not list the only exceptions to the requirement of privity in breach of warranty cases: "It is clear from the language of section 2-318 * * * and the commentary thereon, that the requirement of privity between the purchaser and remote manufacturer is not established." Berry v. G.D. Searle & Co. (1974), 56 Ill.2d 548, 558, 309 N.E.2d 550.

The courts in Hemphill and Johns-Manville distinguished Berry on the grounds that plaintiffs in Berry were purchasers, in "vertical privity" with defendant manufacturer, whereas plaintiffs in Hemphill and Johns-Manville, like plaintiffs in the instant case, were non-purchasing users, in "horizontal privity" with those defendants. Defendants in this case argue that section 2-318 establishes a limitation on the right of persons in "horizontal privity" to recover for breach of warranty, although it does not act as a bar for persons in "vertical privity." Defendants point to the three alternative versions of section 2-318 written by the drafters of the UCC. Alternatives B and C require courts to extend the right to recover for breach of warranty to a larger class of non-purchasing users than that class named in alternative A. ( [1 Current Materials] U.C.C. Rep.Serv. (Callaghan) par. 2-318.) Plaintiff, as an employee of a purchaser, would clearly be allowed to recover for breach of warranty under alternatives B and C. Illinois adopted alternative A. Defendants argue that the Illinois legislature has by implication decided not to extend the right to recover to persons like plaintiff, who are expressly embraced only under the alternative versions of section 2-318 which the Illinois legislature decided not to adopt.

The Illinois legislature enacted section 2-318 of the UCC in 1961. (Ill.Rev.Stat.1963, ch. 26, par. 2-318.) At that time there were no alternative versions of the section. However, several states refused to enact this section in the form suggested by the drafters of the UCC, so alternatives B and C were added in 1966 as recommended alternative forms of section 2-318. ( [1 Current Materials] U.C.C.Rep.Serv. (Callaghan) par. 2-318, p. 22-24.) Illinois, like most states, retained the original version of the section. (1 Anderson, Uniform Commercial Code par. 2-318:3.) Following the addition of alternatives B and C to the UCC, the drafters revised the UCC Comment to clarify the import of each alternative. The revised UCC Comment states in subsection 3:

The first alternative [the version adopted in Illinois] expressly includes as beneficiaries within its provisions the family, household and guests of the purchaser. Beyond this, the section in this form is neutral and is not intended to enlarge or restrict the developing case law on whether the seller's warranties, given to his buyer who resells, extend to other persons in the distributive chain. The second alternative is designed for states where the case law has already developed further and for those that desire to expand the class of beneficiaries. The third alternative goes further, following the trend of modern decisions as indicated by Restatement of Torts 2d § 402A (Tentative Draft No. 10, 1965) in extending the rule beyond injuries to the person.

S.H.A. (Supp.1986), ch. 26, sec. 2[156 Ill.App.3d 320] -318, p. 101.

Thus, the Illinois version of the statute does not "restrict the developing case law * * *." The questions left for developing case law are clearly indicated by its subsequent sentences: "The second alternative is designed for states where the case law has already developed further * * *. The third alternative goes further, following the trend of modern decisions * * *." (S.H.A. (Supp.1986), ch. 26, sec. 2-318, p. 101.) Thus it is apparent that where the comment speaks of "developing case law" it includes developing case law regarding persons in horizontal privity with sellers. The Wisconsin Supreme Court, interpreting a statute and comments identical to section 2-318 in Illinois, found that the statute did not limit the seller's liability to non-purchasing users for breach of warranty to those persons specified in the statute. (Dippel v. Sciano (1967), 37 Wis.2d 443, 155 N.W.2d 55, 62.) We agree. The Illinois legislature expressly stated that warranty coverage must extend to the family or household of the purchaser, if the members of the household would reasonably be expected to use the product; the legislature left it for the courts to decide, in accord with common law principles and with the guidance of the UCC, whether warranty coverage should further extend to any other non-purchasing users of a product. (S.H.A. (1963), ch. 26, par. 2-313, U.C.C. Comment sec. 2, p. 219; State ex rel. Western Seed Production Corp. v. Campbell (1968), 250 Or. 262, 442 P.2d 215, 217, cert. denied (1969) 393 U.S. 1093, 89 S.Ct. 862, 21 L.Ed.2d 784.) To the extent that this part of our holding is inconsistent with statements we made in Knox and Miller v. Sears,...