242 F. 285 | D. Maryland | 1917
The elevator and the pier on which it stood belonged to the Northern Central Railway Company, hereinafter referred to as the “Northern Central.” Many years before the fire, the latter had leased them to the respondent, the Central Elevator Company, of whose stock it was the owner. The Central Elevator Company for brevity will be styled the “Elevator Company.” The Northern Central, some years before the fire, had leased for a term of 999 years all its property to the respondent the Pennsylvania Railroad Company, hereinafter called the “Pennsylvania.”
The ships say that the fire was caused by the negligence of the Elevator Company and its employés, and that the Pennsylvania had exer • cised such control over the management of the elevator that it, as well as the Elevator Company, is liable for the damage done. The flexible methods of the admiralty made it possible to consolidate the salvage proceedings against the ships with the latter’s claims against the Elevator Company and the Pennsylvania. By agreement, or by decree, the salvage awards have been made, and in this opinion the salvage operations need not be further referred to.
The elevator which was burned was -the fourth which had stood on what was substantially the same site. Every one of them went up in smoke and flames. So far as' the testimony discloses, the three predecessors of the one with which this case is concerned were destroyed by fire caused by sparks from locomotives or from donkey engines used oil ship board. Nevertheless, their fate emphasizes the inflammable nature of such structures, and the difficulty of saving them from complete destruction when once a fire has gotten under way in them. It also serves, to a degree at least, to bring home to the respondents knowledge of how liable elevators are to destruction by fire. A description of the building burned last June shows why it is that fires in such structures are so disastrous. From north to south it was 240 feet long, and perhaps 100 feet broad from east to west. It had a height of 179 feet 6 inches. For 30 feet from the ground its walls were of
It is for lack of reasonable care in another respect that the ships seek to hold the respondents liable. Belts such as those which ran in the receiving legs are, from any one of a number of different causes, liable to become choked. That is to say, the btelt in some way is caught and held fast while the pulley upon which it operates continues to revolve. The result is friction which, if continued for any length of time, must necessarily break the belt and may cause fire. The ships say that the particular conflagration which proved so serious originated in this very way, and was the natural and proximate result of a long-continued neglect of the respondents to provide means for promptly and certainly throwing a choked belt out of gear. It had been long recognized that,
The.hopper boss on the track floor saw that grain was piling up on the floor over and around the hopper at the base of leg 3. He started to investigate. As he got closer, he thought it looked as if the belt was choked. Apparently appreciating the importance of speed, he broke into a run. When he reached it, he looked up and saw that it was choked. He then did what, under similar circumstances, everybody in that elevator .had for many years always done. He went to the speaking tube, which fortunately was nearer to this leg than it was to the majority of them. He sounded the gong on the scale floor, 133 feet above the track floor. The scale floor was the next .under the machinery floor, but was 19 feet below it. There were always a number of men somewhere on the scale floor, and it was the duty of the one of them who chanced to be closest to the tube to go to it as soon as the gong told him that somebody downstairs had something to say. On this occasion, one Smith, the boss or foreman of the scale floor, happened to be near the tube. He went to it.' He was one of those who lost their lives within less than half an hour thereafter. He was told by the hopper boss that leg 3 was choked. • He, in turn, did what it was the rule to do under such circumstances. He sounded the gong on the machinery floor. Now, if there happened to be anybody in this great room, 240 feet long, and he heard the gong, and furthermore supposed that there was nobody nearer tiran he, he went to it. Apparently, the only person who had any regular business on tire machinery floor was the oiler. But he had duties, not only on that floor, but on the one above it and on the one below it as well, and at any particular time he might be on any one of the three, or indeed on none of them. He was, properly enough, forbidden to keep a stock of oil in the elevator. When he needed a fresh supply, he had to go down to the ground, out of the building, to get it. Now, it so happened, that was what he was doing when Smith sounded the gong to call him to the tube. Naturally, there was no answer. How long Smith waited for one does not clearly appear, although one witness estimates it at two minutes; it was probably not longer, as the distinct impression left by the evidence is that everybody understood the importance of haste, and that everybody did what he could to hurry things along, although the methods employed were such that without an unusually favorable combination of circumstances there was bound to be waste of effort and loss of time. After whatever interval of waiting for an answer there was, Smith told one of his assistants, a man named Lucas, to go upstairs and throw belt 3 put of gear. Lucas says he knew nothing of machinery. It is at least doubtful whether he had any clear idea of what he was to do when he got up to the top of the two flights of steps between the scale and the machinery floor. Whether he did or not did not turn out to be material; for, as his head rose above the level of the machinery floor, he saw the millwright, a man
Was the fire the result of the delay? Respondents say that the evidence does not show that it was.
There are witnesses who, when they first saw or heard of the fire, were on the scale floor, others who were on the track floor, and still others who were outside the main building all together. Of all these, it appears that the first to see any fire was a colored man named Walker. He was on the track floor cleaning up when a live coal fell from leg 3. He stamped it out and reported the fact to Bardroff, the elevator foreman, who was right at hand. The latter made a hurried examination. He saw no> fire in No. 3. He called up the tube to the machinery floor to look for fire around No. 3. Lucas was on the scale floor standing near Smith, who received the message. As he did so, somebody called, “Fire!” and Lucas, looking up over his head through the cracks of the floor, saw flames. Just then the fire alarm sounded. White at the time was coming out of the receiving weigher’s oh flee on the scale floor. Some one said, “There is a fire upstairs, and I am going to get out.” White seized a fire extinguisher and started up to the machinery floor. Lucas on the sounding of the alarm ran to the front of the building. When he saw some one going up the stairs with a fire extinguisher, he turned back; but had made only two steps when the explosion came. By the time White reached the landing at the first of the two flights of steps which lead from the scale to the machinery floor, he saw a reflection of flames all along the main shaft. He realized that a fire extinguisher was useless, and he started down. He had just reached the machinery floor when the explosion took place.
In the meantime, Bardroff down on the track floor went towards leg 2. He smelt smoke, which he thought was stronger in No. 2 than No. 3. Another coal fell. Lie told Walker to go for a bucket of water. The latter did so, and was coining back to No. 3 to use it when he saw flames and smoke coming out of the grate of No. 1. He threw the water on the grain there, and at that minute the explosion happened. Bardroff in the meanwhile had gotten a bucket of water from, another man and had lifted the trap door of No. 2. As he did, a puff of hot air blew out, and then the explosion.
Young was on the track floor at the time. He says he saw Walker going for water, but did not know it was for a fire, and that he heard nothing about the fire until Bardroff sang out, “There’s a fire boys, go!” and the explosion instantly followed.
Welker, the engineer, was in the engine room when the fire alarm sounded. He went to’the door to see what was the matter, and then
Many of the numberless cases in which railroads have been held to answer for the damage done by fire set by sparks negligently allowed to escape from their locomotives may perhaps be put on one side, because in many states special statutes recognize, define, or impose liability under such circumstances.
The respondents reply that if so much be admitted it does not follow that they are liable. They claim that, whatever may be the language of the opinions relied on by the libelants, the fires actually dealt with were in nearly every instance purposely started, although for a proper or at least for an innocent purpose, and the negligence for which the defendants have been held responsible consisted, either in recklessness in starting the fire under the physical conditions existing, or in a lack of reasonable care to prevent tire fire getting beyond control. In other words, that the real reason why liability was imposed was that if defendants saw fit to make use of a dangerous element they were bound to be careful to keep it from harming other people. They argue that there is nothing which has been actually decided in
There can be no question that the damage done to the ships and their cargoes was the proximate and indeed, under the circumstances, the necessary result of the fire in the oleyator. The ships were at its side by the invitation of the Elevator Company, and for its profit as well as theirs. It knew that any fire which started in such a structure was likely to spread with a rapidity that injury to vessels made fast to the pier was the not improbable result, if a fire within the building once got headway.
The question remains as to whether the probability of a fire being caused by the friction between a choked belt and its pulley was great enough to make the Elevator Company, because of its failure to use the ordinary means of preventing such friction, liable to the libel-ants for the consequences of the fire. This question raises an issue of fact, in a common-law case for a jury, and in this for the admiralty judge. In passing upon it, all the facts and circumstances must be taken into consideration.. Blackstone construed the statutes of Anne and George as he did because he thought the one on whose premises the fire started suffered enough by the damage done his own property, without requiring him to make good that which the fire caused his neighbors. It is difficult logically to reconcile this reasoning with accepted legal principles, but it has a good deal of human nature in it. Every one who is called upon to pass upon such an issue as that now presented is likely, consciously or unconsciously, to feel a strong sympathy with it, none the less that the claim will often be made, not for
If any other than the Elevator Company is answerable for the consequences of this fire, it must be because that other actually took such part in the management and control of the elevator as to make itself liable for the negligence of the persons there employed. No rule of law forbade the Northern Central so leasing its property to another as to free itself from any liability for negligent operation by that other. On the other hand, the lessee will be liable if it does anything which would have made the lessor liable had there been no lease. It would be answerable, not because it was the lessee, but because it took such part in the conduct of the business as to make itself liable therefor. Liability does not depend on title. If it exists at all, it is because the person sought to be held actually does something in so negligent a manner that the plaintiff suffers. The fact that the legal title to the fee in the elevator and the land upon which it stood remained in the Northern Central has nothing to do with the case.
What part did the Pennsylvania take in the management of the elevator? It could have done whatever it wished. Any stockholder of a corporation who owns all, or even a majority, of its stock, can absolutely control its policy and management, so long as he acts in good faith towards the minority stockholders, if there are any. He ■can select its officers, and through them its employés. That the Pennsylvania did. Its general superintendent in Baltimore had been for years the president of the Elevator Company, and, when the individual who had filled those places surrendered one of them, he gave up both, and had the same successor in both. The treasurer of the Elevator
In February, 1910, the traffic department of the Baltimore & Ohio and the Northern Central decided to abolish the scaleage reduction feature in the elevators at Baltimore, whereupon the respective managements of the elevators were instructed to notify the Baltimore Chamber of Commerce that no such deductions would be thereafter made. In March, 1910, the president reported that he had received authority from the fourth vice president of the Pennsylvania to increase the salary of the Elevator Company’s superintendent to $375 a month.
In June, 1912, the president of the Elevator Company reported that, with the approval of Vice President Dixon of the Pennsylvania, he had entered into an arrangement with the Chamber of Commerce, under which the Elevator Company would undertake to maintain in concrete tanks not less than 30 per cent, in monetary valuation of the grain stored at Canton.
In June, 1914, the president of the Elevator Company reported that the traffic department of the Pennsylvania had effected an arrangement by which the Elevator Company would insure the grain stored at the Canton elevators at the rate of 25 cents per $100 per annum, and suggested that the superintendent of the Elevator Company be sent to Philadelphia to consult with the superintendent of the Pennsylvania insurance department with a view to perfecting the details.
In October, 1914, it was reported that the operation of the Pennsylvania under the lease of the Northern Central had resulted in transferring all persons employed therein to the service of the Pennsylvania, whereupon the Elevator Company released the Northern Central from the previously existing pension agreement.
After the fire now in controversy, an inquiry was made as to whether the Pennsylvania would guarantee the insurance on the grain destroyed by fire, and the Pennsylvania notified the Chamber of Commerce it
Sometimes, though not always, when the Elevator Company had surplus cash, it was turned over to the Northern Central, not as a dividend, but as a special deposit at 3 per cent., and then in January, 1908, when this deposit amounted to $100,000, the Elevator Company voted .that the rent it had paid for two of its elevators for six years had been $14,000 per annum too low, and for three years $2,200 on the other, and that the Northern Central might take $90,600 of the money on deposit for this back rent. A year later the president of the Elevator Company reported that under a decision of the Northern Central it would have to pay $14,000 a year insurance.
Still, on the other hand, the organization of the Elevator Company was regularly kept up. Its stockholders’ meetings were held, its directors met monthly. At the time of the fire, it had a considerable surplus of upwards of $200,000 in bank. It was, in no sense a mere shell. At the same time, it was true that everybody connected with it knew that the Pennsylvania owned it and that anything the Pennsylvania chose to say was final. The officers and directors of the company ■could not always keep in memory the fact that, while the Pennsylvania could do what it would by its control over the stock, that control ought regularly to be exercised only through the board of directors of the Elevator Company. At times, the Pennsylvania was allowed to do things in a way which was not quite consistent with the assumption that the Elevator Company was an independent corporation; but there was no such wiping out of the corporate organization as is described in the case of Goralski et al. v. General Stevedoring Co. (D. C.) 213 Fed. 51.
In this case we are not dealing with an act in itself a wrong to some one else, done by the direction of the governing body of the Elevator Company. If we were, it might well be argued that the Pennsylvania, controlling all the stock of the Elevator Company and directing so many of its actions, ought not to be heard to say that it had not directed a particular one. That issue does not arise in this case and need not be here passed upon.
The libelants are justified in asserting that the elevator was operated as a facility to the business of the railroad company. They say that the owner of the stock of a subsidiary corporation, which is doing a part of its work, or which exists to facilitate the carrying on of its business, is answerable for its defaults in some cases in which one who owned its stock merely as an investment would not be. It does not seem necessary here to go into the merits of this contention. It would hardly seem that the stockholder thereby necessarily waives all its rights to rely upon the limitations of its liability in every case in which some servant of the subsidiary company does some careless thing to another’s hurt. We are not here dealing with a subsidiary corporation without substantial resources, and which exists merely as a shield to enable the owner of its stock to carry on his business without exposing himself to liability for the negligence of the employés
The libelants rely on Lehigh Valley R. Co. v. Dupont, 128 Fed. 840, 64 C. C. A. 478, and Lehigh Valley R. Co. v. Delachesa, 145 Fed. 617, 76 C. C. A. 307.
The Lehigh Valley Railroad Company owned all the stock of the Easton & Amboy Railroad Company. The same men held the same offices in each of the two corporations. The Rehigh Valley absolutely controlled everything that the Easton & Amboy did. Each of the companies had a separate account book. In every other respect they were carried on precisely as if the Rehigh Valley had owned and operated the railroad lines of both corporations. In the first case, the person injured was a passenger; in the second, a stevedore. The United States Circuit Court of Appeals for the Second Circuit held the Rehigh Valley Railroad Company liable, and said:
■‘Where the lines of several railroad corporations are conducted as a single system, for the purposes of the traffic between different points, originating upon either, the corporations may constitute themselves a partnership for the business of such traffic; and when they do, although the general management of each road is retained by the corporation owning it, the several corporations are, as to such business, partners, and liable upon the principles of the law of agency.”
It does not seem to me that the facts here proved bring the case within the rule there laid down. The rule of respondeat superior is based on practical considerations, rather than on fundamental justice. It is not clear that it is always right to hold every one who gets a profit out of a particular business to unlimited liability for every negligent act of every one of the servants employed therein. As the law is, one not protected by a statute is liable for the acts of one who is technically his servant, when such acts are committed in the course of his business. The lawmaking power recognizes that this rule, useful as it is in most cases, may sometimes work great injustice, as is instanced in the limited liability statutes for the protection of shipowners. The negligence which resulted in damage to the libelants was negligence of people who were not legally the servants of the Pennsylvania. This case presents no facts which require that the legal form shall be ignored in order that justice may be done.
It follows that as against the Pennsylvania the libel will be dismissed, with costs. The Elevator Company will he held liable to the libelants for the damage suffered by them as a result of the fire. The amount can be ascertained by agreement or by a reference or by a hearing in open court.