## Facts

- Towmotor Corporation manufactured forklifts and distributed them in New York through a sole distributor.
- Towmotor developed a new forklift model that included an overhead guard manufactured by Marine Industrial Equipment Co., but attached in a manner specified by Towmotor.
- At Towmotor’s direction, a Towmotor-owned forklift was delivered to T. Hogan & Sons (a stevedore) as a “demonstrator” for Hogan to try and evaluate.
- The claimed defect concerned the overhead guard’s attachment: rear uprights were secured with U-bolts allowing movement, while front portions were welded rigidly to an angle-iron plate held against the forklift’s front.
- Plaintiff’s expert testified that the rigid front welding, combined with vibration, would cause metal fatigue and fracture.
- About seven weeks after delivery, William J. Delaney, a Hogan employee, was operating the forklift on a pier when the overhead guard collapsed and injured him.
- Delaney sued Towmotor in federal court under diversity jurisdiction, alleging negligent design and strict (manufacturer’s) liability for a defective product.
- Towmotor impleaded Marine (guard manufacturer) and Hogan (employer) as third-party defendants; the parties proceeded on the assumption that New York law governed.

## Issues

1. Whether, under New York law, a manufacturer may be held strictly liable for injuries caused by a defective product placed into the stream of commerce when the particular unit was supplied as a demonstrator and not yet sold.
2. Whether strict products liability in this context depends on contract/implied-warranty concepts tied to a completed sale, or instead arises as a tort duty from placing the product into circulation.
3. Whether treating the demonstrator arrangement as a loan or bailment bars strict liability.

## Decision

- The Second Circuit affirmed judgment for Delaney on the strict-liability claim.
- The court held that New York law permits strict liability when a manufacturer introduces a product into trade channels for foreseeable use, even without a completed sale of the specific unit.
- The court rejected the argument that the demonstrator/bailment characterization insulated Towmotor from strict liability.
- The court found sufficient evidence for the jury to conclude the overhead guard attachment was defective and caused the collapse, and it upheld denial of Towmotor’s directed-verdict and judgment n.o.v. motions.
- The jury’s defense verdict on negligence did not preclude a plaintiff’s verdict on strict liability.

## Legal Principles

- Under New York law as applied, a manufacturer’s strict products liability is a tort-based duty arising from placing a product into the stream of commerce for foreseeable use, not a rule limited to contract privity or to completed sales.
- A manufacturer may be strictly liable where it supplies a product for demonstration or trial use that places the product into the hands of foreseeable users, and the product is defective and causes injury.
- Labeling the transaction as a loan or bailment does not defeat tort-based strict products liability when the policy and doctrine focus on the manufacturer’s role in introducing the product into circulation.
- A strict-liability finding may be supported by proof of a defective design or construction that renders the product unreasonably dangerous when used as intended or foreseeably used.

## Conclusion

The court held that a manufacturer can be strictly liable under New York law for injuries caused by a defective product it introduced for foreseeable use through commercial channels, even when the particular item was provided as an unsold demonstrator rather than transferred by completed sale.


Delaney v. Towmotor Corp., 339 F.2d 4 (2d Cir. 1964)