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

• Decision Date: 26 December 1963
• Docket Number: 17325.,No. 17324,17324
• Citation: 325 F.2d 605
• Parties: The FIDELITY & CASUALTY COMPANY OF NEW YORK and General Accident Fire & Life Assurance Corporation, Ltd., Appellants, v. J. A. JONES CONSTRUCTION COMPANY, Appellee. J. A. JONES CONSTRUCTION COMPANY, Appellant, v. The FIDELITY & CASUALTY COMPANY OF NEW YORK and General Accident Fire & Life Assurance Corporation, Ltd., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

325 F.2d 605 (1963)

The FIDELITY & CASUALTY COMPANY OF NEW YORK and General Accident Fire & Life Assurance Corporation, Ltd., Appellants, v. J. A. JONES CONSTRUCTION COMPANY, Appellee.

J. A. JONES CONSTRUCTION COMPANY, Appellant, v. The FIDELITY & CASUALTY COMPANY OF NEW YORK and General Accident Fire & Life Assurance Corporation, Ltd., Appellees.

Nos. 17324, 17325.

United States Court of Appeals Eighth Circuit.

December 26, 1963.

John W. Barron, Little Rock, Ark., for appellants. Jacob Sharp, Jr., Little Rock, Ark., with him on the brief.

W. A. Eldredge, Jr., Little Rock, Ark., for appellee. Smith, Williams, Friday & Bowen, Little Rock, Ark., of counsel.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and DAVIES, District Judge.

VAN OOSTERHOUT, Circuit Judge.

This is an action for indemnity. Plaintiffs, liability insurance carriers for Erhart, Eichenbaum, Rauch & Blass, architects, paid judgments obtained in the Arkansas state court against the architects by representatives of four of the employees of J. A. Jones Construction Company (Jones) injured or killed by a cave-in of a seventeen-foot vertical basement excavation. Such excavation was made by Jones in the performance of its primary contract for the construction of a Penney store building in Little Rock, Arkansas. The architects were employed to supervise the construction of the building and to perform certain duties imposed by the Little Rock building code hereinafter discussed. Liability of the architects was predicated upon their negligence. The judgments against the architects were affirmed by the Arkansas Supreme Court. Erhart v. Hummonds, 232 Ark. 133, 334 S.W.2d 869.

Plaintiffs by payment of the judgments have been subrogated to all rights of indemnity which the architects may have against Jones. Plaintiffs stand in the shoes of the architects. If the right of the architects to indemnity is established, plaintiffs are entitled to recover. Jurisdiction, based upon diversity of citizenship, is established.

Plaintiffs contend that Jones' construction contract with the owner provides indemnity for them for the judgments paid and that in any event they are entitled to equitable indemnity upon the basis that as between the architects and Jones the injury was caused by the primary negligence of Jones.

Judge Young, in a well-considered opinion reported at 200 F.Supp. 264, denied defendant's pretrial motion for summary judgment. Such opinion and the opinion of the Arkansas Supreme Court in Erhart set out in considerable detail the facts pertinent to the present controversy and hence we will set out only the basic facts necessary for an understanding of the issues presented by this case as the need therefor arises in the course of this opinion.

Judge Young in his opinion just mentioned discusses in considerable detail the controlling law. He points out that under Arkansas law the policy of workmen's compensation coverage protects employers who have paid compensation from actions to enforce contribution among tort-feasors but that there is nothing in such policy which prevents the enforcement against an employer of an express contract of indemnity. See C & L Rural Elec. Co-op. Corp. v. Kincaid, 221 Ark. 450, 256 S.W.2d 337.

The trial court submitted the case to a jury upon special interrogatories. The two interrogatories here material, with the jury's answers thereto, are:

"1. Do you find from a preponderance of the evidence that the defendant or its agents, servants or employees were guilty of negligence and that such negligence, if any, was a proximate cause of the cave-in of the Penney Building excavation on or about March 4, 1957?

Yes ------- ANSWER (Yes or No)

"2. If your answer to Interrogatory No. 1 is `No\', then do not answer this or any further interrogatories. If your answer to Interrogatory No. 1 is `Yes\', then do you further find from a preponderance of the evidence that the architects or their agents were guilty of negligence in failing to stop the work on the Penney Building excavation prior to March 4, 1957 and that such negligence, if any, was a proximate cause of the cave-in?

Yes -------- ANSWER: (Yes or No)"¹

After verdict, plaintiffs filed a motion for judgment and request for finding of fact to the effect that the architects were guilty of no negligence. Such motion was overruled and final judgment was entered dismissing the complaint. This is an appeal from such judgment.

The defendant has filed a cross appeal from the court's denial of its several motions for summary judgment and directed verdict.

I.

Plaintiffs have failed to establish the existence of an express contract of indemnity running in favor of the architects under the circumstances here presented. The rules governing the requisites and validity of contracts generally apply to indemnity contracts. The language employed must clearly and definitely show an intention to indemnify against the loss or liability involved. Anthony v. Louisiana & Arkansas Ry., 8 Cir., 316 F.2d 858, 863.

The contract between Jones and the owner is quite extensive. Many of the material portions of such contract are set out in the trial court's opinion at pp. 268-269 of 200 F.Supp. In substance, the contractor agrees to properly construct the Penney store building and assumes all risk of damage or injury to persons or property and indemnifies the owner against claims on account of such damage or injury. The contractor agrees in connection with excavation to erect such protective bracing and shoring as may be necessary to prevent cave-in of the banks. Article 38 reads in part:

"Art. 38. Architect\'s Status. — The architect shall have general supervision and direction of the work. He is the agent of the Owner only to the extent provided in the Contract Documents and when in special instances he is authorized by the Owner so to act, and in such instances he shall, upon request, show the Contractor written authority. He has authority to stop the work whenever such stoppage may be necessary to insure the proper execution of the Contract.

"As the architect is, in the first instance, the interpreter of the conditions of the Contract and the judge of its performance, he shall side neither with the Owner nor with the Contractor, but shall use his powers under the Contract to enforce its faithful performance by both."

No written contract was entered into between the architects and the owner. The architects were employed to supervise the construction after the building contract had been entered into and became effective.

Section 204 of the Little Rock Building Code ordinance provides:

"Inspection and Special Engineering Supervision.

"Special Engineering Supervision: Any owner or his agent engaged in the erection or causing the erection of a building or structure where the estimated value exceeds $25,000 shall employ a registered architect or a licensed engineer to supervise the construction of the building. Such architect or engineer shall be licensed under the laws of the State of Arkansas and his service shall extend over all important details of framing, erection, and assembly and he shall render full inspection service and adequate supervision on such buildings.

"* * * He * * * shall have the authority to compel the removal of defective materials or to suspend or stop work, pending the ruling of the Building Inspector."

The value of the building here exceeds $25,000.

The Supreme Court of Arkansas with respect to the architects duties in the situation here presented states:

"As indicated, the architects were paid, in addition to the fee for preparing the plans and specifications, $12,000 by the owners to see to it that the terms of the contract between the owners and the contractors were complied with. The contract provides that the general contractor `shall erect such protection as may be required, or as directed by the architect, maintain same, and maintain any existing protections, all in accordance with the governing laws, rules, regulations and ordinances.\' And, further, the `contractor shall do all shoring necessary to maintain the banks of excavations, to prevent sloughing or caving, and to protect workmen.\' The contract further provides: The architect `shall have general supervision and direction of the work —. He has authority to stop the work whenever such stoppage may be necessary to insure the proper execution of the contract.\' It was a question for the jury as to whether the architect was negligent in failing to stop all work until the shoring on the east wall was made safe for the workmen." 334 S.W.2d 869, 872.

The architects' status went beyond that of agent or employee of the owner. The owner had no control over the architects with respect to the safety supervision required by the Little Rock Building Code.

Jones by his contract doubtless indemnifies the owner against all damage claims arising out of the construction. The owner is not involved in the present controversy. We find nothing in the contract which manifests any intention upon the part of the owner and Jones to provide indemnity for the architects. Some contention is made that the architects are covered by the contract as a third party beneficiary. While such doctrine is recognized in Arkansas, it applies only where it is clearly shown that the contracting parties intended to contract for the direct benefit of the third party. Freer v. J. G. Putman Funeral Home, Inc., 195 Ark. 307, 111 S.W.2d 463; Carolus v. Arkansas Light & Power Co., 164 Ark. 507, 262 S.W. 330; see Halliburton Co. v. Norton Drilling Co., 5 Cir., 302 F.2d 431, 435.

Here it cannot fairly be said that the contracting parties intended to provide indemnity for the architects. This is particularly true with respect to injuries proximately caused by the architects own negligence.

Even in the situation of indemnity covering the contracting parties themselves, the cases require a clear expression of intent to include indemnity against...