75 Wash. 622, 135 P. 633 (1913)
In 1912 the plaintiffs operated a profitable restaurant in Seattle serving the general public as patrons.1 Armour & Company manufactured meats and food products for sale to the public, maintained a place of business in Seattle, and represented its goods as pure, wholesome, and fit for human consumption.2
On June 16, 1912, the plaintiffs purchased from the Seattle Grocery Company a carton of cooked tongue manufactured and prepared by Armour & Company.3 The carton bore Armour & Company's name and was bought to be sold to the plaintiffs' customers without further cooking or preparation.4
The plaintiffs relied on Armour & Company's representations that the food was pure and wholesome.5 The carton in fact contained a foul, filthy, nauseating, and poisonous substance in its center.6 In the ordinary course of trade the plaintiffs served a portion of the tongue to one of their patrons, who ate it, became sick and nauseated, and publicly denounced the food in the presence of other persons; the incident became known to the public generally.7
The plaintiffs had no knowledge or means of knowing the condition of the food, which could not be discovered until it was served.8 They suffered damage including loss of reputation, business, and profits during the term of their lease.9 They filed a complaint against Armour & Company; the company demurred, the trial court sustained the demurrer, and the plaintiffs appealed.10
Whether a retailer operating a restaurant may bring a direct action against the manufacturer of a packaged food product for damages to business reputation and lost profits when the product was purchased through an intermediary and contained a hidden defect?11
To the old rule that a manufacturer is not liable to third persons who have no contractual relations with him, for negligence in the manufacture of an article, should be added another exception arising from the changing conditions of society.12 In the absence of an express warranty of quality, a manufacturer of food products under modern conditions impliedly warrants his goods when dispensed in original packages, and that such warranty is available to all who may be damaged by reason of their use in the legitimate channels of trade.13
Yes. The established facts show that the plaintiffs, as restaurant operators in the chain of trade, purchased the sealed carton through an intermediary and relied on Armour & Company's representations of wholesomeness, yet the hidden defect caused the patron's illness and public denunciation that damaged the plaintiffs' business reputation and profits.14 The rule's exception for food products in original packages applies directly because the goods were designed for resale and ultimate consumption, no intermediate party could inspect the contents, and the damage is justly attributed to the manufacturer's breach of the implied warranty.15 The plaintiffs therefore stand in the same position as any party damaged in legitimate channels of trade and may maintain the direct action without privity.16
The complaint states a cause of action; the demurrer should be overruled and the judgment reversed.17