McKnight v. Bellamy
449 S.W.2d 706, 7 U.C.C. Rep. Serv. (West) 287, 248 Ark. 27 (1970)
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Rule of Law:
Under the Uniform Commercial Code, where a tender or delivery of goods fails to conform to the contract so as to give the buyer a right of rejection, the risk of their loss remains on the seller until the seller cures the non-conformity or the buyer accepts the goods.
Facts:
- John A. McKnight, a horse breeder, advertised a mare named 'Holiday Dandy' in an auction catalogue as 'Sells bred to Silver Light,' which prospective buyers understood to mean the mare was in foal.
- Three days before the auction, McKnight's employees discovered the mare was in heat, indicating she was not in foal, but this information was not disclosed at the sale.
- Relying on the catalogue's representation, John H. Bellamy, Jr. purchased the mare for $575 on November 27, 1965.
- Two days after the sale, Bellamy discovered the mare was not in foal.
- On December 11, 1965, Bellamy returned the mare to McKnight's ranch for the purpose of being rebred to cure the non-conformity, in accordance with industry custom.
- While back in McKnight's possession, the mare became ill and lost weight over several months.
- McKnight's employees were aware of the mare's deteriorating condition but a veterinarian was not called until approximately two to three weeks after the illness was noted.
- On March 3, 1966, while still at McKnight's ranch and before being successfully rebred, the mare died.
Procedural Posture:
- John H. Bellamy, Jr. filed suit against John A. McKnight in the White County Circuit Court, the trial court.
- Bellamy's complaint alleged breach of warranty and negligence, seeking return of the purchase price.
- The trial court, sitting as a jury, entered a judgment in favor of Bellamy for $575.
- McKnight, as appellant, appealed the judgment to the Supreme Court of Arkansas, with Bellamy as the appellee.
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Issue:
Does the risk of loss for non-conforming goods remain with the seller even after delivery, until the seller cures the defect or the buyer accepts the goods?
Opinions:
Majority - J. Fred Jones
Yes. When a seller delivers goods that do not conform to the contract, giving the buyer a right to reject them, the risk of loss remains with the seller until the non-conformity is cured or the buyer accepts the goods. Here, McKnight delivered a mare that did not conform to the express warranty that she was bred and supposedly in foal. This non-conformity gave Bellamy a right of rejection, which he exercised by returning the mare to be rebred (the 'cure'). Because the mare died while in McKnight's possession before the non-conformity could be cured, the risk of loss had not shifted to Bellamy and remained with McKnight. The court also found substantial evidence that McKnight's negligence in failing to provide timely veterinary care was a proximate cause of the mare's death, providing an alternative basis for the judgment.
Analysis:
This case serves as a clear illustration of the Uniform Commercial Code's risk of loss provisions under § 2-510, which allocates risk to the breaching party. It establishes that a seller's delivery of non-conforming goods prevents the risk of loss from passing to the buyer as it normally would. The decision underscores that exercising a right to have a defect 'cured,' such as returning an animal for re-breeding, does not constitute 'acceptance' that would shift the risk of loss to the buyer. This precedent reinforces buyer protections by ensuring that sellers who breach a warranty retain responsibility for the goods until the breach is remedied.
