Pabellon v. Grace Line, Inc. (Coston Supply Co., Third-And-Fourth-Party Defendants) , 191 F.2d 169 ( 1951 )

CLARK, Circuit Judge.

In its initial stage this was an action for damages and maintenance and cure by a seaman injured through the alleged negligence of the.original defendant while working upon the latter’s merchant vessel, Santa Isabel. The immediate cause of the injury was alleged to be “a violent and explosive disintegration of some of the appurtenances and appliances upon which, and with which, plaintiff was then and there working,” which resulted in the striking of plaintiff’s, body with fragments of the appurtenances and a- severe and extensive burning of it thereby also occurring. As the trial judge explained, “An examination of the plaintiff elicited that the explosion had occurred after he had mixed together a quantity of caustic soda or lye, sold under the name of ‘Dearborn Cleaner No. 7,’ used for cleaning drains, ‘Pride’ washing pow.der, a quantity of oxalic acid, and a quantity of cleanser under the brand name of ‘Oakite.’ ” 94 F.Supp. at page 990. The defendant shipowner thereupon brought amended third-party complaints against six third-party defendants, including the suppliers to it of these cleansers and detergents and their manufacturers. In this complaint it stated three claims for relief: the first for breach of warranty against the suppliers; the second for negligence against all; and the third for contribution from all as joint tort-feasors with it. One of the suppliers, Rudman & Scofield, Inc., in turn brought a fourth-party complaint against its supplier and the manufacturer, McKesson & Robbins Incorporated and Oldbury Electro-Chemical Co. Then Grace Line, Inc., the original defendant, moved to dismiss the complaint against it, and the various other defendants moved for dismissal of the complaints against them, in each case for failure to state claims on which relief can be granted. The court refused to dismiss the original complaint, but did grant the other motions dismissing the third- and fourth-party complaints, D.C.S.D.N.Y., 94 F.Supp. 989, and Grace Line, Inc., and Rudman & Scofield, Inc., both appeal.

Grace Line has not appealed from the court’s refusal to dismiss the original complaint, and that stands. In so refusing the court said: “In the first claim the plaintiff alleges the unseaworthiness of defendant’s vessel and defendant’s negjligence. Whether liability may be imposed upon defendant depends upon the circumstances under which the explosion occurred such as instruction, custom in mixing certain cleaning products and the like.” 94 F.Supp. at page 990. But when it came to consider the claims over against the third-party defendants it took the view in substance that an explosion of such unusual character as was claimed could not have been reasonably foreseen by the defendant manufacturers and suppliers and that there was no basis for claims of warranty or negligence. It added that this made unnecessary consideration of the third claim for contribution, although its judgment dismisses all claims.

In thus dismissing the complaints over on the face of the pleadings, we think the court has committed the not unusual error of attempting to make haste too rapidly by dispensing with a trial in advance of knowledge of what might develop there. Viewed as a pleading under the liberal Federal Rules, 28 U.S.C.A., the amended third-party complaint now before us seems to us fully adequate. Hickman v. Taylor, 329 U.S. 495, 501, 67 S.Ct. 385, 91 L.Ed. 451; Dioguardi v. Durning, 2 Cir., 139 F.2d 774, 775. Indeed, it sets forth quite fully and frankly the situation in which the Grace Line finds itself by reason of the claim made against it by the plaintiff and its view that if it is to be held liable it has a proper claim for indemnity or at least contribution from those who put in its hands these instrumentalities which eventually proved dangerous in combination. Had it said more, it would have had to make allegations by guess; had it said less, we might have found no ground whatsoever for recovery. But as it stands we cannot say that there is no legal basis in any event for a claim of liability. Hence dismissal of the third-party complaint at this early stage of the case was not justified.

Upon the allegations before us, there would appear to be at least a possibility of liability against the suppliers for breach of warranty and against all the defendants for negligence as alleged. True, one naturally tends to view with some skepticism SO' unusual an accident, as well as the extensive claims made as to it. Nevertheless, such a case as Pease v. Sinclair Refining Co., 2 Cir., 104 F.2d 183, 123 A.L.R. 933, shows that the unusual may happen by way of accident and that liability may be properly assessed against a defendant manufacturer. This case, cited by Grace Line, is support, particularly for the second claim based on negligence and foreseeability, although the district court refused to accept any analogy, saying that “there the basis of the wrong was mislabeling.” But this seems hardly adequate. There a chemistry teacher had obtained from the defendant oil company the latter’s exhibit of petroleum products for demonstration purposes. Included among these' was a sample bottle marked “kerosene,” although it actually contained water for supposed safety in handling. Thinking it kerosene, a preservative of sodium, the teacher poured the contents of the bottle on sodium, causing an explosion and resultant grievous injury to him. We held that the case was properly submitted to the jury on the issue of negligence and foreseeability' of harm; and sustained a plaintiff’s verdict. The defendant manufacturers say that they cannot be held for any but latent or hidden defects in the absence of any privity of contract with Grace Line; but the exceptions stated would seem applicable here if any defects existed at all. MacPherson v. Buick Motor Co.; 217 N.Y. 382, 111 N.E. 1050, L.R.A. 1916F, 696; Campo v. Scofield, 301 N.Y. 468, 95 N.E.2d 802; McSpedon v. Kunz, 271 N.Y. 131, 2 N.E.2d 513, 105 A.L.R. 1497; Schuylerville Wall Paper Co. v. American Mfg. Co., 272 App.Div. 856, 70 N.Y.S.2d 166; Baxter v. Ford Motor Co., 168 Wash. 456, 12 P.2d 409, 15 P.2d 1118, 88 A.L.R. 521; with annotation at 527.

Dismissal of the first claim, founded upon breach of warranty, appears to have been based on a misconception of law. The court held that this claim was rendered “completely insufficient” by the provision of the Sales Act, N.Y.Personal Property Law, McKinney’s Consol.Laws, c. 41, § 96, subd. 4, that in the case of a sale “of a, specified article under its patent or other trade name, there is no implied warranty as to its fitness for any particular purpose.” But this is to overlook the settled construction of the statute to the effect, first, that the mere fact that the article happens to have a trade name does not, per se, bring the sale within its provision and, second, that even if it does the section does not necessarily exclude the warranty contained in the second subdivision. Foley v. Liggett & Myers Tobacco Co., 136 Misc. 468, 241 N.Y.S. 233, 238, affirmed 232 App.Div. 822, 249 N.Y.S. 924. See also Bencoe Exporting & Importing Co. v. McGraw Tire & Rubber Co., 212 App.Div. 136, 208 N.Y.S. 4; Sachter v. Gulf Refining Co., Sup.App.T., 203 N.Y.S. 769; Ganoung v. Daniel Reeves, Inc., 149 Misc. 515, 268 N.Y.S. 325; Ryan v. Progressive Grocery Stores, 255 N.Y. 388, 175 N.E. 105, 74 A.L.R. 339, with annotation at 343; Botti v. Venice Grocery Co., 309 Mass. 450, 35 N.E.2d 491, 135 A.L.R. 1387, with annotation at 1393; Deffebach v. Lansburgh & Bro., 80 U.S.App.D.C. 185, 150 F.2d 591, 168 A.L.R. 1052, with annotation at 1054, certiorari denied Lansburgh & Bro. v. Deffebach, 326 U.S. 772, 66 S.Ct. 177, 90 L.Ed. 466.

There is good reason for this principle of law, since a mere purchase under a trade name does not prove that the purchaser is not relying at all on the skill and judgment of the seller or on the justified belief that the article will perform a particular function. A cleaner is, after all, generally expected to be a cleaner, whatever its fancy name. Compare L. Hand, J., in McNeil & Higgins Co. v. Czarnikow-Rienda Co., D.C.S.D.N.Y., 274 F. 397, 399, that “presumably the brand means some uniform quality, ^which has made it known and desired. The buyer exacts it because he expects the delivery to have that quality. The seller knows of the buyer’s expectations, and he is in a position to know whether the delivery conforms with those expectations.” It is in view of this that the draftsmen of the proposed new Uniform Commercial Code have eliminated a formal statement of this exception as “the major extension of the warranty of fitness which has been made by the cases and continued in this Article.” (Emphasis' added.) Uniform Commercial Code, Proposed Final Draft, Spring 1950, § 2-315, comment 5, i. 116.¹

Since, as we hold, the first two claims are good we need not -consider at this time the third claim for contribution among joint tort-feasors which the district court did not examine. Upon remand of the action, the district court should have free authority to consider such issues or allow such amendments as it thinks -conducive to justice in the trial of the litigation. While the basis for holding that all these defendants are joint tort-feasors may not seem immediately apparent, no definitive conclusion is now appropriate.

The district court also dismissed the fourth-party complaint of the supplier Rudman & Scofield against its supplier and manufacturer. These defendants contend that in any event this complaint does not allege negligence or breach of warranty against them and is not justifiable in law. While the claims are obviously still more remote we think there is no basis at this time in holding them legally impossible. From the standpoint of pleading, the fourth-party plaintiff has stated its allegations alternatively and contingently on the basis that if it is held responsible over to the Grace Line then such liability is entirely upon the fourth-parly defendants. True, before recovery this plaintiff must show either brea-ch of warranty or negligence of a foreseeable nature. Nevertheless alternative or hypothetical pleadings are permissible, Fed.Rules Civ.Proc. rule 8(e) (2), 28 U.S.C.A.; and we read this complaint to make the required allegations, albeit hypothetically. In case of any real lack of clarity the district court has of course power to order an amendment.

Appeal here is taken upon the basis of an express provision of the district court’s order “that in accordance with rule 54(b), of the Federal Rules of Civil Procedure, it is hereby determined that there is no just reason for delay and the entry of judgment is accordingly directed.” While no party has raised any question as to the appeal-ability of the order, it has been discussed among ourselves, since,'we must be sure of our own jurisdiction before we act. There is now a considerable body of authority, in this circuit and elsewhere, upholding and applying the provisions of the amended F.R. 54(b), which the trial court here followed. The more usual situation is the converse of that before us, namely, a judgment still intentionally interlocutory for lack of such a determination and direction. While occasionally it has been pointed out that in point of fact the judgment would have been appealable without the -additional provision before the effective date of the amendment, Lyman v. Remington Rand, Inc., 2 Cir., 188 F.2d 306; Republic of China v. American Express Co., 2 Cir., 190 F.2d 334, yet in other cases no discussion is had under circumstances suggesting that the court did not consider this a requisite. See, e. g., Flegenheimer v. Manitoba Sugar Co., 2 Cir., 182 F.2d 742; Tobin Packing Co. v. North American Car Corp., 2 Cir., 188 F.2d 158; Etten v. Kauffman, 3 Cir., 179 F.2d 302; Felder v. D. Loughran Co., D.C.Cir., 188 F.2d 623. Professor Moore, who was active in the drafting of the amended rule, states definitely that it is within the district judge’s power to make -certain orders final that would not have been final under the original rule. Moore’s Commentary on the U.S.Judicial Code 517, 1949. This also appears to be the import of Lockwood v. Hercules Powder Co., 8 Cir., 172 F.2d 775; Kuly v. White Motor Co., 6 Cir., 174 F.2d 742, 744; Prickett v. Consolidated Liquidating Corp., 9 Cir., 180 F.2d 8, 9, n. 3; and Kam Koon Wan v. E. E. Black, Ltd., 9 Cir., 182 F.2d 146, where the formula of the rule was stated to be adequate even with respect to certain judgments formerly either not or only doubtfully appealable. Cf. Garbose v. George A. Giles Co., 1 Cir., 183 F.2d 513, where the court, per Frank, J., found it unnecessary to pass upon the issue because of lack of an adequate order by the trial judge.²

The possibility of some expansion or at least expansive clarification of the rule •of appealability' is of course quite in keeping with the experience under original F.R. 54(b). That provided for the so-called split judgment, or final judgment upon the adjudication of one of the several joined claims which the new practice permitted and encouraged. This led to a wider lawsuit and to more separate judgments than was the practice 'before the new procedure, but in the many applications of the rules (sometimes unfortunately diverse because of the ambiguity of the subject matter) there appears never to have been raised any question of the validity of the rule itself in its application to multiple claims and it was upheld and applied by the Supreme Court in Reeves v. Beardall, 316 U.S. 283, 62 S.Ct. 1085, 86 L.Ed. 1478.³

Before we consider the application of the. amended rule to the case before us, we should have in mind just what it purports to do, since some district judges have apparently interpreted it as giving them unlimited power to make any order appeal-able.⁴ But an examination of the rule, as well as of its background, will demonstrate that this is an unwarranted extension. The rule is entitled “Judgment Upon Multiple Claims”; it begins, “When more than one claim for relief is presented in an action,” and then goes on to provide that the court may direct “the entry of a final judgment” upon one or more of the multiple claims only upon the two requirements, viz., “an express determination that there is no just reason for delay” and “an express direction for the entry of judgment”; and it concludes that without such determination and direction an order adjudicating less than all the claims shall not terminate the action as to any, but shall be subject to revision at any time “before the entry o-f judgment adjudicating all the claims.” It is therefore limited, like the rule it succeeded, to the case of multiple claims.⁵ When we recall the well-known use of the word “claim” in the Federal Rules in place of the old and confusing “cause of action” and the emphasis upon facts, not legal rights, as the basis of claim,⁶ we see that the new rule is no authority for holding final a district court order which does not adjudicate even a single “claim.” It operates only when there are in the action multiple claims of which at least one has been adjudicated.⁷ Then, and only then, is resort had to the formula of the rule to determine whether the judge intends his ruling upon part of the claims to he final as to them or only interlocutory. As applied to the one situation of multiple claims, it would seem, therefore, that the rule is to be given operation according to its clear intent to provide a uniform and easily understood method and to avoid the former confusion of conflicting precedents. Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 512, 70 S.Ct. 322, 94 L.Ed. 299.⁸

Our present task here is, however, simplified, since there has been no doubt on the authorities of the appealability of a final judgment on an impleaded claim. This Judge Fahy has just pointed out in a perspicacious opinion in David v. District of Columbia, D.C.Cir., 187 F.2d 204, where he refers to the former rule allowing appeals and applies the present requirement of the specified action by the trial judge.⁹ Among other cases he cites New Orleans Public Belt R. Co. v. Wallace, 5 Cir., 173 F.2d 145, applying the principle to a cross-claim, and Winsor v. Daurnit, 7 Cir., 179 F.2d 475, refusing to hear a counterclaim, later heard after appropriate judgment in 7 Cir., 185 F.2d 41. And he might have cited our own case of Slattery v. Marra Bros., dismissed May 1, 1950, as pointed out in D.C.S.D.N.Y., 92 F.Supp. 534, at page 536, and finally heard on the merits, 2 Cir., 186 F.2d 134.

Appealability of impleader decisions on the merits under the former F.R. 54(b) appears from numerous cases, e. g., Brown v. Cranston, 2 Cir., 132 F.2d 631, 148 A.L.R. 1178, affirming 2 F.R.D. 270, certiorari denied Cranston v. Thompson, 319 U.S. 741, 63 S.Ct. 1028, 87 L.Ed. 1698; City of Philadelphia, to Use of Warner Co. v. National Surety Corp., 3 Cir., 140 F.2d 805; Sporia v. Pennsylvania Greyhound Lines, 3 Cir., 143 F.2d 105; Sheppard v. Atlantic States Gas Co. of Pa., 3 Cir., 167 F.2d 841; Akers Motor Lines v. Newman, 5 Cir., 168 F.2d 1012, certiorari denied 335 U.S. 858, 69 S.Ct. 131, 93 L.Ed. 405; Capital Transit Co. v. United States, 87 U.S.App.D.C. 72, 183 F.2d 825, reversed on merits 340 U.S. 543, 71 S.Ct. 399; Northwestern Nat. Ins. Co. v. Samuel R. Rosoff, Ltd., Md., 73 A.2d 461, 465. It was so stated originally in 1 Moore’s Federal Practice 748, 1st Ed. 1938; the later edition, 3 Moore’s Federal Practice 449, 2d Ed. 1948, now points out the present necessity of securing the judge’s order under the amended rule.¹⁰ This principle had, too, its fair analogy in the well-settled rule that appeal would lie from the separate, adjudication of a permissive — though not a compulsory — counterclaim. Libbey-Owens-Ford Glass Co. v. Sylvania Industrial Corp., 2 Cir., 154 F.2d 814, 816, 818, certiorari denied 328 U.S. 859, 66 S.Ct. 1353, 90 L.Ed. 1630; Nachtman v. Crucible Steel Co. of America, 3 Cir., 165 F.2d 997; Huntington Palisades Property Owners Corp., v. Metropolitan Finance Corp. of California, 9 Cir., 180 F.2d 132, certiorari denied 339 U.S. 980, 70 S.Ct. 1027, 94 L.Ed. 1384.

Hence there is no doubt as to the appealability of the order under appeal and of our jurisdiction. The order is reversed and the action is remanded for further proceedings consistent with this opinion.

1 . The comment goes on to explain that under the provision^ retained in the new Code, of implied warranty of fitness of the goods for the purpose required where the -seller has reason to know of that .purpose and that the buyer is relying on his skill or judgment to select or furnish suitable goods, the name'or designation is only one of the facts, and not of itself decisive, to be considered 6n the question of the buyer’s actual relianee on the seller. “If the buyer himself is insisting on a particular brand he is not relying on the seller’s skill and judgment and so no warranty results. But the mere fact that the article purchased has a particular patent or trade name is not sufficient to indicate nonreliance if the article has been recommended by the seller as adequate for the buyer’s purposes.” Uniform Commercial Code, Proposed Final Draft, Spring 1950, § 2 — 315, comment 5.

2 . There appear to have been only two other references to the situation here presented. One is by Judge Frank in Clark v. Taylor, 2 Cir., 163 F.2d 940, 952, n. 12, where he concludes with the suggestion that “the Rule is intended to make decisive the district judge’s determination of finality only if the right of appeal would have been doubtful before the Rule went into operation.” The other is by the writer of this opinion in Lo Bue v. United States, 2 Cir., 178 F.2d 528, 531, n. 1, referring to the “obvious powei'” of a district judge to hold his rulings as interlocutory until he chooses to make them final, adding that the new rule “does no more than'hold this to be his p'urpose unless he makes clear and precise his contrary intent,” and concluding that the “only possible question as to validity” would be limited to an attempt — probably unlikely in fact — of a district judge to make final a clearly interlocutory order, such as permission to amend a pleading. In the light of the later discussion herein I would now substitute the word “construction” for “validity.” The remainder of the observation is now an approved rationale for the rule. Republic of China v. American Express Co., 2 Cir., 190 F.2d 334.

3 . See also cases cited in the Advisory Committee’s Note to amended Rule 54 (b) and Moore’s Commentary on the U. S. Judicial Code 512-515, 1949; cf. id. 517 that the Supreme Court “has the power by rule, which has the force of statute, to define finality for a limited situation — where an action involves multiple claims.”

4 . Cf. Lapin v. La Maur, Inc., D.C.Minn., 11 F.R.D. 339; Ace Grain Co. v. American Eagle Fire Ins. Co., D.C.S.D.N.Y., 11 F.R.D. 164.

5 . “Like its predecessor it deals with finality as related to only one situation, albeit an important and extensive one: the situation where the action embraces multiple claims.” Moore’s Commentary on the U.S.Judicial Code 515, 1949.

6 . See, e.g., F.R. 8(a), 10(b); Reeves v. Beardall, 316 U.S. 283, 285, 62 S.Ct. 1085, 86 L.Ed. 1478; Original Ballet Russe v. Ballet Theatre, 2 Cir., 133 F.2d 187, 189; Petrol Corp. v. Petroleum Heat & Power Co., 2 Cir., 162 F.2d 327, 329.

7 . Compare Canister Co. v. National Can Corp., 3 Cir., 163 F.2d 683; Petrol Corp. v. Petroleum Heat & Power Co., 2 Cir., 162 F.2d 327; Western Contracting Corp. v. National Surety Corp., 4 Cir., 163 F.2d 456; Moore’s Commentary on the U.S.Judieial Code 512, n. 110, 1949.

8 . See also Moore as quoted in note S supra.

9 . Judge Fahy was troubled (though happily not to the point of decision) by the statement in the Advisory Committee’s Note to amended Rule 54(b) that “it concluded that a retention of the older federal rule was desirable*’; this he read as a reference to original Rule 54(b). 187 F.2d at page 206. Actually the Committee was referring to what it terms at the outset of the note “the historic rule in the federal courts” prohibiting “piecemeal disposal of litigation” and later speaks of as “the settled federal rule stated above.” A better choice of words would have been “tbe older (or original) federal principle.” See Moore’s Commentary on the U.S.Judicial Code 510, 511, 517, 1949; Schiel v. New York Life Ins. Co., 9 Cir., 178 F.2d 729, 730, certiorari denied New York Life Ins. Co. v. Schiel, 339 U.S. 931, 70 S.Ct. 668, 94 L.Ed. 1351.

10 . As Professor Moore points out, loe. cit., this principle applies to a judgment adjudicating the impleaded claim; appeal-ability would not, exist as to an order refusing to dismiss a third-party claim, Carlisle v. S. C. Loveland Co., 3 Cir., 175 F.2d 418, or refusing a defendant permission to implead another, Baltimore & O. R. Co. v. United Fuel Gas Co., 4 Cir., 154 F.2d 545; cf. County Bank, Greenwood, S. C. v. First Nat. Bank of Atlanta, 4 Cir., 184 F.2d 152.