Fidelity and Casualty Co. of NY v. JA Jones Const. Co.

• Decision Date: 22 November 1961
• Docket Number: No. LR 61 c 17.,LR 61 c 17.
• Citation: 200 F. Supp. 264
• Parties: FIDELITY AND CASUALTY COMPANY OF NEW YORK, A corporation, and General Accident, Fire and Life Assurance Corporation, Ltd., Plaintiffs, v. J. A. JONES CONSTRUCTION COMPANY, A corporation, Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

200 F. Supp. 264

FIDELITY AND CASUALTY COMPANY OF NEW YORK, A corporation, and General Accident, Fire and Life Assurance Corporation, Ltd., Plaintiffs, v. J. A. JONES CONSTRUCTION COMPANY, A corporation, Defendant.

No. LR 61 c 17.

United States District Court E. D. Arkansas, W. D.

November 22, 1961.

Cockrill, Laser & McGehee, Rose, Meek, House, Barron, Nash & Williamson, Little Rock, Ark., for plaintiffs.

Mehaffy, Smith & Williams, Little Rock, Ark., for defendant.

YOUNG, District Judge.

This is an action for indemnity. Plaintiffs are insurance carriers subrogated to the rights of the architectural firm which prepared plans for and supervised the construction of a J. C. Penney store at Sixth and Main Streets, Little Rock, Arkansas. Defendant was the general contractor for the job. The action arises from a cave-in of an excavation wall on March 4, 1957, for which the architectural firm was held liable to four of defendant's employees killed or injured thereby. See Erhart v. Hummonds, 334 S.W. 2d 869 (Ark.1960). Defendant, before answering, has moved for summary judgment. Fed.R.Civ.P. 12(b), 28 U.S.C.A.; 2 Moore, Federal Practice, § 12.09 3.

Defendant's motion for summary judgment, though primarily asserting a failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b) (6), also alleges that plaintiffs' cause of action is barred by the statute of frauds and by "* * * the statute of limitations and/or laches." As this is not an action to charge the defendant upon its special promise to answer for the debt, default, or miscarriage of another, but rather for its own conduct, it is not an action barred by the statute of frauds. As to the action being barred by statutes of limitation or by laches, it may be noted that normally the statute of limitations runs in favor of the principal obligor, where indemnity is owed, from the time when payment of the obligation is made. Restatement, Restitution § 77 (1937). Here the cave-in out of which this action arises occurred March 4, 1957, the actions by, or on behalf of, the four employees were consolidated and tried May 6-9, 1959, affirmed on appeal May 2, 1960 (rehearing denied May 30, 1960), and this action for indemnity filed in this court January 24, 1961. Defendant admits that a demand was made upon it to defend the four suits prior to their trial in May 1959, and defendant's attorney states in an affidavit attached to the motion for summary judgment that he "maintained a comprehensive file in this case throughout the proceedings in the Circuit Court of Pulaski County and subsequent appeal to the Arkansas Supreme Court" which discloses that defendant was apprised of the four suits from the time of the filing of the initial suit in the latter part of 1957. Defendant makes no allegation of inexcusable delay in the commencement of this action, nor does it allege prejudice on it as the result of any such delay. The defense of limitations or of laches is therefore not well taken.

I

Defendant's assertion that the complaint fails to state a claim upon which relief can be granted is based upon two facts; there is no contract between defendant and the architectural firm to whose rights these plaintiffs are subrogated, and the four workmen to whom the architectural firm was held liable were defendant's employees and received Workmen's Compensation Act benefits from defendant's compensation insurance carrier. Not having specifically entered into a contract having an indemnity clause, defendant insists that the Arkansas Workmen's Compensation Act exclusively measures its responsibility and liability, directly or indirectly, for injury to its employees.

The question thus presented — whether an employer who has paid compensation act benefits to an employee must indemnify a third person held liable for the employee's injury, where, as between the third person and the employer, the injury was the fault of the employer — has received conflicting answers from American courts. With apparent unanimity courts have held that the policy of workmen's compensation coverage protects employers who have paid compensation from actions to enforce contribution among tortfeasors, but have found nothing that prevents the enforcement against such an employer of his express indemnity contract. 2 Larson, Workmen's Compensation §§ 76.21, 76.40 (1952); Note, 8 Ark.L.Rev. 512 (1954); accord, C & L Rural Elec. Co-op. Corp. v. Kincaid, 221 Ark. 450, 256 S.W.2d 337 (1953). Where the action is for indemnity from an employer who has not given an express indemnity contract, the cases are not in agreement, though upon analysis a general agreement may be detected among the majority of these cases.

Thus, where the action for indemnity is among parties whose only legal relationship is that of joint feasors, indemnity as well as contribution is denied. Slattery v. Marra Bros., Inc., 186 F.2d 134, 138-139 (2d Cir.1951) (L. Hand, J.,); Peak Drilling Co. v. Halliburton Oil Well Cementing Co., 215 F.2d 368 (10th Cir. 1954), affirming Calvery v. Peak Drilling Co., 118 F.Supp. 335 (W.D.Okla. 1954). But "(i)n the absence of an express contract the obligation to indemnify may arise from undertakings implicit in relationships assumed." Atella v. Gen. Elec. Co., 21 F.R.D. 372, at 374 (D. R.I.1957); e. g., Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956) (On rehearing) (Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq.); General Elec. Co. v. Moretz, 270 F.2d 780 (4th Cir. 1959) (Tennessee Workmen's Compensation Act, I.C.A. § 50-901 et seq.); American Dist. Telegraph Co. v. Kittleson, 179 F.2d 946 (8th Cir.1950) (Iowa Workmen's Compensation Act, I.C.A. § 85.1 et seq.) (Riddick, J.); Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 N.Y. 175, 15 N. E.2d 567 (1938) (New York Workmen's Compensation Act, Workmen's Compensation Law, § 1 et seq.). See 2 Larson, supra, § 76.43; Note: Third Party's Right to Contribution and Indemnity Under Workmen's Compensation in Tenn., 13 Vand.L.Rev. 772, 778-79 (1960). It is, then, only a partial defense to assert a lack of an express contract containing an indemnity agreement, for neither at common law nor under workmen's compensation acts is indemnity made to depend upon the existence of such an express contractual clause. Restatement, Restitution § 76 (Comment b.) (Common law); Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, 350 U.S. at 132-133, 76 S.Ct. at 236-237; 2 Larson, supra, §§ 76.43, 76.44(a), (b) (Workmen's compensation acts).

II

Is there, then, such a breach of duty¹ by defendant to be found in the facts related in this record as will raise at law an obligation on defendant's part to indemnify these plaintiffs?

In February of 1957 defendant, J. A. Jones Construction Company, contracted with one Seventh & Main Realty Company to construct for the Realty Company a building to be located at Sixth and Main Streets, Little Rock, Arkansas; the building was to be constructed according to specifications and drawings prepared by the architectural firm of Erhart, Eichenbaum and Rauch of Little Rock, and was to serve, upon completion, as a store for the J. C. Penney Company. As the Penney Company declined to supervise construction of the building, the architectural firm was retained by the owners to perform this function. As supervisors of construction they exercised the authority of their principal, Seventh & Main Realty Company, on behalf of, and in the interest of, the principal, but the contract between defendant and the Realty Company gave them a somewhat greater authority than merely that of an agent, for it provided in several instances that the methods of construction to be selected, or the manner of performance thereof, was subject not only to the architects' approval, but that the architects might direct the contractor in the performance of his contract, specifying such methods and procedures as they thought proper and necessary. The contractual provisions set out in the complaint are as follows:

"General Conditions:

"All work shall be executed in strict conformity with all laws and regulations of Federal, State, County, or City, authorities, and/or local utility companies having jurisdiction at the location of this work. None of the terms or provisions of the drawings or this specification shall be construed as waiving or cancelling any said laws and regulations. (GC 04).

"Construction Equipment — Except and unless otherwise specified, each Contractor shall furnish at his own cost and risk, all tools, hoists, derricks, apparatus, including power for same, scaffolding and all temporary work, material and supplies necessary for expeditious prosecution of this contract. (GC 14).

"Responsibilities of Contractor — The General Contractor shall take over and assume all responsibility for the entire premises. He shall erect such protection as may be required, or as directed by the Architect, maintain same, and maintain any existing protection, all in accordance with the governing laws, rules, regulations and ordinances. All such protection unless of a permanent nature, shall be removed from the premises when directed.

"Each Contractor shall be responsible for his own work and every part thereof, and all work of every description used in connection therewith. He shall specifically assume, and does assume, all risks of damage or injury from whatever cause to property or persons used on or in connection with his work, and of all damage or injury from any causes to property wherever located resulting from any action or operation under this particular Contract or in connection with his work under this Contract, and to undertake and promise to protect and defend the Owner against all claims on account of any such damage or injury. (GC 15).

"Supervision — Each Contractor shall keep on his work, during its progress, a competent superintendent, and any

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