Berry v. V. Ponte & Sons

• Decision Date: 19 March 1979
• Citation: 400 A.2d 114,166 N.J.Super. 513
• Parties: Keith BERRY, Plaintiff, v. V. PONTE & SONS, Defendant-Appellant, and American Hoist & Derrick Co., Economy Baler Co., Harris Press and Shear Corp., Baler Service and Equipment Co., Inc., West Street Trucking, John Doe, Individually or trading as proprietorship, partnership or corporation, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 513

166 N.J.Super. 513

400 A.2d 114

Keith BERRY, Plaintiff, v. V. PONTE & SONS, Defendant-Appellant and American Hoist & Derrick Co., Economy Baler Co., Harris Press and Shear Corp., Baler Service and Equipment Co Inc., West Street Trucking, John Doe, Individually or trading as proprietorship, partnership or corporation Defendants-Respondents.

Superior Court of New Jersey, Appellate Division.

Argued Feb. 26, 1979.

Decided March 19, 1979.

Albert C. Lisbona, Montclair, for appellant, V. Ponte & Sons (Dwyer, Connell & Lisbona, Montclair, attorneys).

Glenn A. Montgomery, West Orange, for respondents, American Hoist & Derrick Co., Economy Baler Co. and Harris Press & Shear Corp. (Bennett & Bennett, West Orange, attorneys; Richard D. Bennett, West Orange, of counsel).

No appearance for plaintiff.

Before Judges CONFORD, PRESSLER and KING.

The opinion of the court was delivered by

PRESSLER, J. A. D.

Defendant-respondent American Hoist and Derrick Company (seller) sold an industrial machine to defendant-appellant V. Ponte and Sons (buyer). Their dispute arises out of an indemnity provision included in the contract of conditional sale whereby the buyer agreed to indemnify the seller from liability "arising from injury or damage to property or person, caused in any manner by the possession, use, or operation" of the machine. Plaintiff, an employee of the buyer, lost an arm as a result of an accident occurring while he was using the machine. He settled his claim against the seller during trial, and the seller sought to enforce its right to contractual indemnity against the buyer. The buyer appeals from an order granting that relief. We affirm.

The buyer's contentions in resisting application of the indemnity agreement to this settlement are first, that the seller, by reason of its assignment of the contract, lost its status as the indemnitee; second, that the scope of the indemnity agreement did not and was not intended to include injury arising from design or manufacturing defect; and third, that permitting a manufacturer to indemnify himself in respect of his potential liability based on strict liability in tort would offend public policy. ¹ We reject each of these contentions. The factual basis of the first of these contentions is the introductory language of the indemnity provision by which the buyer agreed to indemnify and hold harmless the "Secured Party." The argument which the buyer makes is that since the seller assigned the paper to a finance company virtually simultaneously with the execution of the contract, it is the finance company and not the seller who is the "Secured Party" and hence the finance company rather than the seller who is the indemnitee. We are satisfied that this argument misconceives both the language and intent of the agreement as a whole. In another clause of the contract, for example, it is stated, in explanation of the status of the contracting parties, that "Seller or any assignee hereof (is) hereinafter sometimes called the 'Secured Party.' " More importantly, however, the obvious purpose of the indemnification was to protect both the seller and its assignee, whichever or both of whom might be sued by an injured person. Excepting an exposure to liability of the seller which continues beyond the assignment simply because of its financing arrangements would, in our view, patently frustrate the basic purpose for which the seller included the indemnity clause in the contract in the first place.

The buyer alternatively argues that design and manufacturing defects were not intended to be included as indemnifiable acts of the seller, and if they were, the indemnity should not be enforceable because of the dictates of public policy. We disagree.

It has long been the law of this State that in the commercial setting, where there is potential for multi-party liability based on multi-party participation in an overall transactional chain, the parties in that chain are free to allocate among themselves, as a matter of business convenience or necessity, the overall insurance burden in respect of coverage for claims of third parties arising out of the transaction as a whole. The technique for such allocation is, of course, indemnification agreements, and such indemnification may, provided the parties so agree, indemnify one in respect of his own negligence. See, E. e., George M. Brewster & Son v. Catalytic Const. Co., 17 N.J. 20, 32-33, 109 A.2d 805 (1954); Stern v. Larocca, 49...