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Shafer v. Reo Motors Inc.

decided: July 14, 1953.

SHAFER
v.
REO MOTORS, INC.



Author: Kalodner

Before MARIS, McLAUGHLIN and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

The issues presented in this appeal are (1) whether an express warranty in a contract of sale "in lieu of * * * all other obligations or liabilities" relieved the seller of liability for negligence, and (2) whether the legal consequence of such provision may be determined on a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, Title 28 U.S.C.

William A. Shafer, a resident of Pennsylvania, brought suit against Reo Motors, Inc. ("Reo"), a Michigan corporation, for the loss by fire of a motor coach which it had purchased from Reo.*fn1

In his complaint Shafer alleged that Reo had been negligent in the design, construction and attaching of the coach's gasoline tank and in the design and construction of the tank's supports and the material used therein; that as a consequence the tank broke from its supports and dragged on the street causing its gasoline to be ignited from sparks caused by friction with an ensuing conflagration which destroyed the coach.

Reo in its answer, as one of its defenses, averred that Shafer had released it from liability for negligence by the express terms of the contract of sale. The contract was annexed to the answer. It contained the following paragraph:

"We Warrant each new Reo Truck and Reo Bus manufactured by us, to be free from defects in material and workmanship under normal use and service, our obligation under this Warranty being limited to making good at our factory any part or parts thereof, including all equipment or trade accessories (except tires) supplied by the Truck Manufacturer, which shall, within (90) days after making delivery of such vehicle to the original purchaser or before such vehicle has been driven 4,000 miles, whichever event shall first occur, be returned to us with transportation charges prepaid, and which our examination shall disclose to our satisfaction to have been thus defective; this Warranty being expressly in lieu of all other Warranties expressed or implied and of all other obligations or liabilities on our part, and we neither assume or authorize any other person to assume for us any liability in connection with the sale of our vehicles."

The execution of the contract and the fact that the vehicle was driven more than 4,000 miles were admitted by Shafer pursuant to stipulation filed at pre-trial conference and by Shafer's failure to answer Reo's requests for admissions in accordance with Rule 36, Federal Rules of Civil Procedure.

The District Court granted Reo's motion for summary judgment under Rule 56, concluding that it had relieved itself of liability under the terms of the warranty, W.D.Pa.1952, 108 F.Supp. 659.

The contract was entered into in Pennsylvania and the law of Pennsylvania controls. Texas Motorcoaches, Inc., v. A.C.F. Motors Co., 3 Cir., 1946, 154 F.2d 91.

As was stated by Chief Judge Kirkpatrick in Charles Lachman Co., Inc. v. Hercules Powder Co., Inc., D.C.E.D.Pa.1948, 79 F.Supp. 206, 207:*fn2

"The general rule is that one party to a transaction may ordinarily contract to limit or eliminate his liability for negligence in performing his obligations. There is no rule of public policy which makes such provisions ineffective, particularly when the obligee is under no disadvantage by reason of confidential relationship, disability, inexperience or the necessities of the situation."

To the same effect see also Cannon v. Bresch, 1932, 307 Pa. 31, 34, 160 A. 595; Wright v. Sterling Land Co., Inc., 1945, 157 Pa.Super. 625, 43 A.2d 614; Perry v. Payne, 1907, 217 Pa. 252, 66 A. 553, 11 L.R.A.,N.S., 1173.

We agree with the District Court's determination that the provision of the "Standard Warranty" expressly releasing defendant from "all other obligations or liabilities on our part" bars Shafer's recovery. We are not called upon to construe this contract in the abstract. The negligence which Shafer asserted revolves around certain defects in the material used to support the gas tank and in design and workmanship. The contract expressly warranted new trucks "to be free from defects in material and workmanship." A reading of the warranty clearly reveals that if it means nothing else it means that as to those types of defects Reo would replace defective parts under certain prescribed conditions and would do nothing else. ...


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