Aetna Insurance Co. v. Loveland Gas & Electric Co.

• Decision Date: 08 December 1966
• Docket Number: No. 16650.,16650.
• Citation: 369 F.2d 648
• Parties: AETNA INSURANCE COMPANY, American Casualty Company, Atlas Assurance Co., Ltd., Centennial Insurance Co., Federal Insurance Company, Fireman's Fund Insurance Co., Great American Insurance Co., Insurance Company of North America, Phoenix Insurance Co., Royal Exchange Assurance Co., and United States Fire Insurance Co., Plaintiffs-Appellants, v. LOVELAND GAS & ELECTRIC COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

369 F.2d 648 (1966)

AETNA INSURANCE COMPANY, American Casualty Company, Atlas Assurance Co., Ltd., Centennial Insurance Co., Federal Insurance Company, Fireman's Fund Insurance Co., Great American Insurance Co., Insurance Company of North America, Phoenix Insurance Co., Royal Exchange Assurance Co., and United States Fire Insurance Co., Plaintiffs-Appellants, v. LOVELAND GAS & ELECTRIC COMPANY, Defendant-Appellee.

No. 16650.

United States Court of Appeals Sixth Circuit.

December 8, 1966.

James L. O'Connell, Cincinnati, Ohio (Lindhorst & Dreidame, Cincinnati, Ohio, on the brief), for appellants.

James E. Kimpel, Cincinnati, Ohio (Barbour, Kimpel & Allen, Kenneth R. Hughes, Cincinnati, Ohio, on the brief), for appellee.

Before WEICK, Chief Judge, O'SULLIVAN and PHILLIPS, Circuit Judges.

WEICK, Chief Judge.

Eleven insurance companies brought suit in the District Court against the Gas Company to recover, by way of subrogation, payments made by them to their insured under fire insurance policies, for damages to his building resulting from an explosion and fire of liquified petroleum customarily known as propane gas, which emanated from a cylinder or tank supplied by the Gas Company to a tenant of the insured property owner. Jurisdiction was based on diversity of citizenship.

The complaint charged negligence against the Gas Company in furnishing to the tenant a cylinder which was supposed to be empty but which in fact contained some propane gas, in failing to give adequate warning of the danger, and in failing to respond to a call for assistance.

The Gas Company filed a motion for summary judgment. In his consideration of the motion, the District Judge had before him stipulations as to certain facts and depositions of witnesses, including officers of the Gas Company, and the tenant. The case was governed by the law of Ohio, Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1937).

The District Judge granted the motion for summary judgment and dismissed the complaint. The ground for his ruling was that on the uncontroverted evidence there was an efficient cause intervening between the alleged negligence of the Gas Company and the occurrence, namely, the conduct of the tenant which operated to break the chain of causation and to absolve the Gas Company. The conduct of the tenant consisted of opening the valve on the cylinder and neglecting to shut it off, thereby permitting the liquified petroleum to flow therefrom into the building where it was ignited by a boiler. The District Judge relied on the decision of the Supreme Court of Ohio in Hurt v. Rogers Transportation Co., 164 Ohio St. 323, 130 N.E.2d 824 (1955), which followed Thrash, a Minor v. U-Drive-It Co., 158 Ohio St. 465, 110 N.E. 2d 419 (1953).

It is the contention of the insurance companies that there was a genuine issue as to the material facts and that it was error for the Court to grant the motion for summary judgment. Rule 56, Fed.R. Civ.P.; Gunn v. International Harvester Co., 366 F.2d 349 (6th Cir. 1966); Weber v. Schlemmer, 365 F.2d 323 (6th Cir. 1966); Rogers v. Peabody Coal Co., 342 F.2d 749 (6th Cir. 1965); S. J. Groves & Sons v. Ohio Turnpike Comm'n, 315 F.2d 235 (6th Cir. 1963), cert. denied, 375 U.S. 824, 84 S.Ct. 65, 11 L.Ed.2d 57. This contention requires a consideration of the evidence.

The insurance companies, as subrogees, stand in the shoes of their subrogor, the insured owner of the building. In order to recover from the Gas Company they must establish not only negligence but also that the damage to the building proximately resulted therefrom.

The tenant was a corporation, engaged in the manufacturing business. The Gas Company was engaged in the retail sale of bottled gas, furniture and appliances. The bottled gas is maintained under pressure in order to keep it in a liquid state.

Bradford Phillips, president of the tenant, had observed some cylinders or tanks on the property of the Gas Company, which he believed had been discarded, and he desired to obtain one of them. He intended to have the bottom of it cut off with a blow torch and to use the cylinder in experimenting with latex. Phillips advised Karl Brown, president of the Gas Company of his needs and Brown agreed to supply a discarded cylinder to Phillips, gratis.

The testimony of Brown and Phillips was in conflict as to many other details. Brown testified that he told Phillips that he had a discarded tank which had no valve and hadn't had any gas in it for two years and that it would have to be steam cleaned; that the Gas Company had no steam cleaning equipment, but its employees would deliver the tank to Phillips' plant and would steam clean it with his equipment.

Phillips' testimony was to the effect that he told Brown that he had seen a tank in the Gas Company's yard, which was about the size that he wanted, and Brown told him it would be all right for him to pick it up. Phillips indicated that he was "concerned about the residual gas in the tank" and asked Brown how to get rid of it. Brown replied, "Don't worry. You can kill gas with steam."

Some time later Phillips and one of his employees drove to the yard of the Gas Company and picked out a cylinder and had it delivered by truck to their plant. Neither Brown nor any of the Gas Company's employees was present at the time and did not know which cylinder had been selected and removed.

The cylinder which Phillips removed weighed about four hundred pounds and had a capacity of seventy gallons. It was equipped with a valve. It had not been discarded. It had a value of $112.

The tenant's employees placed the cylinder in a horizontal position on the ground outside of the building occupied by tenant and about ten or fifteen feet away therefrom. The front or valve end of the cylinder pointed toward the building. An employee named Fisher was told by his superior that the cylinder was empty and that he should take the valve out and put steam in the cylinder for an hour or more before cutting off the bottom of it with a blow torch.

Fisher was a licensed stationary engineer with twenty-five years' experience. Fisher testified, "I was leery because I am afraid of gas. And I said I don't like to burn on gas tanks." Fisher then took a wrench and unscrewed the valve on the cylinder until it was loose in his hands. He observe "There was stuff seeping out of it, and I thought, well that will quit." He walked away and another employee told him not to "fool with the tank. They are coming down to take care of it." When asked why he did not screw the valve back on, Fisher testified:

"I don\'t know. I guess that\'s my fault there because I stated before that I done that."

Phillips and one or more of his employees talked to Brown over the telephone. One of them told Brown that the tank was leaking, although he saw only frost around the valve. No one told Brown that Fisher had unscrewed the valve on the tank and he had no knowledge of that fact. Brown told them not to touch the tank and he would send someone over to look after it. Several hours later, and before he could locate his service man, the explosion occurred.

Since there is a conflict in the testimony, we must view the evidence in the light most favorable to the insurance companies. We accept Phillips' version that he was to have gratis his pick of the tanks in the Gas Company's yard, whether or not discarded, and that he, and not the Gas Company, was to clean out the tank with steam.

Assuming that the Gas Company was negligent, was there an intervening cause which relieved it from liability as a matter of law? There is no claim, and there was no proof, that the cylinder was defective in any respect. So long as the liquified petroleum was contained in the...