728 F.2d 784 (6th Cir. 1984), 81-3600, Grover Hill Grain Co. v. Baughman-Oster, Inc.

Docket Nº:81-3600.
Citation:728 F.2d 784
Party Name:GROVER HILL GRAIN CO., Plaintiff-Appellant, v. BAUGHMAN-OSTER, INC., Defendant-Third Party Plaintiff-Appellee, Champion Screw Company, Third Party Defendant-Appellee.
Case Date:March 05, 1984
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 784

728 F.2d 784 (6th Cir. 1984)

GROVER HILL GRAIN CO., Plaintiff-Appellant,

v.

BAUGHMAN-OSTER, INC., Defendant-Third Party Plaintiff-Appellee,

Champion Screw Company, Third Party Defendant-Appellee.

No. 81-3600.

United States Court of Appeals, Sixth Circuit

March 5, 1984

Argued Oct. 29, 1982.

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[Copyrighted Material Omitted]

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John P. McMahon argued, Terence P. Kemp, Baker & Hostetler, Columbus, Ohio, for plaintiff-appellant.

John A. Pietrykowski, Manahan, Pietrykowski & Bamman, Andrew J. Ayers argued, Toledo, Ohio, for defendant-third party plaintiff-appellee.

Michael L. Hardy, Cleveland, Ohio, for third party defendant-appellee.

Before LIVELY, Chief Judge, WELLFORD, Circuit Judge, and WILHOIT, District Judge. [*]

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WILHOIT, District Judge.

On October 29, 1978, an enormous metal grain bin collapsed at the premises of plaintiff-appellant, Grover Hill Grain Co. of Grover Hill, Ohio. 1 Its collapse caused 90,000 bushels of shelled corn to spill out onto the ground. The bin in question was purchased in September, 1976, from its manufacturer, and designer, defendant-appellee, Baughman-Oster, Inc., of Taylorsville, Illinois. 2 It came to Grover Hill complete (including bolts) but unassembled. During the period of 1974-1977 appellant purchased eight Baughman bins and in each instance they were acquired through Baughman's distributor and authorized dealer, William J. Ross, Jr. 3

Appellant contracted with Ross to erect the 1976 grain bin. It had a diameter of 48 feet and was designed to rise to a height of 22 rings (about 60 feet) with a capacity of approximately 90,000 bushels of shelled (dry) corn.

Baughman had delivered all prior bins purchased by appellant as a complete but unassembled package. This 90,000 bushel bin was the largest one ever delivered between 1974-1976. An erection manual had been supplied with each and every bin, except the 1976 bin in question. Each manual contained a bold print warning that bolts used in assembly should not be tightened to more than fifteen (15) pounds pressure. Baughman supplied Grade 2 bolts. 4

In 1977, a rather salient circumstance arose when Baughman delivered another 90,000 bushel bin to Grover Hill Grain to be assembled by Ross. In this instance the bolt pattern in the bottom four rings was re-designed to provide three times the number of bolts in the horizontal joint as compared to the bolt design of the 1976 bin. Moreover, the bolts supplied were Grade 8 (stronger) bolts. This bin was assembled and erected by Ross in the same manner as all other bins supplied by Baughman. As far as we know the 1977 bin has continued to stand beside the ruins of the 1976 bin and this circumstance is claimed by appellant as immutable evidence to its right to recovery.

In erecting the 1976 bin, as well as all others, Ross used an electric impact wrench and testified that he personally tightened 85% to 90% of the bolts where the electric wrench was used. 5 Notwithstanding the fact that an assembly manual was not supplied with the 1976 bin, with its warning to serve as a reminder that the bolts should not be "over-torqued," Ross claimed that from past experience he was not unmindful of Baughman's warning that the bolts were not to be tightened beyond 15 pounds pressure.

Apparently there was technology available to assist the assembler to accurately determine when a bolt has been sufficiently tightened. Many electric impact wrenches are equipped with a "torque brake" that can be mechanically pre-set by the operator to drive the bolt to the desired tightness.

Unfortunately, this was not the technology employed by Baughman's dealer, Mr. Ross. Utilizing hand wrenches, all or nearly all, the bolts were "tested" as to 15 pounds torque. Armed with this, Ross was able to assure the trial court that none of the bolts in the 1976 bin had been "over-torqued."

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The record discloses that the bin in question was filled to capacity with shelled corn in 1976; with wheat in 1977 and again with shelled corn in 1978. Several days before its collapse, several bolt heads were noticed on the ground about the bin. Ross and Baughman were immediately notified and frantic efforts to shore the bin with cables proved futile. Several vertical joints failed causing the eventual collapse and spillage before the bin could be emptied of its contents in a more orderly fashion.

Appellant filed suit in state court against Baughman alleging strict liability and breach of warranty. A diversity of citizenship was found to exist and the action was removed to United States District Court for the Northern District of Ohio. Baughman impleaded Ross and Champion Screw Company. 6 Ross was subsequently dismissed by agreement of all the parties.

This case was tried by the Court without the intervention of a jury. The trial judge concluded that no warranty, express or implied, was applicable; that no design defect or deficiency in the bolts was established by the proof; and, finally, that Ross was an independent contractor and the bin's collapse was due to the over-torquing of the bolts--an independent intervening force--a proximate cause in bringing about the failure of the bolts and subsequent failure of a significant number of vertical seams in the bin.

Grover-Hill, disappointed by the above findings and conclusions, prosecutes this appeal and lays before us the following propositions that would justify a reversal:

1) Appellee as manufacturer and supplier of the bin components should be held strictly liable for any failures in assembly by an erecting contractor-dealer.

2) The court below erred in not holding appellee liable for its failure to warn Ross, the contractor-dealer, of the dangers involved in over-torquing.

3) The district court failed to make necessary findings of fact whether Ross was acting as agent for appellee.

4) The district judge misapplied Ohio law in requiring expert proof to show a design defect.

I.

The trial judge found that the defect which caused the collapse of the bin was introduced after the unassembled bin left the appellee's hands. Specifically, the District Court Judge concluded that the appellee's distributor, Ross, overtorqued the bolts while constructing the grain bin, causing the eventual collapse.

However, appellant argues that the appellee's responsibility to market a non-defective product did not end until the bin was actually constructed. According to the appellant, the appellee was responsible for introducing the bin into the stream of commerce and derived a significant economic benefit from selling and eventually having assembled a grain bin carrying its trademark.

Citing Vandermark v. Ford Motor Co., 61 Cal.2d 256, 37 Cal.Rptr. 869, 871, 391 P.2d 168, 170 (1971), appellant states that any manufacturer, who markets a product in an uncompleted state and surrenders that product to a third-party, knowing or reasonably expecting that the final part of the manufacturing process will be completed by this third-party prior to its ultimate use by a consumer, is strictly liable for any injuries stemming from a defect introduced during the final construction of the product.

This same theory of strict products liability was considered by the Ohio Court of Appeals in Smith v. Ford Motor Co., 59 Ohio App.2d 41, 392 N.E.2d 1287 (1978). In Smith the plaintiff placed an order with an authorized Ford dealer for a 1967 Ford P-350 truck. Id., 392 N.E.2d at 1290. This was a specialty order which required the Ford Motor Company to assemble the truck chassis only. Ford then shipped the chassis to the J.B.E. Olson Corporation, knowing

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that Olson would complete the manufacturing process by placing a custom aluminum body on the truck chassis. Upon completion of its work Olson delivered the truck to the Ford dealer who sold the truck to the plaintiff. Id.

Subsequently, an accident occurred and the plaintiff was injured. An inspection of the truck revealed that the cause of the accident was the steering shaft which had broken off completely at its base. Id. 392 N.E.2d at 1291. The expert testimony indicated that the fracture of the steering shaft was due to metal fatigue, caused by a misalignment of the steering shaft between the truck chassis and body. The same expert evidence demonstrated that the misalignment was solely the result of the J.B.E. Olson Corporation having improperly secured the top of the steering column to the instrument panel in the truck cab. Id.

At the close of the plaintiff's case Ford was granted a directed verdict. Id. On appeal the plaintiff-appellant, asserted that even though Olson actually created the defect, the Ford Motor Company should be held strictly liable for the appellant's injuries because the completely assembled truck was marketed and sold as a Ford product. Id. 392 N.E.2d at 1293.

The Ohio Court of Appeals stated two theories under which Ford might be found liable. First, a defendant who places his trademark or trade name on a product, manufactured wholly or in part by a third party, should be strictly liable for a defect in the product at the time it reaches the user, regardless of the origin of the defect. Id. 392 N.E.2d at 1294. Secondly, the court expressed the theory of liability argued by the appellant in the instant appeal. Id. The Ohio Court, however, held that, "Neither of the foregoing rules constitutes, in our opinion, an unwarranted or untenable extension of the more traditional principles of products liability." Id. 392 N.E.2d at 1295. It rejected both theories, concluding that such a finding would require a "marked departure" from the law as set forth by the Ohio Supreme Court. Id. 392 N.E.2d at 1296, (citing State Auto Mutual Ins. Co. v....

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