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Speyer Inc. v. Humble Oil and Refining Co.

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


decided: November 12, 1968.

SPEYER, INC., AND YELLOW CAB COMPANY OF ERIE, APPELLANTS,
v.
HUMBLE OIL AND REFINING COMPANY AND A. O. SMITH CORPORATION. SPEYER, INC., APPELLANT IN NO. 17057. YELLOW CAB COMPANY OF ERIE, APPELLANT IN NO. 17058

McLaughlin, Kalodner and Aldisert, Circuit Judges.

Author: Aldisert

Opinion OF THE COURT

ALDISERT, Circuit Judge:

A gasoline fire destroyed plaintiff Speyer's garage and sixty-five taxicabs owned by plaintiff Yellow Cab Company of Erie, a tenant of Speyer. A diversity suit to recover the fire damage was instituted in the District Court against Humble Oil and Refining Company, a gasoline supplier, and A. O. Smith Corporation, successor-in-interest to the manufacturer of a certain gasoline pump. A twelve-day non-jury trial followed, and the court, after receiving 2,000 pages of transcribed testimony, rendered judgment in favor of both defendants.*fn1 Both plaintiffs have appealed from the trial judge's findings and conclusions.

In April, 1954 an Erie Meter Systems Model #910 gasoline pump was installed in the garage by Cemico, then the gasoline supplier of Yellow Cab. The pump was purchased from Erie Meter Systems by Cemico. In October, 1955 Yellow Cab changed its supplier from Cemico to Humble, and purchased Cemico's pump. As an accommodation to its new customer, Humble purchased the pump from Yellow Cab and leased it back on a free basis. Yellow Cab employed no regular gasoline pump attendants; each driver filled his cab's tank at the completion of his shift.

As required by the equipment lease, Humble serviced and repaired the equipment from time to time, either through its own employees or through the services of independent contractors. In October, 1963 one of these contractors, Jabe, installed, a new type heavy-duty flexsteel hose on the pump.*fn2 In April, 1964 two mishaps occurred. On April 20, the bumper of a cab hooked the flexsteel hose, and, as the driver drove his vehicle in the garage, the hose stretched extensively, and a quantity of gasoline leaked from the pumping equipment to the floor. Yellow Cab then shut down the pump. An investigation by the service contractor disclosed that a metal meter casting had fractured within the pump; the entire meter unit, including the metal cover casting was replaced, and the pump returned to service.

Nine days later, on April 29, a similar incident occurred. One of the drivers failed to remove the hose from his cab's tank before driving away from the pump. This caused the hose to jerk and stretch violently, bending the metal pipe coupling to which it was attached at the pump. Although most of the Yellow Cab employees witnessing this misadventure were aware of the leakage which had followed the accident nine days before, no one inspected the pump. Instead, another driver who had observed the violent jerking of the hose proceeded to place the pump in operation to fill his own tank. Shortly thereafter, gasoline was discovered on the floor near the pump. This time the spilled gasoline erupted into flames, and the entire building and a large number of cabs were destroyed.

All parties agreed that the leakage of gasoline had been caused by the inability of the pump mechanism to relieve excess pressure which had been created within the system. The basic factual dispute was on the issue of what caused a dysfunction of certain pressure-relief valves.

The pre-trial statement of the plaintiffs and their evidence presented at trial disclose that they proceeded on various theories of liability. As to Humble: (1) defendant should be held to "the strict liability doctrine as applied to suppliers as well as manufacturers of equipment"*fn3; (2) defendant breached the high degree of care to which it should be held because the equipment dispensed "a highly volatile and dangerous substance"*fn4; (3) defendant failed to inspect and maintain the equipment properly, "and as a result thereof, the relief valve system malfunctioned" due to "* * * either a clogging with excessive grit or dirt, or to improper adjustment by Humble Oil Company or its agents"; (4) defendant provided a pump containing a casting which was "not adequate or proper".

As to A. O. Smith: (1) defendant improperly designed the meter head, furnishing a casting of "relatively poor grade material and the thickness of the casting was less than required under good engineering principles and practices"; (2) defendant failed to provide "fail safe" devices to furnish a warning relating to the buildup of pressures.*fn5

The defendants contended that the proximate cause of the fire was the negligence of the Yellow Cab driver in failing to remove the nozzle from the tank prior to the cab's pulling away from the pump. They produced testimony that the pulling of the hose caused the steel components of the hose to contract, creating a buildup of pressure which led to the fracture of the casting.*fn6

The court agreed with the defendants. It concluded that the fire was caused by the negligence of the plaintiff Yellow Cab, specifically indicating that the fire resulted from:

"* * * the failure of the driver whose duty it was to remove the nozzle from the filler pipe before driving away from the pump, so to do. Nor is it a defense to argue as plaintiff does, that he could not have been aware of the exact nature of the danger involved; it is sufficient that he be, or should be, reasonably aware that the natural consequences of his act be dangerous."

The court said it had no difficulty in finding that the failure to remove the nozzle from the tank was negligence and that "such negligence was the proximate cause of the fire".

Rule 52 of the Federal Rules of Civil Procedure provides that "findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses". The Court defined the meaning of "clearly erroneous" in United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542, 92 L. Ed. 746 (1949): "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed."

In reviewing the decision of the District Court, our responsibility is not to substitute findings we could have made had we been the fact-finding tribunal; our sole function is to review the record to determine whether the findings of the District Court were clearly erroneous, i.e., whether we are "left with a definite and firm conviction that a mistake has been committed". Eastern Express, Inc. v. Mack Warehouse Corp., 326 F.2d 554 (3 Cir. 1964); International Industries, Inc. v. Warren Petroleum Corp., 248 F.2d 696 (3 Cir. 1959), cert. denied, 355 U.S. 943, 78 S. Ct. 529, 2 L. Ed. 2d 523 (1959); Williams v. Babcock & Wilcox Co., 262 F.2d 253 (3 Cir. 1959), cert. denied, 359 U.S. 969, 79 S. Ct. 880, 3 L. Ed. 2d 836 (1959).

The basic evidence on liability was introduced by expert witnesses. The matter of weighing the credibility and persuasiveness of expert opinion is the unique function of the trier of fact. We stated in Brett v. J. M. Carras, Inc., 203 F.2d 451 (3 Cir. 1953), that the findings of the trial judge will not be disturbed "where those findings are based on conflicting oral testimony and where, as here, the district court had full opportunity to observe the witnesses and to appraise their demeanor." 203 F.2d at 453. More recently, in Hadco Products, Inc. v. Frank Dini Co., 401 F.2d 462 (1968), we ruled that a choice between two permissible views by the fact finder is not "clearly erroneous" within the meaning of Rule 52.

The District Court accepted the testimony of the defense witnesses and rejected that of the plaintiffs. We cannot conclude that it was clearly erroneous to do so.

Plaintiffs now assert an alternative argument: that defendants were negligent in installing the flexsteel hose because it was foreseeable that certain uses of this hose would cause an extraordinary internal pressure which would fracture the meter casting. They argue that both defendants were chargeable with such knowledge, and hence were negligent in not rectifying the condition or issuing a warning about it. The argument is ingenious when viewed in the context of the history of this case. This theory was not advanced by plaintiffs in their pre-trial statements nor in their case-in-chief; moreover, the thrust of their own expert testimony was that the flexsteel hose could not have created the rupture in the casting. The examination of plaintiffs' expert Crankshaw (Appendix, page 657a) reveals:

"Q. Is it your testimony, then, that if the high pressure relief valve was clean, that the jerking of the hose on the morning of April 29, 1964, could not have ruptured the cover of the meter?

A. I think that is correct."

Apart from this patently inconsistent position of plaintiffs, the testimony indicated that the Underwriter's Laboratories, the recognized testing agency in the trade,*fn7 had placed its stamp of approval on the use of the flexsteel hose with gasoline pumps and that the hose was in general use in the trade.*fn8 It was only during the progress of this case that experts retained by defendants to conduct experiments for trial testimony discovered the peculiar characteristics of diameter-contraction, pressure-accumulation present in the hose.

The test is one of foreseeability. The trial judge concluded that Humble could not have reasonably foreseen such characteristics and consequences; to reverse that conclusion would be tantamount to a declaration that it was foreseeable as a matter of law. This we cannot do. To hold that the defendants should have known in 1964 the idiosyncracies of the flexsteel hose which were not discovered by experts until 1967, is to ignore the realities of the case, namely, that the flexsteel hose was not a component of the pump as originally manufactured, that its use was initiated over nine years after the meter was sold and installed, that the defendants were neither manufacturers nor dealers in hoses, that the flexsteel hose had received the approval of the Underwriter's Laboratories, and that it was in general use in the trade. The Supreme Court's observation in Brady v. Southern Ry. Co., 320 U.S. 476, 64 S. Ct. 232, 88 L. Ed. 239 (1943) is apropos: "Events too remote to require reasonable prevision need not be anticipated." 320 U.S. at 483, 64 S. Ct. at 236.

There remains the question of the possible liability of both defendants under Section 402A of the Restatement of Torts 2d, adopted "as the law of Pennsylvania" in Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966).*fn9 Assuming that A. O. Smith Corporation, as successor to Erie Meter Systems, could be considered the "seller" of the pump, it is clear that no liability can be imposed under Section 402A. An essential requirement for the imposition of such liability is that the product reach the ultimate user or consumer "without substantial change in the condition in which it was sold". The section specifically provides that a seller may not be held responsible for damages brought about by a modification of his product constituting a substantial change.

Nine years and seven months after the pump was sold, a new type hose, containing a steel wire braid component and capable of creating unusual pressure dynamics when violently stretched, replaced the type of hose ordinarily furnished with the pump. We hold that this was a substantial change in the condition of the product and that the doctrine of strict liability may not be applied to defendant A. O. Smith.

We now turn to defendant Humble, at whose direction the service contractor installed the flexsteel hose. Preliminarily, we must decide whether Humble can properly be classified as a "seller" or moreover, "a seller engaged in the business of selling such a product", within the provisions of Section 402A. If Humble is not such a seller then no responsibility may attach under the doctrine of strict liability.*fn10

The trial court concluded: "The evidence showed that Humble was not in the business of selling pumps. It showed, on the contrary, that the pump in question was purchased by plaintiffs from Cemico and sold, still in place, to Humble who then leased it to plaintiffs. To find Humble liable under Section 402A because it furnished the pump assembly would thus be contrary to both the law and facts of the case"*fn11 275 F. Supp. at 868. We agree.

In an effort to overcome these findings, plaintiffs urge the application of 402A because the pump was a "container" of Humble's product, gasoline.*fn12 This approach completely misconstrues the meaning of that term as it is used in the Restatement. A keg is certainly a container for beer*fn13; a bottle is equally as much a container for beverages.*fn14 When the keg is considered with beer, and a bottle with beverages, the combinations are, in the view of the Restatement, "purchased by the user or consumer as an integrated whole * * * the container cannot logically be separated from the contents when the two are sold as a unit." The product and the actual container are considered as one unit when the test suggested by Professor Prosser is met: when the two are sold as an integrated whole, and it is inconceivable that anyone would buy one without the other.*fn15 We resist the inescapable conclusion to plaintiffs' argument that gasoline is packaged and marketed in pumps.

The trial court found that Humble was not a seller within the meaning of Section 402A. We concur in that conclusion. Because this finding is dispositive of the appeal, no further consideration of this issue is necessary.*fn16 Similarly, it does not become necessary for us to pass upon the issues of unitary enterprise and the exculpatory clause in the indemnification agreement which were raised in this appeal.

The judgment of the District Court will be affirmed.

Disposition

Affirmed


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