Eastern Gas and Fuel Associates v. Midwest-Raleigh, Inc.

• Decision Date: 21 May 1966
• Docket Number: Civ. A. No. 750-F.
• Citation: 253 F. Supp. 954
• Court: U.S. District Court — Northern District of West Virginia
• Parties: EASTERN GAS AND FUEL ASSOCIATES, a Voluntary Trust Association, Plaintiff, v. MIDWEST-RALEIGH, INC., a corporation, the Travelers Insurance Company, a corporation, Interstate Engineers & Constructors, Inc., a corporation, the Fidelity and Casualty Company of New York, a corporation, Alma Jean Jones, Administratrix of the Estate of Robert L. Jones, deceased, Evelyn Elizabeth Ice, Administratrix of the Estate of Gay W. Ice, deceased, Arlie Spry, William J. Ice, and William E. Zirkle, Defendants.

253 F. Supp. 954

EASTERN GAS AND FUEL ASSOCIATES, a Voluntary Trust Association, Plaintiff, v. MIDWEST-RALEIGH, INC., a corporation, the Travelers Insurance Company, a corporation, Interstate Engineers & Constructors, Inc., a corporation, the Fidelity and Casualty Company of New York, a corporation, Alma Jean Jones, Administratrix of the Estate of Robert L. Jones, deceased, Evelyn Elizabeth Ice, Administratrix of the Estate of Gay W. Ice, deceased, Arlie Spry, William J. Ice, and William E. Zirkle, Defendants.

Civ. A. No. 750-F.

United States District Court N. D. West Virginia, Fairmont Division.

April 11, 1966.

Supplemental Opinion May 21, 1966.

Russell L. Furbee, Furbee & Hardesty, Fairmont, W. Va., and William C. Walker, Dickie, McCamey & Chilote, Pittsburgh, Pa., for plaintiff.

Willis O. Shay, Steptoe & Johnson, Clarksburg, W. Va., for defendants Midwest-Raleigh, Inc., The Travelers Ins., Co., Interstate Engineers & Constructors, Inc., and The Fidelity & Cas. Co. of New York.

CHRISTIE, District Judge:

This is an action for declaratory judgment under 28 U.S.C.A. § 2201 and Rule 57 of the Federal Rules of Civil Procedure. Federal jurisdiction by reason of diversity and requisite amount is found to exist under 28 U.S.C.A. § 1332.

For brevity, the plaintiff, Eastern Gas and Fuel Associates, will be referred to as "Eastern," and the defendants here immediately concerned, Midwest-Raleigh, Inc. and Interstate Engineers & Constructors, Inc., as "Midwest" and "Interstate," respectively.

I — Historical Background

The incident giving rise to the underlying controversy was an explosion at the coal mine of Eastern at Grant Town, in Marion County, West Virginia, on July 16, 1962, in which certain of Interstate's employees were either killed or injured, and in which Interstate's machinery and equipment were damaged. Suits for damages were thereafter brought against Eastern by all aggrieved parties.

Thereupon Eastern filed a third-party complaint against Midwest and Interstate on the premise that the explosion was caused by their negligence, either jointly or severally, and further, that they had, prior to the explosion, contractually agreed to indemnify it against loss by reason of claims such as those asserted. Initially, Eastern contracted the sale and dismantling of an abandoned coal tipple and cleaning plant to Midwest on April 30, 1962, inserting therein the following provision for its protection:

"Purchaser (Midwest) will protect and indemnify Eastern against loss or damage to property and injury and death to persons resulting from, arising out of or, incident to the performance of this contract."

Then on May 15, 1962, Midwest, with Eastern's consent, subcontracted the job to Interstate; Interstate agreeing to,

"* * * assume and perform all of the conditions, provisions and terms covenanted to be performed on the part of Midwest * * *,"

under its contract with Eastern. In short, Interstate simply stepped into the shoes of Midwest with Eastern's consent and approval. Midwest and Interstate were both required to carry liability insurance and to subscribe to Workmen's Compensation for Eastern's protection.

After the institution of the damage actions, but before their trial and adjudication, Eastern filed this declaratory judgment action against Midwest and its insurance carrier, Interstate and its insurance carrier, and all the plaintiffs in the damage actions, seeking, among other things, a declaration of rights, duties, responsibilities and legal relationships of the parties, and particularly for a declaration as to Eastern's rights and liabilities in relation to Midwest and its insurance carrier and Interstate and its insurance carrier under the aforesaid indemnity provision.

Counsel for Eastern and counsel for Midwest and Interstate, with the concurrence of the Court, agreed that a resolution of the issues raised by the pleadings in the declaratory judgment action should best await the fixing of fault for the explosion in one of the damage actions. Accordingly, trial of the wrongful death claim of the estate of Gay W. Ice against Eastern was commenced on May 10, 1965, resulting in a verdict and judgment adverse to Eastern. In the trial of that action, to simplify the case for the jury, it was agreed by all counsel that the issue of contractual indemnity between Eastern and Midwest and/or Interstate, raised by the third-party complaint, would not be submitted to the jury, and if a verdict adverse to Eastern were returned, that issue would then be submitted to the Court, without a jury, upon the pleadings in the declaratory judgment action and the record as made in the tort action of Ice v. Eastern. Eastern has since paid the Ice verdict and judgment and is now seeking indemnification and/or contribution from Interstate and/or Midwest. Thus in this declaratory judgment action, the rights of Eastern, on the one hand, and the rights of Midwest and/or Interstate, on the other hand, as to the Ice verdict and judgment, must be considered and determined in the context of the record as made in the Ice case, whereas such record is not proper for consideration with respect of the other tort cases yet to be tried.

Two questions are thus presented:

First: Does the language of the indemnity provision admit of an interpretation that Eastern may have indemnity even for a loss occasioned by its own negligence?

Second: Is the finding by the jury of proximate negligence against Eastern in the Ice case conclusive on Eastern as to that issue in this declaratory judgment action between Eastern, on the one hand, and Midwest and/or Interstate, on the other?

These questions will be taken up in seriatim.

II — Interpretation of Indemnity Provision

The agreement containing the indemnity provision involved here was drawn by Eastern and if it be found vague in its terms and meaning, the doubt must be resolved against Eastern. Southern Ry. Co. v. Coca-Cola Bottling Co., 145 F.2d 304 at 307 (4th Cir. 1944). Moreover, Judge Parker has aptly said that a contract of indemnity will not be construed to indemnify the indemnitee against a loss resulting to it through its own negligent acts, where such intention is not expressed in unequivocal terms. Cacey v. Virginia Ry. Co., 85 F.2d 976 (4th Cir. 1936) at 980. This is in accord with the majority rule for construing an indemnity provision, such as is involved here, as will be seen from an examination of 175 A.L.R. 30 (1952),

"In the overwhelming majority of the cases the result reached by their interpretational efforts can be condensed into the simple rule that where the parties fail to refer expressly to negligence in their contract such failure evidences the parties' intention not to provide for indemnity for the indemnitee's negligent acts. While this rule of construction is expressed by the courts in various forms, all of them in effect say: `A contract of indemnity will not be construed to indemnify a person against his own negligence where such intention is not expressed in clear and unequivocal terms.'"

While Eastern in its brief refers to 97 A.L.R.2d 616 as the most recent annotation relating to the duty of construction contractors to indemnify contractees held liable for injury to third persons, we do not read the annotation as changing or modifying the majority rule above referred to. For example, Section 3 of the later annotation (97 A.L.R.2d 620) gives the general rule in relation to construction contracts thusly:

"It may be stated as a general rule, subject to conditions and qualifications hereinafter noted, that where the contractee is cast in liability for an injury to a third person solely by reason of some wrongful act or omission of the contractor in the performance of the contract, he is entitled to be indemnified by the latter (citation of authorities omitted).

"In order, however, to impose such duty of indemnification upon the contractor in the absence of an express contract therefor, it is essential that he be chargeable with some fault or negligence causing or contributing to the injury." (Emphasis supplied).

So it is seen that this later annotation recognizes the majority rule given in the earlier annotation to the effect that, to have indemnity, the contractee (Eastern here) must show a contract provision expressly providing for it, or that the injury was caused by the negligence of the contractor (Midwest and/or Interstate here).

The West Virginia Supreme Court of Appeals adhered to the majority rule in Bowlby-Harman Lumber Co. v. Commodore Service, Inc., 144 W.Va. 239, 107 S.E.2d 602 (1959), when it said:

"Moreover, to relieve a party from liability for his own negligence by contract, language to that effect must be clear and definite."

In Washington & Berkeley B. Co. v. Pennsylvania S. Co., 215 F. 32 (4th Cir. 1914), the indemnity provision provided,

"* * * against all liability of damage on account of accidents, whether occasioned by the omission or negligence of itself, its agents, or its workmen or otherwise."

The Court there held that the provision could not be construed to cover accidents caused by the negligence of the indemnitee. In Standard Oil Company of Texas v. Wampler, 218 F.2d 768 (5th Cir. 1955), a similar indemnity provision reads as follows:

"Contractor shall indemnify Standard against damages or claims for injury to persons, impairment of health of persons, and death of persons, and damages to property or loss of property, that may arise from Contractor's operations hereunder, * * *."

There, again, the Court held that nothing in the contract indicated an intent that contractors were required to indemnify the oil company against oil company's own negligence. The language used in George Sollitt Const. Co. v. Gateway Erectors, Inc., 260 F.2d 165 (7th Cir. 1958), probably comes closest to the indemnity agreements herein. It provided,

"The Contractor assumes entire responsibility and liability for losses, expenses, damages,

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