Cylinder Ownership

Legal issues for distributors

By Richard P. Schweitzer, Esq.

Because gas cylinders are easily transported and often stay at customers' sites for lengthy periods, over time many distributors lose track of their cylinders. In addition, companies going out of business or selling off unneeded inventory add to the mix of cylinders with names on the shoulder or neck ring that might not correspond to the rightful owner.

As a result, distributors often face one of two scenarios in which cylinder ownership may be questioned:

1. A customer brings in a cylinder for refilling, but the distributor questions whether the customer actually is the rightful owner of the cylinder; or
2. A distributor suspects that another party is filling the distributor's cylinders without permission.

In both cases, DOT regulations provide that “a cylinder filled with a hazardous material may not be offered for transportation unless it was filled by the owner or with the owner's consent.” 49 CFR _173.301(e). Thus, in order to fill a cylinder, a distributor must either own the cylinder or have the consent of the owner.

What if a customer asks you to fill a cylinder that you suspect the customer does not own? Perhaps the cylinder has another distributor's name on it, or the situation otherwise does not “feel right.” How do you meet the consent requirement?

Determining Ownership
The first issue is determining ownership. You can ask the customer to present a bill of sale or other document to establish title to the cylinder(s). In most cases, however, that type of documentation will not be available. As an alternative, you can have the customer sign a form indicating that the customer is the rightful owner of the cylinder(s) presented for filling. Exhibit 1 contains some basic language to accomplish this end.

Obviously, if the customer is unwilling to sign such a document, you should not fill the cylinders as requested.

Although the DOT regulation does not specify “written” consent of the owner, you are always better off if you can get the consent in writing. But if a customer does present a bill of sale or other document of title for the cylinders, the regulations would allow a distributor to fill the cylinder with the oral permission of the owner. Still, I strongly recommend that distributors require a customer sign a written statement consenting to filling the cylinders as a condition of doing business.

Filling Without Permission
What if a distributor suspects that someone else is filling the distributor's cylinders without permission? In this case, there are three potential wrongful acts:

1. The filler would be violating the DOT rule cited on the previous page by failing to get the owner's consent before filling.
2. The filler might be liable for “conversion,” which is a tort where one party has taken, or converted, the property of another party for the first party's use. The aggrieved distributor may sue the filler for conversion in a civil court action to recover the lost value of the converted cylinders.
3. There could be a criminal offense as well. If the filler has stolen the cylinders, the filler would be guilty of theft, burglary or some other crime. Alternatively, the filler could be guilty of receiving stolen property or some other offense where the filler knew he or she did not own the cylinders but used them in any event.

Take Action
In a number of cases, distributors have confronted the filler directly by sending a letter indicating that the distributor knows the other person is filling the distributor's cylinders without permission. The letter cites the DOT prohibition, as well as the law of conversion and the possible criminal offenses of theft or receiving stolen property. The letter then demands that the filler return the cylinders to their rightful owner.

This type of demand letter usually achieves the desired results. Most important, it puts the filler on notice that he or she is violating the law; that in itself is often enough to force the filler to return the cylinders.

If this does not work, some distributors have resorted to filing a complaint with local law enforcement. To file an effective complaint, you must document as best as possible that the cylinders are actually yours, and also provide evidence that the cylinders are being filled without your permission.

Get Evidence
Some distributors have also used private investigators to accumulate evidence that another party is filling the distributor's cylinders without permission. One distributor even had an investigator take the distributor's cylinder, clearly showing the owner's name, to a competitor's branch to have it filled without question. A private investigator can help you develop the evidence necessary to bring a successful civil case or to generate an arrest and prosecution for a criminal offense.

The best way to resolve these issues, of course, is to avoid them by using a cylinder tracking system that allows you to verify the location of your entire cylinder inventory at all times. Although it involves an initial investment, it might be cheaper in the long run than trying to track down lost or stolen cylinders.