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Northern Oil Co. v. Socony MOBIL Oil Co.

decided: November 10, 1966.


Smith, Hays and Feinberg, Circuit Judges.

Author: Feinberg

FEINBERG, Circuit Judge:

This is an appeal by defendant Socony Mobil Oil Company, Inc. ("Socony") from a judgment against it for $72,000 in an action for malicious prosecution. A prior judgment of $95,000 for plaintiff Northern Oil Company, Inc. ("Northern") was reversed by this court because of an erroneous evidentiary ruling. 347 F.2d 81 (2d Cir. 1965). Finding no error in the retrial, we affirm.

Briefly, the jury could have found the following facts: In the summer of 1960, Socony decided to discontinue operations at St. Albans Bay, Vermont, where it had tanks for the storage of petroleum products. Socony accepted an offer from Massena Iron & Metal Company ("Massena") to buy the tanks. The parties agreed to dismantle the tanks for transportation to possible buyers from Massena, but there was no requirement that the tanks be used only for scrap by such a future purchaser. Northern bought the tanks from Massena to operate its own tank "farm" in the St. Albans Bay area. Socony brought suit in October 1960 in a Vermont chancery court against both Northern and Massena to prohibit use of the tanks for storage; Socony alleged that Massena had contracted that the tanks would not be so used. In actuality, Socony did not think it would win the lawsuit; its motive was to prevent Northern from competing with it in the area. On the same day Socony brought its action, the state court chancellor granted a temporary injunction requested by Socony pending a later hearing; the injunction prohibited removal of the tanks from Socony's premises unless they were cut up for scrap. As a result, Northern was unable to use the tanks until almost three years had elapsed. In 1963, after a hearing, the temporary injunction was dissolved and the permanent injunction was denied. The sufficiency of the evidence to support the verdict below of damage caused by malicious prosecution*fn1 is not disputed.

All but one of Socony's points on appeal relate to evidentiary rulings. The most troublesome is whether the trial court erred in excluding evidence of the condition of the tanks; Socony claims this evidence would have proved that it instituted the chancery suit in October 1960 not out of malice but because of "genuine apprehension as to the consequences of the removal and re-use of 35 year old storage tanks." Judge Gibson based his ruling on the collateral estoppel effect of the findings of the chancellor; these, inter alia, were that Socony sold the tanks in August 1960 because it "wanted to close down an uneconomical operation and not because of a safety consideration" and that Socony itself had been using the tanks "for the purpose for which they were intended to be used." We need not decide, however, whether the district judge correctly applied the doctrine of collateral estoppel to this aspect of the case. During his opening statement to the jury, counsel for Socony stated:

Our evidence will tend to show that the tanks were 35 years old and that we considered -- and leaked.

We considered them very dangerous.

That is why --

Counsel for Northern thereupon objected on the ground that the chancellor's findings foreclosed this argument. The following colloquy then took place:

THE COURT: Yes, I have ruled that before, what the Chancellor found as fact, is final, as far as this Court is concerned.

MR. FEEN [for Socony]: Well, I am not opposing it at all.

THE COURT: Well, all right.

MR. FEEN: I am not. * * *

Thus, at the very outset of this retrial, when Socony was presenting its theory of the case, it did not oppose a ruling of the court that the chancellor's findings precluded proving that Socony was concerned with the condition of the tanks for safety reasons. Thereafter, according to the record before us, when the court made the exclusionary rulings Socony now complains of, it did not adequately explain to the court why it believed the collateral estoppel doctrine was being misapplied,*fn2 or the relevance of its questions, even when directly asked by the trial judge.*fn3 Under these circumstances, we find no error in the exclusionary rulings. Cf. United States v. Vater, 259 F.2d 667, 672 (2d Cir. 1958). Also on the issue of motive, Socony claims it was prevented from showing that it acted on the advice of counsel when it sued in the state court. However, Socony calls to our attention only one question, addressed to Socony's Division Attorney; he was asked only if he had advised Socony of the ...

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