United States v. Seckinger

• Citation: 408 F.2d 146
• Decision Date: 28 February 1969
• Docket Number: No. 23432.,23432.
• Parties: UNITED STATES of America, Appellant, v. M. O. SECKINGER, Jr., t/a M. O. Seckinger Company, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

408 F.2d 146 (1969)

UNITED STATES of America, Appellant, v. M. O. SECKINGER, Jr., t/a M. O. Seckinger Company, Appellee.

No. 23432.

United States Court of Appeals Fifth Circuit.

February 28, 1969.

Morton Hollander, William Kanter, Attys., Dept. of Justice, Washington, D. C., for appellant.

John G. Kennedy, Savannah, Ga., for appellee.

Before JOHN R. BROWN, Chief Judge, and GOLDBERG and AINSWORTH, Circuit Judges.

JOHN R. BROWN, Chief Judge:

This case began sounding in tort but through a simple twistification, General Guaranty Ins. Co. v. Parkerson, 5 Cir., 1966, 369 F.2d 821, of the Federal impleader rule, F.R.Civ.P. 14(a), plus a prior final judgment, it is now here after several dismissals for failure to state a claim, for a decision on the propriety of the most recent dismissal. We are called upon like many times in the past,¹ to determine if a contract² calls for indemnity or is merely a simple responsibility clause. This case would be one of a simple nature except for two factors: first, in a prior suit, the indemnitee has been found negligent, and we must decide if this bars his recovery, and second, another wrinkle, Mike Hooks, Inc. v. Pena, 5 Cir., 1963, 313 F.2d 696, 1963 A.M.C. 355, is that the United States is a primary party to the contract. We are not here dealing with merely a contract entered into between two private parties. Rather we are confronted with a contract having direct and significant public interest. Cf. J. M. Huber Corp. v. Denman, 5 Cir., 1966, 367 F.2d 104.

The facts can be severely capsulated.³ In 1956, Claimant, an employee of Contractor, was injured when he came into contact with a high voltage wire while working on a pipe job that Contractor was performing at the Paris Island Marine Depot, South Carolina. Claimant filed an FTCA suit, 28 U.S.C.A. § 1346 (b) (1964), against the Government in South Carolina, for negligence in not deenergizing the wire and for not warning the workers of the danger involved. The Government filed a third-party claim⁴ against Contractor alleging that Claimant's injuries were caused by Contractor's negligence, and asking for recovery against Contractor for all sums recovered by Claimant from it. Contractor, contending that the Government's third-party claim failed to state a claim upon which relief could be granted, moved to dismiss. The motion was granted.⁵ Thereupon the suit by Claimant against the Government went to trial in the District Court in South Carolina. The Government was found negligent and Claimant awarded $45,000.

Thereafter the Government instituted the present suit against Contractor in the Southern District of Georgia asserting that Contractor's negligence caused Claimant's injuries, and that under the express terms of the contract between the parties (see note 2, supra), Contractor was required to indemnify the Government. Contractor's motion to dismiss this complaint was granted. The Court had a double-barrelled basis for its dismissal. The first was that this suit was barred by res judicata since the Government had not appealed from the prior dismissal of its impleader claim. The second was that a mere examination of the contract showed that it is not one which would allow the Government, who had been found negligent in a prior trial, to recover its losses from Contractor. This appeal followed.

The prior dismissal of the Government's claim (see note 5, supra) was without prejudice to refiling. We hold that dismissal on the ground of res judicata was erroneous since the Trial Court expressly left it open for the Government to pursue its claim at a later date.

The question at the outset is what law is to govern, State (South Carolina) or Federal? We think the simple answer is that Federal law must control.⁶ The first and certainly one of the leading cases in this area is Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838. There the Court held that "the application of state law * * * would subject the rights and duties of the United States to exceptional uncertainty." 318 U.S. at 367, 63 S.Ct. at 575, 87 L.Ed. at 842. There is obviously a need for uniformity in results relative to claims presented by the United States to the Federal Courts for solution.⁷ As the discussion on the ultimate merits reveals, there is more than enough difficulty in trying to synthesize a rule that could safely be followed by a multistate corporate business enterprise in determining the construction and enforceability of indemnity contracts without imposing the same uncertainty and burden on the national sovereign in its undertaking to have contractors perform essential work within its wide sphere of governmental responsibilities. Anything having such a direct touch upon the national treasury should likewise be resolved on standards having like national uniformity. But to conclude that it is Federal law, not State (South Carolina) law, that governs, is no solution. It merely states the problem for there is no clearly defined Federal law, which means that with divergent views in the 50 states, we must make the choice.

At the outset the Government seeks to escape from the necessity of any choice and certainly the prospect of our adopting, as a Federal rule, the majority rule. It does this by asserting that its agreement with Contractor is not one for indemnity at all, whether indemnity based upon the Government's negligence as indemnitee or the indemnitor-Contractor's negligence, or a mixture of both. It insists that the engagement is a simple but direct one of putting responsibility on Contractor for all damages to property or persons, although its manner of statement and the absence of the classic terminology of indemnity might well have a bearing upon how it is to be construed and applied. We think this is a much too literal, unrealistic approach. If the Government is right on the construction of it, then in its operative effect it will afford to the Government all of the advantages of an indemnity and will impose on Contractor all of the correlative disadvantages. Thus the stage is set for a determination of the significance negligence on the part of the indemnitee should have. For a while this case suffers from all of the uncertainties of a swift and unilluminating disposition on bare bones pleadings.⁸ The very assertion of the case by the Government inevitably casts it in the role of a negligent actor. The Government's claim against Contractor rests on the fact that it has had to pay substantial sums to Claimant and this was the direct result of a finding of negligence on its part. Its allegation that Contractor was negligent and that this negligence of the Contractor, not that of the Government, was the real proximate cause of Claimant's injuries does not save the day. It simply precipitates the problem of whether this contract (see note 2, supra) imposes on Contractor the burden of absorbing all of the loss brought about by active negligence of the indemnitee if, in some appreciable way, negligence even though slight, of the indemnitor contributed to the damage.

That question is essentially one of contract construction, but a construction viewed from the standpoint of the parties, their relative freedom of action and real bargaining strength and the principles of construction imposed by the pertinent law (State or Federal) concerning the liberality or strictness with which such agreements are to be read. For we would certainly not consider for a moment in fashioning Federal law, that a contract to indemnify one against the consequences of the indemnitee's own negligence is contrary to public policy and thus void altogether, even though there is some division among the courts.⁹

In approaching this as a question of law, really choice of law, governing Federal contracts and contractual relationships with governmental contractors, we think everything points toward the desirability of seeking not only a uniformity for the national sovereign but doing that in a way which will more or less simultaneously effect a uniformity with local law. The easiest way to achieve that is to declare that the Federal interest will best be served by choosing the majority rule. Of course, to choose the law is not to eliminate uncertainty or difficulty or the possibility of variable results. But it will lay a standard concerning the approach which the reviewing court is to have and those principles which the court may properly regard to be the performance of acceptable judicial functions and prerogatives.

The majority rule has been variously stated. 41 Am.Jur.2d Indemnity § 15, at 701 (1968): "An overwhelming majority of jurisdictions adhere to the general rule requiring an unequivocal expression of intent before allowing indemnity for the indemnitee's own negligence * * *."

Although this court in Jacksonville Terminal¹⁰ rejected the "majority rule" for Florida because it "rests on an unsound and dangerous foundation" 296 F. 2d 256, 262, and because "the majority rule presumes that courts have the power to alleviate or eliminate this burden by construing the indemnity agreement in a manner which is patently inconsistent with the plain and clear meaning of the language employed by the contracting parties" and thus constitutes "a dangerous and unwarranted extension of the judicial function" 296 F.2d 256, 262, it recognized that the so-called majority rule had been fairly stated in Batson-Cook.¹¹ We described the process of contract construction in Batson-Cook this way. "In this process, it is the law which steps in and tells the parties that while it need not be done in any particular language or form, unless the intention is unequivocally expressed in the plainest of words, the law will consider that the parties did not undertake to indemnify one against the consequences of his own negligence. The question then is: does the specific contract in dispute clearly reflect such a purpose?" 257 F.2d at 412.¹²

Of course, to...