Burlingame Motor Co. v. Peninsula Activities, Inc.

• Decision Date: 26 February 1971
• Citation: 15 Cal.App.3d 656,93 Cal.Rptr. 376
• Court: California Court of Appeals Court of Appeals
• Parties: BURLINGAME MOTOR COMPANY, Inc., Cross-Complainant and Appellant, v. PENINSULA ACTIVITIES, INC. and Dick Bullis, Inc., Cross-Defendants and Respondents. Civ. 26297.

Page 376

93 Cal.Rptr. 376

15 Cal.App.3d 656

BURLINGAME MOTOR COMPANY, Inc., Cross-Complainant and Appellant, v. PENINSULA ACTIVITIES, INC. and Dick Bullis, Inc., Cross-Defendants and Respondents.

Civ. 26297.

Court of Appeal, First District, Division 4, California.

Feb. 26, 1971.

Maloney, Chase, Fisher & Hurst, San Francisco, for appellant.

Hanna & Brophy, San Francisco, for respondent Peninsula Activities, Inc.

Channell, McNamara & Lewis, William R. Channell, Walnut Creek, for respondent Dick Bullis, Inc.; Richard G. Logan, Oakland, of counsel.

DEVINE, Presiding Justice.

Indemnity among tortfeasors is the subject of this appeal.

On May 5, 1961, Edward Bister, an employee of Dick Bullis, Inc., an automobile dealer, was injured by an explosion in the company's paint shop. He was pumping gasoline from a drum. A moment before the explosion he heard a sound like that of two wires shortcircuiting each other. There were, in fact, as testified by the fire inspector, who investigated the accident, two bare hot wires close by. Bister sued Mausser Electric Company, Inc., Burlingame Motor Company, Inc. (hereinafter sometimes referred to as Burlingame Motors), and Peninsula Activities, Inc. In the action so far as it affected plaintiff, Bister, there was a trial by jury on the issue of liability but not on that of damages. The jury's verdict was in favor of plaintiff and against Burlingame Motors and Peninsula Activities, but was in favor of defendant Mausser Electric Company. By stipulation of the interested parties, judgment was entered in favor of the plaintiff and against the two defendants theretofore found liable, in the sum of $250,000.

During the pendency of plaintiff's case, Burlingame Motors cross-complained against Dick Bullis, Inc., and State Compensation Insurance Fund, the workmen's compensation carrier for Dick Bullis, Inc. ¹ Later, the cross-complaint brought in by amendment the cross-defendant, Peninsula Activities. Indemnity was sought against both cross-defendants for $250,000 plus counsel fees and costs.

The relationship of the parties is this: Burlingame Motors was lessee of premises used in the automobile business. The owner-lessor was Mazie Bromberg, wife of the president of Burlingame Motors. Burlingame Motors subleased the entire premises to Peninsula Activities, which in turn, in 1958, subleased the rear half of the property to Dick Bullis, Inc. In 1959, while the Peninsula Activities lease was in full force and effect, Dick Bullis, Inc. began occupying the entire property as a showroom for its cars. Thereafter, Bullis, Inc. remitted the monthly rental to appellant, Burlingame Motors, on behalf of Peninsula Activities. Appellant was advised of this arrangement and at no time objected.

On February 23, 1961, the sublease between Burlingame Motors and Peninsula Activities was terminated and a written sublease was executed between appellant and Dick Bullis, Inc., to be effective May 1, 1961. The indemnity provision upon which appellant relies, in so far as its claim depends upon express indemnity, is not spelled out in either of the subleases (that is, to Peninsula Activities and to Dick Bullis, Inc.), but is incorporated in each of them by reference as it is set forth in the master lease from Mazie Bromberg to Burlingame Motors. It reads: 'The lessee, as a material part of the consideration to be rendered to the lessor under this lease, hereby waives all claims against the lessor for damages to goods, wares and merchandise, in, upon or about the said premises and for injuries to persons in or about the said premises, from any cause arising at any time, and the lessee will hold the lessor exempt and harmless for and on account of any damage or injury to any person, or to the goods, wares and merchandise of any person, arising from the use of said premises by the lessee, or arising from the failure of the lessee to keep the premises in good condition and repair, as herein provided. The lessee shall take out and keep in force during the term thereof, at the lessee's expense, public liability insurance in companies satisfactory to the lessor against any liability to the public incident to the use of or resulting from any accident occurring in or about the said premises, in the amount of $ to indemnify against the claim of one (1) person, and $ against the claims of two (2) or more persons for injuries to the person and $25,000.00 against any claim for injury to property. The same shall insure the contingent liability of the lessor and copies of the said policies or certificates thereof shall be deposited with the lessor; and the lessee shall obtain the written agreement of the insurors to notify the lessor in writing prior to any cancellation of insurance.'

Burlingame Motors offered to sell to Dick Bullis, Inc. a compressor, but the offer was declined. A large amount of equipment had to be removed by Burlingame Motors, so that it retained the right in the lease to occupy that part of the shop in which the compressor was until August 1, 1958, paying rent for the limited occupancy. The sublease also provided that Burlingame Motors could remove certain equipment. The compressor was removed, probably on July 30 or 31, 1958. In the original personal injury trial, there was conflict of evidence as to who actually did the removing, but the jury has resolved this conflict and for present purposes it may be taken as established that one or more employees of Burlingame Motors, who were untrained in matters electrical, disconnected the compressor and left protruding the two wires which, three years later, became a cause of the accident. This condition was discovered by Doug Tipton, an employee of Dick Bullis, Inc., who checked the wires and found them to be hot. He and Bud Mitchell, another employee of Dick Bullis, Inc., found and removed the fuses which controlled the hot wires, which were then taped and tucked behind the conduit. Tipton reported the incident to Richard Bullis, who approved and thought that Tipton had done the proper thing. Mr. Bullis was president not only of Dick Bullis, Inc., but also of Peninsula Activities, Inc. There was a close relationship between these two sublessees.

During the two years that he worked in the area near the wires, Tipton noticed that some of the employees would put the fuses back in and throw the switch to an 'on' position. In order to prevent this, he wrote on the switch box the words 'Leave Off,' and he also advised fellow workers not to throw the switch on.

While the Peninsula Activities lease was still in effect, Dick Bullis, Inc., supervised, controlled and directed the move of its paint and body shop to the leased premises. The shop was established in the area where the live wires were located. At the time of the accident Bister was working in the paint shop. It is undisputed that sparking from the live wires onto the gasoline vapors brought about the explosion.

The Case Against Peninsula Activities, Inc.

Following the jury's verdict in the personal injury case and the fixing by stipulation of the amount of damages due to Bister, the court proceeded with the next stage of a trifurcated trial, the action of Burlingame Motors against Peninsula Activities' implied or equitable indemnity. When the accident happened, the lease between Burlingame Motors and Peninsula Activities had terminated; wherefore, contractual indemnity was not an issue.

There was a good deal of discussion as to whether the jury should render a verdict or should answer an 'interrogatory.' The judge decided upon the latter but following the jury's answer, which was given unanimously, that the negligence of Burlingame Motors was active, the judge made a finding to that effect. At this second stage of the trial, the jury, by stipulation of the two parties to it, Burlingame Motors and Peninsula Activities, was allowed to consider all of the evidence which had been put before it at the first stage. The terms of the lease and of the sublease were permitted to be presented and argued to the jury, with the exception of the indemnity clause, in order to show the relationship between the parties and the duty on the part of the sublessee to keep the premises in good repair.

During the personal injury phase of the case, plaintiff Bister's counsel had argued to the jury, obviously with telling effect that the negligent leaving of the wires in an exposed condition by Burlingame Motors' employees created a 'time bomb.' This, he argued, was a proximate cause, although there were concurring causes. In the indemnity trial, counsel for Peninsula Activities adopted the 'time bomb' argument, again with persuasive effect. Counsel for Peninsula Activities argued that not only was there a considerable length of time between the removal of the compressor and the explosion, but also the employees of Dick Bullis, Inc., whose actions were ratified by the president of Peninsula Activities, knew of the condition of the wires and were willing to have them remain in the taped condition and, indeed, Mitchell had been uncertain at first whether he might not make some use of the protruding wires (although he did not say so to any employee of Burlingame Motors). Other arguments were offered on both sides, at the end of which the jury decided an essentially factual question which the court, by its judgment and by its order denying the motion for new trial, approved.

We have no hesitancy in following the decision of the jury to the effect that the negligence of appellant was of active character. The removal of the compressor was done, and the creating of the perilous condition was effected by Burlingame Motors itself. This was not a situation in which a third person had acted negligently (as an electrical contractor might have done), and Burlingame Motors merely failed, negligently, to discover the condition. Burlingame Motors chose to do the work itself and did so negligently.

We do not find substantial,...