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Chrysler Corp. v. M. Present Co.

decided: February 5, 1974.

CHRYSLER CORPORATION, ET AL., PLAINTIFFS-APPELLANTS,
v.
M. PRESENT COMPANY, INC., DEFENDANT-APPELLEE. PENN CENTRAL COMPANY, PLAINTIFF-APPELLANT, V. M. PRESENT COMPANY, INC., ET AL., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division.

William E. Steckler, Judge. Swygert, Chief Judge, Fairchild and Stevens, Circuit Judges.

Author: Fairchild

FAIRCHILD, Circuit Judge.

These are appeals from a judgment dismissing consolidated actions upon their merits, defendant's motion for summary judgment having been granted.

Plaintiffs brought their actions to recover damages for loss of property in a warehouse fire, October 8, 1966, in Indianapolis.*fn1 Although defendant M. Present Company, Inc. was the owner of the warehouse, it was occupied at the time of the fire by A.A.A. Warehouse Corporation, defendant's lessee. Several plaintiffs, like Chrysler, were owners of goods which had been placed in the warehouse for the purpose of storage. Penn Central's loss arose primarily from the destruction of railroad cars which Penn Central's predecessor had delivered on a side track inside the warehouse.

M. Present Company was alleged, in substance, to have been negligent in leasing its building to A.A.A., with knowledge that it would be used as a warehouse, when it knew or should have known that the water supply had been and was permitted to remain disconnected, that the fire extinguishers, fire hoses, valves and similar extinguishing equipment (expressly included in the lease as equipment of the building) were defective, inadequate, and inoperable, that the building lacked fire curtains or fire walls and was not adequately protected against fire. Although the complaint is phrased in terms of negligence with respect to leasing the property with the knowledge specified, it also sufficiently asserts that the various deficiencies in equipment and construction were present at the time of leasing.

After a number of procedural skirmishes, the district court granted summary judgment for defendant M. Present Company and certain other defendants. For the most part the facts recited by the district court are undisputed. M. Present Company had leased the entire premises to A.A.A. under a written lease, October 9, 1964; the lease contained no covenant by M. Present Company to keep the premises in repair, except for certain repairs to the roof, not alleged to have contributed to the fire; there is no claim that the conditions said to constitute negligence on the part of M. Present Company were concealed from A.A.A.; the portion of the warehouse in which plaintiffs' property was located was the storage area.

The district court also asserted that the storage area was not thrown open for the public, and admission was carefully restricted. Plaintiffs argue that they had sufficiently shown that there is an issue on this point. It appears to be conceded that if M. Present Company contemplated that its lessee, A.A.A., would generally invite members of the public to enter the storage area in person, the law of Indiana would subject M. Present Company to liability for injury to person or property of such frequenters, resulting from defective conditions existing at the time of leasing. Walker v. Ellis, 126 Ind.App. 353, 129 N.E.2d 65 (1955), transfer denied, 235 Ind. 692, 133 N.E.2d 54. Thus if there were shown to be a genuine issue of fact concerning the use of the storage area by members of the public in person, it was error to grant summary judgment.

Plaintiffs' principal contention, however, is that the so-called public purpose doctrine, recognized as part of the law of Indiana by Walker v. Ellis, applies to the storage area in any event and subjects M. Present Company to such liability because M. Present Company, as owner-lessor, was aware that A.A.A., its lessee, would extend a general invitation to members of the public to deposit their goods in the leased property, for storage. If this contention be correct, it would be immaterial whether there were a general invitation to members of the public to enter the storage area in person.

Plaintiffs also argue, independently of the public purpose doctrine, that because M. Present Company reserved in its lease the right to enter the premises and make repairs, there was an issue of fact whether it was in control of the premises so as to be subject to liability to customers of A.A.A. for damages caused by defective conditions.

Finally, Penn Central contends that a side track agreement between it and M. Present Company puts its case upon a special and more advantageous footing.

1. Applicability of the public purpose doctrine.

As a general rule a landlord is not liable to invitees of his tenant for injury caused by defective conditions existing at the time of the lease. Prosser, Law of Torts, 400 (4th ed., 1971). The theory is that a vendor of land is not subject to liability to his vendee or others for the condition existing at the time of transfer, caveat emptor applying, and that a lessor is similarly not liable because the lease is regarded as equivalent to a sale for the term of the lease. Courts have, however, carved out several exceptions to the general rule of non-liability, calling for liability to the lessee and others upon the land, or to the latter, alone. See generally 2 Powell, Real Property para. 234 (rev. ed., 1971); Prosser, supra, § 63; Restatement, Torts 2d §§ 356-62.

The policy considerations underlying the exceptions are stated in Comment a under § 356 of the ...


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