Safway Rental & Sales Co. v. Albina Engine & Machine Works

• Decision Date: 23 April 1965
• Docket Number: 7618.,No. 7617,7617
• Citation: 343 F.2d 129
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: SAFWAY RENTAL & SALES COMPANY, Appellant, v. ALBINA ENGINE AND MACHINE WORKS, INC., Albina Engine and Machine Works, Inc., as Trustee for Glens Falls Insurance Company, and Glens Falls Insurance Company, Appellees. ALBINA ENGINE & MACHINE WORKS, INC., and Glens Falls Insurance Company, Cross-Appellants, v. SAFWAY RENTAL & SALES COMPANY, Cross-Appellee.

343 F.2d 129 (1965)

SAFWAY RENTAL & SALES COMPANY, Appellant, v. ALBINA ENGINE AND MACHINE WORKS, INC., Albina Engine and Machine Works, Inc., as Trustee for Glens Falls Insurance Company, and Glens Falls Insurance Company, Appellees.

ALBINA ENGINE & MACHINE WORKS, INC., and Glens Falls Insurance Company, Cross-Appellants, v. SAFWAY RENTAL & SALES COMPANY, Cross-Appellee.

Nos. 7617, 7618.

United States Court of Appeals Tenth Circuit.

February 5, 1965.

Rehearing Denied April 23, 1965.

Gordon F. Rainey, Oklahoma City, Okl. (Rainey, Flynn & Welch, Oklahoma City, Okl., of counsel, with him on the brief), for appellant and cross-appellee.

John A. Johnson, Oklahoma City, Okl., for appellees and cross-appellants.

Before PICKETT, LEWIS and SETH, Circuit Judges.

SETH, Circuit Judge.

No. 7617.

Albina Engine and Machine Works, Inc. and Safway Rental & Sales Company entered into an agreement whereby certain swinging scaffolds owned by Albina were to be rented in Oklahoma by Safway. The scaffolds were stored and serviced by Safway, and the proceeds from rentals were divided between the parties to the agreement. A workman was injured as one of the rented scaffolds fell when a cable broke, and Albina and Safway were named as defendants in a negligence action brought by this injured man. In the negligence action, Albina filed a cross-claim against Safway, but it was dismissed by the trial court. The injured workman recovered against Albina and Safway. The case was appealed to this court as Albina Engine and Machine Works, Inc. v. Abel, 305 F.2d 77 (10th Cir.); the judgment was affirmed, but the trial court was directed to reinstate and try the cross-claim of Albina. After the case was submitted, the trial court made Glens Falls Insurance Company a cross-complainant. This insurance carrier had defended the negligence action for Albina and had paid one-half of the judgment.

The trial court on the cross-claim found for Albina and Glens Falls in the amount which the insurance carrier had paid on the judgment, plus the amount of $3,765.56. The latter was the amount paid by Albina as expenses, but not fees, incurred by it during the defense of the negligence action together with a part of a premium on a supersedeas bond. The trial court however denied the claim for Glens Falls' attorney fees and expenses.

The trial court found that the appellant Safway had obligated itself to service and warehouse the equipment which was the subject of the joint adventure agreement. The court further found that there was no express agreement requiring Safway to maintain the equipment in a safe condition nor to repair and service it in a workmanlike manner, nor specifically to indemnify Albina for any loss which might occur as a result of a failure by Safway to so service the equipment. The court however found that such obligations were implied in the express undertakings. The court further held that the loss from the workman's injury resulted from the appellant's failure to perform these express and implied contractual duties, and that such loss was due "wholly and solely" to the negligence of one Hayes, who worked at the Safway warehouse. Hayes had actual knowledge that the cable which failed had been burned and damaged on a previous occasion, and with such knowledge rented the equipment to the injured workman's employer. The trial court further concluded that under the law of Oklahoma, one joint adventurer may be liable to the other for breach of contract; that a service agreement of this character is one upon which a joint adventurer may be held so liable to another. The trial court further concluded that such an agreement to service gives rise to an obligation to indemnify the party to whom the duty is owed.

In the opinion of this court on the appeal in the negligence action, Albina Engine and Machine Works, Inc. v. Abel, 305 F.2d 77, we held that the arrangement and course of dealings between Albina and Safway created a joint adventure. Thus this cross-claim is one brought by one joint adventurer against the other, and is based primarily upon the contract between the parties which provided, as mentioned above, that Safway would handle the rental of the equipment which was owned by Albina in the Oklahoma area and would make a division of the rental proceeds.

Appellant's basic argument is that Albina and Safway were joint tort-feasors by reason of the vicarious liability arising from the negligence of the employee who should have replaced the cable in the scaffolding, and this, coupled with the Oklahoma doctrine that a joint adventure does not create a separate entity, makes both of the joint adventurers employers of the negligent person. Appellant then argues that there is no indemnity between joint tort-feasors under the conditions here presented. Strong reliance is placed by appellant on Peak Drilling Co. v. Halliburton Oil Well Cementing Co., 215 F.2d 368 (10th Cir.). Appellant urges also that there was no implied duty to maintain the equipment in safe condition, and that Glens Falls is the real party in interest, but was not in privity with the joint adventure agreement.

The record shows that Safway alone rented the equipment to the users, and men it paid handled the storage, servicing, and delivery to the users. Albina had no men in the field performing these duties; its place of business is in Oregon, its representatives come occasionally to Oklahoma, but had not been there for nearly two years. There was however considerable correspondence between Albina and Safway's manager at Oklahoma City, but this did not constitute direction of the employees. The president of Safway testified at the negligence trial that the rentals were not under the control of Albina except that it furnished the equipment. The record also shows that Albina had no actual control over the employees of Safway, and had no knowledge of the damage to the equipment which here caused the injury.

The record amply supports the trial court's findings that by the express agreement to service the equipment Safway was obligated to do so in a workmanlike manner so that it was safe for use for its intended purpose. The danger to the user of such cable-supported working platforms from defects in the cables is obvious, and "servicing" includes keeping the cables in safe working order. The breach of this obligation by the employees responsible to Safway is demonstrated by the record. The facts are established, but the parties to this appeal urge that different legal implications arise or different doctrines should be applied.

The contractual relationships and the duties thereby placed on Safway determine the remedies available to Albina on its cross-claim. The legal conclusion that they were joint adventurers was of importance in the negligence action where they faced claims of a third party, but it is of less significance in this action between the two of them based primarily on contract rather than on doctrines of tort. Safway failed to perform its contractual duty, and the injuries to the user of the equipment, and the resulting involvement of Albina were certainly foreseeable consequences. This is no more than a statement of the basic law of contracts and of damages. The fact that the parties to the contract may also be joint adventurers, and the fact that by reason thereof they were vicariously liable in the tort action does not alter these doctrines nor prevent their application. This is probably sufficient to dispose of the case, but in view of the parties' argument based on indemnity, the Oklahoma law on implied indemnity should be considered.

The early Oklahoma case of Cain v. Quannah Light & Ice Co., 131 Okl. 25, 267 P. 641, considered the general rule as to indemnity between parties jointly liable in negligence actions. It held that generally there can be no indemnity between parties in pari delicto. This case was discussed at some length in United States v. Acord, 209 F.2d 709 (10th Cir.), cert. den. 347 U.S. 975, 74 S.Ct. 786, 98 L.Ed. 1115, which also applied the law of Oklahoma. This court there held that the two parties were both "primarily" liable to the injured party, each owed him a like duty, and there could be no indemnity under the Oklahoma authorities. In Peak Drilling Co. v. Halliburton Oil Well Cementing Co., 215 F.2d 368, we again considered an indemnity claim arising under Oklahoma law. It was there found that the parties were joint tort-feasors with no contractual ties, and negligence of the same kind or character was alleged as to them both by the tort claimant. We there said that indemnity depends upon the character or kind of negligence which caused the injury, and further that indemnity arises out of "an independent legal relationship, under which the indemnitor owes a duty either in contract or tort to the indemnitee apart from the joint duty they owe to the injured party." In this cited case the court stated there was no such independent duty. Hence there was no basis for indemnity. In the case at bar, however, there was clearly such a duty owed by appellant.

The record here also shows a distinct difference in the kind and character of the negligence of Albina and of Safway as to the negligence claimant. Considering the parties again in their performance of the contract between them, the appellant Safway had the direct dealings with those who rented the equipment, it had the duty to service the equipment. The failure was to remedy a known defect in a part of the scaffold essential for its safe use. This failure was the active negligence on the part of the employees who were accountable in their duties only to Safway. The trial court found, and it is clearly supported by the record, that there was no active negligence on the part of Albina, and it was held liable in the negligence action only secondarily or by reason of the joint adventure. Thus the two prerequisites noted in the Peak Drilling Co. case were fulfilled, and the...