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Moran v. Pittsburgh-Des Moines Steel Co.


decided: February 26, 1948.


Author: Goodrich

Before MARIS, GOODRICH, and O'CONNELL, Circuit Judges.

GOODRICH, Circuit Judge.

Plaintiff sues as administratrix of the estate of her husband, Patrick J. Moran. The defendants are Pettsburgh-Des Moines Steel Company, a partnership, John E. Jackson, a member of the partnership, and Pittsburgh-Des Moines Company (hereinafter referred to as to Corporation).

The subject matter of the suit is the recovery of damages occasioned to the plaintiff by the death of her husband in an accident which took place in the City of Cleveland, Ohio, on October 20, 1944. The basis of the defendants' alleged responsibility for that accident will appear in the course of the discussion. Suit was brought in the District Court for the Western District of Pennsylvania.

Federal jurisdiction is based solely on diversity of citizenship. We have, therefore, the now familiar situation in which the federal court applies state law and takes its law from the authoritative decisions of the state where the action is brought.*fn1 This reference includes that state's conflict of laws rules in situations where operative facts have occurred across state lines.*fn2 The general rule of reference here is plain enough on the Pennsylvania authorities. We have an occurrence where all the operative facts have an Ohio setting. Pennsylvania, in such cases, follows the general rule of referring to the place of wrong for the legal effect to be given the facts and events.*fn3 Likewise, the application of Pennsylvania conflict of laws rules determining whether a given question is to be characterized as substantive, with reference to the foreign law, or procedural, where the reference will be to the law of the forum, controls us here.*fn4 This statement is, of course, subject to those rules gradually being worked out with regard to the characterization of given questions for the state law or federal law for the application of the Erie Railroad v. Tompkins*fn5 rule regardless of their characterization in two state conflict of laws situations.*fn6

After a long trial in which the plaintiff's case was fully developed, the District Court, on defendants' motion, granted an involuntary nonsuit and dismissed the action. The plaintiff appeals and the appeal, under these circumstances, calls for the application of the familiar principle that the plaintiff's evidence and inferences legitimately to be drawn from it must be taken at face value. The only question is whether plaintiff has made out a case which should have been submitted to a jury.

The tragic accident in which Patrick Moran and others lost their lives was a poignant episode in the development of the kind of bold and ingenious engineering for which Americans have become famous. We all enjoy the benefits of the results of these experiments; the question which courts have to decide is at whose risk they are to be carried on. The story of the development of facts leading up to the lawsuit may be briefly told.

The East Ohio Gas Company is an operating public utility engaged in selling natural gas for both industrial and consumer use in the City of Cleveland, Ohio. A problem presented in distribution was the insufficiency of the gas supply to meet consumer demand at periods of peak load. This occurred largely in the winter when the use of gas for heating purposes was at its height. At the time of these events there was evidently an abundance of natural gas and the problem was one of storage at a point where it would be immediately available to meet the consumer demand. A plan was worked out for the storage of this gas at a temperature of 260 degrees below zero F., at which point it becomes liquid. The condensation in volume is so great that 600 cubic feet of the natural gas becomes one cubic foot of the liquid. The obvious problem was a method of storage by which the "liquefied gas" could be kept at this exceedingly low temperature. The method worked out consisted of a giant thermos bottle type of structure in which one steel tank was built inside an outer tank and a thick layer of insulating material put between them.*fn7 In 1940 East Ohio entered into a contract with the Gas Machinery Company for the construction of a liquefaction and storage plant. That company let out portions of the contract to various concerns. The defendants put up three storage tanks as their part of the construction. These were spherical in form and built on the principle just described. So far as the record shows, these tanks functioned with satisfaction.

The success of this storage venture and the increased demand for gas led East Ohio, in 1942, to look to a further expansion of storage facilities for "liquefied gas." The new tank to be built was to have the storage capacity of two of the earlier ones. There is evidence in the record from which a jury could find that the defendants undertook, with the East Ohio Company, to furnish the material and construct this tank, although the formal contract was made with the Gas Machinery Company and East Ohio and, in turn, Gas Machinery Company and defendants. The explanation of this arrangement was that Gas Machinery Company had certain rights to a commission.

The new tank, it was concluded, was to be in the form of an upright cylinder instead of a sphere. There is testimony in the record to the effect that this decision was reached upon the recommendation of the defendants who stated that the cylindrical form would be as efficient as the spherical form and considerably cheaper. One theory of the plaintiff's case here rests upon the alleged defects in design, workmanship, and materials of this tank, a matter which will be discussed hereafter. Tank No. 4 was completed in May, 1943. Defendants were called in to supervise the first filling. After this was done they were paid and left the job. All went well for nearly thirteen months. On the afternoon of October 20, 1944, No. 4 tank ruptured and gas escaped in great quantities. There was a fire, explosions, and a frightful disater in which lives were lost and property destroyed. One of the lives was that of the plaintiff's decedent, who worked for the East Ohio Company, but not in the operation connected with this liquefaction and storage of gas.

The plaintiff presents two alternative theories claiming recovery on either one of them. The first is that this storage of "liquefied gas" was, under Ohio law, a 'nuisance" and the defendants are responsible as the creators of the nuisance. We have given thoughtful consideration to this theory, but our conclusion is that we cannot accept it. The basis of the confusion in the argument is, we think, the not uncommon cloudiness found in the law and elsewhere in the use of words.*fn8 There is a well recognized doctrine in the law which found a full exposition in the famous English case of Rylands v. Fletcher*fn9 which imposes liability on a land occupier who collects on his premises things which are apt to do harm if they escape. The law imposes insurer's liability, or almost insurer's liability, upon the occupier in such case for the harm done to his neighbors for the escape of the dangerous substance. The rule and its limitations are well recognized and generally classified today under the heading of ultrahazardous activities,*fn10 or some such descriptive phrase.*fn11 Ohio decisions have imposed this responsibility for a good many years.*fn12

Sometimes courts, clear as to the result to be reached, but not always happy in the words used to describe it, have talked the law of nuisance in this connection and it must be admitted that there is some language in the Ohio cases using this terminology.*fn13 But the basis for liability is not really nuisance, a wrong in itself for which equitable relief against continuance would be appropriate.*fn14 The basis of liability, instead, is the conclusion that when a man does something extraordinarily dangerous which creates an unusual risk to his neighbors he should bear the consequences when that risk ripens into harm.*fn15 Not only is this the now orthodox explanation of the basis of liability, but we think it is perfectly consistent with the Ohio decisions. These decisions suggest the imposition of liability where one collects and keeps on one's premises anything inherently dangerous or likely to do mischief if it escapes, which escaping, injures another in the enjoyment of his legal rights.*fn16 Originally the Ohio cases made a distinction between those substances "at all times, in all places, and under all circumstances, dangerous" which are made for their dangerous qualities and those that may be dangerous if not stored properly but are used for other than their dangerous capabilities.*fn17 Now the Ohio rule weighs the various factors in the manner suggested by the Restatement*fn18 and liability depends upon the degree of potential injury compared with the utility and common usage.*fn19

The liability imposed by this "ultrahazardous activity" doctrine is one imposed in him when he engages in such activity. Usually it is a land occupier, although it may be one who conducts such activities on another's land as, for instance, a blasting operation in the course of railroad construction.*fn20 If the defendant in this case were the East Ohio Company, the application of the doctrine to East Ohio's storage of "liquefied gas" would be the major problem in the case. But this is not a suit against the East Ohio Company; it is a suit against the people who supplied the material and built the storage tank which gave way. Contrary to appellant's argument, they are not in the situation of one who creates a nuisance like the building of a dam which floods another's land or a structure which encroaches upon a neighboring property. The defendants built a tank for East Ohio and were paid for it. They did not operate a gas liquefaction and storage enterprise. It is true, for East Ohio's benefit, they supervised the first filling of the tank. But the tank had been filled five times since the defendants had supervised the first filling.

It is true that East Ohio called upon the defendants for advice and service from time to time.The Vice President of East Ohio testified: "I don't think we ever made any changes or did any work there that we did not consult them * * * but we had a close relationship with Pittsburgh-Des Moines, and we considered that they were our protectors until we got things in a good, safe way." Nevertheless, everything which the defendants did after the tank was erected and turned over to East Ohio was at East Ohio's request. "Control is the criterion of responsibility for control means that power which occasions and which can prevent." Shindelbeck v. Moon, 1877, 32 Ohio St. 264, 30 Am.Rep. 584. This enterprise was under the control of East Ohio, not the defendants. It is East Ohio, and not the defendants, for whom the question of liability for consequences of an ultrahazardous enterprise could become an arguable question. Defendants cannot be held liable under the plaintiff's first theory.

Liability for Negligence

The second theory of responsibility which the plaintiff urges against the defendants is that the defendants were negligent in the plans for the structure and materials used therein. Before we outline the plaintiff's allegations with regard to negligence there is a legal question to be met. Assume, for the moment, that the plaintiff has alleged and shown negligence on the part of the defendants in planning and erecting the structure. Does their responsibility extend to harm suffered by one in the position of the plaintiff after the structure has been turned over to the purchaser, East Ohio? This is a question of tort law and a Pennsylvania court, as already stated, in the application of well established rules of conflict of laws, would look to the Ohio law to determine it.*fn21 We do the same.

The old rule was that the manufacturer of a chattel was not responsible for injuries to others than his immediate vendee.*fn22 Exceptions grew up to the rule*fn23 and the whole matter received clarification by the New York Court of Appeals, through Judge Cardozo, in what is now the leading case of MacPherson v. Buick Motor Co.*fn24 This decision puts responsibility for an injury to one operating the car on one who negligently manufactures a part of an automobile and it is fair to call the decision a landmark in tort law. An examination of the Ohio authorities shows clearly, we think, that the principles upon which MacPherson v. Buick Motor Co. was decided are part of the law of Ohio.*fn25 They are, likewise, generally, though not universally, accepted in modern law and are adopted in the Restatement of Torts.*fn26

A finding of the acceptance by the Ohio courts of the principle of MacPherson v. Buick Motor Co. does not give the full answer to the question involved here. We need to find that those courts have taken, or would take, one step more and possibly two. The first step is the manufacturer's or supplier's responsibility, not merely to the ultimate consumer of the article, but to a person in the vicinity of its use who is injured by the manufacturer's lack of due care. This extension of the MacPherson v. Buick Motor Co. doctrine is indicated in the Restatement*fn27 and is clearly indicated to be the Ohio law in the decision of White Sewing Machine Co. v. Feisel.*fn28 In this case the Court of Appeals held the manufacturer of an electric cord was liable for injuries sustained by the child of the vendee. The principle was discussed and followed in Gilbride v. Leffel & Co.*fn29 We have no difficulty, therefore, in finding that the Ohio law imposes liability on a manufacturer, not alone to the ultimate consumer, but to one who might reasonably have been expected to be in the vicinity of the chattel's use.

The last step may or may not be one which must be taken.If these tanks when constructed technically remain "chattels" we think that the rules heretofore set out cover the situation. If, however, the tanks, and especially tank No. 4, be affixed to the realty in such a way as technically to become part of the land, then we have the question of applying the principle of MacPherson v. Buick Motor Co. to structures. This extension has been accepted in fully by the Restatement of Torts, ยง 385*fn30 and, we think, represents the trend of modern authority.*fn31 We have not found any Ohio case which presented this question on its facts unless Gilbride v. Leffel & Co., supra, is such a one.*fn32 In that case the article alleged to have been defective was a boiler and we do not know from reading the decision whether the boiler was affixed to the realty or not. It might have been and it probably was, but it is not so expressly stated. The Ohio decisions cited and discussed in this opinion cite, quote, and follow fully the analysis of the problem of liability as it is set out in the Restatement of Torts. We have no doubt that an Ohio court confronted with the question would, in accordance with the development of the law shown in its previous decisions, extend the liability of the manufacturer to negligence involved in building a structure even though that structure was affixed on another's land.

We pass then to the question whether the plaintiff presented evidence of defendants' negligence which, if accepted by the trier of fact would entitle him to recover. The plaintiff listed fourteen separate specifications of negligence on the part of the defendants in their activity in designing, furnishing materials, erecting and subsequently servicing the No. 4 storage tank. If we, ourselves, were making the classification we would combine some of them as, indeed, the plaintiff did in presenting the case to us. We at first thought some of them could be disregarded, but subsequent examination of the testimony shows there is some basis for each one. The relative weight to be given to each is, of course, for the trier of fact, not for us.

It would be unprofitable to discuss these specifications in detail. It is sufficient, we think, to list them in the margin,*fn33 together with our comment that we think that the evidence to support them shows enough, at this stage of the litigation, to require their submission to a jury to pass upon the question whether that body would believe the evidence and draw the inference of negligence therefrom.

Proximate Cause

The defendants in argument on this appeal have devoted little attention to the specifications just described. In fact, at the oral argument the defendants were willing to assume that some of these specifications showed that there was a violation of the standard of care. But defendants' argument is that there must be causal connection between the defendants' alleged wrong and the plaintiff's alleged harm and it is part of the plaintiff's task to prove that causal connection. That is a correct proposition of law.*fn34 We disagree, however, with its application for we do not agree that it was correct to nonsuit the plaintiff on this point.

So far as proximate cause is determined by rules of law, the law to which reference is made will be the law of the place of wrong, here Ohio. That is the orthodox conflict of laws rule*fn35 and we have no doubt that a Pennsylvania court would make the reference.*fn36 The accepted rule about proximate cause and the rule recognized in Ohio is that the plaintiff does not have to show the defendants' liability creating act was the sole cause of the injury.*fn37 It is enough if it is found, by the trier of fact, to be a substantial factor in producing the resultant injury.*fn38 The testimony of experts who made an investigation of this accident in Cleveland to the effect that they did not agree upon one precise or sole cause for the catastrophe does not settle the question of legal responsibility in tort one way or the other.

The ordinary rule is that the sufficiency of evidence is to be determined by the law of the forum and Pennsylvania cases so hold. Sudol v. Gorga, 1943, 346 Pa. 463, 31 A.2d 119; Carroll v. Godding, 1944, 155 Pa.Super. 490, 38 A.2d 720. Thus while Ohio rules with regard to causation are to be looked to, we have no doubt, also, that the method of proving causal connection as well as negligent acts must be done in the Pennsylvania fashion.*fn39 In this sort of instance we have previously said that we think the federal court in a diversity case should follow the state's rule as to this matter. In Waldron v. AEtna Casualty & Surety Co., 3 Cir., 1944, 141 F.2d 230, we said: "While questions of evidence ordinarily relate to matter of procedure, the sufficiency of the evidence goes to the maintenance of the substantive right and is, therefore, to be tested by local law in cases where such law controls." Page 234 of 141 F.2d; see, also, Stoner v. New York Life Insurance Co., 1940, 311 U.S. 464, 61 S. Ct. 336, 85 L. Ed. 284; see Morgan, Choice of Law Governing Proof, 58 Harv. L.Rev. 153, 171-177 (1944).

In this connection we meet the Pennsylvania rule about "individuating" causes of injury*fn40 and, as said above, plaintiff's case must conform to it even though the litigation is in a federal court. But we think that plaintiff's case did conform to it here.

It is true that J. O. Jackson, an employee of defendants, called for cross-examination by the plaintiff, gave several theories concerning what might have caused the accident. But the facts on which these theories were based were negatived by testimony from other witnesses for the plaintiff. The plaintiff's testimony showed the various alleged negligent acts of material furnishing, construction, and maintenance. Some of the testimony identified the spot in the inner tank of this structure where, in one witness's expert opinion, the first rupture occurred. This was close to at least two of the defects listed by the plaintiff in items of negligence and upon which testimony had been offered. Eye witness testimony, if believed, showed that the series of events culminating in the catastrophe began with the escape of vapor in large and then larger quantities, followed by fire. In other words, the plaintiff's testimony, if accepted, not only showed defects in the structure, but showed how the structure gave way and how the destructive force, that is this rapidly vaporizing liquid rolled out from its place of storage and created the havoc which everyone admits was created. We conclude, therefore, that plaintiff's case was not defective under the Pennsylvania requirement of individuated causes and the plaintiff was entitled to go to the jury with it.

Assumption of Risk

Defendants argue that the doctrine of assumption of risk applied to the decedent and prevents recovery by his representative here. Its argument is more appropriately directed to the attempt to base liability on ultrahazardous occupation theory. We think it applicable neither there nor to the negligence theory. To assume a risk one must know what he is assuming.*fn41 Here, the plaintiff's decedent did not work in the liquefying and storage plant; there is nothing in the record to indicate that he knew the risks involved therein and certainly nothing to show that he had any knowledge of the risks from negligent materials in construction, if such existed. We think the assumption of risk suggestion may be disposed of peremptorily by saying it is not applicable.

Testimony of Adverse Witness

Amici have presented the question of whether plaintiff is bound by the testimony of an adverse witness called for examination under the statute.*fn42 Defendants did not press this question and we mention it only in the event that it might be raised in a subsequent trial. It only comes up in connection with the testimony of J. O. Jackson, one of the employees of defendants. This witness gave certain testimony as to possible causes for the accident. We have already noted above that the assumption on which these suggested conclusions were based were flatly denied by other witnesses. We do not think that there is involved, at this stage at least, any serious question which requires us, at this point, to thread our way through the Pennsylvania decisions under the statute.

Corporation and Partnership Responsibility

Defendants make the point that in no event is the Corporation liable for the consequences sought to be imposed upon it here. The defendants, it will be remembered, are the Partnership which is called "Pittsburgh-Des Moines Steel Company", J. E. Jackson, one of the partners, and, finally, Pittsburgh-Des Moines Company, the Corporation. Plaintiff's point here is that the activities of the parties and their part in the construction of Tank No. 4 were inextricably intertwined. There is evidence to support this theory. Only one or two pieces of it need to be outlined. Corporation owns a plant at Neville Island, Pennsylvania. The sign on top of its building carries the Partnership name. A facsimile of Mr. J. O. Jackson's signature was printed on a form which was used interchangeably as a purchase order by both Corporation and Partnership. Letters signed by the Corporation were sent on the Partnership letterhead; letters to the Corporation were answered by the Partnership. We think there was enough in the testimony to present to the trier of fact the question whether both Partnership and Corporation were not involved in the contract and the construction of the storage tank, the rupture of which caused the disaster.

The judgment of the District Court will be reversed and the cause remanded for further proceedings not inconsistent with this opinion.

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