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ELEANOR J. MICHALKO AND PAUL MICHALKO, HER HUSBAND, PLAINTIFFS-APPELLANTS,v. COOKE COLOR AND CHEMICAL CORP. A/K/A COOKE DIVISION OF REICHOLD CHEMICALSCORP., SQUARE D COMPANY, AND E DISTRIBUTION COMPANY (FICTITIOUS NAME),DEFENDANTS, AND CUBBY MANUFACTURING COMPANY, DEFENDANT-RESPONDENT.
Supreme Court of New Jersey.
Argued February 22, 1982 —
Decided August 16, 1982.
Appeal from Superior Court, Appellate Division.
Douglas S. Brierley argued the cause for appellants ( Schenck, Price, Smith King, attorneys; William R. Albrecht, of counsel).
Donald S. McCord, Jr. argued the cause for respondent ( O'Donnell, McCord Leslie, attorneys).
The opinion of the Court was delivered by HANDLER, J.
This case presents the question whether an independent contractor that rebuilds part of a machine according to the specifications of the owner can be held strictly liable for injuries sustained by a foreseeable user of the machine when the contractor failed to make the machine safe or to warn of the dangers inherent in its use. The courts below found that such a contractor could not be held strictly liable. We now reverse.
I
Since 1972, plaintiff Eleanor J. Michalko worked as a "molder" for Elastimold in Hackettstown, making airport lighting transformers. Her job consisted of operating a 35-ton vertical transfer or transformer press, soldering wires to coils or cable transformers, and then placing the coils with two small rubber strips in a stationary mold or die positioned on two clamps. The clamps would then be shut by pushing a button on the electric control panel to the right of the operator's station. Once the clamps were closed, rubber strips about five to seven inches long were heated and folded into the injection cavities above and below the stationary die. Upon pressing the injection button on the control panel, the rubber was injected around the coil, and the rams and cylinders would approach the stationary die from the top and bottom. Because the folded rubber sometimes fell out of the machine, plaintiff had been instructed by her employer to hold the rubber in place with her left hand while she pushed the button with her right. On the evening of December 10, 1973, plaintiff was working on press # 7, observing the normal production procedures and following her employer's instructions. She held the rubber in the cavity with her left hand as usual, as she pressed the injection button with her right. Her left hand got caught between the stationary die and the bottom injection cavity and was amputated. There were no safety devices on the transfer press to prevent the injury.
Elastimold owned four such transfer presses, three of which were originally built by Elastimold's parent company. These were known as presses # 6, 7 and 8. The fourth machine, press # 9, was built by the defendant, Cubby Manufacturing Company (hereinafter "Cubby"), in 1968 in accordance with Elastimold's plans and specifications. Cubby workers had done approximately two dozen jobs for Elastimold since the mid-1960's and had knowledge of the type of work that the transfer presses performed in the manufacturing process.
In 1969 the engineering department at Elastimold drew up plans to rebuild and redesign the three older presses. Elastimold sent Cubby a purchase order, containing a clause requiring Cubby to conform to Elastimold's drawings and specifications. Cubby picked up the machines from Elastimold's plant and transported them to Cubby's shop in Fairfield, New Jersey. The only item left behind at Elastimold after Cubby removed the presses was the old hydraulic system, which was then scrapped. Cubby disassembled each machine. Three of four horizontal plates for the press frame and supporting ties or strain rods from each of the three presses were remachined and reused. Cubby installed eight hydraulic cylinders with accompanying valves, seals, and other paraphernalia. It manufactured a manifold and other parts, and it modified the length of the rams or pistons.
Cubby was aware of the types of safety devices that could be used on the transfer presses. However, it had a policy of not questioning the absence of safety guards when it was not building a complete machine. Cubby knew that assembly drawings usually showed the machine as a finished product ready to operate and that, in this case, the drawings furnished to it by Elastimold did not indicate any safety devices. Even though Cubby's personnel had visited Elastimold and seen the presses operating without safety devices, Cubby assumed that Elastimold would install safety devices itself. It is undisputed that Cubby knew the transfer presses were dangerous without safety devices.
The work performed by Cubby conformed to Elastimold's specifications, which, as noted, did not include provision for a safety device. Moreover, Cubby failed to warn Elastimold or otherwise to convey or affix warnings to foreseeable users that the press was dangerous without a safety device. When the presses were shipped back to Elastimold, they were not operational since Elastimold had decided to install the electrical and hydraulic systems, including the electrical control panel itself. These systems served to give power to the press to make it function. Neither Cubby nor Elastimold installed any safety devices on the presses.
In 1969 a number of safety devices might have been used on the transfer press, including gates to keep the operator's hands from entering the machine during operation, a cage mechanism that kept the operator away from the exposed moving parts, and a pilot valve, which would require pressing two buttons rather than one for the press to function, keeping both hands of the operator outside the point of access. For example, press # 9 had the control panel far removed from the cylinder so that it would be quite difficult to keep one's hand on the rubber strips while pressing the button to start the machine.
The type of safety device which was best for a particular machine would vary with the product made on it and the means of using the press. For this reason, manufacturers and vendors would sometimes sell presses to users without safety devices when they did not know the particular work the press would be doing.
Plaintiffs' expert, Professor Henry Ortiz, testified that the transfer press was not safe for use without some form of safety device. He stated that it was the custom of the trade in 1969 for the manufacturer of a complete press to warn the buyer of the need for a safety device but that such a warning was customarily given only when the manufacturer produced a complete press. If the manufacturer did not install the hydraulic system, it had not made a complete press, and the failure to give a warning in that instance did not deviate from the custom of the trade. In this case, it was Elastimold, not Cubby, that installed the hydraulic system.
Plaintiffs Eleanor Michalko and Paul Michalko filed this action against Cubby, Square D Co., the alleged manufacturer of the control panel, and Cooke Color and Chemical Corp., the supplier of the rubber inserted in the machine. The complaint alleged negligence, strict liability and breach of express and implied warranties on the part of the defendants. Plaintiffs voluntarily dismissed the action against all of the defendants but Cubby.
At the close of the evidence at trial, the trial court dismissed the action against Cubby with prejudice. The trial judge ruled that (1) there was no "sale;" (2) the addition of the hydraulic and electrical systems constituted a "substantial change" in the product, relieving Cubby of liability; (3) Cubby did not design the machine but produced it according to the exact specifications of the employer; (4) it was impractical to install a safety device since different uses of the machine required different devices; and (5) an independent contractor has no duty to warn a knowledgeable buyer that a machine is dangerously designed. The Appellate Division affirmed for substantially the reasons expressed by the trial court. We granted plaintiffs' petition for certification. 88 N.J. 476 (1981).
II
The major issue in this case is whether an independent contractor that undertakes to rebuild part of a machine in accordance with the specifications of the owner has a legal duty to foreseeable users of the machine to make the machine safe or to warn of the dangers inherent in its use.
Under New Jersey law, manufacturers, as well as all subsequent parties in the chain of distribution, are strictly liable for damages caused by defectively designed products. Employees have been allowed to sue the manufacturers of such machines which have injured them during the course of their employment when those instrumentalities lacked either safety devices or adequate warnings. See, e.g., Freund v. Cellofilm Properties, 87 N.J. 229 (1981); Suter v. San Angelo Foundry Machine Co., 81 N.J. 150 (1979); Cepeda v. Cumberland Engineering Co., 76 N.J. 152 (1978); Finnegan v. Havir Mfg. Co., 60 N.J. 413 (1972); Bexiga v. Havir Mfg. Co., 60 N.J. 402 (1972). See also Beshada v. Johns-Manville Corp., 90 N.J. 191 (1982); Jakubowski v. Minnesota Mining and Manufacturing, 42 N.J. 177 (1964).
The elements of a prima facie case of strict liability for design defects are proof that (1) the product design was defective; (2) the defect existed when the product was distributed by and under the control of defendant; and (3) the defect caused injury to a reasonably foreseeable user. Suter, 81 N.J. at 170, 176; Scanlon v. General Motors Corp., 65 N.J. 582, 590-91 (1974). See Santor v. A M Karagheusian, Inc., 44 N.J. 52 , 66-67 (1965).
In a design defect case, the plaintiff has to show that the product design "is not reasonably fit, suitable and safe for its intended or reasonably foreseeable purposes . . ." Beshada, 90 N.J. at 199, quoting Suter, 81 N.J. at 169. The determination of whether strict liability applies is made by balancing the magnitude of the risk created by the dangerous condition against the social utility attained by putting the product on the market. Beshada, 90 N.J. at 199-200. Strict liability attaches if the product's utility is outweighed by the magnitude of the risk involved in its use. Freund, 87 N.J. at 238 n. 1; Cepeda, 76 N.J. at 172.
The focus in a strict liability case is upon the product itself. Beshada, 90 N.J. at 200; Freund, 87 N.J. at 238. Knowledge of a product's dangerous characteristics is imputed to the defendant. Beshada, 90 N.J. at 200; Cepeda, 76 N.J. at 174-80. It is not necessary to prove that defendant knew or should have known of the harmful attributes of its product while the product was under its control in order to charge it with that knowledge. Beshada, 90 N.J. at 200; Freund, 87 N.J. at 242-43. Once the product is deemed dangerous, the defendant's lack of fault is irrelevant. See generally Wade, "On the Nature of Strict Tort Liability for Products," 44 Miss.L.J. 825, 834-35 (1973).
These principles apply with similar force to one engaged in rebuilding machines or manufacturing component parts. Under these principles, when it is feasible for the rebuilder of machinery or the manufacturer of component parts to incorporate a safety device and it fails to do so, the rebuilt machine or component part will be deemed to be a defective product when delivered by the manufacturer to its owner. Further, the fact that the product was built according to the plans and specifications of the owner does not constitute a defense to a claim based on strict liability for the manufacture of a defective product when the injuries are suffered by an innocent foreseeable user of the product.
In this case, defendant does not contest the fact that the rebuilt press was a defectively designed product. Rather, it claims that since it was hired to rebuild part of the press to the owner's specifications, it never exerted enough control over the product to be legally responsible for injuries resulting from design defects. See Scanlon v. General Motors Corp., 65 N.J. at 591. Cf. Menacho v. Adamson United Co., 420 F. Supp. 128 , 139 (D.N.J. 1976) (as between an original manufacturer and a subsequent rebuilder of a product, liability should be imposed for a defect commensurate with the degree of product control).
We reject this argument. Defendant's lack of responsibility under its contract for the design of the machine is not relevant. Consequently, its adherence to or reliance upon the owner's plans, even though required by its contract, is equally irrelevant. "It is not necessary to show that defendant created the defect. What is important is that the defect did in fact exist when the product was distributed by and was under the control of the defendant." Suter, 81 N.J. at 170. See also Lenherr v. NRM Corp., 504 F. Supp. 165 , 174-75 (D.Kan. 1980); Abdul-Warith v. Arthur G. McKee Co., 488 F. Supp. 306 , 310-11 (E.D.Pa. 1980), aff'd, 642 F.2d 440 (3 Cir. 1981); Greco v. Buccioni Engineering Co., 283 F. Supp. 978 , 980 (W.D.Pa. 1967), aff'd, 407 F.2d 87 (3 Cir. 1969); Union Supply Co. v. Pust, 38 Colo. App. 435, 561 P.2d 355 (Colo.Ct.App. 1976), modified, 196 Colo. 162, 583 P.2d 276 (Colo. 1978).
Defendant relies upon Sanner v. Ford Motor Co., 144 N.J. Super. 1 (Law Div. 1976), aff'd, 154 N.J. Super. 407 (App.Div. 197 7), certif. den., 75 N.J. 616 (1978), in which it was held that a defendant which built a jeep in conformity with contractual specifications supplied by the government was not liable to a plaintiff injured in the jeep because the vehicle lacked seat belts. In Sanner, the Law Division held that defendant's duty was limited to complying with the specifications in the contract. 144 N.J. Super. at 6-7. The Appellate Division further held that since the government had specifically decided not to include seat belts in the jeep, the manufacturer had no duty to install them...