Price v. Gatlin and Columbia Tractor & Implement Co.

405 P.2d 502, 241 Or. 315, 2 U.C.C. Rep. Serv. (West) 1066, 1965 Ore. LEXIS 404

• Court: Oregon Supreme Court
• Decided: September 10, 1965
• Status: Published

Opinions

GOODWIN, J.

This is an action for damages for economic loss resulting from the defective manufacture of a tractor. A jury found that because a new Ford tractor had failed to perform adequately the plaintiff had suffered $4,500 in damages to his business. Judgment was entered against the retail seller, but not against the wholesaler. (The manufacturer was not sued.) The purchaser appeals the judgment in favor of the wholesaler.

The only issue in this case is whether a purchaser of a defectively manufactured product, who is not in privity with the wholesaler, may recover for economic loss against a wholesaler through whose hands the product (or papers representing it) may have passed en route from the manufacturer to the retailer.

A purchaser, or even a stranger, who has sustained personal injuries may maintain an action for damages against a manufacturer whose defective work causes bodily harm. Such a plaintiff is unembarrassed by a lack of contract privity, whether or not he must allege and prove negligence. See, e.g., Wights v. Staff Jennings, Inc. 241 Or 301, 405 P2d 624 (1965); Strandholm v. General Const. Co., 235 Or 145, 157, 382 P2d 843 (1963).

This court has not yet held that a nonprivity purchaser may maintain an action against a manufacturer for economic loss, as distinguished from personal injury, caused by defective workmanship. That issue is not now before us, and we express no opinion upon the matter. This plaintiff is seeking to hold a wholesaler liable for innocently passing along a defective product. This he may not do.

The plaintiff alleges no fault or misrepresentation upon the part of the wholesaler. The plaintiff is frankly searching for a solvent defendant, in this state, whose liability is to be grounded solely upon the fact that he shares in the profits generated by the distribution of merchandise. The plaintiff argues that because the wholesaler makes a profit, even though he is free from fault, he should share in the economic burdens caused by the manufacturer’s sale of a defective product.

If both privity and fault are irrelevant, the wholesaler would be liable, not for a duty he failed to perform, nor for the breach of a contract he never made, but because he happens to lie in the stream of commerce. Wholesalers in this state have had no reason to believe that they would be held liable to strangers, in unlimited amounts, when they are without fault. By whatever name it is called, this kind of liability is enterprise liability. We do not believe that the case at bar is a proper one in which to impose this new form of liability upon wholesalers.

We are not unaware of the authority which has been marshaled in support of the plaintiff’s theory. We believe, however, that the social and economic reasons which courts elsewhere have given for extending enterprise liability to the victims of physical injury are not equally persuasive in a case of a disappointed buyer of personal property. See Seely v. White Motor Company, 45 Cal Rptr 17, 403 P2d 145 (1965).

We hold that a purchaser may not recover against a nonprivity seller, who is not alleged to be at fault in connection with the loss, for economic losses caused by a third party’s defective workmanship.

Affirmed.