Booth-Kelly Lumber Co. v. Southern Pacific Co.

• Decision Date: 11 August 1950
• Docket Number: No. 12340.,12340.
• Citation: 183 F.2d 902,20 ALR 2d 695
• Parties: BOOTH-KELLY LUMBER CO. v. SOUTHERN PACIFIC CO. SOUTHERN PACIFIC CO. v. BOOTH-KELLY LUMBER CO.
• Court: U.S. Court of Appeals — Ninth Circuit

20 ALR 2d 695, 183 F.2d 902 (1950)

BOOTH-KELLY LUMBER CO. v. SOUTHERN PACIFIC CO.

SOUTHERN PACIFIC CO. v. BOOTH-KELLY LUMBER CO.

No. 12340.

United States Court of Appeals Ninth Circuit.

June 28, 1950.

Rehearing Denied August 11, 1950.

COPYRIGHT MATERIAL OMITTED

Veazie, Powers & Veazie and James Arthur Powers, Portland, Or., for Booth-Kelly Lumber Co.

Koerner, Young, Swett & McCulloch, James C. Dezendorf, Alfred H. Corbett, all of Portland, Or., for Southern Pacific Co.

Before HEALY, BONE and POPE, Circuit Judges.

POPE, Circuit Judge.

This was an action by Southern Pacific Company, a Delaware Corporation, against Booth-Kelly Lumber Company, an Oregon Corporation, seeking to recover sums which it had paid to settle a judgment against it by one Mack D. Powers, and for which Southern Pacific Company asserted Booth-Kelly Lumber Company was obliged to indemnify it.

On February 8, 1945, Southern Pacific Company was moving a train of cars over an industrial track, constructed pursuant to an agreement between it and Booth-Kelly, over the latter's premises at Springfield, Oregon. Booth-Kelly's servants had left a wood cart so near the track that the nearest corner of the cart was only 42 inches from the nearest rail, notwithstanding a covenant in the agreement that "structures, material, poles or other obstructions" on the premises should provide a "minimum side clearance of six feet" from the nearest rail. As Mack D. Powers, brakeman on the train, then undertook to climb out of the door of the side-door caboose, he was caught between the caboose and the wood cart.

When Powers brought suit against Southern Pacific to recover damages for his injuries under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., Southern Pacific gave notice thereof to Booth-Kelly with tender of defense and demand that such defense be undertaken by Booth-Kelly, because, the notice stated, it was its position that the injuries and damages were due to "the acts and/or omissions of Booth-Kelly Lumber Company * * * and were due to breach" of the contract mentioned. The tender was declined. Powers recovered a substantial judgment against Southern Pacific which the latter settled by payment of the sum of $44,699.46.¹ Southern Pacific's expenditures for costs and attorneys' fees amounted to $1869.63 more. Southern Pacific then filed its complaint in the present action, seeking recovery of the aggregate of these two sums.

The agreement referred to, and upon the construction of which decision in this case must in large part turn, was dated June 30, 1941. In it Southern Pacific was referred to as "Railroad" and Booth-Kelly as "Industry". It provided that Railroad should maintain and operate the spur track, approximately 2257 feet in length, and serve Industry thereon, and that it should be under control of Railroad which "shall have the right to use the same when not to the detriment of Industry". After providing that Industry would comply with the minimum clearances previously mentioned, the agreement contained a paragraph 7, providing for indemnity to Railroad in certain cases. The portion of this paragraph material here is as follows: "Industry also agrees to indemnify and hold harmless Railroad for loss, damage, injury or death from any act or omission of Industry, its employes or agents, to the person or property of the parties hereto and their employes, and to the person or property of any other person or corporation, while on or about said Track; and if any claim or liability, other than from fire, shall arise from the joint or concurring negligence of both parties hereto, it shall be borne by them equally."

The agreement authorized Railroad to disconnect the track if Industry ceased to do a substantial business on the track, or if Industry failed to perform its covenants under the agreement.

In prosecuting its complaint against Booth-Kelly, Southern Pacific asserted, as it does on this appeal, that it is entitled to recover the full amount of its outlay on account of the Powers judgment for three separate and independently sufficient reasons: (1) In leaving its wood cart within 42 inches of the track Booth-Kelly breached its agreement respecting minimum clearances. In consequence of this breach Powers was injured and as a result Southern Pacific was required to pay these sums. For these consequences which naturally followed from Booth-Kelly's breach, it should pay damages. (2) By the portion of paragraph 7, quoted above, Booth-Kelly agreed "to indemnify and hold harmless Southern Pacific for loss, damage, injury or death from any act or omission of Booth-Kelly, its employes or agents, to the person or property of the parties hereto and their employes, and to the person or property of any other person or corporation, while on or about said track; * * *." It is said that the duty to indemnify arises directly from this provision, since Southern Pacific's loss arises out of an act or omission of Booth-Kelly. (3) That wholly apart from the terms of the written agreement, since Booth-Kelly was guilty of "active negligence" in placing the cart as it was, and since the negligence of Southern Pacific for which it was held in the Powers case was only "passive negligence" in failing to warn its brakeman of the presence of the cart, the parties were not joint wrongdoers in pari delicto, but the efficient and primary cause of the accident was the negligence of Booth-Kelly, and therefore it is liable to Southern Pacific under the common law rule declared in City of Astoria v. Astoria & Columbia River R. Co., 67 Or. 538, 136 P. 645, 49 L.R.A.,N.S., 404.

On its part Booth-Kelly asserted, and now asserts, that the loss resulted solely from Southern Pacific's negligence; that it was so adjudged in the Powers action, and that the judgment there is res judicata to that effect; that the contract was without consideration and void, and to the extent it purported to relieve Southern Pacific of the consequences of its own negligence, it is in any event against public policy and unenforcible; that the loss did not result from any breach of contract by Booth-Kelly, but if there was such breach it was waived by Southern Pacific which is estopped to complain thereof; and that the portions of the contract upon which Southern Pacific relies were modified by custom adopted by the parties in its operation. As more fully stated hereafter, to the extent that these assertions raised questions of fact, the findings of the trial court were against Booth-Kelly.

The court made findings in the course of which it found: "Defendant was negligent in placing and leaving the wood cart within 42 inches from the spur track." "Defendant's negligence in this regard was the active, direct, proximate and primary cause of the injury to plaintiff's employee Powers." "Powers suffered injuries in the amount of $44,000." "Plaintiff suffered loss in the amount of $44,699.46 judgment costs and of $1,869.53 court costs and attorneys' fees, by reason of an act or omission of defendant * * * to an employee of plaintiff while on the industrial track." "The damage to Powers and the liability of plaintiff was the natural or necessary result of defendant's breach of contract." "Some elements of negligence on the part of plaintiff concurred to cause the accident."

As conclusions of law, after holding the spur track agreement valid, and that the claimed defenses of res judicata and waiver had not been maintained, the court concluded: "Defendant is not obligated to pay plaintiff $44,568.99, or any part thereof, independent of the industrial spur track agreement." "Plaintiff is entitled to recover judgment against defendant for the sum of $22,000.00 on the contract, together with its costs and disbursements incurred herein." Judgment was entered accordingly.

The reason for the court's conclusion that recovery should be for no more than $22,000 is explained in the opinion, in which, after holding that Southern Pacific may recover upon the contract, the court said: "However, since the railroad was in some measure also at fault which contributed to the accident, judgment is given under the contract for only one-half of the damage." Here the court clearly refers to the last clause in paragraph 7 of the contract which reads: "* * * and if any claim or liability, other than from fire, shall arise from the joint or concurring negligence of both parties hereto, it shall be borne by them equally." The amount awarded was one half of what the court found was the amount of the injuries to Powers.

Both parties have appealed.

In considering the separate theories advanced by Southern Pacific to support its claim for full recovery, we find it unnecessary to pass upon the validity of its first contention, listed above. Whether losses of the kind here suffered by Southern Pacific could be said to be damages which flow from the breach (in respect to maintaining clearance) "in the natural course of events or which may reasonably be presumed to have been within the contemplation of the parties", Smith v. Pallay, 130 Or. 282, 279 P. 279, 281, is a question which might well present difficulties.

We consider more to the point the argument of Southern Pacific based on the provisions of that part of paragraph 7 by which Booth-Kelly expressly agrees "to indemnify and hold harmless Railroad for loss, damage, injury or death from any act or omission of Industry * * * to the person or property of the parties hereto and their employees * * * while on or about said track". This is language which deals specifically with indemnity. We think that the parties must have intended that their obligations relating to indemnity should be defined by the paragraph which specifically refers to that subject. Deep Vein Coal Co. v. Chicago & E. I. Ry. Co., 7 cir., 71 F.2d 963.

We also agree with the court below that the question of liability is not to be determined under any common law obligation apart from the contract. W...