SEELY v. WHITE MOTOR COMPANY

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District Court of Appeal, Fifth District, California.

Daniel J. SEELY, Plaintiff and Appellant, v. WHITE MOTOR COMPANY, Defendant and Appellant.

Decided: July 28, 1964

John M. Nairn, Bakersfield, for plaintiff and appellant. Baker, Palmer & Wall, and Oran W. Palmer, Bakersfield, for defendant and appellant.

This is an appeal by defendant manufacturer from a judgment for damages for breach of warranty in the sale of a truck, and an appeal by plaintiff buyer from a denial of damages to the truck which resulted from a one-vehicle accident alleged to have been caused by the negligence of defendant manufacturer.

DEFENDANT'S APPEAL

The complaint states five causes of action, the first, a ‘catch-all’ pleading, includes breach of express warranty, breach of warranty of fitness for purpose of intended use, breach of contract, and damages for tort based on strict liability arising out of negligence in manufacture. The second, third, fourth and fifth causes of action incorporate all of the allegations of the first cause of action and, in addition, each separately states one of the causes of action alleged in the first cause of action.

Both the dealer and the manufacturer were made defendants, but during the trial plaintiff dismissed as to the dealer and judgment was entered against the manufacturer alone.

Although the court found there was a breach of an express warranty and a breach of an implied warranty of fitness for use for a particular purpose, the findings are unsatisfactory in several respects. Uncertainty arises at the outset because the trial court failed to make an express finding as to each issue pleaded. Particularly troublesome, as we shall see, is the complete absence of a finding on the issue of manufacturer's strict liability in tort. Nevertheless, these defects in the findings are not fatal, for at least two reasons: first, there is no irreconcilable conflict between the findings that were made and, second, the evidence, which we shall discuss later, amply supports them. In these circumstances the findings, when measured by the Supreme Court's opinion in Brewer v. Simpson, 53 Cal.2d 567, 2 Cal.Rptr. 609, 349 P.2d 289, are sufficient to support the judgment. The Court commented, at page 584 of 53 Cal.2d, at page 616 of 2 Cal.Rptr., at page 296 of 349 P.2d:

“* * * [H]owever lame, however inconclusive, any number of the findings may be, if in any case there be one clear, sustained and sufficient finding upon which the judgment may rest, the others may and will be disregarded.' every presumption being in favor of the judgment, it will be here concluded that the court did rest its judgment upon that finding, or those findings, and [Citation.]'

A judgment supported by express findings as to one cause of action and grounded upon substantial evidence, renders immaterial a failure to find on additional causes of action. (Rogers v. Grua, 215 Cal.App.2d 1, 5, 30 Cal.Rptr. 39; Bohn v. Watson, 130 Cal.App.2d 24, 41, 278 P.2d 454.) In the face of a finding that plaintiff is entitled to recover for a breach of an express warranty, want of a finding on the additional issue of defendant's liability in tort is immaterial. This conclusion follows logically since plaintiff was denied recovery in tort and defendant cannot be harmed by the absence of a finding on that issue.

Defendant contends that even if the findings are sufficient procedurally, they are not supported by substantive law or by the evidence. Having this argument in mind, we turn to the finding that there was a breach of an express warranty and first examine the warranty itself. It was contained in a purchase order signed by plaintiff, which reads, in part:

‘The White Motor Company hereby warrants each new motor vehicle sold by it to be free from defects in material and workmanship under normal use and service, its obligation under this warranty being limited to making good at its factory any part or parts thereof, including all equipment or trade accessories (except tires) supplied by it as standard or optional equipment, * * *’

Plaintiff and several mechanics testified at length regarding the failure of the truck to perform properly, and about the many and varied attempts by both manufacturer and dealer to remedy the fault. There was testimony that the cause of the malfunction was basic, in that the body frame was unsuited for a large truck hauling sand, gravel, gypsum and similar materials. It appears that the truck was one of defendant's first alumium frame models and although it is not entirely clear whether it was the design of the truck or the kind of metal used in the frame that caused the trouble, there is ample evidence to support the finding that the truck was unsatisfactory for use in heavy-duty hauling. Plaintiff gave timely notice of the defect to defendant manufacturer, as well as to the dealer, both of whom attempted to eliminate the trouble, a rhythmic motion known in the trade as ‘galloping,’ that occurred when the truck was fully loaded. Among other things, the following changes were made on the truck:

‘Five sets of front springs.

‘Five drive line changes.

‘Alteration of back springs.

‘Replacement of from shock absorbers.

‘Fish plating of frame.

‘Replacement of clutch brake.

‘Replacement of two clutch release bearings.

‘Replacement of pilot bearing.

‘Replacement of two auxiliary transmissions.

‘Re-installation of new front bearing.

‘Front end aligned six times.

‘Entire truck and trailer aligned twice.

‘Welded cross member.

‘New cross member installed.

‘Replace tires five times.

‘Moved fifth wheel back and forth.’

None of these changes removed the defect, and we are satisfied that the weight of the evidence supports plaintiff's right to recover from defendant manufacturer for a breach of express warranty. Evidence to the contrary, which is stressed by defendant, simply creates a conflict which the trial court resolved in favor of plaintiff.

Defendant attempts to exculpate itself by reference to the following language in the warranty:

‘This warranty is expressly in lieu of all other warranties, expressed or implied, and of all other obligations or liabilities on the part of The White Motor Company which neither assumes nor authorizes anyone else to assume for it any other obligation or liability, or to give any other warranty or make any other representation on its behalf in connection with the sale or use of any motor vehicle.’

This provision of the warranty, when read in conjunction with the portion quoted above, requires only a replacement of the equipment. But this attempt by defendant manufacturer to limit its liability is predicated upon performance of the obligation it assumed by the contract of warranty, a condition that became effective upon notice of a defect by the purchaser. Since there is substantial evidence that defendant attempted to, but did not, correct the defect after notice, the trial court correctly concluded that defendant did not perform its warranty contract. This, in turn, entitled plaintiff purchaser to rescind the sale, as he did, and to demand damages for breach of warranty.

Defendant finds fault with the two items of damage the court allowed plaintiff to recover: the amount paid on account of the purchase price of the truck and plaintiff's loss of earnings resulting from the breach of warranty.

Defendant first questions plaintiff's right to recover the payments on account of the purchase price, asserting that defendant is the manufacturer and that the truck was purchased from its dealer who was dismissed out of the action. Defendant's contention presupposes a recovery for breach of contract. The recovery here is for breach of warranty between the manufacturer and the purchaser, and since the purchaser rescinded the contract of sale by reason of the breach of warranty, which in turn caused the dealer to repossess the vehicle, the amount paid on account of the purchase price of the truck is a recoverable item of damage. Defendant's argument that the payments on account of purchase price were made to the dealer and not to defendant manufacturer, is irrelevant. The sale commission which defendant paid its dealer is a matter between the manufacturer and its dealer; it does not diminish the purchaser's damages flowing from the manufacturer's breach of warranty.

Defendant next argues that if plaintiff buyer is permitted to recover the purchase price payments, then his sole remedy is to recover the amount paid for the truck. This argument is predicated upon Civil Code, section 1789, subsection (1), paragraph (d), which reads:

‘(1) Where there is a breach of warranty by the seller, the buyer may, at his election: * * *

‘(d) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.’

However, section 1789 does not end at this point, and it is provided in subsection (6) that:

‘The measure of damages for breach of warranty is the loss directly and naturally resulting in the ordinary course of events from the breach of warranty.’

Any question whether loss of profits are recoverable as damages for breach of warranty in addition to the damages recoverable under paragraphs (a), (b), (c), and (d) of subsection (1) of section 1789 of Civil Code, was set at rest by the Supreme Court in Grupe v. Glick, 26 Cal.2d 680, 160 P.2d 832. The substance of the Court's observation, at page 692, 160 P.2d 832, is that damages for the loss of prospective profits that otherwise might have been made from the operation of a going business may be recovered whether the operation of the business is prevented or interrupted by a tort, breach of contract, or breach of warranty. The only limitation expressed by the Supreme Court is that such damages must be ascertainable with reasonable certainty, either from past volume of business or other provable data relevant to the issue. (Accord: Mack v. Comstock Associates, Inc., 225 A.C.A. 718, 722, 37 Cal.Rptr. 466.)

In addition to denying plaintiff's right to recover damages for loss of profits, defendant attacks the amount thereof, upon the ground of failure of proof. The record reflects reliable testimony concerning the number of days that plaintiff would have been able to use the truck and as to the amount of gypsum, gravel and similar material he could have hauled had the truck been in operating condition. Although defendant says the evidence is unreliable, we find it credible insofar as it pertains to the amount of material that could have been hauled by an operating truck. Whether the trial judge believed the evidence, as he did here, is a matter within his discretion.

The amount of profits awarded as damages presents two questions. The first concerns the percentage of gross profits the court determined represented net profits. Witnesses varied from 25% to 77% in their estimates, but the trial court concluded that 60% was a more realistic and more reasonable estimate than either the highest or the lowest percentage used by the witnesses. The question here of determining profits is similar to the question reviewed in Ojala v. Bohlin, 178 Cal.App.2d 292, 2 Cal.Rptr. 919, where the proof of damages was perhaps even more unsatisfactory than in the case before us. In Ojala the court held, at page 304 of 178 Cal.App.2d, at page 926 of 2 Cal.Rptr.:

‘In order for us to reject the court's finding as to the amount of damage it would have to appear that the award was unsustainable in reason. It would have to appear definitely that the maximum amount that should have been allowed to plaintiff was somthing less than the amount that was awarded. * * * Its determination was so exclusively within its fact finding powers, which in our opinion were exercised with judgment and discretion, as to preclude any attempt upon our part to order a reduction of the damages or to hold that that issue should be retried.’

Damages for what might have been are necessarily based upon hypothesis, and to that extent, at least, they are uncertain. But a defendant at fault cannot absolve himself by demanding a precise measure of the damages he has caused, if precision is difficult to obtain. We find no error in the trial court's determination of net profits; the facts bring this case within the rationale of Ojala v. Bohlin, supra. (See also Nelson v. Reisner, 51 Cal.2d 161, 171, 331 P.2d 17; Western Electro-Plating Co. v. Henness, 196 Cal.App.2d 564, 573, 16 Cal.Rptr. 691; Zinn v. Ex-Cell-O Corp., 148 Cal.App.2d 56, 77, 306 P.2d 117; 12 Hastings L.J., p. 113.)

Defendant contends that the court also erred in not allowing use or rental value of the truck as an offset to plaintiff's damages for loss of profits. It appears, however, that the court deducted truck depreciation from gross profits in arriving at the 60% norm adopted as the correct measure of net profit. Since depreciation can be equated with use value in determining estimated profits or earnings, we find no error here. Furthermore, the record discloses that defendant did not raise the issue of rental value or use value of the truck by pleading an affirmative defense or counterclaim, or making such contention at pretrial. Apparently defendant never called the court's attention to the finding by serving and filing objections, counter-findings or request for special findings, as may be done under Code of Civil Procedure, section 634.

PLAINTIFF'S APPEAL

Plaintiff urges that the court erred in not permitting him to recover for damages to his truck and equipment as the result of an accident caused by failure of the airbrakes. As pointed out above, the court made no finding as to the tort cause of action predicated on manufacturer's strict liability. However, the court did make specific reference to this issue in a memorandum minute-order-decision, stating:

‘The damages which resulted from the accident that was testified to, the court feels is too remote and speculative to be included as an item of damage in this case.’

Plaintiff argues that the court simply meant that the damages themselves were too remote or speculative to support an award, but the record reflects that these particular items of damage were specific. On the other hand, the witnesses differed as to the cause of brake failure and the consequent accident. In light of the record, the court's language ‘remote and speculative’ applies logically to the burden of proof on the issue of proximate cause.

Plaintiff's argument that the court referred to damages only and not to proximate cause of the tort is a necessary basis for his more fundamental contention that the finding,

‘That said defect was the result of negligent and faulty manufacturing, and assembling and defective materials, all of which were covered by the warranty; * * *’

is, in substance, a finding of manufacturer's liability in tort. He hypothesizes that the doctrine of strict liability is interchangeable with liability predicated upon breach of warranty because of faulty manufacturing, and that for practical purposes they are one and the same. It was suggested at oral argument that the doctrine of strict liability in tort and the doctrine of manufacturer's liability for breach of an express warranty by negligence in manufacture, are indistinguishable insofar as an ultimate finding is concerned.

It seems to us that plaintiff has confused the doctrines; at least the primordial California decision, Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897, distinguishes the doctrine of manufacturer's strict liability in tort from manufacturer's liability for breach of warranty. In Greenman, Mr. Justice Traynor, speaking for the Court, said, at page 62 of 59 Cal.2d, at page 700 of 27 Cal.Rptr. at page 900 of 377 P.2d:

‘A manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.’

The principle of strict liability was given further articulation in Vandermark v. Ford Motor Co., 61 A.C. 245, 37 Cal.Rptr. 896, 391 P.2d 168. As we understand the Greenman and Vandermark cases, they create an entirely new, separate and distinct cause of action in California. This recently-recognized cause of action does not depend upon privity of relations between purchaser and manufacturer, as does breach of warranty; it frees the buyer from the onerous burden of the notice-requirement of Civil Code, section 1769, for the very reason that he seldom experiences privity with the manufacturer; and it prevents the manufacturer from defining the scope of its own responsibility for defective products. These differences, in the words of Mr. Justice Traynor, ‘make clear that the liability is not one governed by the law of contract warranties but by the law of strict liability in tort.’ (Greenman, supra, p. 63 of 59 Cal.2d, at page 701 of 27 Cal.Rptr., at page 901 of 377 P.2d.)

Consequently, the finding that negligence in manufacturer resulted in a breach of warranty is not tantamount to, nor will it serve as, a finding of strict liability in tort.

In our discussion of defendant's appeal we held that the failure to find on the tort issue was not prejudicial, primarily because it resulted in no liability or detriment to defendant. However, as to plaintiff's appeal the same failure to make the same finding had the opposite result; it defeated his right to recover the damages he suffered from the tort. Consequently, argues plaintiff, as to his appeal the issue is material and there must be a reversal under the general rule that a failure to make findings on a material issue requires a remand to the trial court for further proceedings. (Aero Bolt & Screw Co. v. Iaia, 180 Cal.App.2d 728, 743, 5 Cal.Rptr. 53.) There is the additional rule, however, that if an omitted finding must necessarily be adverse to the party appealing, the error does not require a reversal of the judgment. (Foley v. Cowan, 80 Cal.App.2d 70, 77, 181 P.2d 410.)

In light of this rule, defendant suggests that any finding on the issue would have to be against plaintiff, who suffered property damages only. In short, defendant argues that in California the doctrine of manufacturer's strict liability in tort is limited to recovery for personal injuries. Plaintiff suggests that the question is not settled, and he cites cases from other jurisdictions extending the doctrine to property damages. It is true, also, that some highly respected legal writers favor this broad application of the doctrine, but the two authoritative cases, Greenman v. Yuba Power Products, Inc., supra, and Vandermark v. Ford Motor Co., supra, indicate that at this time the doctrine in California is limited to torts resulting in personal injuries.

We are immediately confronted with the arguments that a tort is a tort, whether the damages are to person or property, and that it would be unjust to hold that an inconsequential personal injury resulting from a tort gives substance to a cause of action while sizeable property damage arising from the same tort is without a remedy.

Both arguments are premised upon the presupposition that the doctrine of manufacturer's strict liability in tort rests solely upon the relationship between the parties and the tort suffered by the purchaser. From these premises it is argued that every kind of damage emanating from a tort under these circumstances must have a remedy. The conclusion is fallacious because the presupposition is incomplete. It overlooks that the doctrine of manufacturer's strict liability in tort rests on socioeconomic considerations as well as the relations between the parties and the causal nexus of relation between the tortious act and the resulting damage. Indeed, socioeconomic considerations to which the Supreme Court makes reference in Greenman, supra, seem to have motivated acceptance of the doctrine. At least they provide the underlying reasons for recognizing manufacturer's strict liability in tort, a right quite aside from a cause of action for breach of warranty.

These grounds of justification are less persuasive when considered in relation to property damage than in the case of personal injuries; and although manufacturer's liability in tort for property damage is the ultimate conclusion under the doctrine, nevertheless it is within the rational confines of the doctrine. That the Supreme Court has not extended the doctrine to this ultimate conclusion seems apparent from the following restrictive language in Greenman, at page 63 of 59 Cal.2d, at page 701 of 27 Cal.Rptr., at page 901 of 377 P.2d:

‘The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves.’ (Emphasis added.)

Greenman was an out-and-out personal injury action and there was no way the court could have extended strict liability to include property damage except by a dictum expression, which it did not do. It could be argued that Greenman, standing alone, left open the question of property damage recovery so that this court has a free hand in exploring the limits of the doctrine. But Greenman does not stand alone; it was followed by the Vandermark case, supra, which involved property damage as well as personal injuries. The facts of that case reflect that the plaintiff was injured in an automobile accident which occurred when a defective brake mechanism caused the car to run off the highway and collide with a lightpost. Nowhere in the opinion does the Supreme Court mention recovery for damages to the car. It is a fundamental though often neglected rule that the ratio decidendi of an opinion is resolved not by all facts that may appear in the opinion, but by only those facts relied upon by the court in making its decision. Extraneous facts should not be considered as merged in the rule of the case.

An analysis of Vandermark reveals that the question of property damage was not discussed, and apparently it was not made an issue in the case. Furthermore, in every instance in which the Supreme Court made reference to the strict liability of the manufacturer, the words ‘personal injuries' or ‘injured person’ or ‘injured plaintiff’ were used. Such reference occurs ten times. The absence of mention of property damage and the recurring reference to personal injuries in Vandermark impel us to conclude that the decisional doctrine of manufacturer's strict liability in tort as presently delineated by the California Supreme Court is limited to recovery for personal injuries.

Since there was neither allegation nor proof of personal injuries, it follows as a matter of law that had the trial court made a finding on the issue of strict liability in tort it would have been against plaintiff. Thus, the failure to find on the issue of strict liability in tort for property damage does not require a reversal of the judgment.

The judgment is affirmed.

STONE, Justice.

CONLEY, P. J., and RALPH M. BROWN, J., concur.

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