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