Setting customer confidence, business integrity in stone

By Lawrence E. McCullough
© 2016 Lawrence E. McCullough

THIS YEAR marks the centenary of a landmark judicial decision that transformed the nature of product liability in the American marketplace.

Stemming from a chance breakdown on a rural highway of a 4-cylinder/22-horsepower, open body roadster, MacPherson v. Buick Motor Company codified as legal doctrine the fundamental implied “warranty of safety” between manufacturer and private purchaser.

It’s the principle that laid the modern ground rules for the nation’s business code of conduct, at work today across a broad spectrum of consumer items from exploding hoverboards and contaminated cows to tainted pharmaceuticals and toxic mortgage loans.

In the spring of 1910, 57-year-old stone mason Donald MacPherson purchased a new model Buick Runabout from Close Brothers auto dealership of Schenectady, New York. The following summer, while driving along a nearby country road at approximately 30 mph, the vehicle’s left rear wheel collapsed, causing the car to overturn and trap MacPherson beneath the rear axle.

SUBSEQUENT INVESTIGATION showed the wheel had been made of defective wood; disintegration of the spokes into fragments after even a few months of normal travel was inevitable.

MacPherson’s injuries were severe enough (shattered right eye, broken right arm arm) to irreparably harm his stone cutting abilities and business income. Two months after the accident, he filed a lawsuit for negligence – not against the dealership but against the manufacturer, Buick Motor Company, founded in 1899 and already the nation’s top-selling automaker.

MacPherson argued that the hickory used for the spokes was rotten and that this defect had caused the wheel’s collapse. Buick had acquired the defective wheel from another company, installed it on their product and released that product for sale to the public; therefore, they were liable for negligence.

THE JUDGE DISMISSED the complaint, and MacPherson appealed; a new trial was granted, and in 1913, a jury rendered a judgment for MacPherson against Buick amounting to $5,025.

Buick appealed, citing protection by privity – the legal theory that held a contracting party’s duties and obligations extended only to other contracting parties. MacPherson had bought the car not from Buick but from Close Brothers. Thus, claimed Buick, Close Brothers were liable because it was they who had entered into the direct sales contract with MacPherson.

Complicating the culpability chain, the company that made the wheel and sold it to Buick declined responsibility, since they had not initially harvested the substandard wood.

The case went through two more appeals, with the second landing in the Court of Appeals of New York before Judge Benjamin Cardozo, later an associate U.S. Supreme Court Justice. 

On March 14, 1916, Cardozo ruled that Buick bore ultimate responsibility because it failed in its duty as final manufacturer to adequately inspect the product it issued into the marketplace and warranted as safe.

Cardozo dismissed the argument that Buick had not made the wheel. 

“There is evidence … that its defects could have been discovered by reasonable inspection and that inspection was omitted [by Buick]. The defendant was not merely a dealer in automobiles. It was a manufacturer of automobiles. It was responsible for the finished product.”

THE DECISION HAD far-reaching consequences beyond ensuring that U.S. consumers now had additional avenues of redress when harmed by a defective product.

MacPherson v. Buick Motor Company clarified the role of the “corporate citizen” in America’s emerging business scape. 

Henceforth, products for sale would represent the “identity” of the corporate creator; as products made their way through the marketplace, the company’s identity – and implicit promise of responsibility to the buyer – would travel with them.

Far from hampering business, MacPherson v. Buick Motor Company cemented the buyer-seller relationship by establishing trust and transparency as the conditional norm and desired result of economic exchange.

As the 20th century progressed, building and maintaining a stellar reputation among consumers became a vital asset to a business seeking brand distinction and competitive edge.

To the venerable phrase caveat emptor (“let buyer beware”), MacPherson v. Buick Motor Company added an equally useful codicil – detegat venditor “let seller lay bare” with full disclosure and good faith dealing. *

That’s something Donald MacPherson could have proudly set in stone. # # #

* Updated Latin translation courtesy of Prof. John Cavicchio and students at Red Bank Catholic High School, Red Bank, NJ.