Howard v. United Serum Co.

• Decision Date: 14 December 1926
• Docket Number: 37191
• Citation: 211 N.W. 419,202 Iowa 822
• Parties: C. E. HOWARD, Receiver, Appellee, v. UNITED SERUM COMPANY, Appellant
• Court: Iowa Supreme Court

211 N.W. 419

202 Iowa 822

C. E. HOWARD, Receiver, Appellee, v. UNITED SERUM COMPANY, Appellant

No. 37191

Supreme Court of Iowa, Des Moines

December 14, 1926

Appeal from Black Hawk District Court.--GEORGE W. WOOD, Judge.

Action for damages for loss of business resulting to plaintiff from the use of defective virus and serum purchased from the defendant, which is charged with negligence in the method of the production of the same. The answer, so far as material for our consideration, was a general denial. There was a verdict and judgment for the plaintiff, and the defendant appeals.

Reversed.

M. W Borders and Arbuckle & Arbuckle, for appellant.

Mears & Lovejoy, for appellee.

EVANS J. DE GRAFF, C. J., and ALBERT and MORLING, JJ., concur.

OPINION

EVANS J.

The Waterloo Serum Laboratories, Inc., was a corporation organized by Dr. Cecil, as its sole incorporator and stockholder and manager. It is represented here by a receiver, but, for the purpose of our discussion, we shall refer to the corporation itself as the plaintiff. The plaintiff handled hog cholera serum and virus, as a retail dealer, and was located at Waterloo. In January, 1920, it entered into a written contract of purchase of this hog cholera remedy from the defendant. The contention presented is that the product delivered to it by the defendant was impure, in that it contained the germs of hemorrhagic septicemia and necrotic enteritis; that such diseases were communicated by its use in vaccination to the vaccinated pigs; and that there was large mortality among such vaccinated pigs, resulting from such diseases. The further contention is that such results so operated upon the reputation of plaintiff's business that such business was virtually destroyed. Damages are claimed to the amount of $ 40,000. Plaintiff pleaded that, in January, 1920, it entered into a written contract for such products with the defendant. The portion of such contract which is material for our consideration was as follows:

"It is further agreed and understood by the parties hereto that the United Serum Company does not guarantee the serum and virus mentioned in this contract further than that it will be made and manufactured strictly in accordance with the rules and regulations as laid down by the department of agriculture and that they will not be responsible for any representation or guaranty made by the party of the second part further than above mentioned. It is further understood and agreed that the serum and virus herein referred to is to be manufactured or produced under the present rules, regulations and inspection of the department of agriculture and under the license issued to the Stockyards Serum Company, and any revocation of said license shall render this contract null and void."

The petition set forth six alleged grounds of negligence in the method of production of the product delivered pursuant to the foregoing contract. Specifications 4 and 6 were withdrawn from the jury by the court. Those submitted were Nos. 1, 2, 3, and 5, as follows:

"1. That the defendant, while said alleged remedies were in the process of preparation, kept their animals in inclosures which were not properly disinfected or rendered clean and free from disease germs, such as are discovered in Count 1 hereof."

"2. That said pens or inclosures in which the animals were kept, and whose blood was used in the manufacture or preparation of the alleged remedies, were in fact infected with the disease germs and deleterious substances described in Count 1 hereof, and to the knowledge of this defendant, or that knowledge by the defendant could and would have been obtained by the use of ordinary and reasonable care."

"3. The pigs from which the blood was drawn to be used in the manufacture of said serum and virus, were not 'susceptible' pigs and were not healthy animals, but were, or some of them were, suffering from the diseases or sickness referred to in Count 1 of this petition; that as a result the serum and virus were likewise infected or infested therewith, resulting in the communication of said diseases to the hog subsequently treated by the use of said alleged remedies."

"5. The defendant failed and neglected to maintain at its plant for the manufacture of said remedies any laboratory or laboratory facilities for the purpose of testing the product, either during its manufacture or afterwards, for the purpose of ascertaining either its potency or its freedom from injurious substances and disease germs."

The defendant demurred to the petition on the ground that no specification of negligence therein was predicated upon any breach of the government regulations for the production of such remedy. This demurrer was overruled. The defendant saved an exception to the ruling, and presents the same in one of its assignments of error. The question presented was saved throughout the trial by proper objections to evidence and by proper requests for instructions. We find no evidence in the record that would justify the submission of Specifications 1, 2, and 3. The purported support of such specifications is purely argumentative. The fifth specification of negligence is not only supported by the evidence, but is conceded by the defendant. The controlling question at this point is whether the fact set forth in such specification constituted negligence, either as a matter of law or fact. It will be noted that the damages claimed by the plaintiff are apparently remote from the first cause herein specified, but we shall carry our discussion no further than to consider whether, upon this record, it can be said: (1) That the product delivered to the plaintiff contained the germs of hemorrhagic septicemia and necrotic enteritis; (2) that the defendant was guilty of any negligence in its method of producing the product delivered to the defendant.

Incidentally, also, the consideration of the first of these questions involves the question whether the use of the serum was the proximate cause of these diseases in the hogs upon which it was used. Appellant has assigned a large number of errors. We shall not consider them seriatim. All the material questions in this case resolve themselves into one comprehensive one; and that is whether the methods and standard laid down by government regulations make up the standard which measures the duty of the defendant, and whether a careful compliance with all such regulations by defendant still leaves it subject to a charge of negligence on the ground that it failed to observe some additional precaution, not required by government regulation. The specification is that the defendant had no "laboratory facilities" for testing its product. The conceded evidence is that it had no bacteriological laboratory. It is not claimed to have been lacking in any other "laboratory facilities." Its plant was a laboratory, and all its facilities were under the supervision of, and had the approval of, government agencies. There was no lack of test requirements in the government regulations. The required test, however, was not bacteriological. The method of testing will be set forth later. Of the many expert witnesses testifying at the trial, none testified that a bacteriological test was essential, save Dr. Cecil. He predicated his opinion solely upon the fact that a test could be so made. It would require some weeks to make each test. Such test would not be accepted as sufficient by government regulations. It appears, also, that there are 57 plants engaged in this production, all under the supervision of the government. The production of serum and virus is the exclusive product of 52 of these plants. None of them use the bacteriological test. The five other plants are engaged in producing not only serum and virus, but other products, which require bacteriological examination. It is shown that these plants have bacteriological laboratories. Whatever support, therefore, the fifth specification has, it is in these facts now stated.

It is to be borne in mind that the Federal government has asserted its authority over the business of producing these cholera remedies. It has done so in the exercise of its legitimate police power. The persons who own and operate these plants are not at liberty to substitute their own judgment for the government regulations. In that respect they are not free to do as they will with their own. The remedy is the result of many years of research and expert experiment. It is empirical in its character, and nobody knows just why it operates as it does, nor why it fails at times to meet expectations. Both the serum and the virus are merely the defibrinated blood of a hog. The virus is obtained from the blood of a hog having cholera; the serum is obtained from the blood of an immune hog. No actual difference in the composition of serum and virus has ever been discovered. Neither chemical analysis nor microscopic examination discloses any difference. The cholera germs appear never to have been discovered, or isolated. Therefore, all the government regulations are formulated and predicated upon the results of actual experiments, covering many years of time. To depart from these regulations is to take the risk of losing the benefit of the composite knowledge acquired by many years of expert experiment. But whether it be wise or unwise for any owner or manager of a plant to depart from such regulations either by adding thereto or subtracting therefrom, yet he has no liberty to do so. Every precaution for a perfect result in the production which the ingenuity of experts can devise, is included in the government regulations. The final testing of the product required by the government, before the product can be put upon the market, was described by the witness Dr. Imler, who is,...