Fruehauf Trailer Co. v. Gilmore

• Decision Date: 12 March 1948
• Docket Number: No. 3569.,3569.
• Citation: 167 F.2d 324
• Parties: FRUEHAUF TRAILER CO. v. GILMORE et al.
• Court: U.S. Court of Appeals — Tenth Circuit

167 F.2d 324 (1948)

FRUEHAUF TRAILER CO. v. GILMORE et al.

No. 3569.

Circuit Court of Appeals, Tenth Circuit.

March 12, 1948.

Clayton B. Pierce, of Oklahoma City, Okl., for appellant.

Coleman Hayes, of Oklahoma City, Okl., for appellees.

Before PHILLIPS, BRATTON, and MURRAH, Circuit Judges.

PHILLIPS, Circuit Judge.

Since prior to November 11, 1942, L. A. Gilmore, S. H. Gardner, and L. P. Kirk have been partners, doing business as Gilmore, Gardner & Kirk Oil Company.¹ Fruehauf Trailer Company² is a Michigan corporation authorized to do business in Oklahoma. The Central Surety & Insurance Corporation³ is a Missouri corporation authorized to do business in Oklahoma.

By this action the partners and the Insurance Company sought recovery of amounts paid out by them by way of indemnity or restitution, predicated on alternative grounds, namely, negligence in failure to inspect a tank trailer sold by Fruehauf to the partners and breach of an implied warranty of fitness of the tank trailer.

Sometime prior to November 11, 1942, the partners order from Fruehauf a tank trailer equipped with a metal tank containing three separate compartments. A working agreement existed between Fruehauf and Independent Metal Products Company⁴ under which Fruehauf took the entire output of metal tanks manufactured by the Products Company. Shortly before November 11, 1942, 60 tanks had been manufactured by the Products Company and delivered to Fruehauf in Omaha, Nebraska. None of these tanks met the specifications of the tank ordered by the partners. Hence, the tank was modified by replacing 2-inch lines with 3-inch lines from the compartments to a manifold, the installation of such manifold and of an additional basket tire carrier. The tank was mounted on a semi-trailer and the tank and trailer were delivered to the partners in Omaha by Fruehauf about November 11, 1942.

The tank was inspected by a Fruehauf inspector after it had been constructed by the Products Company, but no interior inspection was made after the larger lines and the manifold had been installed.

The partners used the tank for the transportation and delivery of gasoline. On December 10, 1942, Emmons, an employee of the partners, filled the three compartments of the tank with gasoline at the Phillips Petroleum Refinery at Okmulgee, Oklahoma, and transported such gasoline to the garage of the Oklahoma Transportation Company,⁵ at Oklahoma City, Oklahoma.

The capacity of the front compartment was 1695 gallons, of the middle compartment 505 gallons, and of the rear compartment 1852 gallons. The manifold was located in front of the right rear wheel of the trailer. Each compartment was connected to the manifold by a 3-inch line and adjacent to the manifold and in each of such lines there was a shut-off valve. Connected to the manifold there was a discharge pipe to which the discharge hose was connected when gasoline was being delivered. A master valve was located in such discharge pipe. The valves are illustrated by the following photograph:

Emmons testified that before filling the tank trailer at Okmulgee, he checked the valves and turned each of them down as far as it would turn.

When Emmons arrived at the garage of the Transportation Company, an employee of that company instructed Emmons to deliver 1852 gallons into the Transportation Company's storage tank. That tank was located underground beneath the floor of the garage. The receiving pipe leading to the Transportation Company's tank was located outside the building. Emmons attached the delivery hose and connected it with the receiving pipe and opened the valve in the line from the rear compartment and opened the master valve. He remained outside the building next to the tank trailer until he heard somebody shout inside the building and he then looked through the window and observed gasoline coming out of a pipe leading from the floor to the storage tank underneath. He then shut the master valve and went inside the building to help clean up the gasoline. The gasoline became ignited and he then went out and drove the tank trailer away from the scene of the fire and notified Mr. Kirk. Kirk came to the garage and remained there until the fire was extinguished. He and Emmons then went to the tank trailer, where they made a preliminary inspection of the three compartments. The valve to the rear compartment was wide open. Kirk tested the valves in the lines leading from the middle and front compartments and they appeared to be fully seated. There were about 100 gallons of gasoline in the rear compartment and the level of the gasoline in the front compartment was about one foot below its level when fully filled. They moved the tank trailer to 2100 Exchange Avenue, Oklahoma City, where they discharged the remainder of the gasoline from the three compartments. Kirk estimated that approximately 200 gallons had been discharged from the front compartment. An inspection of the valve in the line leading from the front compartment was made and a piece of welding rod about 3/16ths of an inch in diameter was discovered in the channel of the valve which had prevented the valve disk from fully seating. The three compartments, when fully filled, held 4052 gallons. Assuming that the three compartments were fully filled, and contained 4052 gallons, when Emmons began his delivery of gasoline to the Transportation Company, and deducting therefrom the amount of gasoline which remained in the three compartments, it was estimated that 2097 gallons of gasoline were discharged into the Transportation Company's tank, or 245 gallons more than the capacity of the rear compartment. The distance from the floor of the compartments to the level of the gasoline, when the compartments were full, was approximately 4½ feet.

The fire caused severe burns to Walker, an employee of the Transportation Company, substantial damage to the garage and the equipment therein, and to vehicles and motor busses stored in the garage.

There was in force a policy of insurance issued to the partners by the Insurance Company insuring the partners against liability for bodily injury and property damage caused by an accident arising out of the ownership, maintenance, or use of the tank trailer.

On September 1, 1943, a suit was commenced by Walker against the partners to recover damages. A settlement agreement was reached and a consent judgment for $3,000 was entered in favor of Walker and against the partners. The Insurance Company paid the judgment and it was satisfied on June 20, 1944.

On February 3, 1944, a suit was commenced against the partners in the superior court of Seminole County, Oklahoma, by the Transportation Company and others to recover damages in the total sum of $30,794.31. On the same day, the Texas & Oklahoma Stages and the Merchants Fire Insurance Company instituted another action in the superior court of Seminole County, Oklahoma, against the partners to recover $1,014.41 on account of damages to a bus located in the Transportation Company's garage at the time of the fire. The Insurance Company employed counsel to defend the partners in such actions in Seminole County and, since the claims exceeded the insurance coverage, the partners also employed counsel to whom they paid $1,500 as attorney's fees. Both suits in the superior court of Seminole County resulted in verdicts in favor of the partners.

The partners notified Fruehauf, on October 1, 1943, of the fire and the possibility of claims being asserted for personal injuries and property damage and demanded that Fruehauf defend such actions and save the partners harmless. Fruehauf denied responsibility and refused to defend the actions.

On February 13, 1946, the partners and the Insurance Company instituted this action against Fruehauf. Their claim was predicated on two theories: (1) That Fruehauf was negligent in failing to properly inspect the tank trailer before delivering same and in permitting the piece of welding rod to remain in the front compartment; and (2) that Fruehauf knew at the time of the delivery of the tank trailer that it was intended to be used to transport gasoline, a highly dangerous, inflammable, and explosive substance, and permitted the piece of welding rod to remain in the front compartment of the tank and thereby breached its warranty of fitness of the instrumentality; and that such piece of welding rod lodged in the valve in the front compartment and prevented the valve from fully closing, thereby causing a portion of the gasoline to be discharged from the front compartment and resulting in the overflow of gasoline from the Transportation Company's storage tank and the ensuing fire, injury, and damage. The partners sought to recover the $1,500 expended by them as attorney's fees and the Insurance Company sought to recover the $3,000 paid by it in satisfaction of the Walker judgment.

Fruehauf set up as defenses that the legal foundation and basis of the actions brought against the partners was the negligent acts of Emmons and that the partners and the Insurance Company were estopped from maintaining the instant action. It also set up that each claim was barred by the Oklahoma two-year statute of limitation.

The trial court submitted special interrogatories to the jury, to which the jury answered: (1) That the piece of welding rod was in the compartment of the tank trailer at the time of its delivery to the partners; (2) that Fruehauf was not negligent; and (3) that the partners were negligent and that such negligence contributed to the overflow of the storage tank and the resulting fire and damage.

The partners and the Insurance Company filed a motion for judgment on the ground that there was no substantial evidence from which the jury could find negligence on the part of Emmons and that the undisputed proof established an implied warranty of fitness and a breach thereof by Fruehauf. The court concluded that the third finding was not supported by the evidence...