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Lever Bros. Co. v. Atlas Assur. Co.

November 21, 1942

LEVER BROS. CO.
v.
ATLAS ASSUR. CO., LTD., ET AL.



Appeal from the District Court of the United States for the Northern District of Indiana, Hammond Division; Thomas W. Slick, Judge.

Author: Minton

Before EVANS and MINTON, Circuit Judges, and LINDLEY, District Judge.

MINTON, Circuit Judge.

Lever Brothers Company, herein referred to as the plaintiff, sued the five defendant companies, herein referred to as the defendants, upon ten insurance policies covering loss or damage by explosion, and recovered a judgment below of $375,873.56.

There is no dispute as to the amount of the recovery if the plaintiff is entitled to recover at all. The alleged errors presented on this appeal are the overruling of the motion of the defendants to dismiss the complaint and their motion for a directed verdict; the admission of certain evidence and the refusal to admit other evidence; and the giving of certain instructions to the jury.

The plaintiff is a large soap manufacturer with a plant at Hammond, Indiana. Refined cottonseed oil is one of the products used by the plaintiff. To store it, large tanks are used. On the night of January 18, 1940 Tank 103 burst, and 6,292,000 pounds of refined cottonseed oil it contained spread over five and one-half acres of adjoining property. It was for the loss of this oil and for damage to property and the loss of use thereof that the plaintiff sued to recover under the policies.

The policies issued by the defendants were fire policies. Each of them contained a rider entitled "Extended Coverage Endorsement - Combined Coverage." The purpose of this rider was to make the fire policies cover loss by other perils, including explosion.The pertinent part of the rider covering loss by explosion is found in Special Condition No. 3, printed on the back of the rider, and reads as follows:

"(3) Special Conditions Applicable to Loss or Damage Caused by 'Explosion.'

"This Company shall be liable under this Endorsement for all direct loss or damage to the property and interest (s) covered hereunder caused by explosion, except for any loss or damage (whether or not caused by fire) occasioned by or incident to the explosion, collapse, rupture, or bursting of - (1) steam boilers or other pressure containers, and pipes and apparatus connected therewith, caused by internal pressure * * * ."

The question presented by the motion for a directed verdict is whether or not the bursting of the tank was due to an explosion within the meaning of the policies.

The tank in question was constructed in 1936 by Stone and Webster, experienced engineers in this kind of construction. Mr. Wood, the resident engineer in charge of the construction of the tank, testified as to the manner of the tank's construction, and his testimony was not contradicted or even challenged. The tank was 60 feet in diameter and 50 feet high. It was made of fire-box steel, ranging from one-half inch thickness in the bottom course to one-quarter inch in the top. The bottom plate was of the same material and one-quarter inch thick.The plates forming the shell were welded together in the approved manner; the shell was welded to the bottom plate; and then angle irons were welded on the inside to further anchor the shell to the bottom of the plate. The tank stood on a concrete pile foundation two feet above the ground. There were two sets of coils, referred to as the north and south coils, that wound themselves over the bottom of the tank about six inches above the floor in the bended fashion of trombone tubes, and for that reason they were called trombone coils. They were connected by welding inside the tank to separate steam inlet pipes, and they were also connected to separate condensate outlets.

The only dispute as to workmanship or flaws in construction involved the weld of one of the inlet pipes to the coil. The defendants' evidence was that it was a poor weld with bad penetration and poor alignment, making it weak. The plaintiff's evidence was to the contrary, that the weld was good. Outside of this one dispute, there seems to be no controversy but that the tank was made of sound material, with skilled and flawless workmanship, and in the approved manner.

The tank was built according to specifications, and they are not challenged. The tank weighed 230,000 pounds when empty.

Tank 103 was in a line of four tanks ranging in a general east and west direction, at a distance of four feet apart. They were all built about the same time and were of the same size and construction. To the south of these four tanks at a distance of 7 feet 6 inches were eight smaller tanks, and in line with them extending eastwardly were three more still smaller tanks. The space between the larger tanks to the north and the smaller tanks to the south was occupied by a heavy steel trestlework which carried the pipe lines to and from the tanks.

To the north of the large tanks was a railroad yard with six tracks, numbered 1 to 6 from north to south. Track 6 switched off Track 5 just opposite Tank 103. It was about 7 feet from the south rail of Track 6 to the north side of Tank 103.

Since October 11, 1939, 10,200,000 pounds of oil had been pumped into Tank 103 and over 3,000,000 pounds had been pumped out. On the morning of January 18, 1940 the temperature of the oil in Tank 103 was 87 degrees Fahrenheit. That day 57,000 pounds of oil were taken from Tank 103, and at the processing house the temperature was 71 degrees Fahrenheit.

On the evening of January 18, 1940 Tank 103 had about 39 feet of refined cottonseed oil in it. The steam had been on in the tank in both coils on January 17, and was cut off about 8:30 P.M. that evening. At about 2 P.M. the next day, it was discovered the north coil was frozen. Attempts were made to blow the pipes out with air, and when that failed steam was turned in, but the workmen were not able to thaw out the north coil. On inspection about 10:20 or 10:25 P.M. there seemed to be no unusual noise around Tank 103. The south coil was working normally. The north coil had been cut off entirely.

At about 10:30 P.M. January 18, 1940, Tank 103 burst. The temperature at this time was 14 degrees below zero.

At the moment of the catastrophe there was on Track 6 just opposite Tank 103 a slowly-moving locomotive and tender, with a crew consisting of the engineer, the fireman, the conductor and two switchmen. Some tank cars were on the track farther north. The locomotive weighed 180,000 pounds, and the tender 130,000 pounds. At the time of the catastrophe, the engineer was in the locomotive cab on the righthand side, next to Tank 103. The fireman was standing on the deck putting in a fire, and the conductor, Dyer, was walking on the ground between Tracks 5 and 6 about fifteen feet ahead of the locomotive. Brakeman Dillon was down the tracks to the east approximately 350 feet, and brakeman mortenson was about 390 feet from Tank 103.

The account of what happened as observed by this switching crew and by employees of the plaintiff company was briefly as follows:

The engineer testified that he heard "a rumble immediately followed by a sort of blast.It seemed to lift the engine in the air and shake it," "like a rat terrier shakes a rat"; that "an earthquake or something" would shake it that way; "something violent going on"; that the engine came "down and immediately afterward something hit the engine," oil splashed on the engine, and the locomotive tender was thrown on its side. The engineer was in a daze.

The engine itself had been moved north 24 feet in the rear and 19 feet in the front. Glass in the cab windows was broken, as the engineer expressed it, by a "sort of a rush of wind," which occurred a couple of seconds ...


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