Dalehite v. United States

• Citation: 346 U.S. 15,97 L.Ed. 1427,73 S.Ct. 956
• Decision Date: 08 June 1953
• Docket Number: No. 308,308
• Parties: DALEHITE et al. v. UNITED STATES
• Court: United States Supreme Court

346 U.S. 15

73 S.Ct. 956

97 L.Ed. 1427

DALEHITE et al.

v UNITED STATES.

No. 308.

Argued April 6, 7 and 8, 1953.

Decided June 8, 1953.

[Syllabus from pages 15-16 intentionally omitted]

Messrs. John Lord O'Brian and Howard C. Westwood, Washington, D.C., for petitioners Dalehite and others.

Mr. Austin Y. Bryan, Jr., Houston, Tex., for petitioners Pan-American Refining Corp. and others.

Messrs. Morton Liftin and Oscar H. Davis, Washington, D.C., for respondent.

Mr. Justice REED delivered the opinion of the Court.

Petitioners seek damages from the United States for the death of Henry G. Dalehite in explosions of fertilizer with an ammonium nitrate base, at Texas City, Texas, on April 16 and 17, 1947. This is a test case, representing some 300 separate personal and property claims in the aggregate amount of two hundred million dollars. Consolidated trial was had in the District Court for the Southern District of Texas on the facts and the crucial question of federal liability generally. This was done under an arrangement that the result would be accepted as to those matters in the other suits. Judgment was rendered following separate proof of damages for these individual plaintiffs in the sum of $75,000. Damages in the other claims remain to be determined. The Court of Appeals for the Fifth Circuit unanimously reversed, however, In re Texas City Disaster, Litigation, 197 F.2d 771, and we granted certiorari, Dalehite v. U.S., 344 U.S. 873, 73 S.Ct. 166, because the case presented an important problem of federal statutory interpretation.

The suits were filed under the Federal Tort Claims Act, 28 U.S.C. §§ 1346, 2671—2678, 2680, 28 U.S.C.A. §§ 1346, 2671—2678, 2680. That Act waived sovereign immunity from suit for certain specified torts of federal employees. It did not assure injured persons damages for all injuries caused by such employees.

The Act provides that the federal district courts, '(s)ubject to the provisions of (the act),' are to have:

'exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.' § 1346(b).

There is an exception from the scope of this provision. Section 2680 reads:

'The provisions of this chapter and section 1346(b) of this title shall not apply to—

'(a) Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.'

Suing under this grant of jurisdiction, the plaintiffs claimed negligence, substantially on the part of the entire body of federal officials and employees involved in a program of production of the material—Fertilizer Grade Ammonium Nitrate (FGAN hereafter)—in which the original fire occurred and which exploded. This fertilizer had been produced and distributed at the instance, according to the specifications and under the control of the United States.

The adaptability of the material for use in agriculture had been recognized long prior to 1947. The Government's interest in the matter began in 1943 when the TVA, acting under its statutory delegation to undertake experiments and 'manufacture' fertilizer, 48 Stat. 61, 16 U.S.C. § 831d, 16 U.S.C.A. § 831d first began production for commercial purposes.¹ TVA used plaint facilities formerly used for production of ammonium nitrate for explosives. In the year 1943, the War Production Board, responsible for the production and allocation of war materials, Exec. Order 9024, January 16, 1942, 7 Fed.Reg. 329, U.S.Code Cong.Service, 1942, p. 49, instituted a program of yearly production of 30,000 tons a month of FGAN for private domestic agricultural use through plants no longer required for ammunition production. Administration was to be carried on through the Army's Bureau of Ordnance. The TVA specifications were followed and advice given by its experts. This early production for domestic use furnished a test for manufacture and utility of FGAN.

The particular FGAN involved at Texas City came to be produced for foreign use for these reasons: Following the World War II hostilities, the United States' obligations as an occupying power,² and the danger of internal unrest, forced this Government to deal with the problem of feeding the populations of Germany, Japan and Korea. Direct shipment of foodstuffs was impractical; available fertilizer was in short supply, and requirements from the United States were estimated at about 800,000 tons. However, some 15 ordnance plants had been deactivated and turned over to the War Assets Administration, 44 CFR, Part 401, for disposal. Under-Secretary of War Royall suggested in May of 1946, and Secretary Patterson agreed, that these be used for production of fertilizer needed for export.³ The Director of the Office of War Mobilization and Reconversion, 58 Stat. 785, 50 U.S.C.App. § 1651 et seq. (1944 ed.) § 1651(c), 50 U.S.C.A.Appendix, § 1651 et seq., 1651(c), acting under the power delegated by the President in Exec.Order 9347, May 27, 1943, 8 Fed.Reg. 7207, U.S.Code Cong.Service, 1943, p. 5—48, and Exec.Order 9488, October 3, 1944, 9 Fed.Reg. 12145, 50 U.S.C.A.Appendix, § 1651 note, ordered the plants into operation. Cabinet approval followed. The War Department allocated funds from its appropriations for 'Supplies' and 'Military Posts' for 1946; direct appropriations for relief in the occupied areas were made by Congress in the following year.⁴ The Army's Chief of Ordnance was delegated the responsibility for carrying out the plan, and was authorized particularly to enter into cost-plus fixed fees contracts with private companies for the operation of the plants' facilities. , he in turn appointed the Field Director of Ammunition Plants (FDAP) to administer the program. Thereafter the Department entered into a number of contracts with private firms including the du Pont Co. and Hercules Powder Co.—to 'operate the installations * * * described herein for the graining of ammonium nitrate (fertilizer grade),' but subjecting 'the work to be done by the Contractor * * * to the general supervision, direction, control and approval of the Contracting Officer.' A detailed set of specifications was drawn up and sent to each plant which included 'FDAP Specifications for Products' and a similar TVA paper. Army personnel were appointed for each plant. These were responsible for the application of these specifications, liaison with supply officials and satisfaction of production schedules, pursuant to an Army Standard Operating Procedure. , beyond this, operations were controlled by the administering corporation which supplied the personnel and production experience required. ⁵

FGAN's basic ingredient was ammonium nitrate, long used as a component in explosives. Its adaptability as a fertilizer stemmed from its high free nitrogen content. Hercules Powder Company had first manufactured a fertilizer compound in this form on the basis of Cairns' Explosive Patent, No. 2,211,738, of August 13, 1940. The Cairns' process contemplates a product substantially identical to the Texas City FGAN. The process was licensed to the United States. The Government produced ammonium nitrate at certain other federal plants, and shipped it in solution to the reactivated graining centers for concentration. Thereafter, in addition to clay, a mixture of petrolatum, rosin and paraffin (PRP hereafter) was added to insure against caking through water absorption. The material was then grained to fertilizer specification, dried and packaged in 6-ply paper bags, marked 'Fertilizer Ammonium Nitrate.'

At the inception of the program, however, it appeared that these particular plants were unable to produce sufficient quantities of fertilizer to meet the early needs of the planned allocation. So early shipments to the occupied territories were made up of lots privately produced, and released to the War Department by the Combined Food Board and purchased by the United States, pursuant to an allocation arrangement approved by the Board acting through the Civilian Production Administration, established by Exec. Order 9638, October 4, 1945, 10 Fed.Reg. 12591, U.S.Code Cong.Service, 1945, p. 1318. Thereafter the private producers could replenish their supply for private sale by purchasing government-produced FGAN, if they so desired.

The particular FGAN transported to Texas City had been produced at three of the plants activated by the Government for the foreign fertilizer program, and allotted to the Lion Oil Co., which had previously sold FGAN to the Army pursuant to their sell-back agreement. The agreement provided that title was to pass to Lion on payment. The original contract of sale to the Army having provided that Lion could designate a recipient other than itself for the replacement FGAN, Lion contracted with the Walsen Company for resale. Walsen operated as broker for the French Supply Council representing the French Government which had secured a preferential fertilizer allocation from the Civilian Production Administration. Pursuant thereto Walsen transmitted the French shipping orders to Lion who turned them over to the Army for execution. The FGAN was consigned to the French Supply Council at Texas City by government bills of lading. The Council insured the shipment in its own name, arranged for credit with New York...