*1 BRACEY, al., Appellants, Mike et COMPANY,
MONSANTO
INC., Respondent.
No. 73301. Missouri,
Supreme Court of
En Banc.
Jan.
Lynn Bock, Madrid, appel- N. New lants.
P. Dominique, City, Pierre Jefferson R. Barris, Helmholz, Spring- Gerald Scott C. field, Ill., Kennett, Reynolds, James R. respondent.
BLACKMAR, Judge. This case comes to the writer on recent reassignment, history after a sinuous appellate opinion courts. This makes ideas, use of some of the research and phraseology opinions by of draft other judges. plaintiffs sued for breach of warran-
ty, following purchase their and use of a herbicide known as Lasso. The defendant lengthy filed a motion to dismiss. The trial speci- court this motion sustained without fying a reason and dismissed the prejudice. Appeals, with The Court of District, Southern remanded the case permit plaintiffs order to to amend petition. Both then moved for Court, transfer to this advis- ing peti- elected to stand on the tion as filed. We retransferred the case order, directing appeals to the court of appeal. consider the merits of the That court then reversed and remanded for fur- proceedings. again granted ther We trans- *2 947 petition, limit cedural and so importance of the of the issue flaws fer because to the matters briefed. validity right the our consideration the of a limitation on to damages warranty for recover breach dismissing petition with An a order governed goods a contract the sale of petition, if rea prejudice is erroneous the Code, by Chap. the Uniform Commercial construed, theory sonably sets forth 400.2, RSMo 1986. We now reverse and stan supporting recovery.1 by Tested remand, differing substantially for reasons dard, ruling clearly trial the of the court is by ap- from those adduced warranty challenged in error the because peals. damages limit not to only seeks to and preclude recovery. plaintiffs all But the counts, petition The has Count I two substantially in excess of the damages seek charging warranty express breach of and limitation, the so we must consider and implied warranty. II The Count breach of validity. issue of plaintiffs are tenants of land in Ma- New Counties, drid and Pemiscot on a Necessary Parties Their “cropyield” arrangement. petition pounds purchased procedural states that 95 first with a issue. We deal Lasso, a herbicide manufactured the motion to The defendant asserts the defendants, from supplier; may an intermediate be of “nec- dismiss that there a want essary parties” rights conform of the that the did not to the because the clearly representations; plaintiffs defendant manufacturer’s their landlords are not and petition. point is ad- plaintiffs’ crop and that as a result the defined in the This briefing greatly as an additional rea- yield petition was diminished. The vanced in the supporting ruling. trial charged son court’s specifically that the limitation of warranty described below “causes the war- join necessary party, to a Failure ranty purpose,” fail of to its essential bor- however, ground not dismissal. Rule is rowing phraseology 400.2-719(2), of £ recognized a distinction 52.06. There is part a Uniform Com- “indispensable party,” between without an lacking mercial Code. The presence a case not main may whose be precise detail as failures conformi- tained, “necessary party,” who and ty representations to the cause and of the party in that there should made a order be crop yield. plaintiffs diminished The took a may be a determination electing risk by substantial to stand on the hand, presence controversy at whose amendment, petition without but we find it the is not to a determination of essential minimally present sufficient to the issues claimed parties.2 sues If it is between we now consider. subject necessary parties who are present, processes of the court not are prolix, The motion dismiss is contain- is not a motion to dismiss ing paragraphs 17 14 as to Count and by motion to but rather add II. The defendant also filed an Count necessary. deemed to Rules 52.06 alternative motion for more definite state- opin 55.27(a)(7). If the defendant is ment, ruling unnecessary on which a was multiple subjected to ion that it once the motion to dismiss was sustained. par recovery if landlords are not made unruled motion should now be ruled This ties, bring in. Rules it move them on remand. motion to dismiss asserts 52.04(a) procedural substantive various moreover, true, dismissal, grounds for but the defendant If the stated facts full sought justify the bulk of these are entitled recover has not of war- for the briefing. perceive pro- no fatal allowable breach We Wheaton, 52.04(a)-1 15 Hos- Missouri Practice 1. See Asaro Cardinal Glennon Memorial Miller, 1991). (Mo. Wright S.W.2d banc (1976); A. & Arthur R. pital, Charles (2d ed. and Procedure Federal Practice (b) discussing 52.04(a) generally 2. See Rules 1986). necessary parties. indispensable See also ranty. They purchased prod- and used the THIS OR COMPANY ANY OTHER showing uct. There is SELLER BE LIABLE no of a contractual FOR ANY INCI- CONSEQUENTIAL DENTAL sup- relation between landlords OR DAM- and the plier AGES. of the herbicide. It is of no moment *3 might defendant that buyer The all users are and deemed to obliged any part to account others for accepted the terms of this LIMIT indeed, (if, of their recovery, they are so OF AND WARRANTY LIABILITY obliged, express opin- about which we no may by any which varied not be verbal or ion). agreement. written 400.2-719, 1986, part Section RSMo is Unconscionability Code, adopted the Uniform Commercial in
The “LIMIT OF WARRANTY AND Missouri in 1963. It authorizes contractual LIABILITY” attacked as unconscionable modifications or limitations of remedies for reads as follows: breach of warranty, following terms:
This company warrants that this (1) provisions Subject to the of subsec- description conforms to the chemical on (2) (3) of tions and this section and of reasonably label and is fit for the liquidation section 400.2-718 on limi- and purposes set forth Di- damages, tation of (“Di- rections for Use label booklet (a) agreement may provide for reme- rections”) when used accordance with dies in to or in addition substitution for those Directions under the conditions de- provided in this article and scribed therein. NO OTHER EXPRESS damages limit or alter the measure of OR IMPLIED FIT- WARRANTY OF article, recoverable under this as NESS FOR PARTICULAR PURPOSE limiting buyer’s remedies to return OR MERCHANTABILITY IS MADE. goods repayment subject This warranty is also to the con- price repair replacement or ditions and limitations stated herein. goods parts; nonconforming or Buyer shall promptly notify and all users (b) remedy provided resort to a as is any this company of claims whether optional remedy expressly is unless the contract, negligence, based in exclusive, strict liabil- agreed to be which case it ity, other remedy. tort or otherwise. is the sole
[******] (2) Where circumstances cause an ex- clusive or limited to fail of its THE EXCLUSIVE REMEDY OF THE remedy may purpose, essential be had as USER OR AND THE LIMIT BUYER OF provided chapter. in this THE LIABILITY OF THIS COMPANY ' (3) Consequential damages may be lim- OR ANY OTHER SELLER FROM ANY ited or excluded unless limitation or LOSSES, AND ALL INJURIES OR exclusion is unconscionable. Limitation THE DAMAGES RESULTING FROM consequential damages injury USE OR HANDLING OF THIS PROD- person goods the case consumer (INCLUDING UCT CLAIMS BASED IN prima facie unconscionable but limita- NEGLIGENCE, CONTRACT STRICT the loss tion of where is com- LIABILITY, TORT OTHER OR OTHER- mercial is not. WISE) BE THE SHALL PURCHASE limitations, Any such or PRICE PAID BY THE USER modifications OR BUY- then, expressly subject being tested QUANTITY ER FOR THE OF THIS brings This INVOLVED, OR, unconscionability. into PRODUCT AT THE section; 400.2-302, play another UCC THIS COMPANY ELECTION OF OR 400.2-302, reading as RSMo 1986. Section SELLER, THE ANY OTHER RE- follows: QUANTITY, SUCH PLACEMENT OF
OR,
ACQUIRED
(1)
IF NOT
BY PUR-
If the court as a matter of law
CHASE,
any
or
OF
finds the contract
clause of the
REPLACEMENT
SUCH
QUANTITY
NO EVENT
contract to
unconscionable at
IN
SHALL
have been
code
interrelation of the several
may about the
the time it was made
ad
should be first
questions
sections.
contract,
it may
refuse to enforce
on remand.
the trial court
dressed
remainder of the contract
enforce the
clause, or it
without the unconscionable
400.2-302,
(1) of
Subsection
any
application
un-
may so limit
finding “as a
for a
matter
calls
any
un-
clause
to avoid
conscionable
law,”
question of unconsciona-
so the
result.
conscionable
decide,
not a
bility
the court to
is for
jury
Under Subsection
issue.4
appears to
it is claimed or
When
400.2-302,
finding
be based
the contract or
clause
the court that
evidence,
being
than
decided on
rather
the par-
thereof
be unconscionable
400.2-719(3)
cautions
pleadings, and §
*4
oppor-
a
ties shall
afforded reasonable
the
damages
loss
of
where
“limitation
to its
tunity
present
to
evidence as
com-
prima
is not
facie unconscion-
commercial”
setting, purpose
effect to aid
mercial
defendant,
filing a
to
motion
able. The
making
in
the determination.
the court
dismiss,
any procedural
not waive
does
allege
The
does not
unconsciona-
the
rights
have.5 Thus
it would otherwise
in
terms.
It takes notice of
bility
express
unconscionability cannot be decid-
of
issue
charges
provisions
that
the limitation
who
not
adversely to a defendant
does
ed
warranty to
“causes the
fail
this limitation
to the trial
opportunity
present
to
the
invoking
purpose,”
the
of its essential
thus
appropri-
court
evidence as it thinks
such
400.2-719(2).
provisions of
Subsection
§
expressly
present
ate. The
defendant
(3) of
states
a limitation of
Section 719
that
right in
filed
its brief
with
claimed this
remedy may be invalid if it is unconsciona- Court.
conclude, nevertheless, that
We
the
ble.
guidance
the
give
Our cases
little
challenge
purpose of
action is
to
unconscionability. In
subject
Oldham’s
of
limitation,
challenges
and that
under Sub-
Saleo, Inc., 633
Sausage Co. v.
Farm
(3)
section
and Subseciton
must be
(Mo.App.1982),
upheld
S.W.2d 177
considered.
enforce a limita-
the trial court’s refusal to
much
of
There has been
discussion
with the sale
liability
tion of
connection
(2) and
interrelation between Subsections
limita-
It concluded that the
of a machine.
(3)3
(3) appears
permit
Subsection
found to be uncon-
tion of
could be
400.2-719(3)
a commercial transaction to
it
because
under
scionable
agree on the allocation of the risk of failure
of
print
fine
on the back side
was set
out
product.
picture,
To
signature page
lengthy
contract.
of a
permits
the total exclusion of
that the limita-
The
do not claim
§ 400.2-316
warranties,
express
implied
by conspic
provisions here
were incon-
tion
involved
of
of
provisions.
spicuous
uous contract
Because
or that
were unaware
held,
us,
court also
with-
inadequacy
the record
we
them. The Oldham
before
discussion,
“repair
a
that
temptation
further
out extended
resist
comment
1986;
see,
400.2-302(1),
e.g.,
Fahlgren, Unconscionability: Warranty
4. See
3.See G.
King
Consequential Damages,
Leasing Corporation
20 St.
v.
Funding Systems
Disclaimer and
Samuels,
435,
(1976);
(Mo.
International,
Inc.,
E.
Louis U.L.J.
456-459
ties on
may develop
remand
the record as
obviously
inappropriate here).
may
It
they think wise.
contract,
also enforce the remainder of the
provisions
free from the
deemed to be un
however,
inappropriate,
We deem it not
applica
conscionable. Or it
limit the
suggest
guidance.
available sources of
offending
tion of the
clause in order to
The drafters of the Uniform Commercial
par
avoid an unconscionable result. The
accompanied
product
Code
their
with com-
ments, which,
ties of course
however,
address the trial court
part
are not a
of
sought
finding
unconscionability,
the Code.6
as to how a
if
Commentators have
made,
fill
by
general
implemented.
the void created
lan-
is to be
Co.,
Groppel Company,
Gypsum
Edenfield,
6. See
Company
Inc. v. U.S.
cultural Products
v.
426
(UCC
(Mo.App.1981)
Slemmons v.
(Fla.Dist.Ct.App.1982);
Holt, 491, 1990). (Mo. 789 S.W.2d 492 banc reasonably and is fit for the label petition A is sufficient a mo to withstand Di- forth in the purposes set to dismiss for if tion failure to state a claim (“Di- rections for Use label booklet principles it invokes substantive of law en rections”) used in accordance with when titling plaintiff to alleges relief and ulti de- Directions under the conditions informing mate facts of that defendant scribed therein. plaintiff attempt which will to establish at Fischer, Spuhl, trial. Herzwurm & Asso Co., v. Forrest 586 ciates Inc. T. Jones & THE OF THE EXCLUSIVE REMEDY 310, (Mo. 1979). is not S.W.2d 315 banc It LIMIT OF OR BUYER AND THE USER
to be dismissed for mere lack of definite THE LIABILITY OF THIS COMPANY certainty informality ness or because ANY ANY OTHER SELLER FOR OR of an fact. Mer the statement essential LOSSES, ALL INJURIES OR AND Catón, 106, (Mo. riman S.W.2d THE DAMAGES RESULTING FROM 1965). PROD- HANDLING OF THIS USE OR (INCLUDING IN alleged it is CLAIMSBASED In the UCT NEGLIGENCE, approximately acres STRICT appellants leased CONTRACT LIABILITY, OTHER- land in New Pemiscot OTHER TORT OR farm Madrid and WISE) pur- BE THE year, Counties and March of that SHALL PURCHASE gallons BY BUY- ninety-five from PAID THE USER OR chased of herbicide PRICE QUANTITY phrase meaning ER FOR THE OF within the of that as em- THIS statutes, INVOLVED, OR, ployed AT PRODUCT THE 400.2-102 §§ 400.2-105(l).2 Chapter ELECTION OF THIS which embod- COMPANY OR SELLER, UCC, liberally ANY THE ies the is OTHER RE- to be construed QUANTITY, promote simplification, applied PLACEMENT OF clari- SUCH OR, ACQUIRED IF ty governing BY NOT PUR- modernization law CHASE, transactions, permit REPLACEMENT OF commercial the con- SUCH QUANTITY expansion practices, IN NO SHALL tinued of commercial EVENT among THIS COMPANY OR ANY OTHER and to make uniform law 400.1-102(1). jurisdictions. BE LIABLE ANY SELLER FOR various INCI- CONSEQUENTIAL DENTAL OR DAM- 400.2-7193, Under issues central AGES. first, are, consequen- whether limit on buyer and all users deemed are damages provided tial in Monsanto's label accepted this LIMIT terms of second, and, booklet unconscionable OF WARRANTY AND LIABILITY whether the restrictive afforded by any be varied which not verbal or purpose. therein fails of its essential added.) agreement. (Emphasis written lump invite Court the re- Plaintiffs 400.2-719(2) quirements prin- Monsanto’s motion dismiss focused under a cipally upon test, “LIMIT OF WARRANTY broad but I de- unconscionable would Rather, AND LIABILITY” section as a bar to re- cline so do. should believe we covery consequential damages.1 first determine whether the im- limitations posed under Monsanto’s “LIMIT OF WAR- The main issue for consideration is RANTY AND LIABILITY” uncon- whether the “LIMIT OF WARRANTY scionable, hence unenforceable as to conse- AND LIABILITY” set forth above bars damages. quential recovery consequential damages or, plaintiffs urge, whether as such limit is defining little case There is Missouri law unconscionable thus unenforceable or statutory term In “unconscionable”. because limited unenforceable reme- Systems Funding Leasing Corporation v. dy purpose. fails of its essential International, Inc., 597 King Louie (Mo.App.1979), S.W.2d unconscionabil- *7 AND
EXPRESS IMPLIED ity application both has the “substan- WARRANTIES “procedural” aspects tive” or of transac- parties properly argue Both that this tion. at 634. unconsciona- Id. Substantive by bility is Uniform the con- transaction covered Com- refers undue harshness in (UCC) themselves, goods” procedur- of mercial Code as a “sale tract terms whereas parties damages damages crop 1. The treat the to the corn measure of recoverable under arti- consequential damages. Consequential cle, limiting buyer’s as ages dam- by to return as remedies partially § defined in 400.2-715 as goods repayment price or of the and of the "damages resulting from the breach” seller’s in- nonconforming repair replacement of and cluding person "injury property proximate- or goods parts; or resulting ly warranty.” from breach of (b) optional remedy provided to a as is resort remedy expressly agreed to be unless the exclusive, is are to 2. All citations to Missouri statutes remedy. in which it is the sole case 1978, purchase the time effect at of the (2) cause an exclusive Where circumstances (U.C.C.) The Lasso. Uniform Commercial Code pur- remedy of its or limited to fail essential adopted Chapter has been in Missouri as remedy may pose, provided in this be had as chapter RSMo 1978. After number Missouri chapter. are numbered as in the Code. sections (3) Consequential damages may or be limited 400.2-719. Contractual modification or § is excluded unless the limitation or exclusion remedy limitation consequential unconscionable. Limitation (1)Subject provisions to the of subsection injury person damages case of (3) of this and of section section 400.2-718 goods prima facie consumer unconscionable liquidation damages, on and limitation of where the loss but limitation (a) agreement may provide for remedies is not. commercial pro- in addition to or substitution in this limit or alter the vided article not, plaintiffs leased does as Mon- unconscionability al involves examination acres urges, plaintiffs by indicate the mod- process, of the contract formation center- santo “large scale” farmers. ing pressure parties, ern standards are on the exerted contract, print misrepresen- the fine Examining next the issue of substantive tation, unequal bargaining position. or Id. unconscionability, it should first be ob- Generally before a contract or clause can 1 to 400.2-719 served that Comment be voided as under 400.2- unconscionable states: procedural both and substantive un- a sales con- very it is of the essence of conscionability must found. In the Id. adequate tract that at least minimum application concepts, of these it has been in- If the remedies be available. suggested balancing that there must be a for sale with- tend to conclude a contract procedural as- between substantive accept legal in this Article must if pects, gross proce- and that there exists consequence that there at least a fair unconscionability, dural then not much is quantum of for breach of by way needed unconsciona- substantive obligations in the con- or duties outlined bility, “sliding and that the same scale” be tract. applied great if there is uncon- substantive alleges Monsanto that its offer to refund scionability procedural little of a na- price replace purchase or the herbicides ture. Id. [Citation omitted.] requirements meets the of a minimum ade- Turning to the contract formation quate remedy and asserts that “no Mis- process, plaintiffs surprise cannot claim souri decision has ever set aside a manufac- to the disclaimer. The “LIMIT OF WAR- warranty liability turer’s limitation on appears RANTY AND LIABILITY” clause grounds unconscionability under 2- page the first booklet 719(3).” contrary, To the Oldham’s appellants purchasing which received when Saleo, Inc., Company Sausage Farm conspic- the herbicide. The disclaimers are (Mo.App.1982), the court 633 S.W.2d uous, 400.2-316; as that term is used in § limi- held a manufacturer’s unconscionable however, recognize parties’ disparate liability attempted to exclude tation bargaining positions. purchase was consequential damages where such dam- necessarily on Monsanto’s terms or not at $215,000 ages approximated and the manu- opportunity all as had neither the attempted by warranty use of its facturer power negotiate nor the $4,400. the terms of recovery limit limitations to purchase.5 They had no against alternatives Measuring the limitation clause 400.2-719(3), to Monsanto’s disclaimers for as Monsanto found comments to concedes, employs the disclaimer it “mini- “is vir- that the limitation failed to allow a tually adequate remedy.” the same as the limitations of war- mum Id. at 183. Such ranty liability language us. Monsanto would used all the is the case before *8 $1,449.70, (Emphasis appellants’ recovery manufacturers of restrict to herbicides.” added.) Though yet fully representing purchase price the of the her- record is not the bicides, developed, may reasonably replace it in thereof the herbi- inferred or lieu pleadings plaintiffs the The first from the that are not a cide with more of same. large farming operation. provides “adequate remedy” scale 500 no to these (2) appears unconscionability the court 4. The reference to in 400.2- When it is claimed or 719(3) conjunction any may must be read in with that the contract or clause thereof which states: parties § 400.2-302 shall be afforded a unconscionable the present opportunity evidence as to reasonable Unconscionable contract or clause setting, purpose and effect to aid its commercial If the court as a matter of law finds the making any contract or clause of the contract to have the court in the determination. been unconscionable at the time it was made plaintiffs did not contract, 5. We should be mindful that may refuse to enforce the directly purchase from Monsanto the herbicides it enforce the remainder of the contract clause, through Such does a retail "middleman". without the unconscionable or it so position any of Monsanto to dictate application not alter the limit the of unconscionable purchaser. clause as to avoid unconscionable result. terms to the eventual 954
plaintiffs whose source of income has been
v.
Company,
Herrick Monsanto
874 F.2d
substantially impaired by
prod-
Cir.1989)
Monsanto’s
(8th
(applying
594
South Dakota
and
meaningless
uct
the second is
for the
law)6. The court in Durham stated:
damage
plaintiffs’
crops
be recti-
cannot
crop
...
loss
intended
due to inef-
fied after the fact
of more
addition
fectiveness of the herbicide is inevitable
herbicide.
plaintiffs
potential
and
not be
should
left
reaching
conclusion,
In
I
am mindful
Furthermore,
remedy.
a
without
of the manner a number of sister state
purchasers
pesticides
in posi-
a
not
courts have dealt with
As
the issue.
Mon-
bargain
tion to
with
manufac-
chemical
brief,
notes in
santo
its
majority
a
states
turers
contract terms more favorable
having
which
dealt with the issue have
label,
pre-printed
than those listed on the
ruled
In
manufacturer’s favor.
Ele-
position
nor are
in a
test
Chemicals,
Geigy Agricultural
ven v.
303
pesticide prior
effectiveness
(1975),
Minn.
the trial court. Section Thorton Laurance Petitioner-Appellant, the issue of unconsciona- vides that when bility parties “the shall be afford is raised opportunity present ed a evi reasonable REVENUE, Respondent. Early issue. on Monsanto
dence” on that DIRECTOR OF sought rely that Plaintiffs was noticed No. 17740. “unconscionability.” upon claim of provides the statute While Appeals, Missouri Court given opportunity” are to be “reasonable District, Southern evidence, mandate present it does not Division Two. held, evidentiary hearing hence that an 10, 1992. Feb. has waived claim it Monsanto 400.2-302(2). hearing to a under Further, resulting prejudice there is no waiver9, and, accordingly
from Monsanto’s right argument
its that it has been denied a by jury is not taken.
to trial well
Having consequential concluded that the unconscionable, disclaimer is plaintiffs’ need
feel there is no to address 400.2-719(2) allegation that the limited purpose fails of its essential part
this issue remains a of the case. reasons,
For these I would reverse the
judgment and remand to the trial court plaintiffs’
with directions to reinstate ac- proceedings
tion for further with
further direction the court shall declare as consequential
a matter dam- of law that the
ages disclaimer of Monsanto is unconscion-
able and unenforceable this case. Twibell, petition- Springfield, for
Bert V. er-appellant. Crank, respon- Springfield, for
Don W. dent. upon Although parties might dismissing plaintiffs’ petition have insisted
was in error in affording plaintiffs opportunity hearing an facts without first to amend their the circuit court the such a before pleadings. sought true, Plaintiffs alleged are suffi- taken upon learning of transfer plaintiffs’ to this Court and holding today and Monsanto fails for our cient *10 upon intentions to stand presented relevant facts to cite in its brief pleaded, proceeding we retransferred appeal. appeals the substantive the court of to decide matters involved.