R. Clinton Construction Co. v. Bryant & Reaves, Inc.
442 F. Supp. 838, 24 Fed. R. Serv. 2d 1220, 23 U.C.C. Rep. Serv. (West) 310 (1977)
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Rule of Law:
Under the Uniform Commercial Code (UCC), a retail seller breaches express and implied warranties of merchantability and fitness for a particular purpose when it sells a product with a latent defect, even if the seller is not the manufacturer and never inspected or handled the goods.
Facts:
- R. Clinton Construction Company (Clinton), a highway contractor, needed to winterize its heavy earth-moving equipment in Mississippi.
- In October 1975, Clinton's superintendent, Terry Sargent, contacted Mike Reaves of Bryant & Reaves, Inc., an auto supply business, to order 300 gallons of a "good, permanent quality" antifreeze.
- Bryant & Reaves did not stock the antifreeze and arranged for its supplier, Puryear Auto Company (Puryear), to acquire it.
- Puryear obtained the antifreeze, branded "Kelly's Freezone," from the manufacturer, Luther Kelly, who arranged for it to be shipped directly to a terminal in Holly Springs, Mississippi.
- Bryant & Reaves never physically handled, inspected, or tested the antifreeze before Clinton's agents picked it up.
- In March 1976, when Clinton's agents started the equipment, they discovered the antifreeze contained a corrosive chloride solution that had caused extensive damage to the engines of nine vehicles.
- A chemical analysis confirmed the antifreeze contained 1.24% chloride, a salt-water solution capable of producing significant corrosion in internal combustion engines.
- Clinton incurred substantial costs for the defective antifreeze, labor and parts for repairs, and lost income due to equipment downtime.
Procedural Posture:
- R. Clinton Construction Company (Clinton) filed a diversity action against Bryant & Reaves, Inc. in the United States District Court for the Northern District of Mississippi.
- Bryant & Reaves filed a third-party complaint against its supplier, Porter Puryear, d/b/a Puryear Auto Company (Puryear).
- Puryear then filed a fourth-party complaint against the manufacturer, Luther Kelly, d/b/a Kelly Chemical Company (Kelly).
- Puryear filed an answer to the third-party complaint, asserting a defense of lack of in personam jurisdiction but failing to challenge the sufficiency of service of process.
- A default was entered against Kelly for failing to answer or respond to the fourth-party complaint.
- Two days before trial, Puryear filed a motion to dismiss the third-party complaint, raising for the first time the defense of insufficiency of service of process.
- The court carried Puryear's motion with the evidentiary hearing on the merits.
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Issue:
Does a retail seller who does not manufacture, inspect, or handle a product breach express and implied warranties under the Uniform Commercial Code when it sells a latently defective product that causes damage to the buyer?
Opinions:
Majority - Keady, Chief Judge
Yes, a retail seller breaches its warranties under these circumstances. The court found Bryant & Reaves liable to Clinton on three alternative grounds under Mississippi's Uniform Commercial Code (UCC). First, by agreeing to furnish a "good, first-class permanent type of antifreeze," Bryant & Reaves created an express warranty under UCC § 2-313, which it breached because the product was defective. Second, Bryant & Reaves breached the implied warranty of fitness for a particular purpose under UCC § 2-315 because it knew Clinton needed the antifreeze for winterizing heavy equipment and Clinton relied on Bryant & Reaves's skill to select a suitable product. Third, Bryant & Reaves, as a merchant dealing in such goods, breached the implied warranty of merchantability under UCC § 2-314 because the antifreeze, containing a corrosive agent, was not fit for its ordinary purpose. The court rejected the defendant's argument that it should be exonerated because it was a mere retailer with no knowledge of the latent defect, holding that pre-UCC common law and principles of strict tort liability were inapplicable to a UCC warranty claim. The purpose of the UCC's warranty provisions is to hold the seller responsible for inferior goods passed to an unsuspecting buyer, regardless of the seller's ability to discover the defect.
Analysis:
This decision solidifies the principle under the Uniform Commercial Code that liability for breach of warranty extends to retailers, even for latent defects they did not create and could not reasonably have discovered. It clearly distinguishes modern UCC warranty claims from older common law sales principles and strict product liability tort claims, which might have excused a non-manufacturing seller. The ruling reinforces the chain of commercial responsibility, placing the initial burden of liability on the party that directly sold to the consumer (the retailer), leaving the retailer to seek indemnity from its supplier or the manufacturer. This framework provides a more direct remedy for the consumer and incentivizes all parties in the supply chain to ensure product quality.
