Hudson v. Peavey Oil Co.

• Decision Date: 06 July 1977
• Citation: 279 Or. 3,566 P.2d 175
• Parties: Robert HUDSON and Marilyn Hudson, husband and wife, Respondents, v. PEAVEY OIL COMPANY, an Oregon Corporation, Appellant.
• Court: Oregon Supreme Court

Page 175

566 P.2d 175

279 Or. 3

Robert HUDSON and Marilyn Hudson, husband and wife, Respondents, v. PEAVEY OIL COMPANY, an Oregon Corporation, Appellant.

Supreme Court of Oregon.

Argued and Submitted June 6, 1977.

Decided July 6, 1977.

Larry A. Brisbee, Hillsboro, argued the cause and filed a brief for appellant.

Franklyn N. Brown, Tigard, argued the cause and filed a brief for respondents.

Before DENECKE, C. J., ^* and HOLMAN,* TONGUE, HOWELL, BRYSON, LENT and LINDE, JJ.

HOWELL, Justice.

This is an action for damages for trespass. Defendant appeals from a judgment for plaintiffs, entered after a jury verdict awarding plaintiff both compensatory and punitive damages. Consistent with the jury's verdict, we will summarize the evidence in the light most favorable to plaintiffs.

Defendant owns and operates a service station next door to property owned by the plaintiffs in Tigard. In January, 1975, it was discovered that one of defendant's underground gasoline storage tanks was leaking and that gasoline was seeping underground onto plaintiff's property. The jury could have found that this seepage had been going on since April, 1974, or longer. Beginning at that time, plaintiffs noticed a strong odor on a portion of their property. At first, it was unidentifiable but later was determined to be that of gasoline. At times the fumes and odor were so strong as to make it difficult or impossible for plaintiffs to use a small office building which was located on that portion of their property. At other times the odor subsided.

There was evidence that in the spring of 1974 plaintiffs inquired of defendant's employees about the possibility of gasoline seepage and were told that defendant was not losing any gasoline from its tanks. There was also evidence from which the jury could find that plaintiffs continued to check with defendant's employees periodically and that defendant's agents were, therefore, aware of the problem plaintiffs were having on their property. Defendant's employees continued to tell plaintiffs that, based on their routine checks of their storage tanks and on their records of sales, defendant was not losing any gasoline from its tanks.

Plaintiffs made many attempts to find the source of the problem and to alleviate it but were unsuccessful. In December, 1974, the odor and fumes became particularly severe. Early in January, 1975, in an attempt to do something about the problem by improving the drainage on their property, plaintiffs dug a trench along the boundary between their property and that of defendant. Gasoline was then observed flowing in considerable quantities from the direction of defendant's property into the ditch. Defendant was notified and began making intensive checks of its storage tanks. It was soon discovered that one of the tanks leaked 60 gallons of gasoline during a 24-hour period. Defendant thereupon immediately removed and replaced the defective tank.

The disputed issues at trial included both liability and damages. On the issue of liability the trial court instructed the jury, in effect, that defendant was strictly liable for any damages caused by the seepage of its gasoline onto plaintiff's property. ¹ Defendant excepted to this instruction and to the trial court's refusal to instruct that defendant's liability depended upon a finding of negligence. ² By appropriate assignments of error, defendant has raised in this court the question of the proper theory of liability.

In Loe et ux. v. Lenhardt et al., 227 Or. 242, 248-49, 362 P.2d 312 (1961), we adopted the rule that liability for trespass will not be imposed for an unintentional trespass unless it arises out of defendant's negligence or the carrying on of an extrahazardous activity. The instruction given by the trial court was, therefore, proper only if defendant's trespass was either intentional or negligent as a matter of law or if defendant's storage of gasoline constituted an extrahazardous activity.

We have characterized the seepage of water from irrigation canals onto adjoining property as an actionable trespass where the evidence showed that the owner of the canals knew or should have known of the seepage. Furrer v. Talent Irrigation District, 258 Or. 494, 513, 466 P.2d 605 (1971); Reter v. Talent Irrigation District, 258 Or. 140, 482 P.2d 170 (1971). In the present case, however, the evidence would not have justified a ruling that defendant knew or should have known of the gasoline seepage as a matter of law. Although there was evidence that plaintiffs repeatedly brought to the attention of the defendant the possibility of some seepage, there was also evidence that until January, 1975, so far as the parties knew, the gasoline on plaintiffs' property might have been coming from other sources, including other service stations which were located nearby. There was also evidence that during this period defendant's normal record-keeping did not disclose any gasoline shortages from its tanks.

In support of the trial court's instruction, plaintiffs rely primarily on the theory that defendant's storage of gasoline was an extrahazardous activity and that defendant was, therefore, strictly liable for the resulting damages. Whether an activity is extrahazardous under the particular circumstances is a question of law for the court. Loe v. Lenhardt, supra, 227 Or. at 249, 362 P.2d 312; McLane v. Northwest Natural Gas, 255 Or. 324, 327, 467 P.2d 635 (1970). In McLane we discussed in some detail the concept of strict liability for damages arising out of an extrahazardous, or abnormally dangerous, activity. We placed considerable emphasis on the unusual nature of the activity, considering its location and other circumstances:

" * * * We have come to the conclusion that when an activity is extraordinary, exceptional, or unusual, considering the locality in which it is carried on; when there is a risk of grave harm from such abnormality; and when the risk cannot be eliminated by the exercise of reasonable care, the activity should be classed as abnormally dangerous. * * *

" * * *.e e

"We believe the principal factor which brings the activity within the abnormally dangerous classification is not so much the frequency of miscarriage (although this may be important) as it is the creation of an additional risk to others which cannot be alleviated and which arises from the extraordinary, exceptional, or abnormal nature of the activity. * * *" 255 Or. at 328-29, 467 P.2d at 637-38.

See also Reter v. Talent Irrigation District, supra, 258 Or. at 145, 482 P.2d 170.

There is nothing in the evidence in the present case to indicate that defendant's storage of gasoline in conjunction with the operation of a service station was in any way "extraordinary, exceptional, or unusual" in this location. There were, as we have mentioned, other service stations nearby. Presumably they also stored gasoline on their premises, although there was no evidence of the quantities or of the manner of storage. Moreover, we cannot hold, on the evidence presented, that the risk of seepage cannot be eliminated by the exercise of reasonable care, or that the harm to be anticipated from the underground seepage of gasoline is "grave," as we used the term in McLane. ³

Because the evidence in this case would not justify a ruling that plaintiffs' damages were caused by an abnormally dangerous activity being carried on by defendant, and because it would not permit the determination that defendant's trespass was, as a matter of law, either negligent or intentional, we find that the trial court erred in instructing the jury that defendant was liable for all damages resulting from the seepage of its gasoline onto plaintiffs' land. ⁴ Defendant is entitled, therefore, to a new trial.

Although what we have said is sufficient to dispose of this case, we will also discuss some of the other assignments of error which raise issues that are likely to arise again on retrial.

The question of punitive damages was submitted to the jury over defendant's objection. On retrial, unless the evidence differs substantially, that issue should not be submitted to the jury. The evidence justified, at most, a finding that defendant was negligent in not taking additional steps to discover the leak. Defendant's own records indicated that its tanks were not leaking. Although defendant was made aware that gasoline was coming from somewhere onto its neighbor's property, there was also undisputed evidence that the topography of the area was such that gasoline could have been draining or seeping onto plaintiffs' land from a number of other sources. Therefore, although the evidence was sufficient to show ordinary negligence, there was no showing of any "(conduct) * * * of a kind that sanctions would tend to prevent," nor was there any "particularly aggravated disregard" of plaintiffs' rights. Noe v. Kaiser Foundation Hosp....