Laclede Steel Co. v. Silas Mason Co.

• Decision Date: 25 July 1946
• Docket Number: Civil Action No. 1721.
• Parties: LACLEDE STEEL CO. v. SILAS MASON CO.
• Court: U.S. District Court — Western District of Louisiana

67 F. Supp. 751

LACLEDE STEEL CO. v. SILAS MASON CO.

Civil Action No. 1721.

District Court, W. D. Louisiana, Shreveport Division.

July 25, 1946.

W. Scott Wilkinson and Wilkinson, Lewis & Wilkinson, all of Shreveport, La., and Lewis, Rice, Tucker, Allen & Chubb, of St. Louis, Mo., for plaintiff.

Malcolm E. Lafargue, U. S. Atty., and John H. Overton, Jr., Asst. U. S. Atty., both of Shreveport, La., for defendant.

PORTERIE, District Judge.

Plaintiff operates steel mills, buying scrap iron for remelting purposes and fabrication into steel products; defendant was in the business of operating an ordnance plant, supplying ammunition and other ordnance materials to the United States Government, and as an incident to its business, accumulated and sold large quantities of scrap of various kinds for remelting purposes, including ferrous and non-ferrous materials.

Tin ammunition containers are of ferrous metal, scrap material; aluminum washers are of non-ferrous metal. Under the rules and regulations of the Office of Price Administration and War Production Board a combination of ferrous and non-ferrous materials was prohibited.

Defendant issued an invitation to bid on certain items of scrap material, including the following: "8. Aluminum, Miscellaneous Scrap Ammunition Components, Fuzes, etc. 11. Tin (Ammunition Containers Compressed.)"

The invitation to bid provided that: (a) Purchaser warrants that the purchase and all future transactions with the property would be in accordance with the rules and regulations of the Office of Price Administration and War Production Board, and (b) purchaser agrees to sell and ship or use the items purchased only as scrap.

Joseph Schultz, operating as Southwestern Iron & Supply Company, inspected the above items 8 and 11, located in separate bins or piles at defendant's plant and thereafter submitted his bid therefor, which was accepted. Schultz informed defendant to load the item No. 11 for shipment but to hold item 8 for later shipment with nonferrous metals. Defendant advised Schultz that it had bundled and compressed this item No. 11 and had loaded it at its plant in car T&P 17579 for shipment.

In paragraph 7 of the complaint it is alleged:

"Petitioner had previously ordered a quantity of steel scrap from the Standard Steel and Rail Company of St. Louis, who, in turn, had contracted to buy said carload of compressed ammunition containers from Schultz and directed him to ship same to petitioner. Schultz thereupon ordered out on bill of lading dated August 13, 1945, from defendant's plant, the car of compressed ammunition containers (item number 11) to plaintiff, via Louisiana & Arkansas Railway Company, with the bill of lading reciting the contents thereof as `1 C/L Scrap iron having value for remelting purposes only,' and all of which was known to defendant."

The shipment was inspected by plaintiff upon arrival at its plant in Alton, Illinois, found to be in accordance with the specifications and a large number of the compressed blocks of ammunition containers were then placed in two of plaintiff's open hearth furnaces with the result that within a period of a few hours, the heat of steel went through the furnaces, with a resulting damage of $86,707.47 to plaintiff, the amount sued for in this action.

An immediate inspection was made by plaintiff of several of the blocks of ammunition containers, which had not been placed in the furnaces, disclosing that the containers (ferrous metals) had been loaded with and contained aluminum washers (non-ferrous metals) which had been concealed by defendant from plaintiff, the defendant having blocked or compressed together parts of said items Nos. 8 and 11.

Plaintiff has charged defendant with responsibility and liability for the loss sustained by it, in the following language:

"(a) In unlawfully, negligently, and carelessly, mixing, concealing and compressing aluminum washers, non-ferrous metals, within the compressed ammunition containers, which are of ferrous metal, when defendant knew, or in the alternative, should have known that such compressed blocks were to be remelted, and that, if remelted in such combination, same would be extremely dangerous to life and property.

"(b) In unlawfully, negligently, and carelessly mixing, compressing, and concealing aluminum inside of the ammunition containers, contrary to the purchaser's instructions, and in violation of the orders and regulations of the Office of Price Administration and the War Production Board under which the invitation to bid had been tendered by defendant and the bid therefor accepted, as hereinabove set forth, thereby producing an extremely and inherently dangerous combination of metals for remelting purposes — the only purposes for which such scrap material could be utilized, as defendant well knew.

"(c) In unlawfully, negligently, and carelessly manufacturing, selling and placing upon the market a product which defendant warranted to be a ferrous metal fit for remelting purposes, when defendant knew that a non-ferrous metal was concealed therein, resulting in a combination known to be inherently dangerous to life and property when used for the purposes intended and commonly used."

These contentions (a), (b), and (c) represent an action grounded in tort. Then the complaint, in the following language, sets out an action ex contractu:

"The warranty of defendant that the Tin (Ammunition Containers Compressed) was a ferrous metal fit for remelting purposes existed in plaintiff's behalf and inured to it as the ultimate purchaser and consumer of said product, which warranty plaintiff relied upon, with the resulting damages, as alleged herein, to it by reason of defendant's breach of said warranty."

The defendant has filed a motion to dismiss for the reason that the plaintiff fails to state a claim against defendant upon which relief can be granted. The substance of the motion is that plaintiff has no cause to recover damages either (1) in contract or (2) in tort. Under (1) there is want of privity, and, more, the article sold is alleged to be not one inherently or imminently dangerous so as to make the seller liable for injuries to the person or property of any consumer or user, who has no direct contractual relation with the seller; that the seller of this article was not liable to a remote purchaser, since it did not fall into one of the allegedly generally accepted exceptions established by jurisprudence, to-wit: Articles intended for human consumption, such as foods, drugs and beverages; explosives; firearms; oils and other highly combustible substances; in most jurisdictions, automobiles; and a few miscellaneous items which have been held in isolated cases to be imminently dangerous to life and health.

Under (2) of the motion, which is that phase of plaintiff's complaint which alleges a tort committed by defendant in packing negligently ferrous material with non-ferrous material, the position of defendant is that in the absence of warranty by the seller to a remote buyer and of privity between the two litigants, there is no legal duty due by the defendant to the plaintiff from which a tort action could spring.

The well-pleaded facts of the complaint, excluding all conclusions of law, are to be accepted as proved. The action as to breach of contract, and the action in tort are separate, though concurrent. Illinois Central R. Co. v. New Orleans Terminal Co., 143 La. 467, 78 So. 738; Englert v. New Orleans Ry. & Light Co., 128 La. 473, 54 So. 963, 967; Schoppel v. Daly, 112 La. 201, 36 So. 322 (Headnote 1).

All the jurisprudence furnished by both sides on the liability of the manufacturer to the subvendee for breach of warranty may be taken as persuasive, for in this case we have a packer of ferrous with nonferrous materials which for generally intended purposes becomes a dangerous and damage-causing bundle. There is the analogy of the packer with the manufacturer in that the packer in the instant case, from the facts alleged, and particularly that the rules and regulations of the O.P.A. and W.P.B. prohibited a combination of ferrous and non-ferrous materials, warranted to the world not to mix the two materials in one bundle; if not to the world, at least to those buying upon this publicly-advertised condition.

The legal proposition advanced by defendant relates back to 1842 and to the English case of Winterbottom v. Wright, 10 M. & W. 109, 152 English Reprint 402, in which the Court of Exchequer held that the buyer of a motor coach, who was injured as a result of defects in the construction of the coach, could not recover from the manufacturer who had sold the coach to the Postmaster General because of lack of privity of contract. This doctrine has been very modified by subsequent cases and the tendency of the courts is to abandon it in its entirety. A decided departure was first effected by the great opinion of the late Mr. Justice Cardozo (52 Harv. L. Rev. 376), 1916, in the case of McPherson v. Buick Motor Company, 217 N.Y. 382, 111 N.E. 1050, L.R.A.1916F, 696, Ann.Cas. 1916C, 440.

"In many recent cases that asserted general rule of nonliability to persons not in privity of contract has been denied, either in terms or in effect, and the principle stated earlier in this opinion has been applied.

"The time has come for us to recognize that that asserted general rule no longer exists. In principle it was unsound. It tended to produce unjust results. It has been abandoned by the great weight of authority elsewhere. We now abandon it in this commonwealth." Carter v. Yardley & Co., 319 Mass. 92, 64 N.E.2d 693, 700.

In United States Radiator Corporation v. Henderson, 10 Cir., 68 F.2d 87, certiorari denied, 292 U.S. 650, 54 S.Ct. 860, 78 L.Ed. 1500, it was held that in an action by home owners against a boiler manufacturer for loss of the building and contents by fire, whether the fire was caused through negligent design and construction of the furnace...