Frericks v. General Motors Corp.

Eldridge, J., delivered the opinion of the Court. This case was first before us in Frericks v. General Motors Corp., 274 Md. 288 , 336 A. 2d 118 (1975). Briefly the facts are ³⁰⁶ as follows. On September 21, 1970, John Frericks was a passenger in a 1969 Opel Kadett which was being driven by Ronald B. Baines.

Near Jacksonville, North Carolina, Baines apparently fell asleep at the wheel, and the car left the road and overturned. It was alleged that after leaving the highway, the locking mechanism of the seat in which John Frericks was riding failed, allowing the seat to drop backwards and placing his head “in a position in line with the collapsing roof supports and the collapsing roof on the right side of the vehicle.” His skull was crushed by the collapsing roof and roof supports. The automobile was designed and manufactured by the General Motors Corporation and was purchased in Maryland by the parents of Ronald Baines from Anchor Pontiac Buick, Inc. Plaintiffs, John Frericks and his father, Frank Frericks, brought this suit in the Circuit Court for Cecil County against General Motors and Anchor alleging, inter alia, both negligence in the design, testing and selection of materials for the seat mechanism and roof of the automobile, as well as breach of implied and express warranties. General Motors and Anchor filed demurrers to the negligence and warranty counts which were sustained by the trial court, and its judgment was affirmed by the Court of Special Appeals.

This Court, however, in Frericks v. General Motors Corp., supra, directed a reversal of the judgment of the circuit court insofar as it sustained the demurrer by General Motors as to both the negligence and warranty counts and the demurrer of Anchor as to the warranty counts, but we affirmed that part of the judgment sustaining Anchor’s demurrer to the negligence count. With regard to the negligence counts, we held in Frericks v. General Motors Corp. that while North Carolina law was applicable under the rule of lex loci delictus, neither General Motors nor Anchor had given notice of intent to rely on foreign law as required by Maryland Code (1974), § 10-504 of the Courts and Judicial Proceedings Article. Consequently, we declined to take judicial notice of the foreign law and, for the purpose of testing the sufficiency of the declaration, proceeded under the assumption that North ³⁰⁷ Carolina law was like that of Maryland. The Maryland law in this so-called “automobile crashworthiness” area had been delineated in Volkswagen of America v. Young, 272 Md. 201, 321 A. 2d 737 (1974), in which we agreed with the holding in the leading case of Larsen v. General Motors Corporation, 391 F. 2d 495 (8th Cir. 1968), that an automobile manufacturer may be liable in negligence for a design defect which aggravates injuries received in an accident even though the defect was not the cause of the accident itself.

In Frericks v. General Motors Corp., supra, we applied the principles of Volkswagen of America v. Young, supra, deciding that the negligence count did state a cause of action against General Motors but was insufficient as to Anchor because of the failure to allege any specific act of negligence on Anchor’s part. General Motors, however, was to be permitted on remand of the case to the circuit court to give notice of intent to rely on foreign law and to raise the question of whether North Carolina imposes liability on manufacturers for “secondary impact” injuries caused by design defects. Frericks v. General Motors Corp., supra, 274 Md. at 296-297 . The sufficiency of the breach of warranty counts, on the other hand, was evaluated in Frericks under Maryland law, as the law of the place of sale determines the extent and effect of the warranties which arise from the sale.

See Volkswagen of America v. Young, supra, 272 Md. at 220 . We held in Frericks that the standard of care to provide an automobile suitable for its intended use, including a reasonable measure of safety in the event of a collision, which is applicable in a tort action, was under the circumstances likewise the standard applicable in the action for breach of the warranties. Applying this standard, we decided that the warranty counts were sufficient to state a cause of action against both General Motors and Anchor. Frericks v. General Motors Corp., supra, 274 Md. at 299-301 .

On remand to the circuit court, General Motors filed general issue pleas to both the negligence and warranty counts of the declaration. General Motors also gave notice of intent to rely on North Carolina law. Anchor filed a general ³⁰⁸ issue plea to the warranty count. Both defendants then filed motions for summary judgment.

General Motors contended that under North Carolina law the plaintiffs had failed to state a cause of action under the negligence count. As to the warranty counts, General Motors contended that the plaintiffs were barred from any remedy for breach of warranty by § 2-607 (3) (a) of the Maryland Uniform Commercial Code, Maryland Code (1975), § 2-607 (3) (a) of the Commercial Law Article, for failing to give notice of the breach. Anchor also based its motion upon the plaintiffs’ failure to notify it of the alleged breach. It is undisputed that neither plaintiff notified General Motors or Anchor of any breach until the original suit was filed.

The trial court granted both motions for summary judgment. The court held that a third party beneficiary of warranties is to be treated as a buyer for purposes of the notice provisions of § 2-607, and must notify the seller, including a manufacturer, of any breach within a reasonable time after discovery of the breach or be barred from any remedy. Also, while the court found that the Supreme Court of North Carolina had not yet decided the issue of whether an automobile manufacturer can be held liable for a design defect which does not cause an accident but enhances injuries received in the accident, it predicted that the North Carolina court would follow the rationale of Evans v. General Motors Corporation, 359 F. 2d 822 (7th Cir.) cert. denied, 385 U. S. 836 , 87 S. Ct. 83 , 17 L.Ed.2d 70 (1966), and hold that automobile manufacturers are not liable in negligence for design defects resulting in “secondary impact” injuries in a collision where the defects did not cause the collision. The plaintiffs took an appeal to the Court of Special Appeals, and we granted a writ of certiorari prior to a decision by that court.

On this appeal plaintiffs challenge the trial court’s judgment on both grounds relied on by the trial court. First, plaintiffs argue that, because they are third party beneficiaries, they are not buyers for purposes of § 2-607 of the Maryland Uniform Commercial Code, and were therefore not required to give notice of breach before ³⁰⁹ maintaining the present breach of warranty action. Second, plaintiffs contend that the negligence count was sufficient to state a cause of action under North Carolina law and that the trial court was in error in predicting that North Carolina would adopt the rationale of Evans despite the overwhelming trend towards the adoption of the Larsen holding. (1) As we noted in Frericks, 274 Md. at 299 n. 4, there is no issue of privity involved in this case.

The Maryland Uniform Commercial Code, as amended by Ch. 249, Laws of 1969, provides in § 2-318 that: “A seller’s warranty whether express or implied extends to any natural person who is in the family or household of his buyer ... or any other ultimate consumer or user of the goods or person affected thereby if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.” The 1969 amendments enlarged the class of third party beneficiaries entitled to the protection of sellers’ warranties by adding the words “or any other ultimate consumer or user of the goods or person affected thereby.” Additionally, § 2-314 was amended to provide that in the warranty provisions of the Code, §§ 2-314 — 2-318, the word “ ‘seller’ includes the manufacturer, distributor, dealer, wholesaler or other middleman or the retailer.” The effect of these changes was to abolish the privity requirements in warranty actions for personal injuries. 1 The issue which we must ³¹⁰ now decide is whether one who is not a purchaser, and to whom a seller’s warranty extends by virtue of § 2-318, is required to give notice of breach of warranty under § 2-607 or be precluded from a breach of warranty remedy. Section 2-607 of the Maryland Uniform Commercial Code, insofar as relevant, provides that: “(3) 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;” (Emphasis supplied.) It is clear that in an action by a buyer against his seller for a breach of warranty, the buyer must notify the seller of the alleged breach. Therefore, if the notice requirement of § 2-607 extends beyond the buyer to third party beneficiaries, and if the filing of the lawsuit under the circumstances here would not itself constitute notice, it would appear that the plaintiffs would be precluded from pursuing their warranty actions against General Motors and Anchor, as it is undisputed that they did not give notice of the alleged breach of warranty prior to the filing of the present action.

However, we conclude that the plaintiffs, as third party beneficiaries, are not required by § 2-607 to notify the seller of a breach of warranty and are therefore not precluded from pursuing a remedy for breach.* 2 Section 2-607 provides that the “buyer must... notify the seller of breach . .. .” (Emphasis supplied.) In § 2-103 (1) (a), the definition of “buyer” applicable to § 2-607 is “a person ³¹¹ who buys or contracts to buy goods.” Neither John nor Frank Frericks is a buyer within the definition of that term set forth in § 2-103. That § 2-607 is limited to actual “buyers” is explained in 2 Anderson, Uniform Commercial Code § 2-607:14, p. 212 (2d ed. 1971): “When a non-purchaser is entitled to sue a seller for such third person’s harm resulting from a condition or defect which in itself was a breach of warranty, the requirement of notice to the seller is not applicable. This follows from the fact that the Code, by its express terms merely bars ‘the buyer for failing to give notice.’ Conversely, the Code does not bar plaintiffs generally or injured persons generally but only ‘the buyer.’ That the term ‘buyer’ is not to be extended beyond its ordinary meaning is made clear by the Code definition that ‘buyer’ means ‘a person buying or contracting to buy goods.’ It is therefore clear that when the plaintiff is a ‘stranger’ to the goods he is not bound by the notice provision.” See also Miller, The Code in Products Liability, 21 Okla. L. Rev. 411 , 434 (1968); L. Frumer and M. Miller, Products Liability § 19.05[1] (1976).

Some commentators, however, have concluded that despite the clear language of the statute itself, third party beneficiaries, although not “buyers,” are required to give notice. They seem to rely primarily on Comment 5 to § 2-607 which states: ³¹² See Phillips, Notice of Breach in Sales and Strict Tort Liability Law, 47 Indiana L. Jour. 457, 463-464 (1972); Hawkland, A Transactional Guide to the UCC, par. 1.4802 (1964). General Motors and Anchor have also relied on this Comment 5 to § 2-607 in support of their contention that third party beneficiaries are required to give notice of breach. While the official comments are a valuable aid to construction, they have not been enacted by the Legislature, and “[t]he plain language of the statute cannot be varied by reference to the comments.” Wright v. Bank of California, National Association, 276 Cal.App.2d 485 , 81 Cal.

Rptr. 11, 14 (1969). See Skilton, Some Comments on the Comments to the Uniform Commercial Code, 1966 Wisc. L. Rev. 597. ³¹¹ “Under this Title various beneficiaries are given rights for injuries sustained by them because of the seller’s breach of warranty. Such a beneficiary does not fall within the reason of the present section in regard to discovery of defects and the giving of notice within a reasonable time after acceptance, since he has nothing to do with acceptance.

However, the reason of this section does extend to requiring the beneficiary to notify the seller that an injury has occurred.” ³¹² Relying on the clear language of the statute, the cases have held that the notice provision of § 2-607 applies only to actual “buyers” and not to third party beneficiaries. In Tomczuk v. Town of Cheshire, 26 Conn. Supp. 219 , 217 A. 2d 71 (1965), the plaintiff, a guest in the home of the purchaser of a bicycle, was permitted to maintain an action for breach of warranty against the manufacturer of the bicycle for injuries caused by defects in the bicycle despite the fact that no notice of the breach had been given to the manufacturer. The court reasoned that no notice need be given by a third party beneficiary before maintaining an action against a manufacturer as the third party beneficiary is not a “buyer” as that term is used in § 2-607.

Likewise, in Chaffin v. Atlanta Coca Cola Bottling Co., 127 Ga. App. 619 , 194 S.E.2d 513 (1972), the court held that the plaintiff, whose daughter had purchased a bottle of contaminated soda from a vending machine located in a supermarket, could maintain an action as a third party beneficiary under § 2-318 against the seller supermarket for injuries received when the plaintiff drank the soda even though no notice of breach of warranty had been given to the seller. The court observed that a third party beneficiary is not a buyer, and further stated that § 2-607 can apply only to those plaintiffs to whom the goods have been tendered and who have themselves accepted the goods: “These notice provisions of the breach cannot apply ³¹³ to plaintiff, a third party beneficiary, under UCC § 2-318, for as to the third party there has been no tender of the goods by the seller . .. and no acceptance by plaintiff. She had nothing to