Cooper v. Watson

• Decision Date: 04 June 1971
• Docket Number: No. 42874,42874
• Citation: 187 N.W.2d 689,290 Minn. 362
• Parties: Gerald A. COOPER, Plaintiff, v. Evelyn WATSON, et al., Defendants, Evelyn WATSON, defendant and third-party plaintiff, Appellant, v. James MILLER, third-party defendant, Respondent.
• Court: Minnesota Supreme Court

Page 689

187 N.W.2d 689

290 Minn. 362

Gerald A. COOPER, Plaintiff, v. Evelyn WATSON, et al., Defendants, Evelyn WATSON, defendant and third-party plaintiff, Appellant, v. James MILLER, third-party defendant, Respondent.

No. 42874.

Supreme Court of Minnesota.

June 4, 1971.

Syllabus by the Court

1. A right of indemnity arises where the one seeking indemnity has incurred liability because of a breach of duty owed to him by the one sought to be charged. Such a duty may arise by reason of a contractual obligation.

2. This court has held that the Workmen's Compensation Act does not bar an action for indemnity by the owner of an automobile against a garage owner if the owner of the automobile is held liable to an injured workman solely on account of the Safety Responsibility Act. This is also true where the automobile owner and the garage owner stood in the relationship of bailor and bailee respectively.

3. The holding of the trial court denying an automobile owner's claim for indemnity against the employer of an injured employee who brought an action for damages against the automobile owner gives retroactive effect to Minn.St. 176.061, subd. 10, made effective September 1, 1969. Such holding is contrary to the provisions of §§ 645.21 and 645.31 since the injury alleged by the employee-plaintiff in his lawsuit against the automobile owner was incurred December 12, 1968, and the legislature has not given the slightest hint of an intention that § 176.061, subd. 10, should be applied retroactively.

4. Minn.St. 645.21 expresses the principle that courts will presume that a statutory enactment applies to the future and not to the past. Section 645.21 applies to all laws without making any distinction between laws relating to procedure and those pertaining to substantive rights.

King, Rieke, Lommen & Cole, Minneapolis, for appellant.

Robb, Van Eps & Gilmore and Douglas Dale Reid, Minneapolis, for respondent.

Heard before KNUTSON, C.J., and NELSON, OTIS, PETERSON, and KELLY, J.j.

OPINION

NELSON, Justice.

This is an appeal from a summary judgment dismissing a third-party action on the ground that it is barred by Minn.St. 176.061, subd. 10. The issue brought before us is as follows: Does § 176.061, subd. 10, effective September 1, 1969, serve to bar unliquidated claims for indemnity against employers arising out of injuries to employees ocurring prior to the statute's effective date?

Minn. St. 176.061, subd. 10, provides:

'If an action as provided in this chapter prosecuted by the employee, the employer, or both jointly against the third person, results in judgment against such third person, or settlement by such third person, the employer shall have no liability to reimburse or hold such third person harmless on such judgments or settlements in absence of a written agreement to do so executed prior to the injury.'

Subd. 10 is an amendment added by L.1969, c. 936, § 4, which was made effective September 1, 1969. L.1969, c. 936, § 15. This fact the parties to this appeal are agreed upon. There is no provision in L.1969, c. 936, for the retroactive application of subd. 10.

No record was made of the special proceedings which resulted in the summary judgment appealed from. The parties and the trial court have agreed to the following statement of proceedings, made pursuant to Rule 110.03, Rules of Civil Appellate Procedure:

'The plaintiff served his complaint on appellant Evelyn Watson on November 26, 1969, seeking damages for personal injuries suffered in an automobile accident which occurred on December 12, 1968. The accident occurred on the premises of a gasoline service station owned and operated by respondent James Miller. On the day in question, Evelyn Watson left her automobile at Miller's service station to have certain repairs made. The plaintiff Gerald Cooper and the defendant Jeffrey D. Gibson were both employees of Miller on December 12, 1968, and were working at the station when Watson left her automobile there.

'Gibson was driving the Watson automobile in the garage area, and the plaintiff Cooper was allegedly directing the movement of the car. As a result of Gibson's alleged negligent operation of the Watson car, it was driven into the plaintiff and caused him injury. The plaintiff claimed and received benefits under the Workmen's Compensation laws from his employer's insurer. The subrogated interest of the workmen's compensation carrier is part of the plaintiff's total claim in this case.

'After receiving service of the plaintiff's complaint, Watson instituted third-party proceedings against Miller seeking indemnity. A cross-claim for indemnity was instituted against Watson's co-defendant Gibson. The latter, however, has not yet caused an appearance to be made in his behalf in these proceedings. The third-party claims were served on December 16, 1969.

'The respondent moved before the trial court on July 7, 1970, for summary judgment or dismissal of the third-party claim on the ground such claim was barred by the provisions of M.S.A. 176.061, subd. 10. The motion was opposed by counsel for Watson. On September 3, 1970, Judge Irving Iverson issued an order granting the respondent's motion. On October 9, 1970, the Clerk of District Court entered judgment against the appellant and in favor of the respondent.'

James Miller, respondent and third-party defendant, contends (and this reasoning apparently persuaded the trial court) that § 176.061, subd. 10, was intended to apply to all causes of action commenced against an employer after the effective date of the statute. Since Evelyn Watson, appellant and third-party plaintiff, did not commence her third-party action against the employer until December 16, 1969, well after the September 1, 1969, effective date of subd. 10, the trial court found the action to be barred by the statute because no written agreement to hold her harmless had been executed prior to the injury. Miller also contends that since appellant has made no payment and judgment has not been entered against her in the action brought by Cooper, she does not have a cause of action against his employer, nor does she have any vested right to indemnification.

The trial court proceeded on the theory that there was no genuine issue as to any material fact and determined that the third-party action was barred by § 176.061, subd. 10.

It is the contention of appellant that the employer's obligation to indemnify arises from the accident of December 12, 1968, and the relationship of the parties as of that date. She cites Lunderberg v. Bierman, 241 Minn. 349, 63 N.W.2d 355, 43 A.L.R.2d 865, in support on her contention. She argues that Lunderberg was the law prior to September 1, 1969, and that it secured to her indemnity without a written agreement. Certainly, to apply subd. 10 to the legal consequences of the accident and the relationships then in existence would be to apply the statute retroactively. It should therefore be noted that for the purpose of Miller's motion for summary judgment, it was conceded by him that, absent the bar of subd. 10, appellant would have a common-law action against him.

1. A right of indemnity arises where the one seeking indemnity has incurred liability because of a breach of duty owed to him by the one sought to be charged. Such a duty may arise by reason of a contractual obligation. Altermatt v. Arlan's Department Store, Inc., 284 Minn. 537, 169 N.W.2d 231.

2. The facts of the Lunderberg case are nearly identical to the facts of the instant case. In Lunderberg the owner of a car entrusted it to a garage owner for a 2,000-mile checkup. An employee of the garage owner was injured by the negligent operation of the car by another employee. This court held that the Workmen's Compensation Act does not bar an action for indemnity by the owner of the automobile against the garage owner if the owner of the automobile is held liable to the injured workman solely on account of Minn.St. 170.54 of the Safety Responsibility Act. The automobile owner and the garage owner stood in the relationship of bailor and bailee respectively. With respect to the bailee's duty under the bailment contract, this court noted (241 Minn. 355, 63 N.W.2d 360, 43 A.L.R.2d 872):

'It would be wholly unrealistic to hold that the bailee is liable for damages to the bailor's property but is not liable for damages resulting to the bailor by virtue of the fact that she has been compelled to pay a judgment entered against her due to the negligence of the bailee. The old common-law rule of nonliability is founded upon the nonliability of the bailor, who has no part in the negligent act causing injury to a third party. Now that such liability is imposed upon the bailor by our financial responsibility act (Safety Responsibility Act), we should accept the fact that the liability so imposed is as much a damage to her resulting from the bailee's negligent conduct as damage to the bailor's property would be. We therefore hold that, where the owner of an automobile has become liable to a third person injured by one to whom the owner has granted permission to drive his car solely by virtue of the financial responsibility act, such owner is entitled to recover indemnity from the operator of the car in the absence of any active negligence chargeable to the owner.'

3. If Minn.St. 176.061, subd. 10, is not applicable, appellant's right herein to claim indemnity is plainly acknowledged in Lunderberg, which presents a direct parallel to this case. The holding of the court below gives retroactive effect to subd. 10 contrary to the provisions of §§ 645.21 ¹ and 645.31. ² The injury alleged by plaintiff in the lawsuit here involved was incurred December 12, 1968, almost 9 months before the effective date of subd. 10. It is a historic fact that the language of subd. 10 first appeared in 1967 as part of §...