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32 N.J. 358, 161
A.2d 69, 75 A.L.R.2d 1 Supreme Court of New
Jersey. Claus H. HENNINGSEN
and Helen Henningsen, Plaintiffs-Respondents and Cross-Appellants, v.
BLOOMFIELD MOTORS, INC., and Chrysler Corporation, Defendants-Appellants, and
Cross-Respondents. No. A-50. Argued Dec. 7, 1959. Decided May 9, 1960. SUBSEQUENT
HISTORY: Declined to
Extend by: Rudbart v. North Jersey Dist. Water Supply Com’n, 127
N.J. 344, 605 A.2d 681, 18 UCC Rep.Serv.2d 277 (N.J. Apr. 27, 1992) (No. A-60,
A-61) Distinguished
by: Martins Ferreira v. Jayess Corp., 214 F.Supp. 723 (D.N.J. Feb. 28,
1963) (No. CIV. 978-60) World
Products, Inc. v. Central Freight Service, Inc., 222 F.Supp. 849, 2 UCC
Rep.Serv. 675 (D.N.J. Oct. 29, 1963) (No. CIV. 362-61) Stearns v.
Hertz Corp., 326 F.2d 405 (8th Cir.(Mo.) Jan 14, 1964) (No. 17291) Seely v.
White Motor Co., 63 Cal.2d 9, 403 P.2d 145, 45 Cal.Rptr. 17, 2 UCC Rep.Serv.
915 (Cal. June 23, 1965) (No. L.A. 27618) Tomczuk v.
Town of Cheshire, 26 Conn.Supp. 219, 217 A.2d 71, 3 UCC Rep.Serv. 147
(Conn.Super. Nov. 24, 1965) (No. 10355) General
Motors Acceptance Corp. v. Blanco, 181 Neb. 562, 149 N.W.2d 516 (Neb. Mar. 31,
1967) (No. 36478) Moreira
Const. Co. v. Moretrench Corp., 97 N.J.Super. 391, 235 A.2d 211 (N.J.Super.A.D.
Oct. 31, 1967) (No. A-385) TO JACOB
SIEGAL, 1968 WL 2276, 47 Comp. Gen. 509, B- 163,005, 1968 CPD P 19 (Comp.Gen.
Apr. 2, 1968) Bexiga v.
Havir Mfg. Corp., 114 N.J.Super. 397, 276 A.2d 590 (N.J.Super.A.D. Apr. 26,
1971) Bass v.
General Motors Corp., 491 S.W.2d 941 (TexCivApp.-Corpus Christi Feb 28, 1973)
(NO. 691), writ refused n.r.e. (June 13, 1973) Business
Incentives Co., Inc. v. Sony Corp. of America, 397 F.Supp. 63 (S.D.N.Y. June
04, 1975) (No. 75 CIV 214) Gas House,
Inc. v. Southern Bell Tel. & Tel. Co., 289 N.C. 175, 221 S.E.2d 499 (N.C.
Jan. 29, 1976) (No. 74) Borg-Warner
Acceptance Corp. v. Wolfe City Nat. Bank, 544 S.W.2d 947, 21 UCC Rep.Serv. 631
(Tex.Civ.App.-Dallas Dec. 14, 1976) (No. 19039) Jensen v.
American Motors Corp., Inc., 50 Md.App. 226, 437 A.2d 242 (Md.App. Dec. 3,
1981) (No. 283) Employers
Ins. of Wausau v. Suwannee River Spa Lines, Inc., 866 F.2d 752, 1990 A.M.C.
447, 8 UCC Rep.Serv.2d 659 (5th Cir.(La.) Feb. 13, 1989) (No. 86-3218, 86-3473,
87-3549) Allianz
Ins. Co. v. Cavagnuolo, 2004 WL 1048243 (S.D.N.Y. May 7, 2004) (No. 03 CIV.
1636 (HB)) [*364] [**72] COUNSEL:
Bernard Chazen, Hoboken, argued the cause for plaintiffs. (Carmen
C. Rusignola, Newark, attorney; Baker, Garber & Chazen, Hoboken, of
counsel; Martin Itzikman, Newark, on the brief). Samuel Weitzman,
Newark, argued the cause for defendant Bloomfield Motors, Inc. (Parsonnet,
Weitzman & Oransky, Newark, attorneys). [**73]
Sidney M. Schreiber, Newark, argued the cause for defendant Chrysler
Corporation. (Schreiber, Lancaster & Demos, Newark, attorneys; Roger F.
Lancaster, Newark, of counsel). The opinion of the court was delivered by JUDGE: FRANCIS, J. Plaintiff Clause H. Henningsen purchased a Plymouth automobile,
manufactured by defendant Chrysler Corporation, from defendant Bloomfield
Motors, Inc. His wife, plaintiff Helen Henningsen, was injured while driving it
and instituted suit against both defendants to recover damages on account of
her injuries. Her husband joined in the action seeking compensation for his consequential
[*365] losses. The complaint was predicated upon breach of
express and implied warranties and upon negligence. At the trial the negligence
counts were dismissed by the court and the cause was submitted to the jury for
determination solely on the issues of implied warranty of merchantability.
Verdicts were returned against both defendants and in favor of the plaintiffs.
Defendants appealed and plaintiffs cross-appealed from the dismissal of their
negligence claim. The matter was certified by this court prior to consideration
in the Appellate Division. The facts are not complicated, but a general outline of them is
necessary to an understanding of the case. On May 7, 1955 Mr. and Mrs. Henningsen visited the place of
business of Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer,
to look at a Plymouth. They wanted to buy a car and were considering a Ford or
a Chevrolet as well as a Plymouth. They were shown a Plymouth which appealed to
them and the purchase followed. The record indicates that Mr. Henningsen
intended the car as a Mother’s Day gift to his wife. He said the
intention was communicated to the dealer. When the purchase order or contract
was prepared and presented, the husband executed it alone. His wife did not
join as a party. The purchase order was a printed form of one page. On the front it
contained blanks to be filled in with a description of the automobile to be
sold, the various accessories to be included, and the details of the financing.
The particular car selected was described as a 1955 Plymouth, Plaza
‘6’, Club Sedan. The type used in the printed parts of the
form became smaller in size, different in style, and less readable toward the
bottom where the line for the purchaser’s signature was placed. The
smallest type on the page appears in the two paragraphs, one of two and
one-quarter lines and the second of one and one-half lines, on which great
stress is laid by the defense in the case. These two paragraphs are the least
legible and the most difficult to read in the instrument, but they are most
important in the evaluation [*366] of the rights
of the contesting parties. They do not attract attention and there is nothing
about the format which would draw the reader’s eye to them. In fact, a
studied and concentrated effort would have to be made to read them. De-emphasis
seems the motive rather than emphasis. More particularly, most of the printing
in the body of the order appears to be 12 point block type, and easy to read.
In the short paragraphs under discussion, however, the type appears to be six
point script and the print is solid, that is, the lines are very close
together. The two paragraphs are: ‘The front and back of this Order comprise the entire
agreement affecting this purchase and no other agreement or understanding of
any nature concerning same has been made or entered into, or will be
recognized. I hereby certify that no credit has been extended to me for the
purchase of this motor vehicle except as appears in writing on the face of this
agreement. [**74] ‘I have read the matter
printed on the back hereof and agree to it as a part of this order the same as
if it were printed above my signature. I certify that I am 21 years of age, or
older, and hereby acknowledge receipt of a copy of this order.’ On the right side of the form, immediately below these clauses and
immediately above the signature line, and in 12 point block type, the following
appears: ‘CASH OR CERTIFIED CHECK ONLY ON DELIVERY.’ On the left side, just opposite and in the same style type as the
two quoted clauses, but in eight point size, this statement is set out: ‘This agreement shall not become binding upon the Dealer
until approved by an officer of the company.’ The two latter statements are in the interest of the dealer and
obviously an effort is made to draw attention to them. The testimony of Claus Henningsen justifies the conclusion that he
did not read the two fine print paragraphs referring [*366] to
the back of the purchase contract. And it is uncontradicted that no one made
any reference to them, or called them to his attention. With respect to the
matter appearing on the back, it is likewise uncontradicted that he did not
read it and that no one called it to his attention. The reverse side of the contract contains 8 1/2 inches of fine
print. It is not as small, however, as the two critical paragraphs described
above. The page is headed ‘Conditions’ and contains ten
separate paragraphs consisting of 65 lines in all. The paragraphs do not have
headnotes or margin notes denoting their particular subject, as in the case of
the ‘Owner Service Certificate’ to be referred to later. In
the seventh paragraph, about two-thirds of the way down the page, the warranty,
which is the focal point of the case, is set forth. It is as follows: ‘7. It is expressly agreed that there are no warranties,
express or implied, Made by either the dealer or the manufacturer on the motor
vehicle, chassis, of parts furnished hereunder except as follows. "The manufacturer warrants each new motor vehicle (including
original equipment placed thereon by the manufacturer except tires), chassis or
parts manufactured by it to be free from defects in material or workmanship
under normal use and service. Its obligation under this warranty being limited
to making good at its factory any part or parts thereof which shall, within
ninety (90) days after delivery of such vehicle To the original purchaser or
before such vehicle has been driven 4,000 miles, whichever event shall first
occur, be returned to it with transportation charges prepaid and which its
examination shall disclose to its satisfaction to have been thus defective;
This warranty being expressly in lieu of all other warranties expressed or
implied, and all other obligations or liabilities on its part, and it neither
assumes nor authorizes any other person to assume for it any other liability in
connection with the sale of its vehicles. * * *.” (Emphasis ours.) After the contract had been executed, plaintiffs were told the car
had to be serviced and that it would be ready in two days. According to the
dealer’s president, a number of cars were on hand at the time; they
had come in from the factory about three or four weeks earlier and at least [*368] some
of them, including the one selected by the Henningsens, were kept in the back
of the shop display purposes. When sold, plaintiffs’ vehicle was not
‘a serviced car, ready to go.’ The testimony shows that
Chrysler Corporation sends from the factory to the dealer a ‘New Car
Preparation Service Guide’ with each new automobile. The guide
contains detailed instructions as to what has to be done to prepare the car for
delivery. The dealer [**75] is told to
‘Use this form as a guide to inspect and prepare this new Plymouth for
delivery.’ It specifies 66 separate items to be checked, tested,
tightened or adjusted in the course of the servicing, but dismantling the
vehicle or checking all of its internal parts is not prescribed. The guide also
calls for delivery of the Owner Service Certificate with the car. This certificate, which at least by inference is authorized by
Chrysler, was in the car when released to Claus Henningsen on May 9, 1955. It
was not made part of the purchase contract, nor was it shown to him prior to
the consummation of that agreement. The only reference to it therein is that
the dealer ‘agrees to promptly perform and fulfill and terms and
conditions of the owner service policy.’ The Certificate contains a
warranty entitled ‘Automobile Manufacturers Association Uniform
Warranty.’ The provisions thereof are the same as those set forth on
the reverse side of the purchase order, except that an additional paragraph is
added by which the dealer extends that warranty to the purchaser in the same
manner as if the word ‘Dealer’ appeared instead of the word
‘Manufacturer.’ The new Plymouth was turned over to the Henningsens on May 9,
1955. No proof was adduced by the dealer to show precisely what was done in the
way of mechanical or road testing beyond testimony that the
manufacturer’s instructions were probably followed. Mr. Henningsen
drove it from the dealer’s place of business in Bloomfield to their
home in Keansburg. On the trip nothing unusual appeared in the way in which it
operated. Thereafter, it was used for short trips on paved streets about the
town. It had [*369] no servicing and no mishaps of any kind
before the event of May 19. That day, Mrs. Henningsen drove to Asbury Park. On
the way down and in returning the car performed in normal fashion until the
accident occurred. She was proceeding north on Route 36 in Highlands, New
Jersey, at 20-22 miles per hour. The highway was paved and smooth, and
contained two lanes for northbound travel. She was riding in the right-hand
lane. Suddenly she heard a loud noise ‘from the bottom, by the
hood.’ It ‘felt as if something cracked.’ The
steering wheel spun in her hands; the car veered sharply to the right and
crashed into a highway sign and a brick wall. No other vehicle was in any way
involved. A bus operator driving in the left-hand lane testified that he
observed plaintiffs’ car approaching in normal fashion in the opposite
direction; ‘all of a sudden (it) veered at 90 degrees * * * and right
into this wall.’ As a result of the impact, the front of the car was
so badly damaged that it was impossible to determine if any of the parts of the
steering wheel mechanism or workmanship or assembly were defective or improper
prior to the accident. The condition was such that the collision insurance
carrier, after inspection, declared the vehicle a total loss. It had 468 miles
on the speedometer at the time. The insurance carrier’s inspector and appraiser of
damaged cars, with 11 years of experience, advanced the opinion, based on the
history and his examination, that something definitely went ‘wrong
from the steering wheel down to the front wheels’ and that the
untoward happening must have been due to mechanical defect or failure;
‘something down there had to drop off or break loose to cause the
car’ to act in the manner described. As has been indicated, the trial court felt that the proof was not
sufficient to make out a Prima facie case as to the negligence of either the
manufacturer or the dealer. The case was given to the jury, therefore, solely
on the warranty theory, with results favorable to the plaintiffs against both
defendants. [*370] [**76] I. The Claim of Implied Warranty against the Manufacturer. In the ordinary case of sale of goods by description an implied
warranty of merchantability is an integral part of the transaction. R.S.
46:30-20, N.J.S.A. If the buyer, expressly or by implication, makes known to
the seller the particular purpose for which the article is required and it
appears that he has relied on the seller’s skill or judgment, an
implied warranty arises of reasonable fitness for that purpose. R.S.
46:30-21(1), N.J.S.A. The former type of warranty simply means that the thing
sold is reasonably fit for the general purpose for which it is manufactured and
sold. Giant Mfg. Co. v. Yates-American Mach. Co., 111 F.2d 360 (8
Cir. 1940); Dunbar Bros. Co. v. Consolidated Iron-Steel Mfg. Co., 23 F.2d 416,
419 (2 Cir. 1928); Simmons v. Rhodes & Jamieson, Ltd., 46 Cal.2d
190, 293 P.2d 26 (Sup.Ct.1956); Mead v. Coca Cola Bottling Co., 329 Mass.
440, 108 N.E.2d 757 (Sup.Jud.Ct.1952); Ryan v. Progressive Grocery Stores, 255 N.Y.
388, 175 N.E. 105, 74 A.L.R. 339 (Ct.App.1931); 1 Williston on Sales, s 243
(Rev. ed. 1948). As Judge (later Justice) Cardozo remarked in Ryan, supra, the
distinction between a warranty of fitness for a particular purpose and of merchantability
in many instances is practically meaningless. In the particular case he was
concerned with food for human consumption in a sealed container. Perhaps no
more apt illustration of the notion can be thought of than the instance of the
ordinary purchaser who informs the automobile dealer that he desires a car for
the purpose of business and pleasure driving on the public highway. In this connection, it is appropriate to note that sale of an
article by a trade name does not negate the warranty of merchantability. Adams
v. Peter Tramontin Motor Sales, 42 N.J.Super. 313, 126 A.2d 358
(App.Div.1956); Ryan v. Progressive [*371] Grocery
Stores, supra; Frigidinners, Inc. v. Branchtown Gun Club, 176
Pa.Super. 643, 109 A.2d 202 (Super.Ct.1954); 2 Harper & James, Law of
Torts, s 28.20, p. 1082 (1956). An informative statement of the rule (said to
be supported by overwhelming authority) was made by the Supreme Court of
Pennsylvania in Frantz Equipment Co. v. Leo Butler Co., 370 Pa.
459, 88 A.2d 702, 706 (Sup.Ct.1952): ‘It is perfectly clear, then, that even if the sale be
under a trade name there is implied an obligation on the part of the seller
that the article delivered will be of the same quality, material, workmanship,
and availability for use as articles generally sold under such name. It would
be wholly unreasonable to hold that, if one were to purchase, for example, an
automobile under the trade name of ‘Ford’ or
‘Buick’ or ‘Cadillac’ or the like, no
implied warranty of merchantable quality could be asserted by the purchaser
even though the particular car delivered was in such bad condition, so gravely
defective in materials and construction, that it could not be operated at all
and was wholly useless for the ordinary purpose which an automobile is designed
to serve.’ Of course such sales, whether oral of written, may be accompanied
by an express warranty. Under the broad terms of the Uniform Sale of Goods Law
any affirmation of fact relating to the goods is an express warranty if the
natural tendency of the statement is to induce the buyer to make the purchase.
R.S. 46:30-18, N.J.S.A. And over the years since the almost universal adoption
of the act, a growing awareness of the tremendous development of modern business
methods has prompted the courts to administer that provision with a liberal
hand. Vold, Law of Sales, s 86, p. 429 (2d ed. 1959). Solicitude toward the
buyer plainly harmonizes with the intention of the Legislature. That fact is
manifested further by the later section [**77] of the act
which preserves and continues any permissible implied warranty, despite an
express warranty, unless the two are inconsistent. R.S. 46:30-21(6), N.J.S.A. The uniform act codified, extended and liberalized the common law
of sales. The motivation in part was to [*372]
ameliorate the harsh doctrine of Caveat emptor, and in some measure to impose a
reciprocal obligation on the seller to beware. The transcendent value of the
legislation, particularly with respect to implied warranties, rests in the fact
that obligations on the part of the seller were imposed by operation of law,
and did not depend for their existence upon express agreement of the parties.
And of tremendous significance in a rapidly expanding commercial society was
the recognition of the right to recover damages on account of personal injuries
arising from a breach of warranty. R.S. 46:30-75, 76, N.J.S.A.; Simon v.
Graham Bakery, 31 N.J.Super. 117, 105 A.2d 877 (App.Div.1954), reversed
on other grounds 17 N.J. 525, 111 A.2d 884 (1955); Marko v. Sears, Roebuck
and Co., 24 N.J.Super. 295, 303, 94 A.2d 348 (App.Div.1953); Ryan v.
Progressive Grocery Stores, supra; Stonebrink v. Highland Motors, 171 Or.
415, 137 P.2d 986 (Sup.Ct.1953); Wells v. Oldsmobile Co., 147 Or.
687, 35 P.2d 232 (Sup.Ct.1934); Ebbert v. Philadelphia Electric Co., 126
Pa.Super. 351, 191 A. 384 (Super.Ct.1937), affirmed 330 Pa. 257, 198 A. 323
(Sup.Ct.1938); 77 C.J.S. Sales s 383; Prosser, Law of Torts, p. 493 (1955). The
particular importance of this advance resides in the fact that under such
circumstances strict liability is imposed upon the maker or seller of the
product. Recovery of damages does not depend upon proof of negligence or
knowledge of the defect. Simon v. Graham Bakery, supra; Tomlinson
v. Armour & Co., 75 N.J.L. 748, 754, 70 A. 314, 19
L.R.A.,N.S., 923 (E. & A.1907); Frank R. Jelleff, Inc. v. Braden, 98
U.S.App.D.C. 180, 233 F.2d 671, 63 A.L.R.2d 400 (D.C.App.1956); 2 Harper &
James, supra s 28.15; Prosser, supra 494, 506, 523. As the Sales Act and its liberal interpretation by the courts
threw this protective cloak about the buyer, the decisions in various
jurisdictions revealed beyond doubt that many manufacturers took steps to avoid
these ever increasing warranty obligations. Realizing that the act governed the
relationship of buyer and seller, they undertook to withdraw from actual and
direct contractual contact with [*373] the buyer. They
ceased selling products to the consuming public through their own employees and
making contracts of sale in their own names. Instead, a system of independent
dealers was established; their products were sold to dealers who in turn dealt
with the buying public, ostensibly solely in their own personal capacity as
sellers. In the past in many instances, manufacturers were able to transfer to
the dealers burdens imposed by the act and thus achieved a large measure of
immunity for themselves. But, as will be noted in more detail hereafter, such
marketing practices, coupled with the advent of large scale advertising by
manufacturers to promote the purchase of these goods from dealers by members of
the public, provided a basis upon which the existence of express or implied
warranties was predicated, even though the manufacturer was not a party to the
contract of sale. The general observations that have been made are important largely
for purposes of perspective. They are helpful in achieving a point from which
to evaluate the situation now presented for solution. Primarily, they reveal a
trend and a design in legislative and judicial thinking toward providing
protection for the buyer. It must be noted, however, that the sections of the
Sales Act, to which reference has been made, do not impose warranties in terms
of unalterable absolutes. R.S. 46:30-3, N.J.S.A., provides in general terms
that an applicable warranty may be negatived or varied by express agreement. As
to disclaimers or limitations of the obligations that normally attend a sale,
it seems sufficient at this juncture to say they are not [**78] favored,
and that they are strictly construed against the seller. 2 Harper & James,
supra s 28.25; Vold, supra p. 459; ‘Warranties of Kind &
Quality,’ 57 Yale L.J. 1388, 1400-1401 (1948). With these considerations in mind, we come to a study of the
express warranty on the reverse side of the purchase order signed by Claus
Henningsen. At the outset we take notice that it was made only by the
manufacturer and that by its terms it runs directly to Claus Henningsen. [*374] On
the facts detailed above, it was to be extended to him by the dealer as the
agent of Chrysler Corporation. The consideration for this warranty is the
purchase of the manufacturer’s product from the dealer by the ultimate
buyer. Studebaker Corp. v. Nail, 82 Ga.App. 779, 62 S.E.2d 198
(Ct.App.1950). Although the franchise agreement between the defendants recites
that the relationship of principal and agent is not created, in particular
transactions involving third persons the law will look at their conduct and not
to their intent or their words as between themselves but to their factual
relation. Restatement (Second), Agency s 27 (1958). The normal pattern that the
manufacturer-dealer relationship follows relegates the position of the dealer
to the status of a way station along the car’s route from maker to
consumer. This is indicated by the language of the warranty. Obviously the
parties knew and so intended that the dealer would not use the automobile for
90 days or drive it 4,000 miles. And the words ‘original
purchaser,’ taken in their context, signify the purchasing member of
the public. Columbia Motors Co. v. Williams, 209 Ala. 640, 96 So.
900 (Sup.Ct.1923); Miller Rubber Co. v. Blewster-Stephens Service Station, 171 Ark.
1179, 287 S.W. 577, 59 A.L.R. 1237 (Sup.Ct.1926). Moreover, the language of
this warranty is that of the uniform warranty of the Automobile Manufacturers
Association, of which Chrysler is a member. See Automotive Facts & Figures,
1958 Edition, published by Automotive Manufacturers Association, p. 69;
Automotive News 1959 Almanac (Slocum Publishing Co., Inc., Detroit) p. 25. And
it is the form appearing in the Plymouth Owner Service Certificate mentioned in
the servicing instruction guide sent with the new car from the factory. The
evidence is overwhelming that the dealer acted for Chrysler in including the
warranty in the purchase contract. And see, Studebaker Corp. v. Nail, supra; Advance
Rumley Thresher Co. v. Briggs Hardware Co., 202 Mo.App. 603,
206 S.W. 587 (Ct.App.1918); [*375] New Way
Motor Co. v. Farmers’ Electro-Lighting Co., 48 S.D. 4, 201 N.W.
1000 (Sup.Ct.1925); Pelletier v. Brown Bros. Chevrolet & Oldsmobile, 164
N.Y.S.2d 249 (Sup.Ct.1956); Fetzer v. Haralson, 147 S.W. 290
(Tex.Civ.App.1912); cf. General Motors Corporation v. Dodson, 47 Tenn. App. 438, 338 S.W.2d 655 (Jan. 15,
1960). The terms of the warranty are a sad commentary upon the automobile
manufacturers’ marketing practices. Warranties developed in the law in
the interest of and to protect the ordinary consumer who cannot be expected to
have the knowledge or capacity or even the opportunity to make adequate
inspection of mechanical instrumentalities, like automobiles, and to decide for
himself whether they are reasonably fit for the designed purpose. Greenland
Develop. Corp. v. Allied Heat. Prod. Co., 184 Va. 588, 35
S.E.2d 801, 164 A.L.R. 1312 (Sup.Ct.App.1945); 1 Williston, supra, pp. 625,
626. But the ingenuity of the Automobile Manufacturers Association, by means of
its standardized form, has metamorphosed the warranty into a device to limit
the maker’s liability. To call it an ‘equivocal’
agreement, as the Minnesota Supreme Court did, is the least that can be said in
criticism of it. Federal Motor Truck Sales Corporation v. Shamus, 190 Minn.
5, 250 N.W. 713, 714 (Sup.Ct.1933). The manufacturer agrees to replace defective parts for 90 days
after the sale or until the car has been driven 4,000 miles, whichever is first
to occur, If the part is [**79] sent to the factory,
transportation charges prepaid, and if examination discloses to its
satisfaction that the part is defective. It is difficult to imagine a greater
burden on the consumer, or less satisfactory remedy. Aside from imposing on the
buyer the trouble of removing and shipping the part, the maker has sought to
retain the uncontrolled discretion to decide the issue of defectiveness. Some
courts have removed much of the force of that reservation by declaring that the
purchaser is not bound by the manufacturer’s decision. Mills v.
Maxwell Motor Sales Corporation, 105 Neb. 465, [*376] 181
N.W. 152, 22 A.L.R. 130 (Sup.Ct.1920); Cannon v. Pulliam Motor Company, 230 S.C.
131, 94 S.E.2d 397 (Sup.Ct.1956). In the Mills case, the court said: ‘It would nevertheless be repugnant to every conception
of justice to hold that, if the parts thus returned for examination were, in
point of fact, so defective as to constitute a breach of warranty, the
appellee’s right of action could be defeated by the
appellant’s arbitrary refusal to recognize that fact. Such an
interpretation would substitute the appellant for the courts in passing upon
the question of fact, and would be unreasonable.’ Supra, 181 N.W.
at page 154. Also suppose, as in this case, a defective part or parts caused an
accident and that the car was so damaged as to render it impossible to discover
the precise part or parts responsible, although the circumstances clearly
pointed to such fact as the cause of the mishap. Can it be said that the
impossibility of performance deprived the buyer of the benefit of the warranty? Moreover, the guaranty is against defective workmanship. That
condition may arise from good parts improperly assembled. There being no
defective parts to return to the maker, is all remedy to be denied? One court
met that type of problem by holding that where the purchaser does not know the
precise cause of inoperability, calling a car a ‘vibrator’
would be sufficient to state a claim for relief. It said that such a car is not
an uncommon one in the industry. The general cause of the vibration is not
known. Some part or parts have been either defectively manufactured or
improperly assembled in the construction and manufacture of the automobile. In
the operation of the car, these parts give rise to vibrations. The difficulty
lies in locating the precise spot and cause. Allen v. Brown, 181 Kan.
301, 310 P.2d 923 (Sup.Ct.1957). But the warranty does not specify what the
purchaser must do to obtain relief in such case, if a remedy is intended to be
provided. Must the purchaser return the car, transportation charges prepaid,
over a great distance to the factory? It may be said that in the usual [*377] case
the dealer also gives the same warranty and that as a matter of expediency the
purchaser should turn to him. But under the law the buyer is entitled to
proceed against the manufacturer. Further, dealers’ franchises are
precarious (see, Automobile Franchise Agreements, Hewitt (1956)). For example,
Bloomfield Motors’ franchise may be cancelled by Chrysler on 90
days’ notice. And obviously dealers’ facilities and capacity,
financial and otherwise, are not as sufficient as those of the primarily
responsible manufacturer in his distant factory. The matters referred to represent only a small part of the
illusory character of the security presented by the warranty. Thus far the
analysis has dealt only with the remedy provided in the case of a defective
part. What relief is provided when the breach of the warranty results in personal
injury to the buyer? (Injury to third persons using the car in the
purchaser’s right will be treated hereafter.) As we have said above,
the law is clear that such damages are recoverable under an ordinary warranty.
The right exists whether the warranty sued on is express or implied. See, e.g.,
Ryan v. Progressive Grocery Stores, supra. And, of course, it has long since
been settled that where the buyer or a member of his family driving with his
permission suffers injuries because of negligent [**80]
manufacture or construction of the the manufacturer’s liability
exists. Prosser, supra, ss 83, 84. But in this instance, after
reciting that defective parts will be replaced at the factory, the alleged
agreement relied upon by Chrysler provides that the manufacturer’s
‘obligation under this warranty’ is limited to that
undertaking; further, that such remedy is ‘in lieu of all other
warranties, express or implied, and all other obligations or liabilities on its
part.’ The contention has been raised that such language bars any
claim for personal injuries which may emanate from a breach of the warranty.
Although not urged in this case, it has been successfully maintained that the
exclusion ‘of all other obligations and liabilities on its
part’ precludes [*378] a cause of action for injuries
based on negligence. Shafer v. Reo Motors, 205 F.2d 685 (3 Cir.
1953). Another Federal Circuit Court of Appeals holds to the contrary. Doughnut
Mach. Corporation v. Bibbey, 65 F.2d 634 (1 Cir. 1933). There can be
little doubt that justice is served only by the latter ruling. Putting aside for the time being the problem of the efficacy of
the disclaimer provisions contained in the express warranty, a question of
first importance to be decided is whether an implied warranty of
merchantability by Chrysler Corporation accompanied the sale of the automobile
to Claus Henningsen. Preliminarily, it may be said that the express warranty against
defective parts and workmanship is not inconsistent with an implied warranty of
merchantability. Such warranty cannot be excluded for that reason. Knapp v.
Willys-Ardmore, Inc., 174 Pa.Super. 90, 100 A.2d 105 (1953). And
see, Hambrick v. Peoples Mercantile & Implement Co., 228 Ark.
1021, 311 S.W.2d 785 (Sup.Ct.1958); Hardy v. General Motors Acceptance
Corporation, 38 Ga.App. 463, 144 S.E. 327 (Ct.App.1928); Bekkevold
v. Potts, 173 Minn. 87, 216 N.W. 790, 59 A.L.R. 1164 (Sup.Ct.1927); Hooven
& Allison Co. v. Wirtz, 15 N.D. 477, 107 N.W. 1078 (Sup.Ct.1906); Frigidinners,
Inc. v. Branchtown Gun Club, supra. Chrysler points out that an implied warranty of merchantability is
an incident of a contract of sale. It concedes, of course, the making of the
original sale to Bloomfield Motors, Inc., but maintains that this transaction
marked the terminal point of its contractual connection with the car. Then
Chrysler urges that since it was not a party to the sale by the dealer to
Henningsen, there is no privity of contract between it and the plaintiffs, and the
absence of this privity eliminates any such implied warranty. There is no doubt that under early common-law concepts of
contractual liability only those persons who were parties to the bargain could
sue for a breach of it. In more recent [*379]
times a noticeable disposition has appeared in a number of jurisdictions to
break through the narrow barrier of privity when dealing with sales of goods in
order to give realistic recognition to a universally accepted fact. The fact is
that the dealer and the ordinary buyer do not, and are not expected to, buy
goods, whether they be foodstuffs or automobiles, exclusively for their own
consumption or use. Makers and manufacturers know this and advertise and market
their products on that assumption; witness, the ‘family’ car,
the baby foods, etc. The limitations of privity in contracts for the sale of
goods developed their place in the law when marketing conditions were simple,
when maker and buyer frequently met face to face on an equal bargaining plane and
when many of the products were relatively uncomplicated and conducive to
inspection by a buyer competent to evaluate their quality. See, Freezer,
‘Manufacturer’s Liability for Injuries Caused by His
Products,’ 37 Mich.L.Rev. 1 (1938). With the advent of mass marketing,
the manufacturer became remote from the purchaser, sales were accomplished
through intermediaries, and the demand for the product was created by
advertising media. In such an economy it became obvious that [**81] the consumer
was the person being cultivated. Manifestly, the connotation of
‘consumer’ was broader than that of
‘buyer.’ He signified such a person who, in the reasonable
contemplation of the parties to the sale, might be expected to use the product.
Thus, where the commodities sold are such that if defectively manufactured they
will be dangerous to life or limb, then society’s interests can only
be protected by eliminating the requirement of privity between the maker and
his dealers and the reasonably expected ultimate consumer. In that way the
burden of losses consequent upon use of defective articles is borne by those
who are in a position to either control the danger or make an equitable
distribution of the losses when they do occur. As Harper & James put it,
‘The interest in consumer protection calls for warranties by the maker
that Do run with the goods, to reach all who are [*380]
likely to be hurt by the use of the unfit commodity for a purpose ordinarily to
be expected.’ 2 Harper & James, supra 1571,
1572; also see, 1535; Prosser, supra, 506-511. As far back as 1932, in the well
known case of Baxter v. Ford Motor Co., 168 Wash. 456, 12
P.2d 409 (Sup.Ct.1932), affirmed 15 P.2d 1118, 88 A.L.R. 521 (Sup.Ct.1932), the
Supreme Court of Washington gave recognition to the impact of then existing
commercial practices on the strait jacket of privity, saying: ‘It would be unjust to recognize a rule that would permit
manufacturers of goods to create a demand for their products by representing
that they possess qualities which they, in fact, do not possess, and then,
because there is no privity of contract existing between the consumer and the
manufacturer, deny the consumer the right to recover if damages result from the
absence of those qualities, when such absence is not readily
noticeable.’ 12 P.2d at page 412. The concept was expressed in a practical way by the Supreme Court
of Texas in Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex.
609, 164 S.W.2d 828, 833, 142 A.L.R. 1479 (1942): ‘In fact, the manufacturer’s interest in the
product is not terminated when he has sold it to the wholesaler. He must get it
off the wholesaler’s shelves before the wholesaler will buy a new
supply. The same is not only true of the retailer, but of the house wife, for
the house wife will not buy more until the family has consumed that which she
has in her pantry. Thus the manufacturer or other vendor intends that this
appearance of suitability of the article for human consumption should continue
and be effective until some one is induced thereby to consume the goods. It
would be but to acknowledge a weakness in the law to say that he could thus
create a demand for his products by inducing a belief that they are suitable
for human consumption, when, as a matter of fact, they are not, and reap the
benefits of the public confidence thus created, and then avoid liability for
the injuries caused thereby merely because there was no privity of contract
between him and the one whom he induced to consume the food. * * *’ Although only a minority of jurisdictions have thus far departed
from the requirement of privity, the movement in that direction is most
certainly gathering momentum. Liability [*381] to
the ultimate consumer in the absence of direct contractual connection has been
predicated upon a variety of theories. Some courts hold that the warranty runs
with the article like a covenant running with land; others recognize a
third-party beneficiary thesis; still others rest their decision on the ground
that public policy requires recognition of a warranty made directly to the
consumer. Welter v. Bowman Dairy Co., 318 Ill.App. 305, 47
N.E.2d 739 (App.Ct.1943); Bahlman v. Hudson Motor Car Co., 290
Mich. 683, 288 N.W. 309 (Sup.Ct.1939); [**82] Worley
v. Procter & Gamble Mfg. Co., 241 Mo.App. 1114, 253 S.W.2d 532
(Ct.App.1953); Markovich v. McKesson and Robbins, Inc., 106 Ohio
App. 265, 149 N.E.2d 181 (Ct.App.1958); 2 Harper & James, supra, 1573;
Prosser, supra, 507; Jeanblanc, ‘Manufacturers’
Liability to Persons other than their Immediate Vendees,’ 24 Va.L.Rev.
134, 156 (1937). Further reference to Decker, supra, is enlightening: ‘There certainly is justification for indulging a
presumption of a warranty that runs with the article in the sale of food
products. A party who processes a product and gives it the appearance of being
suitable for human consumption, and places it in the channels of commerce,
expects some one to consume the food in reliance on its appearance that it is
suitable for human consumption. He expects the appearance of suitableness to
continue with the product until some one is induced to consume it as food. But
a modern manufacturer or vendor does even more than this under modern
practices. He not only processes the food and dresses it up so as to make it
appear appetizing, but he uses the newspapers, magazines, billboards, and the
radio to build up the psychology to buy and consume his products. The
invitation extended by him is not only to the house wife to buy and serve his
product, but to the members of the family and guest to eat it. * * * The mere
fact that a manufacturer or other vendor may thus induce the public to consume
unwholesome food evidences the soundness of the rule which imposes a warranty,
As a matter of public policy on the sale of food or other products intended for
human consumption.’ 164 S.W.2d at pages 832, 833. (Emphasis added.) In Patargias v. Coca-Cola Bottling Co. of Chicago, 332
Ill.App. 117, 74 N.E.2d 162 (App.Ct.1947), involving the sale of a bottle of
coca-cola by a dealer, the court said: [*382] ‘We are impelled to hold that, where an
article of food or drink is sold in a a sealed container for human consumption,
public policy demands that an implied warranty be imposed upon the manufacturer
thereof that such article is wholesome and fit for use, that said warranty Runs
with the sale of the article for the benefit of the consumer thereof * *
*.’ 74 N.E.2d at page 169. (Emphasis added.) And in Worley v. Procter & Gamble Mfg. Co., supra, it was
said that: ‘In the case of food products sold in original packages,
and other articles dangerous to life (here a box of soap powder), if defective,
the manufacturer, who alone is in a position to inspect and control their
preparation, should be held as a warrantor, whether he purveys his products by
his own hand, or through a network of independent distributing agencies. In
either case, the essence of the situation is the same—the placing of
goods in the channels of trade, representations directed to the ultimate
consumer, and damaging reliance by the latter on those representations. Such
representations, being inducements to the buyers making the purchase, should be
regarded as warranties imposed by law, independent of the vendors’
contractual intentions. The liability thus imposed springs from representations
directed to the ultimate consumer, and not from the breach of any contractual
undertaking on the part of the vendor. This is in accord with the original
theory of the action * * *.’ 253 S.W.2d at page 537. (Insertion ours.) See to the same effect: Davis v. Van Camp Packing Co., 189 Iowa
775, 176 N.W. 382, 17 A.L.R. 649 (Sup.Ct.1920); Nichols v. Nold, 174 Kan.
613, 258 P.2d 317, 38 A.L.R.2d 887 (Sup.Ct.1953); [**83] Parks
v. G. C. Yost Pie Co., 93 Kan. 334, 144 P. 202, L.R.A. 1915C, 179
(Sup.Ct.1914); Madouros v. Kansas City Coca-Cola Bottling Co., 230
Mo.App. 275, 90 S.W.2d 445 (Ct.App.1936); Ward v. Morehead City Sea Food Co., 171 N.C.
33, 87 S.E. 958 (Sup.Ct.1916). Most of the cases where lack of privity has not been permitted to
interfere with recovery have involved food and drugs. Haut v. Kleene, 320
Ill.App. 273, 50 N.E.2d 855 (App.Ct.1943); Welter v. Bowman Dairy Co.,
supra; Davis v. Van Camp Packing Co., supra; Madouros v.
Kansas [*383] City Coca-Cola Bottling Co., supra; Greenberg
v. Lorenz, 12 Misc.2d 883, 178 N.J.S.2d 407 (Sup.Ct.1958); Ryan v.
Progressive Grocery Stores, Inc., supra; Jacob E. Decker & Sons, Inc. v.
Capps, supra; La Hue v. Coca-Cola Bottling, 50 Wash.2d 645, 314
P.2d 421 (Sup.Ct.1957). In fact, the rule as to such products has been
characterized as an exception to the general doctrine. But more recently
courts, sensing the inequity of such limitation, have moved into broader
fields: home permanent wave set, Markovich v. McKesson and Robbins, Inc.,
supra; Rogers v. Toni Home Permanent Co., 167 Ohio St. 244,
147 N.E.2d 612 (Sup.Ct.1958); soap detergent, Worley v. Procter & Gamble
Mfg. Co., supra; inflammable cowboy suit (by clear implication), Blessington
v. McCrory Stores Corp., 305 N.Y. 140, 111 N.E.2d 421, 37 A.L.R.2d
698 (Ct.App.1953); exploding bottle, Mahoney v. Shaker Square Beverages, 46
Ohio Op. 250, 102 N.E.2d 281 (C.P.1951); defective emery wheel, DiVello v.
Gardner Machine Co., 46 Ohio Op. 161, 102 N.E.2d 289 (C.P.1951);
defective wire rope, Mannsz v. Macwhyte Co., 155 F.2d 445 (3
Cir. 1946); defective cinder blocks, Spence v. Three Rivers Builders &
Masonry Supply, 353 Mich. 120, 90 N.W.2d 873 (Sup.Ct.1958). We see no rational doctrinal basis for differentiating between a
fly in a bottle of beverage and a defective automobile. The unwholesome
beverage may bring illness to one person, the defective car, with its great
potentiality for harm to the driver, occupants, and others, demands even less
adherence to the narrow barrier of privity. 2 Harper & James, supra, 1572;
1 Williston, supra, s 244a, p. 648; Note, 46 Harv.L.Rev. 161 (1932). In Mannsz
v. Macwhyte Co., supra, Chief Judge Biggs, speaking for the Third
Circuit Court of Appeals, said: ‘We think it is clear that whether the approach to the
problem be by way of warranty or under the doctrine of negligence, the
requirement of privity between the injured party and the manufacturer [*384] of the
article which has injured him has been obliterated from the Pennsylvania law.
The abolition of the doctrine occurred first in the food cases, next in the
beverage decisions and now it has been extended to those cases in which the
article manufactured, not dangerous or even beneficial if properly made,
injured a person because it was manufactured improperly.’ 155 F.2d at
pages 449-450. Under modern conditions the ordinary layman, on responding to the
importuning of colorful advertising, has neither the opportunity nor the
capacity to inspect or to determine the fitness of an automobile for use; he
must rely on the manufacturer who has control of its construction, and to some
degree on the dealer who, to the limited extent called for by the manufacturer’s
instructions, inspects and services it before delivery. In such a marketing
milieu his remedies and those of persons who properly claim through him should
not depend ‘upon the intricacies of the law of sales. The obligation
of the manufacturer should not be based alone on privity of contract. It should
rest, as was once said, upon ‘the demands of social justice." Mazetti
v. Armour & Co., 75 Wash. 622, 135 P. 633, 635, 48
L.R.A.,N.S., 213 (Sup.Ct.1913). ‘If privity of contract is required,’
then, under the circumstances of modern merchandising, ‘privity of
contract exists in the consciousness and understanding of all right-thinking
persons.’ [**84] Madouros v. Kansas
City Coca-Cola Bottling Co., supra, 90 S.W.2d at page 450. Accordingly, we hold that under modern marketing conditions, when
a manufacturer puts a new automobile in the stream of trade and promotes its
purchase by the public, an implied warranty that it is reasonably suitable for
use as such accompanies it into the hands of the ultimate purchaser. Absence of
agency between the manufacturer and the dealer who makes the ultimate sale is
immaterial. [*385] II. The Effect of the Disclaimer and Limitation of Liability Clauses
on the Implied Warranty of Merchantability. Judicial notice may be taken of the fact that automobile
manufacturers, including Chrysler Corporation, undertake large scale
advertising programs over television, radio, in newspapers, magazines and all
media of communication in order to persuade the public to buy their products.
As has been observed above, a number of jurisdictions, conscious of modern
marketing practices, have declared that when a manufacturer engages in
advertising in order to bring his goods and their quality to the attention of
the public and thus to create consumer demand, the representations made
constitute an express warranty running directly to a buyer who purchases in
reliance thereon. The fact that the sale is consummated with an independent
dealer does not obviate that warranty. Mannsz v. Macwhyte Co., supra;
Bahlman v. Hudson Motor Car Co., supra; Rogers v. Toni Home Permenent Co.,
supra; Meyer v. Packard Cleveland Motor Co., 106 Ohio St. 328,
140 N.E. 118, 28 A.L.R. 986 (1922); Baxter v. Ford Motor Co., supra; 1 Williston,
Sales, supra s 244a. In view of the cases in various jurisdictions suggesting the
conclusion which we have now reached with respect to the implied warranty of
merchantability, it becomes apparent that manufacturers who enter into
promotional activities to stimulate consumer buying may incur warranty
obligations of either or both the express or implied character. These
developments in the law inevitably suggest the inference that the form of
express warranty made part of the Henningsen purchase contract was devised for
general use in the automobile industry as a possible means of avoiding the
consequences of the growing judicial acceptance of the thesis that the
described express or implied warranties run directly to the consumer. [*386] In the light of these matters, what effect should
be given to the express warranty in question which seeks to limit the
manufacturer’s liability to replacement of defective parts, and which
disclaims all other warranties, express or implied? In assessing its significance
we must keep in mind the general principle that, in the absence of fraud, one
who does not choose to read a contract before signing it, cannot later relieve
himself of its burdens. Fivey v. Pennsylvania R.R. Co., 67
N.J.L. 627, 52 A. 472, (E. & A.1902). And in applying that principle, the
basic tenet of freedom of competent parties to contract is a factor of
importance. But in the framework of modern commercial life and business
practices, such rules cannot be applied on a strict, doctrinal basis. The
conflicting interests of the buyer and seller must be evaluated realistically
and justly, giving due weight to the social policy evinced by the Uniform Sales
Act, the progressive decisions of the courts engaged in administering it, the
mass production methods of manufacture and distribution to the public, and the
bargaining position occupied by the ordinary consumer in such an economy. This
history of the law shows that legal doctrines, as first expounded, often prove
to be inadeqate under the impact of later experience. In such case, the need
for justice has stimulated the necessary qualifications or adjustments. [**84] Perkins
v. Endicott Johnson Corporation, 128 F.2d 208, 217 (2 Cir. 1942),
affirmed 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed. 424 (1943); Greenberg v.
Lorenz, supra. In these times, an automobile is almost as much a servant of
convenience for the ordinary person as a household utensil. For a multitude of
other persons it is a necessity. Crowded highways and filled parking lots are a
commonplace of our existence. There is no need to look any farther than the
daily newspaper to be convinced that when an automobile is defective, it has
great potentiality for harm. No one spoke more graphically on this subject than Justice Cardozo
in the landmark case of [*387] MacPherson v. Buick Motor Co., 217 N.Y.
382, 111 N.E. 1050, 1053, L.R.A.1916F, 696 (Ct.App.1916): ‘Beyond all question, the nature of an automobile gives
warning of probable danger if its construction is defective. This automobile
was designed to go 50 miles per hour. Unless its wheels were sound and strong,
injury was almost certain. It was as much a thing of danger as a defective
engine for a railroad. * * * The dealer was indeed the one person of whom it
might be said with some approach to certainty that by him the car would not be
used. * * * Precedents drawn from the days of travel by stagecoach do not fit
the conditions of travel to-day. The principle that the danger must be imminent
does not change, but the things subject to the principle do change. They are
whatever the needs of life in a developing civilization require them to
be.’ In the 44 years that have intervened since that utterance, the
average car has been constructed for almost double the speed mentioned; 60
miles per hour is permitted on our parkways. The number of automobiles in use
has multiplied many times and the hazard to the user and the public has
increased proportionately. The Legislature has intervened in the public
interest, not only to regulate the manner of operation on the highway but also
to require periodic inspection of motor vehicles and to impose a duty on
manufacturers to adopt certain safety devices and methods in their
construction. R.S. 39:3-43 et seq., N.J.S.A. It is apparent that the public has
an interest not only in the safe manufacture of automobiles, but also, as shown
by the Sales Act, in protecting the rights and remedies of purchasers, so far
as it can be accomplished consistently with our system of free enterprise. In a
society such as ours, where the automobile is a common and necessary adjunct of
daily life, and where its use is so fraught with danger to the driver,
passengers and the public, the manufacturer is under a special obligation in
connection with the construction, promotion and sale of his cars. Consequently,
the courts must examine purchase agreements closely to see if consumer and
public interests are treated fairly. [*388] What influence should these circumstances have on
the restrictive effect of Chrysler’s express warranty in the framework
of the purchase contract? As we have said, warranties originated in the law to
safeguard the buyer and not to limit the liability of the seller or
manufacturer. It seems obvious in this instance that the motive was to avoid
the warranty obligations which are normally incidental to such sales. The
language gave little and withdrew much. In return for the delusive remedy of
replacement of defective parts at the factory, the buyer is said to have
accepted the exclusion of the maker’s liability for personal injuries
arising from the breach of the warranty, and to have agreed to the elimination
of any other express or implied warranty. An instinctively felt sense of
justice cries out against such a sharp bargain. But does the doctrine that a
person is bound by his signed agreement, in the absence of fraud, stand in the
way of any relief? In the modern consideration of problems such as this, Corbin
suggests that practically all judges are ‘chancellors’ and
cannot [**86] fail to be influenced by any equitable
doctrines that are available. And he opines that ‘there is sufficient
flexibility in the concepts of fraud, duress, misrepresentation and undue
influence, not to mention differences in economic bargaining power’ to
enable the courts to avoid enforcement of unconscionable provisions in long
printed standardized contracts. 1 Corbin on Contracts (1950) s 128, p. 188.
Freedom of contract is not such an immutable doctrine as to admit of no
qualification in the area in which we are concerned. As Chief Justice Hughes
said in his dissent in Morehead v. People of State of New York ex rel.
Tipaldo, 298 U.S. 587,
627, 56 S.Ct. 918, 930, 80 L.Ed. 1347, 1364 (1936): ‘We have had frequent occasion to consider the
limitations on liberty of contract. While it is highly important to preserve
that liberty from arbitrary and capricious interference, it is also necessary
to prevent its abuse, as otherwise it could be used to override all public
interests and thus in the end destroy the very freedom of opportunity which it
is designed to safeguard.’ [*389] That sentiment was echoed by Justice Frankfurter in
his dissent in United States v. Bethlehem Steel Corp., 315 U.S. 289, 326, 62 S.Ct.
581, 599, 86 L.Ed. 855, 876 (1942): ‘It is said that familiar principles would be outraged if
Bethlehem were denied recovery on these contracts. But is there any principle
which is more familiar or more firmly embedded in the history of Anglo-American
law than the basic doctrine that the courts will not permit themselves to be
used as instruments of inequity and injustice? Does any principle in our law
have more universal application than the doctrine that courts will not enforce
transactions in which the relative positions of the parties are such that one
has unconscionably taken advantage of the necessities of the other? ‘These principles are not foreign to the law of
contracts. Fraud and physical duress are not the only grounds upon which courts
refuse to enforce contracts. The law is not so primitive that it sanctions
every injustice except brute force and downright fraud. More specifically, the
courts generally refuse to lend themselves to the enforcement of a
‘bargain’ in which one party has unjustly taken advantage of
the economic necessities of the other. * * *’ The traditional contract is the result of free bargaining of
parties who are brought together by the play of the market, and who meet each
other on a footing of approximate economic equality. In such a society there is
no danger that freedom of contract will be a threat to the social order as a
whole. But in present-day commercial life the standardized mass contract has
appeared. It is used primarily by enterprises with strong bargaining power and
position. ‘The weaker party, in need of the goods or services, is
frequently not in a position to shop around for better terms, either because
the author of the standard contract has a monopoly (natural or artificial) or
because all competitors use the same clauses. His contractual intention is but
a subjection more or less voluntary to terms dictated by the stronger party,
terms whose consequences are often understood in a vague way, if at
all.’ Kessler,’ Contracts of Adhesion-Some Thoughts About
Freedom of Contract,’ 43 Colum.L.Rev. 629, 632 (1943); Ehrenzweig,
‘Adhesion Contracts in the Conflict of Laws,’ 53 Colum.L.Rev.
1072, 1075, 1089 (1953). Such standardized contracts have been [*390]
described as those in which one predominant party will dictate its law to an
undetermined multiple rather than to an individual. They are said to resemble a
law rather than a meeting of the minds. Siegelman v. Cunard White Star, 221 F.2d
189, 206 (2 Cir.1955). Vold, in the recent revision of his Law of Sales (2d ed. 1959) at
page 447, wrote [**87] of this type of
contract and its effect upon the ordinary buyer: ‘In recent times the marketing process has been getting
more highly organized than ever before. Business units have been expanding on a
scale never before known. The standardized contract with its broad disclaimer
clauses is drawn by legal advisers of sellers widely organized in trade
associations. It is encountered on every hand. Extreme inequality of bargaining
between buyer and seller in this respect is now often conspicuous. Many buyers
no longer have any real choice in the matter. They must often accept what they
can get though accompanied by broad disclaimers. The terms of these disclaimers
deprive them of all substantial protection with regard to the quality of the
goods. In effect, this is by force of contract between very unequal parties. It
throws the risk of defective articles on the most dependent party. He has the
least individual power to avoid the presence of defects. He also has the least
individual ability to bear their disastrous consequences.’ The warranty before us is a standardized form designed for mass
use. It is imposed upon the automobile consumer. He takes it or leaves it, and
he must take it to buy an automobile. No bargaining is engaged in with respect
to it. In fact, the dealer through whom it comes to the buyer is without authority
to alter it; his function is ministerial—simply to deliver it. The
form warranty is not only standard with Chrysler but, as mentioned above, it is
the uniform warranty of the Automobile Manufacturers Association. Members of
the Association are: General Motors, Inc., Ford, Chrysler, Studebaker-Packard,
American Motors, (Rambler), Willys Motors, Checker Motors Corp., and
International Harvester Company. Automobile Facts and Figures (1958 Ed.,
Automobile Manufacturers Association) 69. Of these companies, the ‘Big
Three’ (General Motors, Ford, and Chrysler) represented 93.5% Of the
passenger-car production for 1958 [*391] and
the independents 6.5%. Standard & Poor (Industrial Surveys, Autos, Basic
Analysis, June 25, 1959) 4109. And for the same year the ‘Big
Three’ had 86.72% Of the total passenger vehicle registrations.
Automotive News, 1959 Almanac (Slocum Publishing Co., Inc.) p. 25. The gross inequality of bargaining position occupied by the
consumer in the automobile industry is thus apparent. There is no competition
among the car makers in the area of the express warranty. Where can the buyer
go to negotiate for better protection? Such control and limitation of his
remedies are inimical to the public welfare and, at the very least, call for
great care by the courts to avoid injustice through application of strict
common-law principles of freedom of contract. Because there is no competition
among the motor vehicle manufacturers with respect to the scope of protection
guaranteed to the buyer, there is no incentive on their part to stimulate good
will in that field of public relations. Thus, there is lacking a factor
existing in more competitive fields, one which tends to guarantee the safe
construction of the article sold. Since all competitors operate in the same
way, the urge to be careful is not so pressing. See ‘Warranties of
Kind and Quality,’ 57 Yale L.J. 1389, 1400 (1948). Although the courts, with few exceptions, have been most sensitive
to problems presented by contracts resulting from gross disparity in
buyer-seller bargaining positions, they have not articulated a general
principle condemning, as opposed to public policy, the imposition on the buyer
of a skeleton warranty as a means of limiting the responsibility of the
manufacturer. They have endeavored thus far to avoid a drastic departure from
age-old tenets of freedom of contract by adopting doctrines of strict
construction, and notice and knowledgeable assent by the buyer to [**88] the
attempted exculpation of the seller. 1 Corbin, supra, 337; 2 Harper &
James, supra, 1590; Prosser, ‘Warranty of Merchantable
Quality,’ 27 Minn.L.Rev. 117, 159 (1932). Accordingly to be found in
the cases are statements that disclaimers and [*392] the
consequent limitation of liability will not be given effect if
‘unfairly procured,’ Davis Motors, Dodge and Plymouth Co. v.
Avett, 294 S.W.2d 882, 887 (Tex.civ.App.1956); International Harvester Co. of
America v. Bean, 159 Ky. 842, 169 S.W. 549 (Ct.App.1914); if not brought to the
buyer’s attention and he was not made understandingly aware of it, Vaughan’s
Seed Store v. Stringfellow, 56 Fla. 708, 48 So. 410 (Sup.Ct.1908); Parsons
Band Cutter & Self-Feeder Co. v. Haub, 83 Minn. 180, 86
N.W. 14 (Sup.Ct.1901); Bell v. Mills, 78 App.Div. 42, 80
N.Y.S. 34 (1902); Landreth v. Wyckoff, 67 App.Div. 145, 73
N.Y.S. 388 (1901); St. Louis Cordage Mills v. Western Supply Co., 54 Okl.
757, 154 P. 646 (Sup.Ct.1916); Reliance Varnish Co. v. Mullins Lumber Co., 213 S.C.
84, 48 S.E.2d 653 (Sup.Ct.1948); Stevenson v. B. B. Kirkland Seed Co., 176 S.C.
345, 180 S.E. 197 (Sup.Ct.1935); Black v. B. B. Kirkland Seed Co., 158 S.C.
112, 155 S.E. 268 (Sup.Ct.1930); or if not clear and explicit, McPeak v.
Boker, 236 Minn. 420, 53 N.W.2d 130 (Sup.Ct.1952). Some of these cases are worthy of more specific reference. In Stevenson
v. B. B. Kirkland Seed Co., supra (176 S.C. 345, 180
S.E. 199), plaintiff asked for Abruzzi rye seed and defendant’s agent
sold seed to him as such. The invoice contained a non-warranty or disclaimer
clause to the effect that no warranty, express or implied, was given by the
seller ‘as to description, quality, productiveness, or any other
matter of any seeds, bulbs, or plants,’ that there would be no
responsibility for the crop, and that if the goods were not acceptable they
were to be returned at once. The seed was discovered not to be Abruzzi when it
had grown sufficiently to be distinguished. In the absence of proof that the
disclaimer was actually brought to the attention of the buyer, it was declared
not binding. In St. Louis Cordage Mills v. Western Supply Co., supra (54 Okl.
757, 154 P. 648), the seller claimed that a card was attached to certain cables
when they were sold. It purported to notify plaintiff that defendant
‘sells no goods [*393] with a warranty.’ On
this basis, the contention was advanced that any oral guaranty was rebutted.
The ‘complete answer’ was adjudged to be that the record
failed to show that the card was brought to the attention of the plaintiff. And
the court went on to say that if there was evidence tending to establish the
fact, the problem was for determination by the jury. International Harvester Co. of America v. Bean, supra, involved
the purchase of an ‘auto wagon’ which the buyer wanted for
use in the transportation of passengers and their baggage between two cities.
He explained the kind of roads to be traversed and the salesman recommended the
type of vehicle purchased. The car could not operate on the roads described and
rescission was sought. International Harvester contended that the only warranty extended
was contained in the purchase order. It was substantially similar to the one in
the present case, providing for the replacement of defective parts over a
60-day period and reciting that ‘This express warranty excludes all
implied warranties.’ The Kentucky Court of Appeals affirmed a
rescission judgment saying: ‘It must be borne in mind that the warranty of fitness
for a particular use, which is implied by law where a manufacturer sells
machinery for a purpose made known to him by the buyer thereof, relying on the
skill and judgment of the manufacturer in selecting machinery adapted thereto,
is a warranty which attaches itself to the contract of sale, independent of any
express representation by the manufacturer of the suitability of the machinery
[**89] for such use. It attaches by implication of
law as a direct result of the communication by the buyer to the manufacturer of
the nature of the intended use. ‘And while, if the parties to a contract for the sale of
machinery, under such circumstances, expressly stipulate against all warranties
implied by law, none will be imposed by the court against their consent, still
such stipulation will not be given effect unless Fairly made as a part of the
contract of sale. Such a stipulation, relieving, as it does, the manufacturer
from duties imposed by law, will be conclusively presumed to have been inserted
in the contract of sale for the sole benefit of the manufacturer, the
beneficiary of such relieving stipulation, and effect will not be given to such
stipulation unless its inclusion in the contract Was fairly procured. [*394] ‘In the case under consideration, this
stipulation was contained in a printed form of order blank or contract used by
appellant company. The language of the stipulation is extremely technical,
‘This express warranty excludes all implied warranties;’ its meaning
is clear to but few persons. The writing in which such stipulation appears
directs appellant company to furnish to appellee an auto vehicle, a class of
machinery concerning which appellee was indisputably ignorant; and the
particular style or pattern of auto vehicle ordered was that selected and
recommended by the company’s agent; this is undenied. Appellee
testified that he explained to the company’s agent the purposes for
which he intended to use the auto wagon; and it is apparent that, Had he understood
the full import of the stipulation, he would not have signed the order. Under
these circumstances, the court will not say that the stipulation against
implied warranties was fairly procured to be included in the contract of sale.
To hold that it was so included would be to give life to the letter of the
contract and render inanimate the spirit thereof.’ 169 S.W. at pages
550, 551. (Emphasis ours.) The same court, in Myers v. Land, 314 Ky. 514, 235
S.W.2d 988 (1950), made a similar forthright declaration. The plaintiff
purchased a new machine designed and represented as capable of making concrete
blocks. It would not do the work and recovery of the purchase price was sought. The purchase order contained this provision: ‘There are no understandings, agreements, representations
or warranties, expressed or implied, not specified herein respecting this
order. The warranties, provisions, terms and conditions on the reverse side
hereof are expressly made a part of this agreement.’ 235 S.W.2d at
page 990. The back of the order contained special warranties limiting the
seller’s liability to defects in material and workmanship which might
develop under normal use and service, the obligation being limited to making
good at its factory any defective parts. Attention is attracted to the fact that the language quoted above
is more comprehensive and formidable in its adverse implications to the buyer
than in our case. The clause in the Henningsen purchase order makes no express
reference to the exclusion of warranties express or implied except those
appearing on the back of the contract. But in the case under [*395]
discussion, a jury question was held to exist as to the binding effect of the
limitation of liability. The court said: ‘In short, this contract undertakes to eliminate and to
avoid practically every sort of warranty except the very limited one stated.
There is no remedy provided in case the machinery proves to be worthless. The
appellant relies [**90] upon this negation of
an implied warranty. ‘The statute is, in the particulars involved here, a
codification of the prevailing common law on the subject. This court long
before its enactment recognized the principle that it was competent for the
parties to a contract to stipulate expressly against implied or extrinsic
warranties and to confine the obligations of the seller to specific terms. But
we have always required that such limitation of liability shall be plainly
expressed. * * * Though the present disclaimer of warranty is clear in its
terms, we cannot overlook the fact that it is to be found in a long and
formidable document prepared by the seller and that it was doubtless unnoticed
or its import uncomprehended by the buyer. Anyone brought up to believe that
for every wrong there is a remedy will pause before saying that the seller will
escape all liability by merely putting in an order blank a statement to the
effect that there is no assurance that the buyer will get a machine that will
work. We have paused for the moment and have readily concluded that the
avoidance of liability under such a circumstance is not permitted by the law. *
* *’ 235 S.W.2d at page 990. (Emphasis ours.) The sales contract in Reliance Varnish Co. v. Mullins Lumber Co., supra,
contained a limited liability warranty in fine print. The officers of the buyer
who made the purchase testified they had not observed the limiting clause and
that it was not called to their attention. The court pointed out that it was
‘so located as to easily escape attention’ and declared: ‘Certainly it could not be said as a matter of law that
appellant should have been aware of the stipulation. ‘The rule in this
state is that for such a clause to be applicable in any case it must be shown
that it was brought to the attention of the purchaser.’’ 48
S.E.2d at page 659. Although Cutler Corp. v. Latshaw, 374 Pa. 1, 97 A.2d
234 (Sup.Ct.1953), involves a contract for the performance of work for a
homeowner, and not a sale, the result reached [*396] by
the court reflects a pertinent point of view. The contract for the work
contained on its reverse side a warrant of attorney for the confession of
judgment. In denying enforcement, this was said: ‘Equally in the case at bar the defendant did not sign
the warrant of attorney-confession of judgment. The reference on the face side
of the contract to the ‘conditions’ on the reverse side,
among which was buried the supposed authority for a warrant of attorney, can
hardly be accepted in a court of law as an acknowledgment of a confession of
judgment. While the word ‘condition’ may conceivably embrace
almost any circumstance, upon which, or, because of which, a right is created
or a liability attaches, it cannot be used to mean surrender of fundamental
personal and property absolutes unless the word appears within a setting which
warns of the potency of the capitulation being made. ‘The case at bar falls far short of producing evidence
that Miss Latshaw was even aware that a warrant of attorney was remotely
contemplated. The physical characteristics of the five-page document
demonstrate that the reverse sides were entirely ignored.’ 97 A.2d at
page 236. The rigid scrutiny which the courts give to attempted limitations
of warranties and of the liability that would normally flow from a transaction
is not limited to the field of sales of goods. Clauses on baggage checks
restricting the liability of common carriers for loss or damage in transit are
not enforceable unless the limitation is fairly and honestly negotiated and
[**91] understandingly entered into. If not called
specifically to the patron’s attention, it is not binding. It is not
enough merely to show the form of a contract; it must appear also that the
agreement was understandingly made. Hill v. Adams Express Co., 82
N.J.L. 373, 81 A. 859 (E. & A.1911); 1911); S. S. Ansaldo San Giorgio I
v. Rheinstrom Bros. Co., 294 U.S. 494, 55 S.Ct. 483,
79 L.Ed. 1016 (1935) (clause void as against public policy); Ferris v.
Minneapolis & St. L. Ry. Co., 143 Minn. 90, 173 N.W. 178
(Sup.Ct.1919); Healy v. New York Cent. & H.R.R. Co., 153
App.Div. 516, 138 N.Y.S. 287 (1912). The same holds true in cases of such limitations
[*397] on parcel check room tickets, Jones v. Great
Northern Ry. Co., 68 Mont. 231, 217 P. 673, 37 A.L.R. 754 (Sup.Ct.1923); Klar
v. H. & M. Parcel Room, 270 App.Div. 538, 61 N.Y.S.2d 285 (1946),
affirmed 296 N.Y. 1044, 73 N.E.2d 912 (Ct.App.1947); and on storage warehouse
receipts, French v. Bekins Moving & Storage Co., 118 Colo.
424, 195 P.2d 968 (Sup.Ct.1948); Denver Public Warehouse Co. v. Munger, 20
Colo.App. 56, 77 P. 5 (1904); Brasch v. Sloan’s Moving & Storage
Co., 237 Mo.App. 597, 176 S.W.2d 58 (1943); Voyt v. Bekins Moving &
Storage Co., 169 Or. 30, 119 P.2d 586 (Sup.Ct.1941), affirmed on
rehearing 127 P.2d 360 (Sup.Ct.1942); on automobile parking lot or garage
tickets or claim checks, Kravitz v. Parking Service Co., 29
Ala.App. 523, 199 So. 727 (Ct.App.1940); Hoel v. Flour City Fuel & Transfer
Co., 144 Minn. 280, 175 N.W. 300 (Sup.Ct.1919); Miller’s Mut. Fire
Ins. Ass’n of Alton, Ill. v. Parker, 234 N.C. 20, 65
S.E.2d 341 (Sup.Ct.1951); Agricultural Ins. Co. v. Constantine, 144 Ohio
St. 275, 58 N.E.2d 658 (Sup.Ct.1944); as to exculpatory clauses in leases
releasing a landlord of apartments in a multiple dwelling house from all
liability for negligence where inequality of bargaining exists, see Annotation,
175 A.L.R. 8 (1948). And the validity of release clauses in orders signed by a
depositor directing a bank to stop payment of his check, exonerating the bank
from liability for negligent payment, has been seriously questioned on public
policy grounds in this State, Reinhardt v. Passaic-Clifton Nat. Bank, 16
N.J.Super. 430, 436, 84 A.2d 741 (App.Div.1951), affirmed 9 N.J. 607, 89 A.2d
242 (1952). Elsewhere they have been declared void as opposed to public policy.
Speroff v. First-Cent. Trust Co., 149 Ohio St. 415, 79 N.E.2d 119, 1
A.L.R.2d 1150 (Sup.Ct.1948). French v. Bekins Moving & Storage Co., supra (118 Colo.
424, 195 P.2d 970), is particularly significant in the present connection.
There the patron signed a storage receipt which contained blanks in which were
written the details of removal of the household articles, charges and other
information. [*398] Toward the bottom, in ‘smaller
poorly printed five-point type’ were eight lines authorizing the
handling of the goods at a limited valuation. Plaintiff testified that she did
not read the provision and no one informed her of it or of its implications.
The Supreme Court of Colorado, in commenting upon the clause, said: "While a warehouseman may not avoid his liability for
negligence, he may nevertheless stipulate with the owner as to what the extent
of the latter’s recovery shall be, where the rate charged the owner is
based upon an agreed valuation which is put upon the property. * * * if the
condition was to become a part of the contract, it was necessary that
plaintiff’s attention be called to it, and that she be advised that
the rate to be charged was a reduced rate to be applied in consideration of her
consent to the limitation of defendant’s liability." 195 P.2d at
page 971. It is true that the rule governing the limitation of liability
cases last referred to is generally applied in situations said to involve
services of a public or semi-public nature. Typical, of course, are the public
carrier or storage or parking lot cases. [**92] Kuzmiak
v. Brookchester, 33 N.J.Super. 575, 111 A.2d 425 (App.Div.1954); Annotation,
supra, 175 A.L.R. at pp. 14-17. But in recent times the books have not
been barren of instances of its application in private contract controversies,
witness, e.g., Kuzmiak v. Brookchester, supra; Fairfax Gas & Supply Co.
v. Hadary, 151 F.2d 939 (4 Cir. 1945); and Cutler Corp. v. Latshaw,
supra. In the last named matter, which has been noted earlier, the
court relied upon the public interest cases as authority. It said: ‘Although these cases have to do with limitation on the
liability of common carriers, their reasoning applies with equal force to the
facts in the case at bar. When a party to a contract seeks to bind the other
party with the unyielding thongs of a warrant of attorney-confession of
judgment, a device not ordinarily expected by a homeowner in a simple agreement
for alterations and repairs, the inclusion of such a self-abnegating provision
must appear in the body of the contract and cannot be incorporated by casual
reference with a designation not its own.’ 97 A.2d at page 238. [*399] Basically, the reason a contracting party offering
services of a public or quasi-public nature has been held to the requirements
of fair dealing, and, when it attempts to limit its liability, of securing the
understanding consent of the patron or consumer, is because members of the
public generally have no other means of fulfilling the specific need
represented by the contract. Having in mind the situation in the automobile industry
as detailed above, and particularly the fact that the limited warranty extended
by the manufacturers is a uniform one, there would appear to be no just reason
why the principles of all of the cases set forth should not chart the course to
be taken here. It is undisputed that the president of the dealer with whom
Henningsen dealt did not specifically call attention to the warranty on the
back of the purchase order. The form and the arrangement of its face, as
described above, certainly would cause the minds of reasonable men to differ as
to whether notice of a yielding of basic rights stemming from the relationship
with the manufacturer was adequately given. The words
‘warranty’ or ‘limited warranty’ did not
even appear in the fine print above the place for signature, and a jury might
well find that the type of print itself was such as to promote lack of
attention rather than sharp scrutiny. The inference from the facts is that
Chrysler placed the method of communicating its warranty to the purchaser in
the hands of the dealer. If either one or both of them wished to make certain
that Henningsen became aware of that agreement and its purported implications,
neither the form of the document nor the method of expressing the precise nature
of the obligation intended to be assumed would have presented any difficulty. But there is more than this. Assuming that a jury might find that
the fine print referred to reasonably served the objective of directing a
buyer’s attention to the warranty on the reverse side, and, therefore,
that he should be charged with awareness of its language, can it be said that
an ordinary layman would realize what he was relinquishing in [*400]
return for what he was being granted? Under the law, breach of warranty against
defective parts or workmanship which caused personal injuries would entitle a
buyer to damages even if due care were used in the manufacturing process.
Because of the great potential for harm if the vehicle was defective, that
right is the most important and fundamental one arising from the relationship.
Difficulties so frequently encountered in establishing negligence in
manufacture in the ordinary case make this manifest. 2 Harper & James, supra, ss 28.14,
28.15; Prosser, supra, 506. Any ordinary layman of reasonable
intelligence, looking at the phraseology, might well conclude that Chrysler was
agreeing to replace defective [**93] parts and perhaps
replace anything that went wrong because of defective workmanship during the
first 90 days or 4,000 miles of operation, but that he would not be entitled to
a new car. It is not unreasonable to believe that the entire scheme being
conveyed was a proposed remedy for physical deficiencies in the car. In the
context of this warranty, only the abandonment of all sense of justice would
permit us to hold that, as a matter of law, the phrase ‘its obligation
under this warranty being limited to making good at its factory any part or
parts thereof’ signifies to an ordinary reasonable person that he is
relinquishing any personal injury claim that might flow from the use of a
defective automobile. Such claims are nowhere mentioned. The draftsmanship is
reflective of the care and skill of the Automobile Manufacturers Association in
undertaking to avoid warranty obligations without drawing too much attention to
its effort in that regard. No one can doubt that if the will to do so were
present, the ability to inform the buying public of the intention to disclaim
liability for injury claims arising from breach of warranty would present no
problem. In this connection, attention is drawn to the Plymouth Owner
Certificate mentioned earlier. Obviously, Chrysler is aware of it because the
New Car Preparation Service Guide sent from the factory to the dealer directs
that it be given to the purchaser. That certificate contains a paragraph called
[*401] ‘Explanation of Warranty.’ Its
entire tenor relates to replacement of defective parts. There is nothing about
it to stimulate the idea that the intention of the warranty is to exclude
personal injury claims. At this point, a recent decision of the New York Court of Appeals
is relevant. In Lachs v. Fidelity & Casualty Co. of New York, 306 N.Y.
357, 118 N.E.2d 555, 557 (1954), the plaintiff’s mother went to Newark
Airport in order to obtain a plane flight to Miami, Florida. A vending machine
was located in front of the Air Service counter where she obtained her
transportation ticket. On the machine, in letters ten times as large as any
other words on it, appeared ‘Airline Trip Insurance.’ Over
that legend was a well illuminated display of airplanes flying round and round,
and in large characters the words and numerals ‘25¢ For Each
$5,000. Maximum $25,000.’ Below that on a placard, in letters
‘many times’ the size of the other words thereon, was
printed: ‘Domestic Airline Trip Insurance 25¢ for each
$5,000. Maximum $25,000.’ Below, in much smaller print on the same placard, appeared: ‘Covers one-way flight shown on application * * *
completed in 12 months within (certain points) on any scheduled airline. Policy
void outside above limits.’ The application mentioned was obtained by inserting 25¢
in a slot for each $5,000 of insurance desired. The application says, among
other things: ‘I hereby apply to Company named below for Airline Trip
Insurance to insure me on one Airline trip between:—* * *.’
Provision is made therein for the naming of a beneficiary and for the signature
of the applicant. Upon completion of the application, the prospective insured
pressed a button and a policy of insurance emerged from the machine. The
contract was about 11 inches long [*402] and
both sides of it were filled with printed matter. Across the front of it, in
large letters which obliterated some of the printing beneath, was the
statement: ‘This Policy Is Limited To Aircraft Accidents. Read It
Carefully.’ The coverage clause on page 1 said: ‘This insurance shall apply only to such injuries
sustained following the purchase by or for the Insured of a transportation
ticket from * * * a Scheduled Airline during any portion [**94] of the
first one way or round airline trip covered by such transportation ticket * * *
in consequence of: (a) boarding, riding as a passenger in * * * any aircraft
operated on a regular or special or chartered flight by a Civilian Scheduled
Airline maintaining regular, published schedules and licensed for interstate,
intrastate or international transportation of passengers by the Governmental
Authority having jurisdiction over Civil Aviation * * *.’ 118 N.E.2d
at page 557. The mother’s plane ticket (plaintiff was the named
beneficiary) was for transportation on a Miami Airline, Inc. plane. It crashed
on the way to Florida and she the minds of the decedent and the to pay on the
ground that the flight was not operated by a Civilian Scheduled Airline. The
court sustained the refusal to dismiss the complaint, saying: ‘What contract of insurance, then, did the decedent
purchase? She intended to buy coverage for her flight to Miami. The defendant
says it did not intend to cover her on that flight. We all know that a contract
of insurance, drawn by the insurer, must be read through the eyes of the
average man on the street or the average housewife who purchases it. Neither of
them is expected to carry the Civil Aeronautics Act or the Code of Federal
Regulations when taking a plane. * * * Was the decedent entitled to believe
that she had purchased ‘Airline Trip Insurance’ through a
policy ‘Limited To Aircraft Accidents’? It seems to us that a
jury could find that when decedent purchased her policy on an application for
‘Airline Trip Insurance’ from a machine having in prominent
lighting those same three words, before obtaining her ticket from a counter in
front of which the machine stood, she was covered on her flight, since the
mindsof the decedent and the company had met on that basis. * * * ‘* * * As we pointed out in Hartol Products Corp. v.
Prudential Ins. Co., supra, the burden in such a case as this is on the
[*403] defendant to establish that the words and
expressions used Not only are susceptible of the construction sought by
defendant but that it is the only construction which may fairly be placed on
them. The defendant in its large illuminated lettering and in its application
could have added proper, unambiguous words or a definition or could have
avoided allowing its vending machine to be placed in front of the ticket
counter ‘utilized by all non-scheduled airlines operating out of the
Newark Airport’, thus removing the ambiguity or equivocal character of
the invitation to insure, of the application for insurance and the contract of
insurance itself.’ 118 N.E.2d at pages 558-559. (Emphasis ours.) The task of the judiciary is to administer the spirit as well as
the letter of the law. On issues such as the present one, part of that burden
is to protect the ordinary man against the loss of important rights through
what, in effect, is the unilateral act of the manufacturer. The status of the
automobile industry is unique. Manufacturers are few in number and strong in
bargaining position. In the matter of warranties on the sale of their products,
the Automotive Manufacturers Association has enabled them to present a united
front. From the standpoint of the purchaser, there can be no arms length
negotiating on the subject. Because his capacity for bargaining is so grossly
unequal, the inexorable conclusion which follows is that he is not permitted to
bargain at all. He must take or leave the automobile on the warranty terms
dictated by the maker. He cannot turn to a competitor for better security. Public policy is a term not easily defined. Its significance
varies as the habits and needs of a people may vary. It is not static and the
field of application is an ever [**95] increasing one. A
contract, or a particular provision therein, valid in one era may be wholly
opposed to the public policy of another. See Collopy v. Newark Eye & Ear
Infirmary, 27 N.J. 29, 39, 141 A.2d 276 (1958). Courts keep in mind the
principle that the best interests of society demand that persons should not be
unnecessarily restricted in their freedom to contract. But they do not hesitate
to declare void as against public policy contractual provisions which clearly
tend to the injury of [*404] the public in some way. Hodnick
v. Fidelity Trust Co., 96 Ind.App. 342, 183 N.E. 488
(App.Ct.1932). Public policy at a given time finds expression in the
Constitution, the statutory law and in judicial decisions. In the area of sale
of goods, the legislative will has imposed an implied warranty of
merchantability as a general incident of sale of an automobile by description.
The warranty does not depend upon the affirmative intention of the parties. It
is a child of the law; it annexes itself to the contract because of the very
nature of the transaction. Minneapolis Steel & Machinery Co. v. Casey
Land Agency, 51 N.D. 832, 201 N.W. 172 (Sup.Ct.1924). The judicial
process has recognized a right to recover damages for personal injuries arising
from a breach of that warranty. The disclaimer of the implied warranty and
exclusion of all obligations except those specifically assumed by the express
warranty signify a studied effort to frustrate that protection. True, the Sales
Act authorizes agreements between buyer and seller qualifying the warranty
obligations. But quite obviously the Legislature contemplated lawful
stipulations (which are determined by the circumstances of a particular case)
arrived at freely by parties of relatively equal bargaining strength. The
lawmakers did not authorize the automobile manufacturer to use its grossly
disproportionate bargaining power to relieve itself from liability and to
impose on the ordinary buyer, who in effect has no real freedom of choice, the
grave danger of injury to himself and others that attends the sale of such a
dangerous instrumentality as a defectively made automobile. In the framework of
this case, illuminated as it is by the facts and the many decisions noted, we
are of the opinion that Chrysler’s attempted disclaimer of an implied
warranty of merchantability and of the obligations arising therefrom is so
inimical to the public good as to compel an adjudication of its invalidity. See
57 Yale L.J., supra, at pp. 1400-1404; proposed Uniform
Commercial Code, 1958 Official Text, s 202. [*405] The trial
court sent the case to the jury against Chrysler on the theory that the
evidence would support a finding of breach of an implied warranty of
merchantability. In fact, at one point in his charge he seemed to say that as a
matter of law such a warranty existed. He also told them that: ‘A provision in a purchase order for an automobile that
an express warranty shall exclude all implied warranties will not be given
effect so as to defeat an implied warranty that the machine shall be fit for
the purposes for which it was intended unless its inclusion in the contract was
fairly procured or obtained.’ Thereafter, the court charged that when the car was sold a
warranty arose that it was reasonably suited for ordinary use, and that if they
found that it was defective and ‘not reasonably suited for ordinary
driving’ liability would exist ‘provided * * * you find there
was an implied warranty and a breach thereof.’ The reasonable
inference to be drawn from the whole context is that a preliminary finding
against the binding effect of the disclaimer would have to be made, i.e., that
the disclaimer was not ‘fairly procured,’ before an implied
warranty could be deemed to exist. Even assuming that the duty to make such a
finding was not as explicit as it should have been, in view of our holding that
the disclaimer is void as a matter of law, the charge was more favorable to the
defendant than the law required it to be. The [**96] verdict in
favor of the plaintiffs and against Chrysler Corporation establishes that the
jury found that the disclaimer was not fairly obtained. Thus, this defendant
cannot claim to have been prejudiced by a jury finding on an aspect of the case
which the court should have disposed of as a matter of law. Chrysler raises in this court for the first time the defense that
plaintiffs’ failure to give reasonable notice of the breach of
warranty bars their recovery. The claim was not made in the answer, pretrial
order, at the trial or as a ground of appeal in the brief filed on this review.
It [*406] was added by letter filed after oral argument. It
comes too late for consideration at this point in the proceedings. The same situation arose in National Equipment Corporation v.
Moore, 189 Minn. 632, 250 N.W. 677 (Sup.Ct.1933). The contention was
rejected, the court saying: ‘It is enough to say that no such defense to the
counterclaim was pleaded, litigated, or submitted to the jury. There was some
testimony as to whether certain complaints were made * * * but nothing to
indicate to the court or opposing counsel that such evidence was directed to
prove noncompliance with said section 8423, and no such issue was submitted, or
requested to be submitted, to the jury.’ 250 N.W. at page 679. III. The Dealer’s Implied Warranty. The principles that have been expounded as to the obligation of
the manufacturer apply with equal force to the separate express warranty of the
dealer. This is so, irrespective of the absence of the relationship of
principal and agent between these defendants, because the manufacturer and the
Association establish the warranty policy for the industry. The bargaining
position of the dealer is inextricably bound by practice to that of the maker
and the purchaser must take or leave the automobile, accompanied and encumbered
as it is by the uniform warranty. Moreover, it must be remembered that the actual contract was
between Bloomfield Motors, Inc., and Claus Henningsen, and that
the description of the car sold was included in the purchase order. Therefore,
R.S. 46:30-21(2), N.J.S.A., annexed an implied warranty of merchantability to
the agreement. Stuart v. Burlington Co. Farmers’ Exchange, 90 N.J.L.
584, 101 A. 265 (E. & A.1917); Adams v. Peter Tramontin Motor Sales,
supra; Cassini v. Curtis Candy Co., 113 N.J.L. 91, 172 A. 519
(Sup.Ct.1934); [*407] McCabe v. L. K. Liggett Drug
Co., 330 Mass. 177, 112 N.E.2d 254 (Sup.Jud.Ct.1953); Ryan v.
Progressive Grocery Stores, supra; Mahoney v. Shaker Square Beverages, Inc.,
supra; Prosser, Law of Torts, supra, at p. 495; Vold on
Sales, supra, at pp. 436, 442-443; 1 Williston on Sales, supra, ss 233, 242. It
remains operative unless the disclaimer and liability limitation clauses were
competent to exclude it and the ordinary remedy for its breach. It has been
said that this doctrine is harsh on retailers who generally have only a limited
opportunity for inspection of the car. But, as Chief Judge Cardozo said in
Ryan, supra: ‘The burden may be heavy. It is one of the hazards of the
business. ‘* * * In such circumstances, the law casts the burden on
the seller, who may vouch in the manufacturer, if the latter was to blame. The
loss in its final incidence will be borne where it is placed by the initial
wrong.’ 175 N.E. at pages 106 and 107. Re-examination of the purchase contract discloses an ambiguous
situation with respect to the warranty position of the dealer. Section 7, on
the reverse side thereof, says no warranties, express or implied, are made by
the dealer or manufacturer except [**97] the
express warranty of the manufacturer discussed above. However, the last
paragraph of the section says that: ‘The dealer also agrees to
promptly perform and fulfill all terms and conditions of the owner service
policy.’ That policy, as noted above, sets forth the same
manufacturer’s warranty and then adds a stipulation substituting
‘dealer’ in the context wherever
‘manufacturer’ appears. Presumably the intention was to
incorporate the policy into the sales contract by reference. Accepting that to
be the dealer’s intention, the binding character of the limitation on
its liability to the buyer under the warranty is even less apparent than in the
case of Chrysler. The uncontradicted proof shows that the policy was not shown
or given to Henningsen prior to or at the time of execution of the sales
agreement; it was delivered with the car. No [*408]
one
suggests that the clause limiting the dealer’s liability to
replacement of defective parts and excluding implied warranties as well as
responsibility for personal injury claims was specifically brought to
Henningsen’s attention, or that any attempt was made to make him
understand that he was yielding his right, and that of any third person
claiming in his right, to recover for such injuries. For the reasons set forth in Part I hereof, we conclude that the
disclaimer of an implied warranty of merchantability by the dealer, as well as
the attempted elimination of all obligations other than replacement of
defective parts, are violative of public policy and void. The trial court submitted to the jury, on the same basis as in the
claim against the manufacturer, the issue of whether the disclaimer provisions
in the contract were fairly procured by the dealer. The dealer also contends
that the language is susceptible of the conclusion that the jurors were told as
a matter of law that an implied warranty of merchantability came into existence
once the sale was made by him. As we have said, a reasonable purport of the
instructions in context is that upon the evidence adduced at the trial a
decision was to be made as to whether the disclaimer clauses were valid, and if
it was found that they were not valid, then an implied warranty existed, breach
of which would support plaintiffs’ action. Submission of the case to
the jury on that basis represented more favorable treatment than the dealer was
entitled to receive. But assuming the contention to be correct that the only
conclusion to be drawn from the court’s statements is that the jury
were told that an implied warranty of merchantability arose from the sale as a
matter of law, and that they were to decide if the proof demonstrated a breach
of it, such advice was correct for the public policy reasons already expressed.
Under the circumstances, there is nothing in defendant Bloomfield
Motors’ criticism of the charge on that score which would warrant
reversal of the judgment. [*409] IV. Proof of Breach of the Implied Warranty of Merchantability. Both defendants argue that the proof adduced by plaintiffs as to
the happening of the accident was not sufficient to demonstrate a breach of
warranty. Consequently, they claim that their motion for judgment should have
been granted by the trial court. We cannot agree. In our view, the total effect
of the circumstances shown from purchase to accident is adequate to raise an
inference that the car was defective and that such condition was causally
related to the mishap. See, Yormack v. Farmers’ Coop.
Ass’n of N.J., 11 N.J.Super. 416, 78 A.2d 421
(App.Div.1951); Knapp v. Willys-Ardmore, Inc., supra. Thus,
determination by the jury was required. The proof adduced by the plaintiffs disclosed that after servicing
and delivery of the car, it operated normally during the succeeding ten days,
so far as the Henningsens could tell. They had no difficulty or mishap of any
kind, and it neither had nor [**98] required any
servicing. It was driven by them alone. The owners service certificate provided
for return for further servicing at the end of the first 1,000
miles—less than half of which had been covered at the time of Mrs.
Henningsen’s injury. The facts, detailed above, show that on the day of the accident,
ten days after delivery, Mrs. Henningsen was driving in a normal fashion, on a
smooth highway, when unexpectedly the steering wheel and the front wheels of
the car went into the bizarre action described. Can it reasonably be said that
the circumstances do not warrant an inference of unsuitability for ordinary use
against the manufacturer and the dealer? Obviously there is nothing in the
proof to indicate in the slightest that the most unusual action of the steering
wheel was caused by Mrs. Henningsen’s operation of the automobile on
this day, or by the use of the car between delivery and the happening of the incident.
Nor is there [*410] anything to suggest
that any external force or condition unrelated to the manufacturing or
servicing of the car operated as an inducing or even concurring factor. It is a commonplace of our law that on a motion for dismissal all of
the evidence and the inferences therefrom must be taken most favorably to the
plaintiff. And if reasonable men studying the proof in that light could
conclude that the car was not merchantable, the issue had to be submitted to
the jury for determination. Applying that test here, we have no hesitation in
holding that the settlement of the question of breach of warranty as to both
defendants was properly placed in the hands of the jury. In our judgment, the
evidence shown, as a matter of preponderance of probabilities, would justify
the conclusion by the ultimate triers of the facts that the accident was caused
by a failure of the steering mechanism of the car and that such failure
constituted a breach of the warranty of both defendants. A somewhat similar case is Knapp v. Willys-Ardmore, Inc., supra, where
liability was predicated upon breach of implied warranty of merchantability.
Plaintiff bought a new car from defendant and drove it 107 miles in eight days.
During that period it was used only for pleasure and was driven properly and
without incident. Immediately before the accident, Mrs. Knapp was driving along
at a moderate speed, when the steering mechanism failed to function and the car
suddenly veered to the right over the curb and into a telephone pole. After the
collision it was noted that the tie-rod at the right end of the steering
assembly had become disconnected and had dropped to the ground. Inspection
showed that the rod had been bent and a connecting sleeve or turnbuckle had
been broken. A witness who had been driving in the opposite direction testified
that he observed the right front wheel ‘wobbling’ and the car
‘seemed to go out of control,’ over the curb and into the
pole. A mechanic gave some testimony from which it might be inferred that the
tie-rod had been broken before the impact with the pole. [*411] It was
held that the facts created a reasonable inference that the car was defective
when delivered and that the defect was not caused by subsequent conduct of the plaintiff.
The court pointed out that while existence of a defect cannot be found on the
basis of mere conjecture or guess, yet it is not necessary to exclude every
other possible cause which the ingenuity of counsel might suggest. The finding
of breach of an implied warranty of merchantability was held to be
circumstantially supportable by the necessary Quantum of proof. It may be conceded that the opinion of the automobile expert
produced by the plaintiffs in the present case was not entitled to very much
probative force. However, his assertion in answer to the hypothetical question
that the unusual action of the steering wheel and front wheels must have been
due to a mechanical defect or failure of something from the steering wheel down
to the front wheels, that ‘something down there had to drop off or
break loose’ to cause the car to act in the [**99] manner it
did, cannot be rejected as a matter of law. Its evaluation under all of the
circumstances was a matter for jury consideration. Defendants argue that the
proof of his qualifications was not adequate to warrant the admission of his
testimony. But the matter of an expert’s competency to testify is
primarily for the discretion of the trial court. An appellate tribunal will not
interfere unless a clear abuse of discretion appears. Carbone v. Warburton, 11 N.J.
418, 94 A.2d 680 (1953). In our view, the experience of the witness, as an
automobile repairman and as an appraiser of damaged cars, was such as to
preclude a holding by us that the trial court accepted his qualifications
without any reasonable basis. In M. Dietz & Sons, Inc. v. Miller, 43
N.J.Super. 334, 128 A.2d 719 (App.Div.1957), defendant purchased a new car from
a dealer. He drove it only 50 miles when, on the day of the accident while
driving in traffic, he applied the brakes in order to stop in back of the Dietz
vehicle. The brakes failed completely and Miller ran into the rear of that car.
[*412] Dietz sued Miller, who cross-claimed against
the dealer for negligent installation or inspection of the power brakes. The
Appellate Division properly declared that ‘even where the rule of Res
ipsa loquitur does not apply, the plaintiff may nevertheless show
‘defendant’s negligence by circumstantial or direct evidence
of specific acts from which liability may be inferred.’’ Supra, 43
N.J.Super. at page 338, 128 A.2d at page 721. And further that: ‘The
real issue here is the efficacy of the circumstantial proof to create a fact
issue as to defendant’s negligence either in installation or
inspection of the unit upon installation. There can be no doubt as to the
sufficiency of the evidence to justify the finding that there was a power brake
failure * * *.’ Supra, 43 N.J.Super. at pages 338-339, 128 A.2d at
page 721. And, see, Mazzietelle v. Belleville Nutley Buick Co., 46
N.J.Super. 410, 134 A.2d 820 (App.Div.1957); Yormack v. Farmers’
Co-op. Ass’n of N.J., supra. Although these latter
cases sound in negligence, the test for finding a jury question in them is even
more stringent. Circumstantial evidence sufficient to create a jury question as
to the negligence of a manufacturer or dealer would clearly justify the same
result where the issue is breach of warranty. As the late Chief Justice
Vanderbilt said, in Simon v. Graham Bakery, supra, liability would exist
notwithstanding all care was used to prevent a breach. V. The Defense of Lack of Privity Against Mrs. Henningsen. Both defendants contend that since there was no privity of contract
between them and Mrs. Henningsen, she cannot recover for breach of any warranty
made by either of them. On the facts, as they were developed, we agree that she
was not a party to the purchase agreement. Faber v. Creswick, 31 N.J.
234, 156 A.2d 252 (1959). Her right to maintain the action, therefore, depends
upon whether she occupies such legal status thereunder as to permit her to take
advantage of a breach of defendants’ implied warranties. [*413] For the most part the cases that have been
considered dealt with the right of the buyer or consumer to maintain an action
against the manufacturer where the contract of sale was with a dealer and the
buyer had no contractual relationship with the manufacturer. In the present
matter, the basic contractual relationship is between Claus Henningsen,
Chrysler, and Bloomfield Motors, Inc. The precise issue presented is whether
Mrs. Henningsen, who is not a party to their respective warranties, may claim
under them. In our judgment, the principles of those cases and the supporting
texts are just as proximately applicable to her situation. We are convinced
that the cause of justice in this area of the law can be served only by
recognizing that she is such a person who, [**100] in the
reasonable contemplation of the parties to the warranty, might be expected to
become a user of the automobile. Accordingly, her lack of privity does not
stand in the way of prosecution of the injury suit against the defendant
Chrysler. The context in which the problem of privity with respect to the
dealer must be considered, is much the same. Defendant Bloomfield Motors is
chargeable with an implied warranty of merchantability to Claus Henningsen.
There is no need to engage in a separate or extended discussion of the
question. The legal principles which control are the same in quality. The
manufacturer establishes the network of trade and the dealer is a unit utilized
in that network to accomplish sales. He is the beneficiary of the same express
and implied warranties from the manufacturer as he extends to the buyer of the
automobile. If he is sued alone, he may implead the manufacturer. Davis v.
Radford, 233 N.C. 283, 63 S.E.2d 822, 24 A.L.R.2d 906 (Sup.Ct.1951);
Annotation, 24 A.L.R.2d 913 (1952). His understanding of the expected use of
the car by persons other than the buyer is the same as that of the
manufacturer. And so, his claim to the doctrine of privity should rise no
higher than that of the manufacturer. See, e.g., Haut v. [*414] Kleene,
supra; Greenberg v. Lorenz, supra; Ryan v.
Progressive Grocery Stores, Inc., supra. The situation before us in its legal aspects is very similar to
that which we dealt with recently in Faber v. Creswick, supra. There, in
a landlord and tenant relationship the lease contained a covenant to have the
premises in good repair at the inception of the occupancy. The wife of the
tenant was injured by reason of a breach of that agreement. We held that she
was entitled to recover damages even though she was not a party to the lease.
In doing so, our approval was given to the doctrine proposed by Section 357 of
the Restatement of Torts that where a lessor agrees to keep the premises let in
good repair, he is subject to liability for bodily harm caused to the lessee
and others on the land with his consent by a condition of disrepair. True, the
suit in Faber was in tort while this one is in contract. But it cannot be
overlooked that historically actions on warranties were in tort also, sounding
in deceit. Simon v. Graham Bakery, supra, 17 N.J. at pages 528,
529, 111 A.2d at pages 885, 886; 1 Williston on Sales, supra, ss 195-197. The
contract theory gradually emerged, although the tort idea has continued to lurk
in the background, making the warranty ‘a curious hybrid of tort and
contract.’ Prosser, supra, s 83. An awareness of this evolution makes
for ready acceptance of the relaxation of rigid concepts of privity when third
persons, who in the reasonable contemplation of the parties to a warranty might
be expected to use or consume the product sold, are injured by its unwholesome
or defective state. It is important to express the right of Mrs. Henningsen to
maintain her action in terms of a general principle. To what extent may lack of
privity be disregarded in suits on such warranties? In that regard, the Faber
case points the way. By a parity of reasoning, it is our opinion that an
implied warranty of merchantability chargeable to either an automobile
manufacturer or a dealer extends to the purchaser of the car, members of his
family, and to other persons occupying or using it with his consent. It would
be [*415] wholly opposed to reality to say that use by
such persons is not within the anticipation of parties to such a warranty of
reasonable suitability of an automobile for ordinary highway operation. Those
persons must be considered within the distributive chain. Harper and James suggest that this remedy ought to run to members
of the public, bystanders, for example, who are in the path of harm from a
defective automobile. 2 Harper & James, supra, note 6,
p. 1572. Section 2-318 of the Uniform Commercial Code proposes that the
warranty be extended to ‘any natural person who is in the family or
household of his [**101] 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.’ And the section provides also that ‘A seller
may not exclude or limit the operation’ of the extension. A footnote
thereto says that beyond this provision ‘the section 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.’ Uniform Commercial Code, supra, at
P. 100. It is not necessary in this case to establish the outside limits
of the warranty protection. For present purposes, with respect to automobiles,
it suffices to promulgate the principle set forth above. In his charge as to Mrs. Henningsen’s right to recover on
the implied warranty, the trial court referred to her husband’s
testimony that he was buying the car for her use, and then instructed the jury
that on such facts the warranty extended to her. In view of our holding,
obviously the protection of the warranty runs to her as an incident of the sale
without regard to such testimony. Accordingly, the contention that the
instruction was reversible error must be rejected. Defendants rely upon certain cases for the proposition that lack
of privity of contract bars Mrs. Henningsen’s recovery. [*416] The
pertinent ones are Tomlinson v. Armour & Co., supra; Cassini v. Curtis
Candy Co., supra; Schlosser v. Goldberg, 123 N.J.L. 470, 9
A.2d 699 (Sup.Ct.1939); General Home, etc., Co. v. American, etc., Inc., 26
N.J.Misc. 24, 56 A.2d 116 (Cir.Ct.1947). Tomlinson v. Armour & Co. provides
the foundation for the others. It was decided 52 years ago and the principle on
which defendants seek support for their case is contained in a short statement
which, if applied in the light of the modern marketing conditions, is not
inconsistent with the basic substance of the rule we have now espoused. In
discussing the legal consequences of a sale of canned ham, Chancellor Pitney
said: ‘Whether a warranty be express or implied, it is a matter
of contract, rendering the maker liable in case of breach, notwithstanding he
used all care to prevent a breach, but rendering him liable in ordinary
circumstances only to the party with whom he contracted, Or to others for whose
benefit the contract was made.’ 75 N.J.L. at pages 754-755, 70 A. at
page 316. (Emphasis ours.) In 1908, the need of the community for the making of distinctions
growing out of the nature of the contract was not as pressing as it is in this
commercial era. A common rule was applied, as indicated by the citation of Marvin
Safe Co. v. Ward, 46 N.J.L. 19 (Sup.Ct.1884), and Styles v. F. R. Long
Company, 67 N.J.L. 413, 51 A. 710 (Sup.Ct.1902), which involved agreements
wholly unrelated to the sale of products for consumer use. In this day, given
the present situation, it is extremely unlikely that such an enlightened jurist
as Chancellor Pitney would not find his expression that ‘others for
whose benefit the contract was made’ could sue for its breach
compatible in spirit with the doctrine we deem to be necessary in the interest
of justice. In any event, to the extent that Tomlinson v. Armour & Co. and its
cited progeny conflict with our ruling, they can no longer be considered the
law of this State. See Collopy v. Newark Eye and Ear Infirmary, supra. The final argument on this point relates to the damage claim of
Claus Henningsen. That claim has two [*417] aspects:
one for property damage to the automobile and the other for medical and
hospital expenses and loss of his wife’s society and services. As to
the first, he being an actual [**102] party to the contract
of sale, and the owner of the automobile, clearly the property damage is
recoverable. The second claim is a derivative one, stemming from his
wife’s right. Faber v. Creswick, supra. But it is
universally known that in family relations husbands and fathers are ordinarily
responsible for such expenses of spouses and children. It would be illogical to
accept the right of a wife to recover in contract for breach of warranty and to
hold that the husband’s derivative claim was not within the
contemplation of the parties when the agreement of sale was made. For this
reason it was proper to submit Henningsen’s consequential losses to
the jury as an element of damage. VI. Plaintiffs contend on cross-appeal that the negligence claim
against the defendants should not have been dismissed. Their position is that
on the facts developed, the issue should have been submitted to the jury for
determination. The result we have reached on the other aspects of the case
makes it unnecessary to consider the problem. For that reason we express no
opinion thereon. All other ground of appeal raised by both parties have been
examined and we find no reversible error in any of them. VII. Under all of the circumstances outlined above, the judgments in
favor of the plaintiffs and against the defendants are affirmed. For affirmance: Chief Justice WEINTRAUB and Justices BURLING,
JACOBS, FRANCIS, PROCTOR and SCHETTINO—6. For reversal: None. |