No. 81-410
I N THE SUPREME COURT O THE STATE O F M N A A
F OTN
1982
N O A THOMPSON,
EM
P l a i n t i f f and A p p e l l a n t ,
VS.
NEBRASKA MOBILE H M S CORPORATION,
O E
A N L KRUSE, d/b/a AMERICAN IDEAL
R OD
HOMES; and J A C K BOLES,
D e f e n d a n t s and R e s p o n d e n t s .
Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f C a s c a d e
H o n o r a b l e H. W i l l i a m C o d e r , J u d g e p r e s i d i n g .
C o u n s e l o f Record:
For Appellant:
F r i s b e e , Moore & S t u f f t , C u t Bank, Montana
David S t u f f t a r g u e d , Cut Bank, Montana
For Respondents:
J a r d i n e , S t e p h e n s o n , B l e w e t t & Weaver, G r e a t F a l l s ,
Montana
Lon Holden a r g u e d , G r e a t F a l l s , Montana
L a r s e n & N e i l l , G r e a t F a l l s , Montana
D i r k L a r s e n a r g u e d , G r e a t F a l l s , Montana
Submitted: May 28, 1982
Decided: J u n e 23, 1982
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of the
Court.
Plaintiff, Neoma Thompson, appeals the decision of the
Eighth Judicial District Court of Montana to dismiss her claim
of strict liability in tort against defendants. It was
dismissed because the only injury suffered by plaintiff was
to the product itself, the mobile home. We reverse the decision
of the District Court and hold that a strict liability
action can lie when the only damage suffered is to the
defective product itself.
Neoma Thompson purchased a 1972 Magnolia Futurama from
Arnold Kruse, d/b/a American Ideal Homes, and Jack Boles on
September 25, 1971. She paid $8,465.00 for the mobile home.
It was designed and constructed by Nebraska Mobile Homes
Corporation (Nebraska) .
The purchase agreement contains the following language:
"It is mutually agreed that the buyer takes
the new mobile home, trailer or other described
unit, 'as is' and that there are no warranties,
either express or implied, made by the dealer.
The seller specifically makes no warranty as to
its merchantability or of its fitness for any
purpose. '
I
There was also a repair clause in the agreement whereby
American Ideal Homes agreed "to return to service Thompson's
home as required."
Regarding factory warranties, Mr. Thomas Wilson, Jr.,
General Manager of Nebraska Mobile Homes, stated at trial
that every mobile home sold by Nebraska in 1971-72 had at
least a 90 day warranty. Since some states required one
year warranties, Wilson stated that it was his practice to
honor all of Nebraska's warranties for one year.
Thompson's mobile home was delivered and set up on
November 17, 1971. That night the furnace malfunctioned.
At Thompson's request and pursuant to the purchase agreement,
American Ideal returned to Thompson's mobile home and repaired
the furnace the next day. Within a month, Thompson noticed
that several interlocking roof shingles had been blown from
the roof. Again she phoned American Ideal, who delivered
new shingles to Thompson. She then found a friend to replace
the shingles and some roof batting for her. At an unspecified
later date, a sliding glass door was also repaired by American
Ideal.
Mrs. Thompson was injured in an automobile accident in
1966 and suffers memory loss. Although much of her memory
has returned, she still has some problems. Therefore,
Thompson's testimony is rather vague with respect to dates
and time frames.
During the first winter she owned the Futurama, 1971-
72, Thompson was plagued by cold air blowing through the
home's outlets, cupboards and closets. She contacted American
Ideal regarding this problem and was told a "factory man"
(from Nebraska Mobile Homes) would be sent to repair the
leaks. After several more calls to American Ideal and
sometime during the next two years, 1973 or 1974, a factory
man did visit Thompson at her home. He spent approximately
30 to 40 minutes at the mobile home and caulked her bedroom
closet floorboard. He immediately left as he needed to
return to Nebraska for his daughter's wedding. Thompson
testified that she was unable to discuss with him other
problems with her mobile home due to his quick departure.
The caulking was insufficient. Thompson found it
necessary to install a gas heater as well as to purchase
several electrical heaters in an effort to keep her home
warm.
Sometime after the caulking was performed, Mrs. Thompson
noticed that the living room ceiling was starting to sag.
She called American Ideal Homes about the problem, to no
avail.
On June 6, 1976, Mrs. Thompson saw Mr. Arnold Kruse
installing another mobile home in her court. She went to
that site and requested Kruse to come examine her sagging
roof and ceiling. He did so. He testified at trial that
the roof and ceiling were sagging approximately four inches
and that the walls of the mobile home were bowed. He stated
that he had never before seen a Magnolia in that kind of
condition.
Mrs. Thompson is unclear about when she first noticed
her ceiling was sagging. She testified at trial that it
could have been a year or a year and a half after her bedroom
was caulked. She also testified that it had been sagging
for no less than one year and may be as much as two or three
years prior to Mr. Kruse's visit. The exact time remains an
open question of fact.
Mr. Kruse phoned Nebraska Mobile Homes on June 7, 1976,
and requested someone come check the Thompson mobile home.
In response to that call, Mr. Bill Boyer inspected Thompson's
home in either June or July of 1976. He told Mrs. Thompson
that he had never seen a Magnolia act that way and that he
would call Thomas Wilson about the problem. Mr. Boyer later
told Mrs. Thompson that Mr. Wilson stated there was nothing
Nebraska could do as her one year warranty had expired.
Approximately one year later, September 1, 1977, Thompson
filed a complaint against Nebraska Mobile Homes, Arnold
Kruse, d/b/a American Ideal Homes and Jack Boles. The
primary allegations in the complaint were:
(1) That defendant Nebraska Mobile Homes had failed to
use due care and had used inferior materials when constructing
her home ;
(2) That such actions had resulted in the mobile home
being in a defective condition when it was delivered to Mrs.
Thompson; and
(3) That the defects constituted breach of warranties
that the home was suitable for Montana's severe winters and
that the home was fit for general use.
The complaint was later amended to include a claim against
defendants for damages, based on strict liability in tort.
A jury trial was held July 14, 1981. On that same day,
Nebraska filed a motion in limine prohibiting any testimony
regarding plaintiff's physical or emotional sickness allegedly
caused by the mobile home. The motion was granted and there
is no appeal of that issue. At the close of the trial, both
defendants moved for dismissal of plaintiff's claim for
property damages based on strict liability in tort. Plaintiff
filed a brief in support of her claim, after which defendant's
motions to dismiss were granted.
The case was submitted to the jury on negligence, fraud
and warranty theories. The jury was instructed by the judge
that disclaimers are a defense to warranties. Defendants
were thus allowed to rely on Uniform Commercial Code defenses
not available for strict liability claims. The jury found
for the defendants on all counts submitted to them. The
only issue raised in this appeal is whether the District
Court erred in dismissing plaintiff's claim for strict
liability in tort.
This Court adopted strict liability in tort in Brandenburger
v. Toyota Motor Sales (1973), 162 Mont. 506, 513 P.2d 268.
We stated several reasons for so doing:
(1) ". . . to place liability on the party
primarily responsible for the injury occurring,
that is, the manufacturer of the defective
product. I'
(2) To fulfill such public policy considera-
tions for openly fixing responsibility on the
manufacturer regardless of negligence as:
(i) requiring the manufacturer to anticipate
hazards and guard against their recurrence,
as the consumer is not able to do so;
(ii) placing the cost of injury on the manu-
facturer, who can cover the risk of injury
through insurance, rather than overwhelming
the injured consumer with that burden;
(iii) discouraging the marketing of defective
products; and
(iv) placing responsibility on the retailer
and wholesaler of the defective product as
they act as a conduit through which liability
may reach the manufacturer.
Strict liability in tort is defined in 2 Restatement of
Torts Second, Section 402(A), as follows:
"(1) One who sells any product in a defective
condition unreasonably dangerous to the user
or consumer or to his property is subject to
liability for physical harm thereby caused to
the ultimate user or consumer, or to his prop-
erty, if
"(a) the seller is engaged in the business of
selling such a product, and
"(b) it is expected to and does reach the
user or consumer without substantial change
in the condition in which it was sold.
" (2) The rule stated in Subsection (1) applies
although
"(a) the seller has exercised all possible
care in the preparation and sale of his product,
and
"(b) the user or consumer has not bought the
product from or entered into any contractual
relation with the seller."
In Brandenburger, we adopted the above definition and
held that a claim for strict liability in tort could lie
whenever a defective product caused physical harm to its
consumer, or to the consumer's property. As the only physical
harm caused by Mrs. Thompson's defective mobile home was to
the mobile home itself, the District Court Judge dismissed
Thompson's strict liability in tort claim.
We reverse the District Court's decision to dismiss the
claim and remand this case for a new trial on the theory of
strict liability in tort. By doing so, we extend the doctrine
of strict liability in tort to include those instances where
the only injury suffered is to the defective product itself.
The rationale quoted in Brandenburger also applies
under these circumstances. The public remains in an unfair
bargaining position as compared to the manufacturer. In the
case of damage arising only out of loss of the product,
this inequality in bargaining position becomes more pronounced.
Warranties are easily disclaimed. Negligence is difficult,
if not impossible, to prove. The consumer does not generally
have large damages to attract the attention of lawyers who
must handle these cases on a contingent fee. We feel that
the consumer should be protected by affording a legal remedy
which causes the manufacturer to bear the cost of its own
defective products. By allowing a claim for strict liability
in tort we are joining with the jurisdictions of New Jersey,
Wisconsin, Michigan, Minnesota and Colorado in affording
legal recourse to all victims damaged by defects resulting
from the manufacturing process.
In Hiigel v. General Motors Corporation (Colo. 1975),
544 P.2d 983, Hiigel's motor home was damaged when its wheel
studs sheared off, causing the dual rear wheels to separate
from the vehicle while it was in operation. In extending
strict liability in tort to cover damages to the motor home
itself, the Colorado court stated: "Since under S 4 0 2 A the
burden of having cast a defective product into the stream of
commerce falls upon the manufacturer, it appears inconsistent
to limit his responsibility to property other than the
product sold." Hiigel, 544 P.2d at 989.
Gautheir v. Mayo (Mich. 1977), 258 N.W.2d 748, involves
a modular home rendered uninhabitable due to manufacturer
created defects. In finding the manufacturer liable to the
purchaser, the Michigan court enunciated the same "stream of
commerce" rationale and held that "(a) consumer has a cause
of action directly against a manufacturer for economic loss
resulting from a defective product, when said defect is
attributable to the manufacturer. . ." Gautheir, 258 N.W.2d
Santor v. A and M Karagheusian, Inc. (1965), 44 N.J.
52, 207 A.2d 305, is one of the first, as well as the best-
rea~oned~opinionsin
this area. In finding the manufacturer
of a defective carpet liable to the purchaser for the value
of the carpet when the defective condition was first discovered,
the New Jersey court stated:
". .. the great mass of the purchasing public
has neither adequate knowledge nor sufficient
opportunity to determine if articles bought
or used are defective. Obviously they must
rely upon the skill, care and reputation of
the maker. .
. It must be said, therefore, that
when the manufacturer presents his goods to
the public for sale he accompanies them with
a representation that they are suitable and
safe for the intended use. ..
The obliga-
tion of the manufacturer thus becomes what in
justice it ought to be -- an enterprise liability
.
. . The purpose of such liability is to insure
that the cost of injuries or damages, either
to the goods sold or to other property, result-
ing from defective products, is borne by the
makers of the products who put them in the
channels of trade, rather than by the injured
or damaged persons who ordinarily are power-
less to protect themselves." Santor, 207 A.2d
at 311, 312.
Other cases applying strict liability in tort to instances
where the only injury is to the defective product itself are
City of Lacrosse v. Schubert, Schroeder and Associates
(1976), 72 Wis.2d 38, 240 N.W.2d 124; Superwood Corp. v.
Siempelkamp Corp. (Minn. 1981), 311 N.W.2d 159; and C & S
Fuel, Inc. v. Clark Equipment Co. (E.D. Ky. 1981), 524
F.Supp. 949.
Finally, respondent Nebraska Mobile Homes asserts that
even if the District Court erred in dismissing the strict
liability in tort claim, the error was harmless for two
reasons:
(1) Implied warrantability of fitness for use is the
same thing as strict liability. Since the jury
returned a verdict for defendants on the warranty
theory, they would have also done so on the theory
of strict liability, had it been submitted to
them.
(2) The Statute of Limitations for filing the strict
liability in tort claim had run, thus barring that
claim.
We disagree.
The court did instruct on the breach of implied warranty
of fitness. However, the court also instructed that such a
warranty could be disclaimed. The purchase agreement, as
quoted at the outset of this opinion, disclaims the warranty.
Therefore, the jury might well have determined that the
disclaimer barred any action against defendant for a breach
of an implied warranty of fitness for use.
Strict liability is not governed by the Uniform Commercial
Code. It cannot be disclaimed. Therefore, the jury could
logically have held for Mrs. Thompson under the strict
liability theory even though they held against her under the
warranty theory. It was prejudicial error for the judge to
fail to give the strict liability instruction.
The evidence of when Mrs. Thompson first discovered her
ceiling to be defective is both inconsistent and unclear.
It is a question of fact for the jury to determine. We
cannot ascertain from the jury's general verdict whether or
not they found the statute of limitations to have run. The
applicable period of limitations is three years and commences
to run from date of discovery, although the period may be
further tolled by acts creating an estoppel. These are
fact questions to be considered at a future trial with the
defendant having the burden to prove this affirmative defense.
The decision of the District Court is reversed and this
cause is remanded for a new trial on the theory of strict
liability in tort.
We Concur:
' ~ % l
3 & d .
4
Chief ,Justice