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Markle v. Mulholland's Inc.

April 26, 1973


Appeal from Circuit Court, Washington County. Glen Hieber, Judge.

Franklyn N. Brown, Tigard, argued the cause for appellant. With him on the brief was James F. McCaffrey, Tigard.

Joe D. Bailey, Hillsboro, argued the cause for respondents. With him on the brief was Carrell F. Bradley, Hillsboro.

In Banc. Holman, J. O'Connell, C.J., specially concurring. McAllister, J., specially concurring. Denecke, J., dissenting. Bryson, J., dissenting.


Plaintiff was injured when the left rear tire of his automobile blew out, causing the vehicle to leave the highway. The tire had been purchased by plaintiff for $12.35 nine months earlier, after it had been recapped. It had 5,000 to 6,000 miles of use at the time of the accident. Defendants are the recapper, the wholesaler, and the retailer of the recapped tire. At the completion of the testimony, the trial court granted defendants' motion for a directed verdict. Judgment was entered thereon, and plaintiff appealed.

Plaintiff's cause of action was pleaded in two counts: the first, in negligence; the second, in strict liability.

Plaintiff assigns as error failure to admit testimony by a rubber chemist that he inspected the tire after the accident and found the rubber of the side walls to be so subject to ozone deterioration that the casing was not suitable for recapping. However, plaintiff's counsel admitted, during his offer of proof, that "* * * we don't have testimony to say that because of this [ozone deterioration] the tire was dangerous." It therefore was not error to reject the testimony because the condition concerning which the chemist testified was irrelevant to any defect in the tire which may have caused the accident.

Plaintiff's only other assignment of error was the granting of defendants' motion for a directed verdict. He contends there was sufficient evidence to take the case to the jury on both counts.

The only other expert witness presented by plaintiff testified that the failure of the tire was due to an air pocket in the casing which either was in

existence in the casing at the time of original manufacture or was formed when a small pin hole developed in the inner layer of the casing, allowing air to seep into the cord. He did not say which was the more probable, nor could he say, in the latter event, whether the hole had already developed by the time the casing was retreaded and sold to plaintiff. The expert also testified that, in his opinion, the blowout was not due to impact. No one testified that the blowout was caused by the manner in which the retread had adhered to the casing. Plaintiff testified that from the time it had been purchased by him the recapped tire had been driven almost exclusively on paved roads, had been properly inflated, and had not been driven into curbs, large rocks or chuck holes, or otherwise abused.

Three specifications of negligence were pleaded:

1) Failing to properly test and inspect the tire by putting it in an ozone chamber;

2) Recapping a casing which showed ozone markings;

3) Failing to inspect after recapping to determine the degree of adherence of the cap to the casing.

The testimony of plaintiff's witnesses did not substantiate in any way any of the allegations of negligence in the complaint. As a result, plaintiff failed to sustain his negligence count.

Plaintiff contends that, even in the absence of being able to show negligence or the exact reason for the air pocket in the casing, the tire did not perform in accordance with a purchaser's reasonable expectations. He claims that evidence of such nonperformance, of the resultant dangerousness, and of the lack

of probable causes for its nonperformance for which he would have been responsible is sufficient to take the case to the jury on his strict liability cause of action.

The initial problem with this cause of action is the nature of plaintiff's strict liability claim. The complaint on which the action was tried purports to state a cause of action for breach of warranty. In previous cases, because of the evolving nature of the law in this field, we have treated similar complaints as stating as broad and all-encompassing a cause of action as it was possible to state for strict liability arising out of the sale of goods. In those cases we did not limit the issue to the warranty type of strict liability under the Uniform Commercial Code (UCC). See McGrath v. White Motor Corp., 258 Or 583, 484 P2d 838 (1971), and Vanek v. Kirby, 253 Or 494, 450 P2d 778, 454 P2d 647 (1969).

In McGrath we called to the attention of the bar the difficulty engendered by the use of "warranty" if it was the intention of the pleader to state as broad a case as possible in strict liability. The original opinion in McGrath was handed down April 29, 1971. It was, of course, not published in the Advance Sheets until a short time later. All the pleadings upon which the instant case was tried were made up by May 5, 1971. Plaintiff, apparently, heeded the admonition in McGrath and tendered before trial an amended complaint, but it was not accepted by the court for reasons not appearing in the record, and it was not filed.

At trial and upon appeal this case was treated as an ordinary strict liability case, and the Oregon cases discussed by both sides in their briefs were

decided under Section 402A*fn1 of Restatement (Second) of Torts. No claims of lack of notice, of disclaimer, or of any other restriction upon liability particular to the provisions of the UCC were made. Under such circumstances we believe that plaintiff should not be prevented from putting what he apparently considers to be his best foot forward. We hold for the purposes of this case that plaintiff's allegations that the tire was not of merchantable quality and therefore blew out are the equivalent of an allegation that it was defective.

In Wights v. Staff Jennings, 241 Or 301, 405 P2d 624 (1965), we rationalized the seller's liability as being one of tort arising out of a breach of implied warranty of merchantable quality. We rejected as the sole basis*fn2 for products liability the rationale of enterprise liability because its natural and logical extension would require the enterprise to be responsible

for the "inevitable accident toll" which results from all its activities, not just from its sale of goods. Wights was a case involving an ultrahazardous article; therefore, the application of Section 402A was unnecessary to establish liability. However, we subsequently adopted it in Heaton v. Ford Motor Co., 248 Or 467, 470-71, 435 P2d 806 (1967), and determined that liability under that section, as we conceive it, is "* * * conceptually related to the traditional warranty of merchantable quality in the law of sales." When, in Heaton, we adopted Section 402A, we said nothing about enterprise liability, which is one of the rationales given in comment c under Section 402A for the formation of the rule.

Thereafter, we decided a series of cases under Section 402A without any further comment as to whether we were rejecting or accepting the enterprise liability rationale. This has been commented upon in Products Liability in Oregon: Present and Future, 8 Will L J 410, 424 (1972):

"* * * [T]he entire products liability case law is confused by the court's express rejection of the enterprise liability approach to products liability in Wights, and its later adoption in Heaton of Restatement (Second) of Torts, ยง 402A which is actually based on the enterprise liability theory * * *." (Footnote omitted.)

We necessarily adopted a limited theory of enterprise liability when we adopted Section 402A. Why else would liability under the section be restricted to those who are engaged in the business of selling? It was restricted to them because they are in a position to spread the risk while others are not. The comment to the section so recognizes. However, that restricted form of enterprise liability should not be confused

with the absolute liability we disavowed in Wights. We were correct in Heaton in rationalizing the seller's strict liability as being conceptually related to implied warranty of merchantable quality and in pointing out in Wights that if there were no more to the rationale of such liability than distribution of the risk occasioned by the enterprise, its logical extension would carry us to absurd lengths.

In addition to the enterprise liability rationale, something similar to the rationale behind an implied representation of merchantable quality also has to be part of the theoretical basis for the rule. There is no other way to account for the language used in the discussion of the meaning of "defective condition" in comment g*fn3 to Section 402A, such as, "in a condition not contemplated by the ultimate consumer." The same can be said of language used in the discussion of "unreasonably dangerous" under comment i,*fn4 such as, "dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it." This language is consistent only with something conceptually similar to an expectation by the consumer of merchantable quality. It is an expectation which is the result of the manufacturer's or seller's placing the article in the stream of commerce with the intention that it be purchased. This expectation is

given legal sanction by the law through an assumption that the seller, by so placing the article in the stream of commerce, has represented that the article is not unreasonably dangerous if put to its intended use. This is so even though the comment to Section 402A admonishes us that liability under the section is not in warranty because it is not subject to certain contract rules.*fn5 In addition, the history of Section 402A shows the gradual evolution from the law of warranty.

The relation to warranty has been generally recognized. The following language from Dickerson, Products Liability: How Good Does a Product have to be ?, 42 Ind L J 301, 304-05 (1967), is appropriate:

"Despite these differing approaches, the underlying problem appears to be the same. Apparently, it makes no material difference whether a court operates under the common law, the Uniform Sales Act, or the Uniform Commercial Code, and whether it takes the traditional warranty approach or the Restatement approach. Thus, a coherent, uniform idea of 'legal defectiveness' that fits comfortably with each of these approaches, as well as with the principles of negligence, can be developed.

"Consideration of the reported cases strongly suggests that the factors defining compliance with minimum standards of consumer use (and, conversely, the non-compliance inherent in the idea of legal defect) are closely identified with the normal, reasonable expectation patterns of buyers and sellers. This is not surprising, because the protection

of, or reluctance to disturb, established patterns of expectation motivates much of the law * * *."

Both rationales, that of a representational tort and that of enterprise liability, have their place in Section 402A. The enterprise liability rationale is one of expansion of the protection of consumers; the representational aspect is one of limitation in an attempt to keep that expansion within manageable and logical bounds and to keep the liability from being absolute.

The relationship between the risk spreading and representational aspects is discussed in P. Keeton, Products Liability -- Liability Without Fault and the Requirement of a Defect, 41 Tex L Rev 855, 858-59 (1963). Professor Keeton states as follows:

"* * * [C]ourts that impose strict liability eliminating negligence as a requirement for recovery must adopt some rules or principles as a substitute for negligence as a delimiting principle. The method employed to date is the requirement that there must have been a defect in the product as it left the hands of the manufacturer. This requirement remains the principal obstacle to a recovery. What should be the scope of the manufacturer's duty or warranty? What should be the test of a defect? The answer to the question of the scope of the warranty or the test or definition of a defect depends to a certain extent upon the reasons or policies for the imposition of liability in the first place. If the basis for responsibility is primarily reliance on the manufacturer to put out products in accordance with his express or tacit representations as to their nature, and in accordance with the latest scientific knowledge and discoveries, and by the exercise of reasonably developed skill, then perhaps a product should not be regarded as defective

if it is no different from that which a consumer expected it to be. If, on the other hand, the underlying basis for the imposition of strict liability is the notion that the manufacturer is a better risk bearer because of his capacity to shift losses incurred from the use of the products to the consuming public generally, then the issue is somewhat different, and the problem is one of allocating between the particular user and the manufacturer losses resulting from the various risks or hazards that inhere in the use of a product."

As previously indicated, we have decided that our basis for limiting the enterprise responsibility rationale is the requirement that there be a defect in the article. The test of a defect is whether the article is in conformance with a tacit representation which the law imposes that it is not unreasonably dangerous if put to the use for which it was manufactured. This rationale is consistent with Section 402A and with the previous opinions of this court in this field.

Justice Schaefer of the Supreme Court of Illinois has summed it thusly in Dunham v. Vaughan & Bushnell Mfg. Co., 42 Ill 2d 339, 247 NE 2d 401 (1969):

"Although the definitions of the term 'defect' in the context of products liability law use varying language, all of them rest upon the common premise that those products are defective which are dangerous because they fail to perform in the manner reasonably to be expected in light of their nature and intended function * * *." 247 NE2d at 403.

The concurring opinion of McAllister, J., holds that a representation of merchantable quality is not a doctrinal basis for liability under Section 402A. This opinion holds that there is something analogous to such a representation behind the Section, because it

cannot be determined what constitutes a defect as contemplated by the Section without first determining whether the purchaser had a right to expect that the article was free from the condition which caused the injury. If he did have such a right, the condition constitutes a defect under the Section. One can only determine what a purchaser had a right to expect by the implications express or inherent in the sale to him. These implications are analogous to those underlying a representation of merchantable quality.

Defendants' motion for an order of involuntary nonsuit as to plaintiff's strict liability cause of action was stated in the following manner:

"* * * upon the further ground that there is neither proof nor pleading that there was a defect in the tire at the time the tire left the hands of the defendant.

"There is no substantial evidence that the tire was not reasonably suitable and fit for use as a tire on an automobile at the time it left the defendants' possession."

The trial court was of the opinion there was insufficient evidence of a defect at the time of the sale. If the air pocket between the plies concerning which plaintiff's expert testified was in existence at the time of original manufacture the tire was necessarily defective at the time it was retreaded and sold to plaintiff. However, he testified that it was equally probable that the air pocket was created subsequent to original manufacture by a leak from a small hole on the inside of the casing but he could not say whether this occurred before or after the tire was retreaded. Thus, we must assume the situation which is the more favorable to defendants: that the small hole and resultant air pocket, which the witness said caused the blowout,

came into existence subsequent to the retreading of the tire and its sale to plaintiff.

In the absence of abuse or of abnormal use by plaintiff since the purchase, which abuse plaintiff denied, it could be inferred that the casing was weakened or worn at the time of sale, for otherwise the defect would not have manifested itself before the expiration of the casing's anticipated use. The requirement that the defect must have existed when the product left the remanufacturer's control does not mean that the defect must manifest itself at once. The defect may be latent. The fact that there was no evidence that the remanufacturer by the exercise of reasonable care could have detected the weakness in the casing would be relevant if this were a negligence case. However, it is irrelevant in a strict liability action. The case should have been submitted to the jury.

It can be argued that plaintiff could not reasonably expect performance the equivalent to that which he would have received from a new tire because he paid only $12.35 for a tire which probably would have cost $25 to $30 had it been new. Also, he was aware that the casing had already been used for the life for which it originally had been manufactured. Nevertheless, the manufacturer selected this casing from among all available casings to retread and this implies something concerning its condition. Tread was put upon it which was capable of lasting more than 5,000 or 6,000 miles. This indicates that there is reason to believe that the manufacturer intended and the purchaser had a right to expect a quality of performance from the casing greater than that which it gave. In addition, everyone knows that, absent an impact with some object, a blowout while engaged in ordinary highway

travel is not a normal or usual thing. As the condition of tires has improved, such a blowout has become a rare and unexpected thing.

The immediate seller and the wholesaler come within the purview of Section 402A by the terms of (2)(b) and comment f*fn6 thereunder.

The concurring opinion of the Chief Justice has raised the question of whether the UCC is the exclusive source of liability in non-negligence cases and, thus, whether this court was free to adopt Section 402A. As that opinion concedes, impediments to recovery, such as notice, privity, disclaimer, and limitation of remedy, make little sense in the usual context of personal injury cases. A statutory scheme made essentially for business transactions among merchants is not geared to, nor ...

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