Associated Metals & Minerals Corp. v. Dixon Chemical & Research, Inc.

• Citation: 82 N.J.Super. 281,197 A.2d 569
• Decision Date: 19 February 1963
• Docket Number: No. A--807,A--807
• Parties: ASSOCIATED METALS & MINERALS CORP., a New York corporation, Plaintiff-Respondent and Cross-Appellant, v. DIXON CHEMICAL & RESEARCH, INC., a New Jersey corporation, Defendant and Third-Party Plaintiff-Appellant, and Cross-Respondent, v. GLENS FALLS INSURANCE COMPANY, a New York corporation, Third-Party Defendant-Respondent.
• Court: New Jersey Superior Court – Appellate Division

Page 281

82 N.J.Super. 281

197 A.2d 569

ASSOCIATED METALS & MINERALS CORP., a New York corporation, Plaintiff-Respondent and Cross-Appellant, v. DIXON CHEMICAL & RESEARCH, INC., a New Jersey corporation, Defendant and Third-Party Plaintiff-Appellant, and Cross-Respondent, v. GLENS FALLS INSURANCE COMPANY, a New York corporation,

Third-Party Defendant-Respondent.

No. A--807.

Superior Court of New Jersey Appellate Division.

Argued Nov. 19, 1962.

Supplemental Memoranda Nov. 20, 29, 1962 and Jan. 10, 1963.

Decided July 24, 1963.

Rehearing Granted Sept. 10, 1963.

Opinion Amended Feb. 19, 1963.

Theodore W. Geiser, Ocean Port, for defendant-appellant and cross-respondent and third-party plaintiff-appellant (Shaw, Pindar, McElroy, Connell & Foley, Newark, attorneys).

Charles Danzig, Newark, for plaintiff-respondent and cross-appellant (Riker, Danzig, Marsh & Scherer, Newark, attorneys).

Samuel A. Larner, Newark, for third-party defendant-respondent (Budd, Larner & Kent. Newark, attorneys; Samuel A. Larner and John J. Budd, Newark, of counsel).

Before Judges GOLDMANN, FREUND and FOLEY.

The opinion of the court was delivered by

GOLDMANN, S.J.A.D.

Defendant Dixon Chemical & Research Inc. (Dixon) appeals from the whole of a Chancery Division judgment awarding plaintiff Associated Metals and Minerals Corporation (Associated) $300,347.58 in damages, and finding no cause of action as to Dixon's third-party suit against the Glens Falls Insurance Company (Glens Falls) to recover on an insurance policy providing coverage for property damage caused by 'accident' in the limited amount of $25,000. Associated Metals and Minerals Corp. v. Dixon Chemical & Research, Inc., 68 N.J.Super. 305, 172 A.2d 237 (Ch.Div.1961) . The judgment was stayed upon the filing of a Supersedeas bond of $325,000. Associated cross-appeals from so much of the judgment as awarded only $300,347.58 and from an order denying its application to have the damages assessed at $500,000.

The trial was an extended one, held before a Chancery Division judge sitting alone.

I

Plaintiff, a New York corporation, had for many years been an international trader in ores, metal products, steel scrap and steel products. In connection with this business it imported considerable amounts of steel annually from foreign countries and sold it to warehouses, fabricators and consumers. It also exported steel to all parts of the world. However, prior to 1955 it had never engaged in the steel warehouse business, i.e., selling steel at retail from a supply of different types and sizes kept on hand. It is not uncommon for warehouses to store structural steel out-of-doors. Plaintiff begain to look for a site to supply the retail market in New Jersey, New York and Connecticut. It checked sites in the Port Newark area and other places in New Jersey, as well as in Brooklyn and Long Island City. It finally selected Port Newark because rail facilities were available, the site was close to the Port Newark Channel where ocean-going vessels could load and unload, and there was room for expansion. Inspection of the site indicated that there were no industrial operations producing smoke within two miles. The area was found free of industrial smells or smoke (plaintiff had rejected the Long Island site for this reason); the Channel had no salty smell, and the Newark Airport, together with the highway complex bordering the site, afforded a protective belt.

On the basis of its experience plaintiff decided that Port Newark was suitable for steel storage. It thereupon entered into a lease with the Port of New York Authority on February 3, 1956 for a plot measuring 285 422 (hereinafter Area 1), located a few hundred feet north of Berth 3 of the Port Newark Channel. The first boat deliveries of steel from European sources to plaintiff's site were made early in July 1956. All but 4 1/2 tons of this material was sold prior to the arrival of defendant Dixon's sulphur in September 1956, about to be mentioned. However, plaintiff had before that time already begun negotiations for additional space to the north of and adjacent to Area 1. These negotiations culminated in a lease dated October 5, 1956 between the Port Authority and plaintiff's wholly-owned subsidiary, Associated Metals & Minerals Corporation, a New Jersey corporation, for Area 2, immediately to the north of Area 1; and in a second lease between the same parties dated November 29, 1956, for Area 3, to the north of Area 2. These two leases brought plaintiff's original leased premises to within 113 and 38 , respectively, of defendant's sulphur. It appears that plaintiff assigned the Area 1 lease to its subsidiary soon after its execution.

Defendant leased an area 150 150 from the Port Authority for a term beginning September 17, 1956 and expiring September 30, 1957, for the 'receipt, storage and handling of bulk sulphur' owned by it. At the time it entered into this lease defendant was building a sulphuric acid plant on Doremus Avenue, Newark. Finding it impractical to store sulphur there because of the construction work, it leased the Port Newark plot as a stopgap arrangement. Although the Doremus Avenue plant started operations on November 1, 1956, it was not until early April 1957 that defendant stored sulphur in excess of 1,000 tons at that location. The main storage depot was at Port Newark. When defendant's representatives inspected the site before leasing it, they saw plaintiff's steel stored nearby.

On September 17, 1956 defendant received a shipment of 10,249 gross tons of crude sulphur. The sulphur was removed from the hold of the ship and dumped into a truck which transported it over a road running alongside plaintiff's yard and then deposited it onto defendant's premises. The trucks used were open dump trucks, and as they moved along the road sulphur blew off onto plaintiff's storage yard. As the pile of sulphur grew in size, defendant used a bulldozer to flatten it and make a roadway running up and over the pile so that trucks could go higher to dump their loads. The size of the pile was estimated to be 40 to 50 high. The unloading took place on September 17, 18 and 19, 1956. Sulphur dust covered all of plaintiff's premises and affected the eyes and throats of its employees. It complained to the Port Authority, with the result that Port Manager Fleming, who had seen the dust, told defendant's officials to put covers on the trucks and to wet the sulphur down when loading and unloading. Defendant said it would take care of the situation, but nothing was ever done: no covers were provided for the trucks in moving the sulphur to or from the sulphur pile, nor was the pile or the sulphur on the trucks ever wetted down. The pile was left completely unattended. Newark Inspector of Combustibles and Fire Risks Dukiet also instructed defendant to wet the pile and cover the trucks, but although there were a hose installed and water available, his directions went unheeded.

On April 8, 1957 another sulphur shipment arrived, this one 3,741 gross tons. Defendant deposited 2,519 tons at the rented site and had the remainder trucked to its Doremus Avenue plant. It took two days to unload this shipment. The third and last deposit of sulphur took place on May 28, 1957, when 5,250 gross tons arrived at Port Newark. 725 tons were dumped at the leased site and the remainder trucked to the plant. The operation took two days. As was the case in September 1956, the transporting, dumping and piling of the last two shipments of sulphur was accompanied by dust blown over the entire area, with no effort on defendant's part to contain or diminish the dust by cover or wetting.

From time to time defendant removed sulphur from the Port Newark site for use at its Doremus Avenue sulphuric acid plant. Beginning with October 27, 1956 there were 22 days when such transfers were made. The last of the sulphur was removed on September 23, and 24, 1957, just before defendant's lease expired. A front-end loader would take sulphur from the pile and dump it into open trucks. This created large clouds of dust which blew over the area, including plaintiff's premises. In none of these removal operations was the sulphur wetted or the trucks covered. The testimony was that even in the absence of deposits on or removals from the pile, sulphur dust would blow onto plaintiff's premises whenever there was a strong wind.

Defendant does not dispute that sulphur dust was desposited all over plaintiff's premises. Nor does it dispute that the accumulation of dust on the steel was heavier in Area 3 (only 38 away from the pile) than in Areas 1 and 2, and heavier in Area 2 than in Area 1. There was sulphur dust on all the steel in every part of the yard--as much as 1/8 thick at the northern end nearest the pile.

There was no rust on plaintiff's steel prior to the arrival of the sulphur. Rust began to appear toward the end of October 1956. This was not ordinary surface rust, which is brownish in color, provides a protective coat which adheres to the surface of the steel, and is not laminated or flaky. The rust which appeared on the steel after the sulphur arrived was yellowish-brown and flaky. It was testified that by March 1957 the steel was heavily flaked and pitted; even the steel in Area 1 was pitted. A photograph taken June 12, 1957 shows scale more than 1/32 thick and the steel severely pitted. Some of the scale was as large as the palm of a hand. On that day six representative samples of rust were taken from steel in different parts of the yard and analyzed. Steel which arrived at plaintiff's yard in January 1957 showed a sulphur content of 0.53% Or higher, and steel which arrived in the two preceding months showed 0.32%, 0.54% And 1.10%. The chlorine content ran between 0.03% And 0.05%. These figures become significant in the light of the testimony of plaintiff's experts, hereinafter mentioned.

On December 1, 1959, sometime after the sulphur pile had been...