"The assault upon the citadel of privity", Chief Judge CARDOZO wrote in 1931, "is proceeding in these days apace." (Ultramares Corp. v. Touche, 255 N.Y. 170, 180.) In these days, too, for the present appeal, here by leave of the Appellate Division on a certified question, calls upon us to decide whether, under the facts disclosed, privity of contract is essential to maintenance of an action against a manufacturer for breach of express warranty.
American Cyanamid Company is the manufacturer of chemical resins, marketed under the registered trade-mark "Cyana", which are used by textile manufacturers and finishers to process
Insofar as relevant, the complaint alleges that Cyanamid "represented" and "warranted" that the "Cyana" finished fabrics sold by Fairtex and Apex to the plaintiff would not shrink or lose their shape when washed and that the plaintiff purchased the fabrics and agreed to pay the additional charge for the cost involved in rendering them shrink-proof "in reliance upon" Cyanamid's representations. However, the complaint continues, the fabrics were not as represented since, when manufactured into garments and subjected to ordinary washing, they shrank and failed to hold their shape. The damages suffered are alleged to be over $208,000.
According to the complaint and the affidavits submitted in opposition to Cyanamid's motion, the representations relied upon by the plaintiff took the form of written statements expressed not only in numerous advertisements appearing in trade journals and in direct mail pieces to clothing manufacturers,
and were issued to fabric manufacturers using the "Cyana Finish" only after Cyanamid had tested samples of the fabrics and approved them. Cyanamid delivered a large number of these labels to Fairtex and Apex and they, with Cyanamid's knowledge and approval, passed them on to garment manufacturers, including the plaintiff, so that they might attach them to the clothing which they manufactured from the fabrics purchased.
As noted, Cyanamid moved for summary judgment dismissing the complaint against it on the ground that there was no privity of contract to support the plaintiff's action. The court at Special Term denied the motion and the Appellate Division unanimously affirmed the resulting order.
Thirty-nine years ago, in Chysky v. Drake Bros. Co. (235 N.Y. 468), this court decided that an action for breach of implied warranty could not succeed absent privity between plaintiff and defendant and, some time later, in Turner v. Edison Stor. Battery Co. (248 N.Y. 73), we reached a similar conclusion with respect to express warranties, writing, "There can be no warranty where there is no privity of contract" (p. 74).
It was in this precise type of case, where express representations were made by a manufacturer to induce reliance by remote purchasers, that "the citadel of privity" was successfully breached in the State of Washington in 1932. (See Baxter v. Ford Motor Co., 168 Wn. 456; same case after new trial, 179 Wn. 123.) It was the holding in the Baxter case that the manufacturer was liable for breach of express warranty to one who purchased an automobile from a retailer since such purchaser had a right to rely on representations made by the manufacturer in its sales literature, even though there was no privity of contract between them. And in the 30 years which
The rationale underlying the decisions rejecting the privity requirement is easily understood in the light of present-day commercial practices. It may once have been true that the warranty which really induced the sale was normally an actual term of the contract of sale. Today, however, the significant warranty, the one which effectively induces the purchase, is frequently that given by the manufacturer through mass advertising and labeling to ultimate business users or to consumers with whom he has no direct contractual relationship.
The world of merchandising is, in brief, no longer a world of direct contract; it is, rather, a world of advertising and, when representations expressed and disseminated in the mass communications media and on labels (attached to the goods themselves) prove false and the user or consumer is damaged by reason of his reliance on those representations, it is difficult to justify the manufacturer's denial of liability on the sole ground of the absence of technical privity. Manufacturers make extensive use of newspapers, periodicals and other media to call attention, in glowing terms, to the qualities and virtues of their products, and this advertising is directed at the ultimate consumer or at some manufacturer or supplier who is not in
The policy of protecting the public from injury, physical or pecuniary, resulting from misrepresentations outweighs allegiance to an old and out-moded technical rule of law which, if observed, might be productive of great injustice. The manufacturer places his product upon the market and, by advertising and labeling it, represents its quality to the public in such a way as to induce reliance upon his representations. He unquestionably intends and expects that the product will be purchased and used in reliance upon his express assurance of its quality and, in fact, it is so purchased and used. Having invited and solicited the use, the manufacturer should not be permitted to avoid responsibility, when the expected use leads to injury and loss, by claiming that he made no contract directly with the user.
It is true that in many cases the manufacturer will ultimately be held accountable for the falsity of his representations, but only after an unduly wasteful process of litigation. Thus, if the consumer or ultimate business user sues and recovers, for breach of warranty, from his immediate seller and if the latter, in turn, sues and recovers against his supplier in recoupment of his damages and costs, eventually, after several separate actions by those in the chain of distribution, the manufacturer may finally be obliged "to shoulder the responsibility which should have been his in the first instance." (Hamon v. Digliani, 148 Conn. 710, 717; see Kasler & Cohen v. Slavouski , 1 K. B. 78, where there was a series of 5 recoveries, the manufacturer ultimately paying the consumer's damages, plus a much larger sum covering the costs of the entire litigation.) As is manifest, and as Dean Prosser observes, this circuity of action is "an expensive, time-consuming and wasteful process, and it may be interrupted by insolvency, lack of jurisdiction, disclaimers, or the statute of limitations". (Prosser, The Assault
Indeed, and it points up the injustice of the rule, insistence upon the privity requirement may well leave the aggrieved party, whether he be ultimate business user or consumer, without a remedy in a number of situations. For instance, he would be remediless either where his immediate seller's representations as to quality were less extravagant or enthusiastic than those of the manufacturer
Although we believe that it has already been made clear, it is to be particularly remarked that in the present case the plaintiff's reliance is not on newspaper advertisements alone. It places heavy emphasis on the fact that the defendant not only made representations (as to the nonshrinkable character of "Cyana Finish" fabrics) in newspapers and periodicals, but also repeated them on its own labels and tags which accompanied the fabrics purchased by the plaintiff from Fairtex and Apex. There is little in reason or logic to support Cyanamid's submission that it should not be held liable to the plaintiff even though the representations prove false in fact and it is ultimately found that the plaintiff relied to its harm upon such representations in making its purchases.
We are also agreed that the present case may not be distinguished, and liability denied, on the ground that the article sold by the appellant, resin, is different from that purchased by the plaintiff, fabric. To be sure, as Cyanamid urges, the failure to render the fabric shrink-proof may rest with Fairtex and Apex, but the short and simple answer is that Cyanamid actually and expressly represented that fabrics accompanied by the labels which it supplied were "Cyana Finish" and would not shrink or lose their shape. Since it made such representations, Cyanamid may not disclaim responsibility for them. If the ultimate fault for the plaintiff's loss is actually that of Fairtex and Apex, Cyanamid's appropriate recourse is against them.
Nor may it be urged that section 93 of the Personal Property Law renders privity of contract necessary. The Legislature has there defined a warranty as an "affirmation" (or "promise") made by a seller, but the section nowhere states
In concluding that the old court-made rule should be modified to dispense with the requirement of privity, we are doing nothing more or less than carrying out an historic and necessary function of the court to bring the law into harmony "with modern-day needs and with concepts of justice and fair dealing." (Bing v. Thunig, 2 N.Y.2d 656, 667; see Greenberg v. Lorenz, 9 N.Y.2d 195, 200, supra; Woods v. Lancet, 303 N.Y. 349, 355.)
The order appealed from should be affirmed, with costs, and the question certified answered in the negative.
We concur in result only. We agree with Judge FULD that defendant, American Cyanamid Company, may be held liable for its express representations (as to the nonshrinkable character of "Cyana Finish" fabrics) in newspapers and periodicals where they have been repeated on its own labels and tags delivered by Cyanamid to fabric manufacturers such as Fairtex and Apex, to be passed on to garment manufacturers such as plaintiff, so that they might attach them to the clothing cut from the fabrics purchased, all allegedly with Cyanamid's knowledge and authorization.
We do not agree that the so-called "old court-made rule" should be modified to dispense with the requirement of privity without limitation. We decide cases as they arise, and would affirm in this case under the facts here disclosed.
Order affirmed, etc.