Aetna Cas. & Sur. Co. v. Osborne-McMillan Elevator Co.

Decision Date09 June 1967
Docket NumberOSBORNE-M
Citation35 Wis.2d 517,151 N.W.2d 113
PartiesThe AETNA CASUALTY & SURETY CO., a corporation et al., Appellants, v.cMILLAN ELEVATOR CO., a corporation, Respondent.
CourtWisconsin Supreme Court

Francis J. Wilcox, Wilcox & Wilcox, Eau Claire, Donald N. Clausen, Clausen, Hirsh, Miller & Gorman, Chicago, Ill., R. E. Anderson, Hughes, Anderson, Davis & Witkin, Superior, for appellants.

Robert H. Gee, Powell, Gee & Powell, Superior, Peter Dorsey, William A. Whitlock, Dorsey, Owen, Marquart, Windhorst & West, Minneapolis, Minn., for respondent.

HALLOWS, Justice.

This case is making its second visit to this court. It involves the question whether a steel storage tank containing grain exploded within the meaning of the term 'explosion' in an insurance policy. In the first trial the jury found there was an explosion but on appeal we reversed and granted a new trial because of error in instructing the jury on the question of what constitutes an explosion. Aetna Cas. & Sur. Co. v. Osborne-McM. E. Co. (1965), 26 Wis.2d 292, 132 N.W.2d 510. Upon the retrial, the jury again found the grain elevator exploded and judgment was entered upon the verdict for $483,320.89 damages together with $91,884.43 interest and $19,705.12 costs, for a total of $594,910.44. A year after the second trial the Minnesota supreme court decided an explosion case which the appellants claim is determinative of the Minnesota law which is applicable to this case. Again before us are questions relating to what constitutes an explosion as the term is used in an insurance policy, the sufficiency of the evidence, and the correctness of rulings on motions and of the instructions to the jury.

The physical facts on this appeal are essentially the same as on the first and most of them are set forth in our previous opinion but some must be repeated to give a background understanding of the present issues. This action was commenced for declaratory relief by 44 appellant insurance companies (the insurance companies) to determine their liability under insurance policies for a loss suffered by the defendant-respondent Osborne-McMillan Elevator Company (the elevator company). One policy insured the buildings and the equipment and the other policy insured contents against various perils including explosion under an extended coverage endorsement.

The elevator company operated a grain elevator at Superior, Wisconsin, which consisted in part of a battery of concrete storage bins and four cylindrical steel storage tanks located along a slip on a dock in Lake Superior. The steel tank in question was 80 feet in diameter with sidewalls 80 feet high surrounded by a conical steel roof. The tank was built by welding together 10 tiers of steel plate of varying thickness each about eight feet high. The bottom tier was welded to a flat baseplate composed of 16 separate steel 3/4th-inch thick arc segments eight feet wide which were welded together to form a circle. However, the 16 segments did not quite complete the bottom circumference of the tank; a small gap remained between two of the segments and was filled in with a small filler base which was improperly and incompletely welded into the gap. This defect constituted a notch or discontinuity in the steel baseplate, which significantly increased the amount of stress flowing through the steel around the notch. The base plate with the defective weld was bolted by 128 one-inch anchor bolts to a concrete platform. Thus the monolithic storage tank was secured to its concrete base.

It is conceded that steel contracts a known quantity for every degree of drop in temperature and when exposed to low temperatures, such as the 27 degrees below zero which existed on January 17, 1962, the day in question, steel is extremely brittle. It is undisputed that the circumference of the steel wall of the tank at 27 degrees below zero would normally have contracted more than two inches from its size at 95 degrees above zero. The tank, built in 1958, was designed to support and contain 361,000 bushels of wheat. Wheat was first placed in the tank in March of 1959 and it was well filled in June of 1961 when the temperature was around 93 degrees. The last movement of grain was on June 29, 1961, when 4,000 bushels were removed. On January 17, 1962, the tank contained 361,000 bushels of wheat which weighed 21,660,000 pounds.

On January 17, 1962, about 1:00 o'clock in the morning when the temperature was about 27 degrees below zero, after having fallen from 30 degrees above zero at 6:00 p.m. on January 13, the tank suddenly burst or, as the jury found, exploded. The initial fracture in the tank traveled vertically from the defective weld in the baseplate up through the 10 tiers of steel plates, opening the tank from bottom to top. Within a fraction of a second, other fractures occurred elsewhere splitting the cylindrical wall into three major segments. One segment of the tank weighing approximately 87,100 pounds was folded over and was at its nearest point about 108 feet from the concrete platform. Another segment weighing approximately 75,921 pounds was wrapped backward around an adjoining tank which was caved in about 13 inches for a distance of 22 feet along its circumference. The third segment weighing 145,163 pounds was found in the slip adjacent to the pier with its bottom course 94 feet from where it had been attached to the concrete platform. About one-half of the anchor bolts had snapped in tension; the other half had been sheared off and all were bent away from the center of the tank. The roof of the tank settled in almost a vertical path. The wheat came to rest in various levels of repose; approximately 100,000 bushels went into the adjacent slip. A portion of the grain was found 187 feet from the outer edge of the tank and generally covered a larger area than such volume would in a conical shape of repose caused by gravity. While there was no burning, charring, or combustion of the wheat, there was at the time of the occurrence vibration of the frozen ground and also an extremely loud noise.

The disputed fact issue concerned the elasticity of the wheat and its effect on the occurrence. The insurance companies claim the compressed wheat did not possess any appreciable elasticity or active internal force, that there was no sudden and violent increase of an internal pressure but only the passive resistance of the grain to a gradual compaction and such force played no part in the occurrence which was caused by the initial cold-weather-brittle fracture. The elevator company contends an active internal force existed in the compacted wheat, over and above the passive resistance, which active force contributed to the sudden and violent bursting of the storage tank and it is not necessary that such force be a cause of or contribute to the initial fracture, but in fact the evidence showed that it did contribute significantly.

In our first opinion we stated an explosion was a combination of several elements including such factors as increase in pressure, noise, a result such as a fractured container and not the least of which was an active force which suddenly and violently exerted itself in some form. Applying this concept to a nonexplodable substance, we stated, 'The probability of grain like water which is not an explodable substance being an element of explosion consists in its ability to contain or harbor active forces or energy. In explosions involving a nonexplodable substance there must be an internal active force created which breaks out of its confinement. In the case of grain such active force must be in addition to that of the normal static force exerted on the inside of a container because of the weight and position of the grain.' 26 Wis.2d at 302, 132 N.W.2d at 514.

The appellant contends the law requires a sudden and violent increase of the internal active force and argues this is required by our original opinion and by the subsequent opinion of the Minnesota court construing the Minnesota law which is applicable to the facts. The language of our first opinion did...

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