Redfield v. Mead, Johnson & Company , 266 Or. 273 ( 1973 )

McAllister, j.

Plaintiff brought this action under the Uniform Commercial Code against the manufacturer of a contraceptive drug to recover damages for personal injuries resulting from the alleged breach of an implied warranty that the drug was fit for the purpose for which it was sold to her. The trial court sustained a demurrer to plaintiff’s second amended complaint on the ground that the action was barred by the two-year tort statute of limitations. Plaintiff appeals from the resulting judgment contending that the trial court applied the wrong statute of limitations. We agree with plaintiff and reverse. We hold that the four-year statute of limitations specifically prescribed by the Uniform Commercial Code is applicable to this action.

This action was commenced on August 26, 1971. The second amended complaint alleged that between May, 1966, and the end of January, 1968, defendant manufactured and sold a contraceptive drug, and that plaintiff purchased and used that drug during the same period. Plaintiff alleged that, as a result of her use of the drug, she suffered personal injuries in February, 1968. The complaint further alleged that defendant impliedly warranted that the drug was safe for use as a contraceptive, and that plaintiff relied on the defendant’s skill and judgment, and upon its implied warranty of fitness, but that the drug was not safe and was not reasonably fit for plaintiff’s use as a contraceptive, and that defendant failed to furnish proper directions or warnings about the dangers of using the drug.

Actions for breach of implied warranties are governed by our Commercial Code. See OES 72.3140, 72.3150, 72.7140. The Code specifically provides as one of the buyer’s remedies for a breach of a contract of sale the recovery of damages for personal injuries caused by a breach of warranty. OES 72.7150 provides as follows:

“72.7150 Buyer’s incidental and consequential damages. * * *

“(2) Consequential damages resulting from the seller’s breach include:

“(b) Injury to person or property proximately resulting from any breach of warranty.”

See, also, OES 72.3180.

The Uniform Commercial Code’s special four-year statute of limitations is contained in OES 72.7250, which reads in pertinent part as follows:

“(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. * * *

“ (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.”

Our general statute on limitations of actions is OES 12.010:

“Actions at law shall only be commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute. * * *” (Emphasis added.)

When the above statutory provisions are read together, the legislative intent is clear. The legislature has provided a cause of action for personal injuries for breach of warranty, and has adopted a lhnitation period made specifically applicable to such actions. The action for breach of warranty is clearly one for which “a different limitation is prescribed by statute” (OB.S 12.010) and thus is not governed by the provisions of Chapter 12.

In spite of the clarity of these provisions, defendant argues that the two-year tort statute should apply because this court has characterized product liability actions as sounding in tort. This argument misses the mark. The seller’s implied warranties have their genesis in the contract of sale. Where the legislature has provided for a right of action for breach of the warranties implied in such a contract, it does not matter whether that action would be characterized at common law as lying in tort or in contract. It is a statutory action for which a specific limitation period has been provided. We do not need to look outside the provisions of the Code for more precise definitions.

In some of our cases applying the principles of strict liability in tort, the pleadings were framed in traditional warranty terms. In Wights v. Staff Jennings, 241 Or 301, 405 P2d 624 (1965) the action was filed before the effective date of the Uniform Commercial Code. We held there that a non-privity purchaser may have a cause of action, based entirely upon tort principles, for injuries caused by a defective product. It was pointed out that the tort liability which was recognized in that case “is distinct from that imposed under the Uniform Sales Act * * * or the Uniform Commercial Code * * 241 Or at 310, note 14. Because of the evolving nature of the tort of strict liability, we have not always held plaintiffs to the strict terms of their pleadings. This has been recently discussed in Markle v. Mulholland’s, Inc., 265 Or 259, 263, 509 P2d 529, 531 (1973) and McGrath v. White Motor Corp., 258 Or 583, 593-594, 484 P2d 838 (1971). Those cases indicate a temporary leniency toward plaintiffs who had drawn their pleadings in traditional warranty terms hut whose cases had been tried on the theory of strict tort liability. We did not indicate, and did not intend, that plaintiffs who wished to base their actions on the Uniform Commercial Code would be denied that right.

It has also been argued that application of the Code’s four-year limitation period would be undesirable in consumers’ actions for personal injury because the buyer’s cause of action under OPS 72.7250 will ordinarily accrue when the seller tenders delivery of the goods. It may be that the Code’s limitation statute could, in some cases, result in barring a plaintiff’s cause of action before any injury has occurred. This was the result in Mendel v. Pittsburgh Plate Glass Co., 25 NY2d 340, 253 NE2d 207, 305 NYS2d 490 (1969), a case which has been extensively discussed and criticized.^① The real significance of the Mendel case, however, is that it apparently forecloses recovery on a theory of strict liability in tort, leaving injured purchasers and users of defective products to their remedies for negligence and breach of warranty.^② This court, however, has very recently reaffirmed its recognition of the theory of strict liability in tort as formulated in Restatement of Torts 2d, § 402 A. Markle v. Mulholland’s, Inc., supra. With this theory available, a plaintiff who is injured more than four years after the sale of the defective product, although barred from recovery for breach of warranty in an action pursuant to the Code, will nevertheless have two years to bring an action based on strict liability in tort, provided he can show that the defective product was unreasonably dangerous as required under § 402 A.

It is argued that the legislature could not have intended plaintiffs in product liability cases to have a choice between two different limitation periods, and that we should apply the tort statute of limitations as best fitted to the essential nature of an action for personal injuries for breach of warranty. We have not, however, found any evidence of the legislature’s intention to limit plaintiffs to a single theory of recovery.

There are eases in which this court has denied plaintiffs the right to obtain the benefit of a favorable statute of limitations by restricting them to a single theory of recovery. In Dowell v. Mossberg, 226 Or 173, 355 P2d 624, 359 P2d 541 (1961), a medical malpractice case, we held that the real basis of the action is the physician’s failure to use due care, and that the “unspoken contractual relationship” between a physician and patient will not support an action for breach of contract. We left open the question whether a plaintiff could, within the contract limitation period, bring an action based on an express contract to effect a cure or to accomplish a particular result. 226 Or at 181. We extended Dowell to another malpractice setting in Bales for Food v. Poole, 246 Or 253, 424 P2d 892 (1967), an action against an engineer who had contracted to perform professional services as an architect. The plaintiff alleged that the defendant had faded to use due care and skdl in carrying out his contractual duties. We said that it was the failure to exercise care, and not the breach of the contract, which was the substance of the action. 246 Or at 256. See, also, Goodman v. Fernald, 154 Or 654, 61 P2d 1253 (1936), an action for breach of a covenant to repair leased premises, in which the court said the “gravamen of the complaint” was in tort, and that the action was barred by the tort statute of limitation. 154 Or at 662.

Another line of cases, however, permits plaintiffs who have avadable two theories of recovery for a single wrong to choose that which results in the more beneficial limitation period. In Martin v. Reynolds Metals Co., 221 Or 86, 342 P2d 790 (1959) we applied the trespass limitation statute although an action for nuisance, governed by a shorter limitation period, would also have been available to the plaintiff. Wells v. Oldsmobile Co., 147 Or 687, 35 P2d 232 (1934), was an action for breach of express warranty in the sale of a new car. The court held that the action was not barred by the tort statute of limitation. It was of the opinion that an action for breach of warranty could be brought either in tort or contract, and that the complaint in that case sounded in contract. Other cases, although not involving the statutes of limitation, assume the plaintiff’s right to choose between available tort and contract theories. Harper v. Interstate Brewery Co., 168 Or 26, 36-42, 120 P2d 757 (1942); Sevier v. Mitchell, 72 Or 483, 142 P 780 (1914).

The legislature has not, so far as we are aware, taken any position on this question. It has, however, provided a limitation period specifically applicable to actions for breach of warranty, including personal injury actions. Regardless of our view of the “gravamen” or “substance” of an action for personal injuries caused by breach of warranty, we are not free to ignore this provision.

It has also been suggested that the legislative intent that the tort statute should apply may be found in the fact that when the legislature enacted the Uniform Commercial Code, it amended ORS 12.080, the general contract statute of limitations, to provide an exception for sales contract actions governed by ORS 72.7250, but did not similarly amend ORS 12.110, the general tort statute of limitation. We do not find this circumstance particularly significant. Prior to the enactment of the Code, this court had held that an action for personal injuries resulting from the breach of a sales warranty was governed by the contract statute of limitations. Wells v. Oldsmobile Co., supra, 147 Or 687. On the basis of the Wells decision, the legislature may well have concluded that because a warranty action had previously been governed by the general contract statute, only that statute needed to be amended to conform to ORS 72.7250.

Cases from other jurisdictions which have considered this problem are divided. Three cases which have refused to apply the Uniform Commercial Code statute of limitations involved a choice between the Code provision and a statute applying, by its terms, to all actions for personal injury or property damage. Tyler v. Street & Co., 322 FS 541 (ED Va 1971); Heavner v. Uniroyal, Inc., 118 NJ Super 116, 286 A2d 718 (1972); U. S. Fidelity & G. Co. v. Truck & Con. Equip. Co., 21 Ohio St 2d 244, 257 NE2d 380 (1970). These eases are distinguishable on the ground that a personal injury or property damage statute of the kind they involved is more specific than the Code’s general statute, applying to all actions on sales contracts. ORS 12.110 (1) is not so specific in its terms.^③ The decision in the U. S. Fidelity case, moreover, is expressly based on the reasoning that because the plaintiff was not in any privity relationship recognized by the Code’s provisions, the complaint did not state a cause of action in contract for breach of warranty. See, also, Abate v. Barkers of Wallingford, Inc., 27 Conn Supp 46, 229 A2d 366 (CP New Haven 1967), a trial court decision which we do not find persuasive.

On the other hand, several courts of last resort have applied the Code’s statute of limitations in breach of warranty actions on the ground that the legislature has provided a statute specifically governing actions brought under the Code’s sales article, including personal injury actions for breach of warranty. Sinka v. Northern Commercial Company, 491 P2d 116 (Alaska 1971); Gardiner v. Philadelphia Gas Works, 413 Pa 415, 197 A2d 612 (1964); Layman v. Keller Ladders, Inc., 224 Tenn 396, 455 SW2d 594 (1970). In the Sinha case the tort statute, which the court held inapplicable to an action for breach of warranty brought under the Code, was nearly identical to OES 12.110 (1). We agree with these courts, for the reasons we have stated, and hold that an action for personal injuries caused by a breach of the warranties implied in a contract for the sale of goods, by virtue of our Commercial Code, may be brought within four years after the accrual of the cause of action.

Defendant also contends that the complaint does not state a cause of action for breach of warranty. It is argued that plaintiff did not adequately allege that the drug was not of merchantable quality, that there was no allegation of privity, and that plaintiff failed to allege that she had given defendant the required notice of the breach of warranty.

The complaint alleges that the drug was a contraceptive pill, that defendant knew that members of the public were purchasing the pill for contraceptive purposes, and that the drug “was unsafe and was not reasonably fit for plaintiff’s use as a contraceptive.” These are adequate allegations that the drug was unmerchantable, in that it was not fit for the ordinary purposes for which such goods are used. OES 72.3140 (2)(c).

On the question of privity, plaintiff points to her allegation that she relied upon defendant’s implied warranty of fitness for “the purpose for which said drug was sold by defendant to the public and to the plaintiff” (emphasis added). Although not as direct as it might be, we believe this allegation is adequate to inform defendant that plaintiff claimed to be a purchaser of the drug, and to permit the raising of the issue of privity by denial.^④

Plaintiff concedes that her complaint is inadequate in that it does not allege that defendant was given notice of the alleged breach. ORS 72.6070 (3) provides:

“Where a tender has been accepted:

“(a) The buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; * *

The language of this section indicates that notice is an essential element of plaintiff’s case. It has been so held. See L. A. Green Seed Company of Arkansas v. Williams, 246 Ark 463, 438 SW2d 717, 719 (1969). Plaintiff has asked for leave to amend her complaint to include an allegation of notice. As the trial court sustained the demurrer on the basis of the statute of limitation, which we have held to be error, and not on the basis of other defects in the complaint, we believe plaintiff should be given an opportunity to amend in this particular.

The case is reversed and remanded with directions to the trial court to permit plaintiff to amend her complaint to add an allegation of notice of breach, and for such further proceedings as may be appropriate.

① See, for discussions of Mendel and the statute of limitations problem, Dewey, Products Liability Without Privity: Contract Warranty or Tort, 45 St John’s L Rev 76, 80 (1970); Bischoff, Comments on Mendel, 45 St John’s L Rev 71 (1970); Siegel, Procedure Catches Up—And Makes Trouble, 45 St John’s L Rev 63 (1970); Note, 39 Fordham L Rev 152 (1970); Note, 11 Bost Coll Ind & Comm L Rev 1038, 1044-1045 (1970).

② “* * * When Goldberg [Goldberg v. Kollsman Instrument Corp., 12 NY2d 432, 191 NE2d 81, 240 NYS2d 592 (1963)] was before us, we were confronted with the issue of whether or not a cause of action other than in negligence should exist in favor of those persons not in privity with the contract of sale. After determining that the cause of action should exist, two avenues were open to us—either to establish, as other jurisdictions already had, a new action in tort, or to extend our concept of implied warranty by doing away with the requirement of privity. While there is language in the majority opinion in Goldberg approving of the phrase ‘strict tort liability’, it is clear that Goldberg stands for the proposition that notwithstanding the absence of privity, the cause of action which exists in favor of third-party strangers to the contract is an action for breach of implied warranty. * * *” 253 NE2d at 209.

Mendel was not governed by the Uniform Commercial Code. The court applied the general contract statute of limitation, and indicated that the Code’s' four-year statute would govern in cases involving sales which took place after the Code’s effective date.

③ “An action ** * * for any injury to the person or rights of another, not arising on contract, and not especially enumerated in this chapter, shall be commenced within two years; * * (Emphasis added.)

④ Plaintiff relies on this allegation as adequate to allege a direct sale by defendant to plaintiff. Therefore, this case does not require us to consider whether the protection of the Code’s warranty provisions will be extended to other persons in the distributive chain.