Appeal from the United States District Court for the Southern District of Indiana, Evansville Division - No. EV 66 C 79 S. Hugh Dillin, Judge.
Pell and Tone, Circuit Judges, and Perry, Senior District Judge.*fn*
In this diversity case arising under Indiana law, the issue presented is whether a business conducting, without negligence, an activity authorized by statute and approved by the appropriate state regulatory agency can be liable under a theory of nuisance for damage to adjacent property when the plaintiff*fn1 may be chargeable with contributory negligence. Most of the facts are stipulated, although the plaintiff's case at trial included two days of evidence, defendant choosing not to put on a case. The jury returned a verdict for plaintiff in the amount of $12,000, upon which judgment was entered. A motion by defendant for judgment notwithstanding the verdict was denied by the District Court.
The relevant facts, as established by the stipulations of the parties, may be summarized as follows:
Plaintiff and her predecessors in interest, her parents, owned in fee simple about 135 acres of land in Gibson County, Indiana. In about 1952 the land was leased for oil and gas exploration. The lessee drilled three wells along the western edge of the property, offsetting three wells which had been drilled on the adjacent property. Only one of the wells on plaintiff's property, known as the Kimball Well No. 1, is involved here. By 1956 it had ceased operating, and it was plugged in that year by plaintiff's lessee.
Defendant was the lessee under the oil and gas lease on the adjacent property, which was known as the Callis lease. In September 1955, before the well on plaintiff's land was plugged, defendant commenced waterflood operations, which consisted of injecting salt water at high pressure into the oil strata to force the remaining oil from the "cypress" oil sands into the Callis operating wells. The waterflood operation had been authorized and approved by the Oil and Gas Division of the Indiana Department of Conservation pursuant to the statutory requirements. See Ind. Code 13-4-7-20 and Ind. Code 13-4-7-14. In 1958 and again in 1959 or 1960, long after the plugging of the well on plaintiff's land in 1956, crude oil was found seeping out on plaintiff's land at ground level around that well, and in July 1963, crude oil leaked into and contaminated the nearby fresh water well that supplied plaintiff's domestic water. The parties stipulated as follows:
"That defendant's water flood caused salt water and oil to migrate from the cypress sands under the Callis lease flooded by the defendant to the cypress sands under plaintiff's land. . . .
"That the crude oil in plaintiff's water well migrated from the Cypress sand up the plugged Kimball well No. 1, into the fresh water sand and into plaintiff's well."
Plaintiff alleged in her complaint that the waterflood created a private nuisance, and the jury was instructed on that theory of the case. In ruling on defendant's motion for judgment notwithstanding the verdict, the District Court relied principally on the doctrine of liability without fault for abnormally dangerous, or ultrahazardous, activity, which the Indiana Supreme Court adopted in Enos Coal Mining Co. v. Schuchart, 243 Ind. 692, 188 N.E. 2d 406 (1963). Many American courts have viewed abnormally dangerous activity as one of the kinds of conduct that gives rise to a private nuisance*fn2 but the Indiana Supreme Court in Enos Coal does not invoke the doctrine of nuisance.*fn3 Applying Indiana law, we think liability could have been supported by the facts of this case on either theory, nuisance or abnormally dangerous activity, but since the case was tried and the jury was instructed on the theory of nuisance, we consider the case under that theory.
Under Indiana statute, a remedy is provided for maintaining a private nuisance:
"Whatever is injurious to health, or . . . an obstruction to the free use of property, so as essentially to interfere with the comfortable enjoyment of life or property, is a nuisance, and the subject of an action." Ind. Code 34-1-52-1.
Neither the lawfulness of a business allegedly constituting a nuisance nor lack of negligence in its conduct is a defense. Indiana Pipe Line Co. v. Christensen, 195 Ind. 106, 115, 143 N.E. 596, 599-600 (1924); Northern Indiana Public Service Co. v. Vesey, 210 Ind. 338, 352, 200 N.E. 620, 626 (1936). Nor is the contributory negligence of the plaintiff a defense. Niagara Oil Co. v. Ogle, 177 Ind. 292, 294-295, 98 N.E. 60, 62 (1912); Niagara Oil Co. v. Jackson, 48 Ind. App. 238, 244, 91 N.E. 825, 827-828 (1910). The reasonableness of the use of land is available as a defense (Niagara Oil Co. v. Jackson, supra, 48 Ind. App. at 241, 91 N.E. at 826-827) and presents a question for the jury. Ohio Oil Co. v. Westfall, 43 Ind. App. 661, 663-664, 88 N.E. 354, 355 (1909).
Several of the Indiana cases just cited involve the escape of oil from the defendant's land over the surface to adjoining land, where the escaping oil inflicts harm. It is but a short step from these cases to the case at bar, where water from defendant's land invaded the plaintiff's land underneath the surface.*fn4 The trial court correctly held that the doctrine of nuisance was ...