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SPEYER, INC. v. HUMBLE OIL & REF. CO.

October 18, 1967

SPEYER, INC. and Yellow Cab Company of Erie
v.
HUMBLE OIL & REFINING COMPANY and A. O. Smith Corporation



The opinion of the court was delivered by: WILLSON

 Henry W. Buhl has been engaged in the taxicab business in the City of Erie in this District since 1935. Under the Public Utility Laws of Pennsylvania, he operates Yellow taxicabs. But to garage and to maintain his cabs, he formed the corporation, plaintiff Speyer, which owns the building. The cab business is owned by plaintiff Yellow Cab. Mr. Buhl owns all of the stock of both corporations except for nominal shares, and was and is the force behind the operation of both plaintiffs.

 On April 24, 1964 a disastrous gasoline fire occurred on plaintiffs' premises which destroyed the building and over 65 taxicabs as well. Suit was filed on December 31, 1964. The diversity jurisdiction of the Court was invoked. The case came on for disposition non-jury. Throughout the pretrial stages, the issues appeared complex. Some 8 hearings were had on discovery and other motions prior to trial. Several third party defendants were added of record. However, it was decided that the issue of liability only against Humble and A. O. Smith should first be tried. During a 12 day trial some 2,063 pages of testimony were taken and transcribed. It is believed that a recital of but the essential facts which appear in this extensive record is necessary to an understanding of the case and greatly simplifies it.

 In the mid-1940's, plaintiff Speyer purchased a building at 117 East Tenth Street in Erie, and in consultation with the architects and builders the management of Speyer remodeled that building, including the installation of a wall at the proposed location of a gasoline pump. Humble had nothing whatever to do with this remodeling. After this remodeling, Yellow Cab began to utilize that building as a garage for its taxicab operation.

 Humble is a major supplier of gasoline and oil products and does business in the Erie, Pennsylvania area. For some time prior to April 1954 when Humble lost the Yellow Cab account to Cemico, Humble furnished gasoline to Yellow Cab at the plaintiffs' garage.

 After Cemico started to supply gasoline to the plaintiff enterprise, Cemico in April 1954 purchased from Erie Meter Systems and installed in the plaintiffs' garage a #910 pump. The Erie pump was selected by J. T. Harper, the President of Yellow Cab, and Humble had nothing whatever to do with its selection, purchase or installation. Installation of the Erie pump was on the east side of a wall located inside the garage which had been constructed by the plaintiff enterprise as a part of the remodeling previously referred to. A pipe extended from the pump and through this wall to the west side thereof, where a gasoline hose and nozzle used to dispense the product was located. The Erie pump was leased by Cemico to the Yellow Cab following its installation in April 1954.

 On October 1, 1955 Yellow Cab changed its source of gasoline back to Humble. Yellow Cab purchased from Cemico the gasoline dispensing equipment, including the Erie pump, used to store and dispense gasoline at the plaintiffs' garage. Humble as an accommodation to the business purchased this equipment from Yellow Cab and leased it back under an Equipment Lease dated November 1, 1955. No rental was paid under this Equipment Lease.

 That Equipment Lease contained a provision under which Humble agreed to make certain repairs to the leased equipment upon written notice from the plaintiff enterprise and upon certain other conditions. Prior to 1959, those repairs were made either by Humble employees or independent service contractors, including Jabe, hired by Humble from time to time on a specific request basis.

 Then in 1959 Humble entered into an Area Maintenance Agreement with Jabe. Jabe was the best pump service contractor in the Erie area and the contractor who for several years had made repairs to the service station equipment, including gasoline pumps, for Humble under a Contract Mechanics Specific Request Agreement, at service stations selling, and at customer locations using Humble gasoline and other petroleum products. Among the equipment to be serviced by Jabe under this agreement was the gasoline dispensing equipment, including the Erie pump, located at the plaintiffs' garage. Jabe pursuant to its agreements with Humble made numerous service calls to the plaintiffs' garage repairing damage to the pumps and inspecting them. The evidence showed that for several years from time to time the hoses attached to the gasoline pumps became damaged. The damage occurred because of the method of operation by Yellow Cab employees. The routine followed was that an incoming driver going off duty filled the tank of his cab with gas prior to checking in his cab fare and quitting his shift. But plaintiffs employed no attendants to fill the gasoline tanks of the cabs. Each driver performed this task for his cab. The cabs came off the street at 8 hour intervals and lined up at pump or pumps awaiting their respective turn at the pump. Hose trouble frequently occurred because the drivers would drive off with the nozzle of the hose still in the tank thus stretching and pulling the hose and occasionally catching the hose on bumpers of the cabs. Humble through Jabe made the repairs when necessary and when called upon by Yellow Cab. Finally in October 1963 Jabe installed on the Erie pump a Flexsteel hose manufactured by Goodyear. This hose, which had Underwriters' Laboratories approval was used by Jabe only at problem locations where a heavy duty hose was needed or when requested by a customer. This hose was made of a steel, wirebraid construction. Several companies other than Goodyear, including U. S. Rubber and B. F. Goodrich, have manufactured and marketed a similar gasoline hose for many years. This type of gasoline hose was first approved by Underwriters' Laboratories in 1957 and the Goodyear Flexsteel brand of this hose was initially approved in early 1960.

 On April 20, 1964, a cab driven by Arthur Locke, a Yellow Cab driver, after refueling at the Erie pump and in maneuvering to go up a ramp, hooked the hanging hose of the Erie pump with the cab bumper and pulled and stretched the hose as the cab was driven away. Shortly thereafter, gasoline was observed on the floor of the Yellow Cab garage. The gasoline was promptly cleaned up and no fire ensued. Inspection of the Erie pump by Yellow Cab personnel revealed that the meter cover casting, located inside the Erie pump, was cracked. Yellow Cab shut down the Erie pump, removed it from operation and called Jabe. The following morning, John Elmer, Jr., of Jabe, made the necessary repairs by replacing the entire meter unit, including the meter cover casting, of the Erie pump. Mr. Elmer, Jr., then made the usual inspection and operating tests on the Erie pump, which showed that the valves of the pump were clean and operating properly; that the other parts of the pump were operating properly; and that the pump was not leaking gasoline. Thereafter, the Erie pump was placed back in operation, and it worked properly until the incident eight days later.

 On April 29, 1964 a cab driver named Charles Southward, after completing his work shift, pulled up to the Erie pump to refuel his cab. To do this, Southward placed the nozzle of the hose in the gasoline filler pipe of the cab and "hooked it in" so that it would not fall out of the tank. An advertising sign was mounted on the rear of the cab with the bottom of the sign below the level of the filler pipe. Consequently, it was necessary for Southward to move the sign in order to insert the nozzle in the filler pipe of the cab. After inserting the nozzle, Southward, following the practice of all the drivers, hooked the nozzle in the tank by placing the ad sign on top of the nozzle and perhaps by some other method. Southward then worked on his report inside his cab while the refueling proceeded. Southward was in a hurry to leave since he had a date and wanted to get a "quick beer". In any event, when the nozzle shut off, he forgot to remove it from the tank and drove off several car lengths with the nozzle in the tank, stretching the hose tight and giving it a violent jerk. This jerk was sufficient to severely distort in the direction of the pull, the pipe coupling to which the hose was attached.

 Although the nozzle was automatic in that it shut off the flow of gas when the tank became filled, thereby allowing the driver to leave the vicinity of the tank while refueling, the nozzle had a spout without any spring or other deice on it which would permit it to remain in the filler pipe without some external retaining force. Defendants contend that the drivers hooked the advertising sign over the nozzle to keep the spout in the filler pipe of the gas tank. Plaintiffs deny this practice. There is considerable uncertainty in the record as to the component parts of the nozzle which were attached to the hose on April 29th, as this nozzle was not found after the fire. However, the evidence favors defendants' contention.

 Despite the fact that most of the employees of Yellow Cab who witnessed this incident on April 29th were aware of the Locke incident of April 20th and the damage it had done to the pump, and the gasoline leakage which had then occurred, no one took a look at the Erie pump after the Southward incident to see if it had been damaged or if it was leaking gasoline. Instead, another driver, named Lee, who, at the time Southward was refueling, was waiting immediately behind Southward to refuel and who had observed the hose being jerked by Southward driving away with the hose in the tank of his cab, pulled his cab along the Erie pump, turned the pump on and placed the nozzle into the tank of his cab, putting the nozzle on the automatic position. After the pump had been running for 3 or 4 minutes, although it was not delivering gasoline to Mr. Lee's cab, another Yellow Cab employee, Charles Siebold, chanced by the Erie pump and discovered gasoline on the floor in the vicinity of the pump. He then shouted a warning; but before effective action could be taken, the gasoline ignited and the subsequent fire damaged or destroyed the physical and real property located at the garage. After the fire, a crack was noted in the meter cover casting which had been installed on the Erie pump on April 21, 1964 by John Elmer, Jr. This crack was similar in appearance to that found in the meter cover casting involved in the April 20, 1964 incident.

 ALLEGED NEGLIGENCE OF DEFENDANT HUMBLE

 There is no divergence of opinion between the parties as to how the accident happened. As plaintiffs state in their post-trial brief, - "All parties to this case agree that internal pressure was created in the system and that the system, on the date of the accident, was incapable of relieving the pressure." However, this seeming concord on the how of the accident merely points up the great dispute on the why of the accident. From the outset of litigation, and throughout their portion of the trial, plaintiffs contended that the pressure build-up was caused by a malfunctioning pressure relief valve and that this in turn was the result of improper maintenance by Humble. Plaintiffs' expert, John Crankshaw, expressed this opinion in his testimony and explained the basis for it as follows. The meter head casting was of Class 15 or Class 20 cast iron, which had a tensile strength of 15,000 or 20,000 psi respectively. The static pressure required to fracture a casting under laboratory conditions was approximately 500 psi. Similarly, under laboratory conditions, with the pressure relief valve rendered inoperative, pressures of the magnitude of 150-175 psi could be obtained in the meter head by rapidly opening and closing the hose nozzle valve. Since the gaskets in the pump assembly would leak at 250 psi or less, Mr. Crankshaw reasoned that the meter head casting fracture was not the result of any single pressure surge, but was rather the result of material fatigue, i.e., the cumulative result of numerous repetitive pressure surges. Using stress analysis to explain the material fatigue theory of the casting fracture, Mr. Crankshaw explained that the cast iron of the type used in the casting, had an endurance limit of 8000 psi, that is, it could withstand repeated stresses of that magnitude without ultimately failing, but if a stress greater than that were produced, the number of times it could be produced without resulting in material failure would be finite and the casting would ultimately fracture. Taking the surge pressures of 100-175 psi, Mr. Crankshaw computed the resulting stress to be 4000-7000 psi, or in surges, double that or 8000-14000 psi, beyond the endurance limit. Since pressures of the magnitude of 100-175 psi were impossible to obtain under normal operating conditions with all relief valves functioning properly, and since such pressures could be obtained by rendering the relief valves inoperative, Mr. Crankshaw concluded that the casting was fractured because the relief valves were inoperative, and that they were inoperative because of accumulations of foreign materials which proper maintenance would have prevented.

 Mr. Crankshaw's testimony in chief was impressive and convincing in its application of engineering principles to the facts of the case. Had this been all that there was to the case, the effect of it would have tended toward imposing liability upon Humble for improper maintenance. However, after persistent and exhaustive cross-examination had been conducted by Humble's counsel, this Court was left with two impressions: first, that the engineering bases for plaintiffs' theory of liability were not as bedrock sound as they first appeared, and second, that defendants were not going to be content merely with refuting plaintiffs' theory but were prepared to propose a theory of their own. In short, had the plaintiffs' case depended solely on their evidence, this Court would have found difficulty in rendering a judgment in their favor.

 Defendants' theory of the case rests upon a fact given little weight by the plaintiffs. Noting that preceding each instance of casting fracture, the hose had been subjected to a violent jerk, Humble formulated the theory that it was the jerk, and not the inoperative valves, which caused the casting fractures. Using a pumping assembly and piping constructed to similate the conditions which obtained at the Yellow Cab garage, defendants demonstrated to the Court that even in a properly maintained and cleaned pumping assembly, with all valves thereby presumably operative, the meter head casting could be fractured simply by having a man stretch the hose to its full length and give it a sharp jerk. Defendants' experts explained this phenomenon by reference to the physical characteristics of the hose installed on the pump at the Yellow Cab garage and at the demonstrations. The hose, a Goodyear Flexsteel brand, is constructed of wire braid encased in rubber, which gives it greater strength and resistance to crushing, as when driven over by an automobile. As indicated, defendants' witnesses testified that this hose had been installed on the pump at the Yellow Cab garage because the abuse given other hoses had resulted in their being crushed and unsuitable for use. A peculiar characteristic of this hose, however, defendants' experts testified, was that because of the wire mesh construction, the bore of the hose, when stretched, tended to decrease at a rate greater than the length increased, resulting in a sharp reduction of volume and corresponding sharp increase in pressure, which, when transmitted back along the pipe to the meter head casting, caused the fracture.

 Defendants' evidence tended strongly to exonerate them of any negligence based on improper maintenance. The demonstrations, while not conclusively establishing the cause of the casting fracture which precipitated the fire, are more persuasive than plaintiffs' theory, unsupported as it was by any evidence that the valves in fact were inoperative because clogged, and questioned as it was by defendants' undercutting its engineering soundness. The contention of the defendants, that the fracture was caused by a sudden jerk on the hose and could be caused thereby even under optimum working conditions, is entitled to more credibility and hence to be accorded more weight in formulating the decision of this Court. Plaintiffs' argument, that if a casting in a properly maintained pump could be fractured by a jerk, a casting in an improperly maintained pump could be fractured more easily, assumes its ...


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