Magnolia Petroleum Co. v. Howard

• Decision Date: 21 December 1951
• Docket Number: No. 4292.,4292.
• Citation: 193 F.2d 269
• Parties: MAGNOLIA PETROLEUM CO. v. HOWARD.
• Court: U.S. Court of Appeals — Tenth Circuit

193 F.2d 269 (1951)

MAGNOLIA PETROLEUM CO. v. HOWARD.

No. 4292.

United States Court of Appeals, Tenth Circuit.

December 21, 1951.

Robert W. Richards, Oklahoma City, Okl. (Earl A. Brown, Ardmore, Okl., on the brief), for appellant.

A. G. Windham and George Windham, Poteau, Okl. (Foster Windham, Carlsbad, N. M., on the brief), for appellee.

Before PHILLIPS, Chief Judge, and HUXMAN and MURRAH, Circuit Judges.

HUXMAN, Circuit Judge.

Magnolia Petroleum Company entered into a contract with appellee, L. C. Howard, in which he, as consignee, agreed to sell and distribute petroleum products furnished by Magnolia. Howard had charge and control of storage tanks (a bulk plant) in Poteau, Oklahoma, where the products furnished by Magnolia were stored. There were separate underground storage tanks for kerosene, regular gasoline, ethyl gasoline and diesel oil. Howard withdrew kerosene and gasoline from these tanks as he sold it to customers, under his contract with Magnolia. Howard sold a quantity of kerosene, delivered to him by Magnolia, to T. D. Dobson, a retailer at Panama, Oklahoma. He, in turn, sold some of it to Russell S. Skelton, who together with his daughter, was burned to death as a result of an explosion of a heating stove, when he used some of the kerosene in starting a fire. Magnolia was sued in two actions for damages resulting from these deaths. It settled the litigation for $27,500. In this action it sought to recover that amount from Howard under a provision in the consignment contract providing that "The consignee assumes all liability for loss and damage of whatever character sustained by consignor or third parties, resulting from the acts of consignee or his employees and servants."

It is conceded that the kerosene received by consignee from Magnolia, when sold by Howard, did not comply with the standards for kerosene adopted by the Corporation Commission of Oklahoma.¹ It seems to be conceded that the kerosene in question became contaminated with gasoline, resulting in a flash test much lower than the flash test of not less than 120 degrees F. Tagliabue open cup, provided for in the regulation. Appellee's liability to Magnolia under the indemnity clause of his contract depends upon whether he or his employees negligently caused the contamination or, if not, whether they knew or, by the exercise of reasonable care, should have known when they sold it that there was a question whether it was thus contaminated.

The case was tried to a jury under instructions by the court, which are not challenged on appeal. The jury decided the issues in favor of Howard and Magnolia has appealed. Three assignments of error are set out in Magnolia's brief. They are, however, argued under the single proposition that "There is no substantial evidence to support the verdict of the jury."

On appeal we inquire only to ascertain whether there is substantial evidence to support the verdict and judgment of the court. A verdict based on such evidence and approved by the trial court is conclusive and will not be disturbed on appeal.² Magnolia introduced record evidence as to the manner in which kerosene was tested before delivery to make sure that it met the statutory safety requirements test. A Magnolia loader testified that he drew a sample from each truck after it was loaded and waited until the laboratory tested the sample for flash point and gave him an okay, before letting the truck leave the refinery. Clark, another witness, testified that records were kept of these tests and, from these records, he found that a sample had been taken from the truck load delivered to Howard and that it showed that it had a flash point of 136 degrees Fahrenheit. He further testified that he did not make the test in question and that it could have been made by any one of thirty testers. No witness was produced who made or had actual knowledge of the making of the test or of the method or correctness of the test shown to have been made by the company's records. Appellee was, of course, unable to attack or impeach the correctness of this record evidence. The fact that this record evidence was uncontradicted did not require the jury to accept it as true.³ That is especially true here, since the persons who made the test and had actual knowledge thereof, or the method of making the test, or the correctness of the test, as reflected by the records, were not produced as witnesses. Under these circumstances, the weight to be accorded to these records was a question for the jury.

The manner in which the load of petroleum products in question was handled and the question whether appellee Howard was guilty of negligence at any time is established largely by the testimony of Frank Ramsey, the truck driver who delivered it, H. L. Vaughn, his Superior, Robert Howard, an employee of appellee, and appellee himself.

Ramsey testified that this particular load consisted of one compartment of ethyl gas, one compartment of regular gas, and one compartment of kerosene; that the regular gas was in the front compartment, the kerosene in the middle compartment, and the ethyl gas in the back compartment; that he arrived at appellee's bulk station at about 3:00 a. m. in the morning where he met Robert Howard; that Robert got the keys to the station and that they then proceeded to unload the gasoline and kerosene; that the underground tanks had pipes extending to the top of the ground; that hose were attached to valves on the truck compartments and were then inserted into the appropriate pipes from the underground storage tanks; that when the valves were opened, gravity caused the gas and kerosene to flow into the underground tanks to which the hose was attached. He testified that Robert helped in the unloading; that while he attached the hose to the pipes or valves underneath the truck, Robert was placing the open end of the hose into the underground storage tanks; that after he had attached the hose to the truck, he asked Robert if he was ready for him to open the valves and, receiving an affirmative answer, opened the valves; that he had a leak at the connection of the kerosene hose; that Robert went to get a five gallon can to catch the run-off; that on his return with the can, Robert asked if the drippings from the hose were kerosene and, being informed that they were, said: "My Goodness! Shut it off"; that he thereupon closed the valves; that after closing the valves they discovered that they had placed the hose in the wrong storage tanks. He testified that after they shut off the valves Robert called appellee and Ramsey placed a call to H. L. Vaughn, his superior; that they ran no more...