Crosby v. General Tire & Rubber Co.

• Decision Date: 13 December 1976
• Docket Number: No. 75-2059,75-2059
• Citation: 543 F.2d 1128
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: James Robert CROSBY, Plaintiff, v. The GENERAL TIRE & RUBBER COMPANY, Defendant-Third-Party Plaintiff-Appellant, v. VULCAN PAINTERS, INC., etc., et al., etc., Third-Party Defendants-Appellees.

Page 1128

543 F.2d 1128

James Robert CROSBY, Plaintiff, v. The GENERAL TIRE & RUBBER COMPANY, Defendant-Third-Party Plaintiff-Appellant, v. VULCAN PAINTERS, INC., etc., et al., etc., Third-Party

Defendants-Appellees.

No. 75-2059.

United States Court of Appeals Fifth Circuit.

Dec. 13, 1976.

Charles E. Sharp, George M. VanTassel, Jr., Birmingham, Ala., for defendant-third-party plaintiff-appellant.

Bibb Allen, Birmingham, Ala., for Vulcan, etc.

Appeal from the United States District Court for the Northern District of Alabama.

Before RIVES, ^* GEWIN and MORGAN, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

I. Introduction.

A flash fire inside a chemical tank at the Columbus, Mississippi plant of General Tire and Rubber Company (General Tire) severely burned James Crosby, who was inside the tank painting it. The work was being done pursuant to a contract between General Tire and Vulcan Painters, Inc. (Vulcan), the Alabama company that employed Crosby.

Crosby received workmen's compensation from Vulcan. Then Crosby filed a suit against General Tire, claiming that General Tire had departed from the standard of ordinary care with respect to the safety of Crosby's workplace. General Tire filed a third party complaint seeking indemnity from Vulcan and from Assurance Company of America (Assurance), Vulcan's liability insurer. The district court granted summary judgment in favor of Vulcan and Assurance and certified the order in compliance with Fed.R.Civ.P. 54(b). General Tire settled the suit brought by Crosby for $187,500.00, and the district court entered a consent judgment with respect to that claim.

General Tire appeals the district court's order granting summary judgment to Vulcan and Assurance in the third party action seeking indemnity.

Had it not been for the parties' failure to keep a close eye on the Mississippi legislature, this dispute in all its complexity would not have occurred. Several weeks before General Tire and Vulcan entered into their painting contract, a Mississippi statute became effective that declared void certain contracts for indemnity. We shall discuss this measure in some detail below, but suffice it to say that, had the parties known of the statute in time, they surely would have fashioned their agreement to take account of it. The statute took them by surprise, however, and now General Tire, the statute's victim, seeks some path around it.

II. The Express Contract of Indemnity.

The written contract entered into by General Tire and Vulcan contained a promise by Vulcan to hold General Tire harmless for all liability arising out of performance of the work. The district court held that indemnity could not be predicated on that promise, because such promises are void under the aforementioned Mississippi statute, which was in force at the time the contract was made. The statute reads:

(a) With respect to all public or private contracts or agreements, for the construction, alteration, repair or maintenance of buildings, structures, highway bridges, viaducts, water, sewer or gas distribution systems, or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise and/or agreement contained therein to indemnify or hold harmless another person from that person's own negligence is void as against public policy and wholly unenforceable.

(b) This act does not apply to construction bonds or insurance contracts or agreements.

Miss.Code Ann. § 31-5-41 (1972).

General Tire advances three theories in its search for some route around the statute. We reject all three.

A. A Proposed Exception for Those of Equal Bargaining Strength.

General Tire invites us to do a little legislating. It urges that we carve an exception to the statute, preserving from its operation those indemnity provisions negotiated by knowledgeable businessmen of relatively equal bargaining strength. No such exception, of course, appears in the statute itself, and we have no legislative history suggesting that the scope of the measure was intended to be so limited. Thus, while the proposed exception might have some merit as a policy matter, it is not for us to amend the statute.

B. Recovery for Vulcan's Negligence.

The indemnity agreement between General Tire and Vulcan states:

Seller (Vulcan) will indemnify, save harmless and defend buyer (General Tire) from all liability for loss, damage or injury to person (including employees or agents of the seller) or property in any manner arising out of or incident to the performance of the contract.

General Tire argues that even if the Mississippi statute blocks indemnity for General Tire's own negligence, the statute does not prohibit recovery under the agreement for that portion of the Crosby settlement attributable to Vulcan's negligence. For the purpose of this discussion, we treat the Crosby settlement as recompense for General Tire's liability to Crosby liability generated by General Tire's actual negligence. ¹ General Tire's point seems to be that, even though the liability represented by the settlement is General Tire's liability, the fault for the injury is shared by Vulcan, and therefore the settlement burden ought to be shared by Vulcan. It is a nice distinction, and one that might be allowed under the Mississippi statute, but we cannot find the distinction recognized expressly or impliedly in the straightforward indemnity provision entered into by the parties. That provision operates on the basis of liability. The liability here is General Tire's liability, arising from General Tire's negligence. It is that liability that the agreement would shift to Vulcan were it not for the statute. The statute blocks indemnity for one's own negligence. That ends the matter. The agreement does not recognize any sort of contractual contribution insulated from the operation of the statute, and we decline to rewrite the agreement so that it avoids the effect of the statute.

C. The Insurance Exception.

General Tire contends that only uninsured indemnity agreements are voided by the statute, because insured agreements are preserved by section (b), which states that "(t)his act does not apply to construction bonds or insurance contracts or agreements."

General Tire's interpretation of section (b) contradicts the plain language of the section. Section (b) exempts insurance contracts, not insured indemnity contracts, from the operation of section (a). The purpose of section (b) can be illustrated in this way. If General Tire had realized that it could not rely on the indemnity agreement with Vulcan to protect it against liability, it likely would have arranged for its own liability insurance. Such an insurance contract would have come within the terms of section (b). The drafters of the statute, we conclude, did not mean to abrogate such insurance agreements and, perhaps out of an abundance of caution, they added section (b).

Section (b) in fact operates to preserve the agreement between Vulcan and its insurer, Assurance. But that does General Tire no good, because section (a) cuts the link between Vulcan and General Tire, and General Tire can reach Assurance only through Vulcan.

III. Implied Indemnity a la Ryan.

We need not tarry long on this next point. General Tire argues that recovery is available under a doctrine of implied indemnity illustrated in Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1955). We have held already that Mississippi law recognizes no such implied indemnity. Smith Petroleum Service, Inc. v. Monsanto Chemical Co., 420 F.2d 1103 (5th Cir. 1970). General Tire has cited no Mississippi authority that convinces us that our analysis in Smith Petroleum was incorrect. We adhere, therefore, to the holding in that case.

IV. Quasi-Contractual Indemnity.

General Tire seeks the aid of a common law doctrine, recognized in Mississippi, ² allowing indemnity in some circumstances to prevent unjust enrichment. General Tire asks the opportunity to present to a jury the following factual scenario, which it contends would mandate the application of this quasi-contractual indemnity. First, the fire that burned Crosby happened because a valve leaked, causing the highly inflammable chemical MEK to seep into the tank where Crosby was painting. ³ Second, General Tire departed from the standard of ordinary care when it failed to discover ⁴ and remedy the leak in the valve. Third, Vulcan departed from the standard of ordinary care, because Vulcan failed to train and equip Crosby properly.

General Tire contends that quasi-contractual indemnity would apply on such a record because the law would characterize General Tire's negligence as "passive" and Vulcan's negligence as "active." Since the litigation is here on appeal from a grant of summary judgment, we shall assume that General Tire can prevail with respect to all of the factual allegations that form the foundation of its quasi-contractual indemnity argument. ⁵ We think the district court was correct in concluding that, even were General Tire to prevail on all of the factual allegations, recovery would not be available under Mississippi law.

The Mississippi case upon which General Tire relies most heavily to support its active-passive negligence argument is Bush v. City of Laurel, 215 So.2d 256 (Miss.1968). In Bush, a municipality sought indemnity from an independent contractor after the city was held liable to a third party who had fallen into a ditch. The liability of the city was based on its non-delegable duty to provide reasonably safe streets and sidewalks. The Mississippi court held that indemnity against the independent contractor was appropriate because the contractor had caused the dangerous condition.

The Bush case is distinguishable from this one. In Bush, liability of the city was not founded upon any actual departure by it from the standard of ordinary care. The city's liability grew out of its...