The Container Co. v. United States

• Court: U.S. Claims Court
• Writing for the Court: JONES, , and HOWELL, MADDEN, WHITAKER and LITTLETON
• Citation: The Container Co. v. United States, 90 F.Supp. 689, 116 Ct.Cl. 706 (Fed. Cl. 1950)
• Decision Date: 05 June 1950
• Docket Number: No. 48622.,48622.
• Parties: THE CONTAINER CO. et al. v. UNITED STATES.

90 F. Supp. 689

116 Ct. Cl. 706

THE CONTAINER CO. et al. v. UNITED STATES.

No. 48622.

United States Court of Claims.

June 5, 1950.

Bernard J. Gallagher, Washington, D. C., for the plaintiffs. M. Walton Hendry, Washington, D. C., was on the brief.

Thomas L. McKevitt, Washington, D. C., with whom was Assistant Attorney General A. Devitt Vanech, for the defendant.

Before JONES, Chief Judge, and HOWELL, MADDEN, WHITAKER and LITTLETON, Judges.

JONES, Chief Judge.

On March 6, 1944, the greater portion of a building leased by the United States from plaintiff, The Container Company, was destroyed by fire. Plaintiffs seek to hold the United States liable under the lease for the damage. Plaintiffs contend that the second floor of the building had been overloaded in violation of the terms of the lease and that this and other acts of negligence caused the fire. Plaintiffs claim that the United States breached its obligations under the lease not to overload the building, to repair immediately any damage caused by loading, and to return the premises in the same condition as when received, reasonable wear and tear and damages by the elements excepted.

The lease, entered into on August 25, 1943, covered certain land and buildings in a plant in Rockaway, New Jersey, which the United States wanted for warehousing, packing, and shipping. The term was from September 1, 1943, to June 30, 1944, renewable at the Government's option; rental was $50,000 per annum. The lease was on the standard United States lease form. However, Paragraph 9 of the standard form, obligating the lessor to maintain the premises in good repair and tenantable condition, except in case of damage arising from the act or negligence of the Government's agents or employees, was deleted. The following covenants were typewritten into the lease:

"Paragraph 16

"The Government has examined the premises and is familiar with the structures. It specifically agrees that it shall not overload any structure covered by this lease and that if any damage is occasioned by reason of loading, it will immediately repair the same.

"Paragraph 17

"Upon the expiration or sooner termination of this lease, the Government shall return the premises in their present condition, reasonable wear and tear and damages by the elements excepted.

On September 1, 1943, the defendant contracted with the Cardinale Export Packing Company to operate and manage the leased premises. Although some Government employees were stationed at the plant, Cardinale was in possession.

On February 20, 1944, a Government Inspector discovered overloading on some of the floors, including the second floor of Building No. 2, and left instructions that the loads be reduced. We have found (Finding 9) that the second floor of Building No. 2 was at this time overloaded in violation of Paragraph 16 of the lease. The Inspector's instructions to reduce the floor loads were not complied with. Defendant did endeavor to obtain from The Container Company a schedule of permissible floor loadings, but the information was not transmitted to defendant until after the second floor had collapsed on March 2. The collapse was caused by the overloading. Defendant promptly made arrangements to have the bulged-out wall braced, and on March 4 shoring timbers were put in place. On March 6, fire broke out under the collapsed part of the building, burned for several days, and consumed the major portion of the structure.

The sagging of the second floor broke a section of iron electric wiring conduit; the broken conduit cut through the insulation of the wires it contained. An electric arc resulted causing the fire. The conduit contained a two-wire circuit. One wire of the circuit contained a fuse. After the collapse and before the fire, this fuse was removed. Where only one wire of such a circuit contained a fuse, the National Electrical Code and local ordinance required that the other be grounded. Defendant contends that the other wire was not grounded and that the fire could not have occurred if it had been. Plaintiffs contends that the other wire was grounded. The evidence on this question is inconclusive. Plaintiffs suggest that the wiring added to the plant by Cardinale was a factor in producing the arc. The Container Company made no warranties or covenants as to the condition of the premises. The defendant specifically covenanted that it had examined the premises and was familiar with the structures. Also defendant inspected the property shortly after the term began and required The Container Company to correct certain matters to defendant's satisfaction. We find that there is insufficient evidence that the permanent wiring system was defective or that any factor producing the arc and the fire is chargeable to The Container Company.

The case is in contract, not in tort. Defendant undertook not to overload and to repair immediately any damage caused by loading. The building was overloaded. This violated a covenant of the lease. It might also have been negligent. We are not called upon to decide whether in a tort action before a proper tribunal defendant could successfully defend that the negligence was that of an independent contractor not attributable to defendant. We do decide that defendant could not escape its contract obligations under the lease by putting Cardinale in possession whether as agent or as independent contractor.¹ There is no contention that defendant attempted to assign its obligations to Cardinale or that such assignment, if attempted, could have been effective without The Container Company's assent. Aside from this, the defendant is hardly in a position to contend that Cardinale was not its agent. For defendant agreed in the lease not to permit the premises to be used by anyone other than itself, its sublessee, or the agents or servants of itself or its sublessee.

A lessee is not liable under a covenant to repair if the damage was caused by the lessor's negligence or by a defect which it was the lessor's duty to repair or which the lessor created.² In a tort action, contributory negligence is an affirmative defense and the burden of proving it is on the defendant.³ Likewise in this case, if the fact that the wiring was defective would relieve defendant from liability under the covenant, then the burden of establishing that fact, or the risk of nonpersuasion that it was a fact, is on the defendant.⁴ The defendant having failed to prove that the original wiring was defective, we do not reach the question of whether defendant would still be liable if it had been. We find that the damage resulted from the overloading of the second floor in violation of the lease. This is the only proven proximate cause of the fire.

Defendant covenanted not to overload and to repair damage caused by loading. The damage involved here was caused by loading. We hold that defendant is liable, under Paragraph 16 of the lease, for the cost of repairing or rebuilding the destroyed structure. By the common law rule a tenant, having covenanted to repair, must rebuild after destruction by fire.⁵ It appears that this is also the law of New Jersey.⁶ Understandably enough, courts have sought to avoid the common law rule where the fire resulted without fault on the part of the lessee.⁷ But we are not at all reluctant to apply it in a case where the damage resulted from a violation of the lease and where the covenant to repair expressly contemplates damage resulting from that type of violation. Overloading having caused the damage, the United States is liable for the cost of restoration or rebuilding under its covenant not to overload and to repair damage caused by loading.

The Container Company is suing in its own behalf and for the use of certain insurance companies. All of the leased premises, including Building No. 2, were covered by an insurance policy issued by Firemen's Mutual Insurance Company. The policy was a blanket one covering all properties of Continental Can Co., Inc., and affiliated companies. The Container Company is a wholly owned subsidiary of Continental Can Company, Inc.; under the policy its Rockaway property was insured in the amount of $445,000. Seven other insurance companies each assumed a percentage of the insurance as set out in Findings 3 and 20. The eight companies are members of Associated Factory Mutual Fire Insurance Companies, a voluntary association which makes appraisals, adjustments, settlements of fire losses, and performs general engineering and laboratory services for the member companies. The policy obligates the insurer to provide insurance "* * * to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss * * *"

It is also provided that "This policy also covers expense of removal from the premises containing the property insured hereunder of debris remaining after any loss hereby insured against, except that there shall be no liability assumed for the expense of removal of (1) any foundations, (2) any building or part thereof, the removal of which is required by any ordinance or law regulating construction or repair."

Claim having been made on the policy, the Associated Factory Mutual Fire Insurance Companies employed the W. J. Barney Corporation to estimate the cost of repairing the damage. The Barney Corporation's estimate, which was in the form of a firm offer to do the work, was that it would cost $164,056 to restore Building No. 2 and $12,000 to remove the debris. Because of disagreement between the insured and the insurer, the Barney Corporation made two subsequent estimates which raised the estimate to restore the building to $200,422 and the estimate for removal of debris to $17,000. We find that the evidence fails to establish the necessity for incurring this additional expense and that the cost of...