Concast, Inc. v. AMCA Systems, Inc., 91-2179
| Decision Date | 10 March 1992 |
| Docket Number | No. 91-2179,91-2179 |
| Citation | 959 F.2d 631 |
| Parties | CONCAST, INC., Plaintiff-Appellee, v. AMCA SYSTEMS, INC., doing business as Morgan Engineering, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Al J. Pranaitis, Hoagland, Fitzgerald, Smith & Pranaitis, Alton, for Joel Henry.
Daniel L. Schmidt, Jan E. Steinberg (argued), Peter Von Gontard, Sandberg, Phoenix & Von Gontard, St. Louis, Mo., for AMCA Systems, Inc.
James E. DeFranco (argued), Carl W. Lee, Gundlach, Lee, Eggmann, Boyle & Roessler, Belleville, Ill., for Concast, Inc.
Before POSNER, EASTERBROOK, and RIPPLE, Circuit Judges.
In 1979 Concast, Inc., undertook construction of a new continuous slab casting facility for Granite City Steel Co. in Illinois. Concast installed three heavy-duty cranes. AMCA Systems, Inc., designed and made the cranes, shipping them to the site in segments, which Concast assembled. Concast bought the cranes from AMCA under a purchase order providing, among other things, that AMCA as seller
agrees to indemnify and save harmless the Buyer [Concast] ... from and against all loss or expense (including costs and attorney's fees) by reason of liability imposed by law upon the Buyer, for damages because of bodily injury ... sustained by any person or persons ... arising out of or in consequence of the performance of this contract....
In 1984 Joel Henry, a millwright for Granite City Steel, was injured while using one of the cranes. Because of the workers' compensation laws, Henry could not sue Granite City Steel. Instead he sued Concast and AMCA. Concast filed this cross-claim invoking the indemnification clause. After settling with Henry for $15,000, Concast demanded that sum, plus legal expenses, from AMCA. Concast prevailed on motion for summary judgment. Although the district judge did not enter a proper judgment under Fed.R.Civ.P. 58, AMCA's appeal is within our jurisdiction under Bankers Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978).
Henry's complaint related objections to the design of the crane and lack of warning about risks, not its assembly. Indemnity under the common law is normal in such cases, Prosser and Keeton on The Law of Torts § 51 (5th ed. 1984), which creates something of a puzzle about why AMCA and Concast dispute the meaning of the contractual indemnity clause. Perhaps it is the provision for legal expenses? However that may be, AMCA's principal contention in the district court--that the clause violates the public policy of Illinois because it may require AMCA to indemnify Concast for Concast's own negligence--is no longer the sticking point. Instead AMCA insists that the clause expired when Concast accepted delivery of the crane.
Language is an unruly tool because meaning is contextual, and there are so many contexts--surrounding words, bargaining history, understandings of the author (or audience) and of other participants in the market, nature of the business transaction. Lists of this kind may be spun out at length. Rare is the text whose meaning cannot be complicated by one of these contexts. Although these many contexts can illuminate the text, a court captivated by the resulting ambiguity may defeat the central purposes of contract: to establish obligations for the present and allocate between the parties the risks of events that may occur in the future. By the time the future has arrived, either side can point to events that serve as additional contexts. When the inevitable tugs of the contexts lead to complex legal proceedings, certainty is defeated and costs of contracting rise.
Put into almost any of the possible contexts, the language of the AMCA-Concast contract is clear enough. The parties contemplated liability in tort arising out of this durable product and assigned that risk to AMCA, the designer and principal manufacturer. Henry complained of "bodily injury ... arising out of or in consequence of the performance of this contract" to supply the cranes. "[A]rising out of or in consequence of" is broad language indeed. Assigning liability to AMCA makes sense, for AMCA was better placed to curtail the injuries caused by its cranes, and thus to diminish the total costs of precautions and injuries. Concast and AMCA could share any resulting savings. Indemnification under the contract tracks the common law of torts and in addition recognizes that the full costs of injuries include the operation of the legal system. The danger caused by defective design or manufacture begins when the crane enters service; yet by AMCA's reasoning its contractual liability ends earlier. AMCA advances no reason (and we can think of none) why the...
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