Jacksonville Terminal Co. v. Railway Express Agency, Inc.

Decision Date11 January 1962
Docket NumberNo. 18868.,18868.
Citation296 F.2d 256
PartiesJACKSONVILLE TERMINAL COMPANY, Appellant, v. RAILWAY EXPRESS AGENCY, INCORPORATED, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Elliott Adams, Jacksonville, Fla., McCarthy, Adams & Foote, Jacksonville, Fla., of counsel, for appellant.

John S. Cox, Jacksonville, Fla., Cox, Grissett, MacLean & Webb, Jacksonville, Fla., of counsel, for appellee.

Before TUTTLE, Chief Judge, and JONES and WISDOM, Circuit Judges.

TUTTLE, Chief Judge.

Jacksonville Terminal Company (JTC), appeals from a judgment of the trial court, entered upon the jury's answers to three interrogatories, rejecting its claim for indemnity against the defendant, Railway Express Agency (REA).

JTC was the lessor and REA the lessee of railway terminal property in Jacksonville, Florida. The lease contained the following provisions:

"5. It is further agreed that all of the railway tracks constructed upon the land hereby leased and demised * * * shall be constructed and maintained by the Terminal Company according to its standard, but cost of such construction and maintenance shall be paid for by the Express Company, provided, however, that the Terminal Company shall construct and maintain at its expense all railway tracks necessary to afford proper connections to railway tracks aforesaid, and the Terminal Company shall operate all the said railway tracks."
"9. Inasmuch as the station facilities are operated and maintained for the joint and common use of all Railway Companies using the Jacksonville Terminal Company\'s station and property, it is hereby expressly stipulated that the said Express Company will fully indemnify and save harmless the said Terminal Company and the Railway Companies using the Terminal Company\'s station and property from and against all charges, expenses, loss, damage, injuries, suits, or judgments, arising by reason of or in connection with occupation and use of the premises of the Terminal Company by the Express Company under this agreement, whether to the property of, or persons in employ of, the Terminal Company * * *"

On March 9, 1954, one Johnson, a switchman employed by JTC, suffered a back injury while working in a yard consisting of a system of railroad tracks used for switching express cars. Although the yard was leased to REA by JTC, it was maintained and operated by JTC in accordance with Paragraph 5 of the lease. The cars upon which Johnson was working had already been loaded by REA with express matter, and were on a spur or storage track in the leased yard. Johnson was engaged in classifying and taking out the cars which were to be incorporated in an outgoing train.

At the time of his injury, Johnson was aligning a draw bar on one of the cars so that it would couple upon impact with another car. The injury resulted from his stepping on a rotten crosstie which caused his foot to slip down into a hole approximately 6 to 8 inches deep and 12 to 14 inches wide alongside the crosstie.

Johnson was compensated for his injury in the following manner: JTC provided him with medical services and paid for his lost time, amounting to $18,917.89. Johnson then sued JTC in a state court under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., and Federal Safety Appliances Act, 45 U.S.C.A. § 1 et seq. REA rejected JTC's demand to defend Johnson's action, and Johnson thereafter recovered a judgment against JTC for another $43,483.08.

JTC then brought this suit, claiming that, under paragraph 9 of the lease, REA was required to indemnify JTC for the above expenses, plus the expense of defending Johnson's state court action. The total claimed was $68,062.62.

REA resisted this suit on the following principal grounds: First, that the injury did not arise "by reason of or in connection with occupation and use of the premises of the Terminal Company by the Express Company" within the meaning of paragraph 9 of the lease; second, that the injury was caused solely by JTC's negligence in failing to maintain the storage track in a safe and proper condition; and third, that the injury was caused solely by JTC's breach of its contractual duty, under paragraph 5 of the lease, to maintain the track "in accordance with its standard."

With respect to the meaning of the indemnity clause (Paragraph 9), the trial court charged the jury as follows:

"Now, the question then is, that you must answer here, is whether or not this loss and damage * * * arose by reason of or in connection with the occupation and use of these premises by the Express Agency, or did it arise from some other reason? The plaintiff has the burden of showing that it arose by reason of the occupation and use of the premises by the Express Agency.
"Now, in that framework you are required under this first question to decide whether or not these injuries and the incident loss and expenses * * * arose by reason of or in connection with the occupation and use that the Express Company was there, or they arose from some other reason; that is, if they arose from the occupation and use of the premises by the Terminal Company and not by reason of or in connection with the use and occupation of the premises by the Railway Express Company, why then, of course, you would answer that question in the negative.
"If you find from a preponderance that they did arise by reason of the use and occupation * * * of the leased premises by the Express Agency, you should answer that question in the affirmative."

The trial court further instructed the jury to return a verdict for REA if it found that Johnson's injury was caused by JTC's negligence or breach of contract in failing to maintain the storage track in a safe and proper condition. In other words, the court construed the indemnity clause as not protecting JTC from losses due to its own negligence or failure to perform satisfactorily its obligations under other provisions of the lease agreement.

In accordance with these instructions, the jury returned a verdict for REA, finding (1) that Johnson's injury did not arise "by reason of or in connection with occupation and use of the premises of the Terminal Company by the Express Company," and (2) that the injury was caused by JTC's negligence and breach of contract in failing to maintain the storage track in a safe and proper condition.

In resolving the issues presented by this appeal, there are two preliminary points which must be kept in mind. First, since the lease agreement was made and performed in Florida, it is clear that the law of that state controls as to the construction and validity of the indemnity clause.1 Pacific Portland Cement Co. v. Food Machinery & Chemical Corp., 9 Cir., 178 F.2d 541; second, it is also clear that, in Florida, as elsewhere, the cardinal rule of construction is to ascertain the intention of the contracting parties and to give effect to that intention if it can be done consistently with legal principles. St. Lucie County Bank & Trust Co. v. Aylin, 94 Fla. 528, 114 So. 438. Where the language chosen by the parties, given its ordinary and natural meaning, unambiguously manifests that intention, the judicial task is at an end. McGhee Interests v. Alexander National Bank, 102 Fla. 140, 135 So. 545.

With these propositions in mind, we conclude that the judgment below was erroneous, and that a judgment should have been entered in favor of the plaintiff-appellant, JTC, for the amount claimed.

An examination of the trial court's instructions reveals a failure to stress or explain what we think is the crucial language in the indemnity clause. The court emphasized the phrase "by reason of," which, given its ordinary and natural meaning, implies a need for some sort of a causal relationship between REA's occupation and use of the premises and the resultant injury. On the other hand, the court minimized the significance of the phrase "in connection with," which does not ordinarily refer to causal connection; and there is no indication that the parties intended this phrase to convey other than its ordinary meaning in the context of the indemnity clause.

Moreover, the jury was instructed to consider whether the loss "arose from the occupation and use of the premises by the Terminal Company and not by reason of or in connection with the use and occupation of the premises by the Express Company." This clearly implies that if the loss arose by reason of JTC's use and occupation of the premises, it could not have arisen in connection with REA's use and occupation of the premises. In our view, these elements were not mutually exclusive. We fail to see why the injury could not have arisen by reason of JTC's use and occupation of the premises and still have arisen in connection with REA's business on the premises.

The Supreme Court of Florida has interpreted the phrase, "in connection with" in the following manner:

"The words, `in connection with that company\'s railways\' as used in relation they bear to the whole clause, are equivalent of `in the interest and upon the employment of that company in and about its railways and the operation and management thereof, and all matters connected with, relating to, and growing out of the proper and legitimate business of the company as the possessor and operator of such railways." J. Ray Arnold Lumber Corporation of Olustee v. Richardson, 105 Fla. 204, 141 So. 133, 135.

Giving this phrase the meaning attributed to it by the Florida Supreme Court, we find no escape from the conclusion that Johnson's injury arose "in connection with" the occupation and use of the terminal premises by REA. Even though the Express yard was maintained and operated solely by JTC, it is clear that Johnson's job of incorporating the fully loaded express cars into an outgoing train "grew out of the proper and legitimate business" which REA conducted on the Terminal premises. As JTC points out in its brief:

"The injury to Johnson occurred on the
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