Aluminum Co. of America v. Hully

• Decision Date: 15 December 1952
• Docket Number: No. 14488.,14488.
• Citation: 200 F.2d 257
• Parties: ALUMINUM CO. OF AMERICA v. HULLY et al.
• Court: U.S. Court of Appeals — Eighth Circuit

200 F.2d 257 (1952)

ALUMINUM CO. OF AMERICA v. HULLY et al.

No. 14488.

United States Court of Appeals Eighth Circuit.

November 25, 1952.

Rehearing Denied December 15, 1952.

Larned A. Waterman, Davenport, Iowa (Charles D. Waterman, Davenport, Iowa, Otto C. Bauch, Des Moines, Iowa, and Lane & Waterman, Davenport, Iowa, on the brief), for appellant.

Wendell B. Gibson, Des Moines, Iowa, (Walter L. Stewart, Neill Garrett, and Gibson, Stewart & Garrett, Des Moines, Iowa, on the brief), for appellee.

Before SANBORN, WOODROUGH and COLLET, Circuit Judges.

WOODROUGH, Circuit Judge.

This action was brought by the co-partnership here referred to as the asbestos contractor¹ to recover the unpaid balance for work and materials furnished by it under a written contract in the construction of the Works of the defendant Aluminum Company of America, herein referred to as Alcoa, at Davenport, Iowa. The plaintiff had performed its contract insofar as it had agreed "to furnish all supervision, labor, materials, tools, equipment, hauling, unloading and all other things necessary for the completion of installation of Johns-Manville (asbestos)² pipe covering for steam and condensate return pipe lines, valves, fittings, etc. at Owner's Davenport Iowa Works". It had earned $219,111.13 under the terms of the contract and had received $187,692.54. It prayed judgment for the balance of $31,418.59. The aluminum company did not deny the contract nor the amount earned under it nor the amount received, but it alleged a set-off in the amount of $26,599.00 which it claimed the right to deduct from the $31,418.59 and it tendered and kept open the tender of the difference of $4,819.59. When this suit was brought against it, it offered to pay the tendered amount into court.

The amount it claimed as a set-off was the amount which it had been obligated to pay out for judgment, interest, costs, expenses and attorney fees in a personal injury action brought against it in the State court in Iowa by one Earl Barnes. Barnes was employed by the asbestos contractor as one of its asbestos applicators in the performance of its contract with the aluminum company and while so employed in the aluminum company's factory building, referred to as the Remelt Building, he suffered personal injuries through the operation of that company's travelling crane which struck him and pinned him against the wall. At the moment he was struck he was not actually applying asbestos but was moving out of the reach of certain gases from the fluxing of a furnace in the building which gases he thought to be dangerous. He was intending to return to applying asbestos when the gases passed away which, it developed, would be only a matter of minutes. In his action he attributed his damages to negligence of the aluminum company in the operation of the crane.

That company notified the asbestos contractor and called upon it to defend the action, asserting that it was obligated to such defense and to indemnify the aluminum company under Article 24 of the Contract, reading as follows:

"Article 24. Liability To Others.

"The Contractor shall save and hold the Owner harmless from and against all liability, claims and demands on account of personal injuries, including death, or property loss or damage to others (including Contractor and employees of Contractor) arising out of or in any manner connected with the performance of this contract, whether such injury, loss or damage shall be caused by the negligence of Contractor, a subcontractor hereunder, Owner or otherwise and the Contractor shall at his own expense defend any and all actions based thereon and shall pay all charges of attorneys and all costs and other expenses arising therefrom."

The asbestos company having refused to assume defense of the Barnes action and having denied liability in respect to it under Article 24 of its contract, was impleaded in the action by Alcoa as a defendant in third party proceedings. Such proceedings were ordered docketed separately by the State court and were continued until Barnes's case was tried. After Barnes recovered his judgment against Alcoa that company voluntarily dismissed the third party proceedings without prejudice.

In this action the only issue tried was whether or not Alcoa was entitled to the set-off and deduction claimed by it. The trial of that issue was to the court without a jury and the defenses asserted by the contractor and considered and passed on by the court were to the effect (1) that the provisions of Article 24 of the contract relied on by Alcoa were contrary to public policy and void, and (2) that the injuries to Earl Barnes did not arise out of and were not in any manner connected with the performance of the contract within the meaning of Article 24 of the contract.

The court adopted the stipulation of the facts submitted by the parties as its findings of fact. It declared that Article 24 was not ambiguous but that it "will be strictly construed", and applying such "strict construction" the court noted the fact that Barnes had temporarily quit applying asbestos and was moving out of the reach of gas from the furnace fluxing at the time when he was struck by the crane and because of that fact the court concluded that the personal injuries of Barnes did not arise out of and were not in any manner connected with the performance of the contract. It was the view of the court that only such injuries as might happen to Barnes when he was in the act of applying asbestos would be covered by the indemnity provisions of Article 24.

The court held that when so strictly construed the contract was not contrary to public policy or void.

In the view taken by the court it found that it was unnecessary to consider other defenses asserted against the set-off. It concluded for the reasons stated, that Alcoa was not entitled to make a deduction for the set-off. Judgment was entered accordingly in favor of the contractor for the full amount of its claim with costs. Alcoa appeals.

It contends that the court erred in applying a strict construction to the unambiguous contract of indemnity embodied in Article 24 and it argues that that contract should be read and applied like contracts generally so as to carry out and not to defeat the intention of the parties and the purpose for which it was executed. It also contends that the contract is valid when so construed and applied and that the personal injuries to Barnes did arise out of and were connected directly or indirectly with the performance of the contract within the fair intendment and meaning of the indemnity provision.

On the trial of the case the parties submitted to the court the following "simplified statement of the facts" in the case of Barnes against Alcoa in the State court.

"On November 24, 1948, at about 11:00 A.M. Earl Barnes was injured. Barnes and a co-worker, as a part of the work being performed by Contractor pursuant to said contract, were engaged in insulating a valve located in the steel girders supporting the roof of the building known as the Remelt Building. A furnace operated by Alcoa was fluxed, which resulted in the release and upward flow of gases to this location. Barnes and his co-worker left their work, which was not completed, because of the fumes. A jury question was presented as to whether a sudden emergency existed, creating a peril which Barnes believed, or had reasonable grounds to believe, endangered his safety. In any event Barnes and his co-worker stopped their work of applying asbestos, pulled up a rope used to raise materials from the floor to their scaffolding, traveled along a steel beam across to the north wall of the building and each slid down a column onto a crane rail. The crane, which was either in operation or commenced operation immediately, moved toward Barnes along the rail and Barnes was caught between the front truck of the crane and the wall of the building with resultant injuries. The crane was being operated by Alcoa, allegedly for the exclusive benefit of Eichleay Corporation another contractor as transportation for a worker. Negligence in the operation of the crane was charged and there was a jury question on this issue. The question of Barnes\' contributory negligence was also submitted to the jury."

In addition to the "simplified statement", an extensive and particularized statement of the facts adduced at the trial of the Barnes case was also contained in narrative form in the stipulation submitted. There were also included the following instructions to the jury which were given by the State court in the submission of the case.

Number 18 of the Court's Instructions was as follows:

"It is conceded, and the evidence in this case shows without dispute that on and for some time prior to November 24, 1948 the plaintiff Earl Barnes, was an employee of the Central Asbestos and Supply Company, and that said company had contracted with the defendant to handle the insulation of pipes and other insulating details in and about the manufacturing plant of said defendant, and that at the time of the accident in question the plaintiff, as an employee of such company, was engaged in work pertaining to said contract. The plaintiff, therefore, was what is known under the law as an `invitee\' upon the premises of the defendant at the time of the accident.

"An `invitee\' to a place of business is defined in law as one who comes there, either at the express or implied invitation of the owner or occupant, on business of mutual interest to both, or in connection with the business of the owner.

"It is the duty of the owner or operator of a place of business, toward an invitee, to exercise reasonable care, to see that the premises are reasonably safe for the use of the invitee, and to use reasonable care that conditions shall not be allowed to exist on the premises which imperils the safety of the invitee; but such owner is not the insurer of the safety of the invitee."

Number 20 was as...