Eley v. Brunner-Lay Southern Corp., Inc.

• Decision Date: 03 August 1972
• Docket Number: 6 Div. 932,BRUNNER-LAY
• Parties: J. E. ELEY, d/b/a J. E. Eley Excavating Co., et al., v.SOUTHERN CORPORATION, INC., a Corporation.
• Court: Alabama Supreme Court

Page 276

266 So.2d 276

289 Ala. 120

J. E. ELEY, d/b/a J. E. Eley Excavating Co., et al., v. BRUNNER-LAY SOUTHERN CORPORATION, INC., a Corporation.

6 Div. 932.

Supreme Court of Alabama.

Aug. 3, 1972.

Rehearing Denied Sept. 14, 1972.

Spain, Gillon, Riley, Tate & Ansley, and Ollie L. Blan, Jr., Birmingham, for appellants.

Lange, Simpson, Robinson & Somerville, and White E. Gibson, Jr., Birmingham, for appellee.

MERRILL, Justice.

This appeal is from a decree rendered in a declaratory judgment proceeding in which the trial court held that the lessee, appellant Eley, would be required to indemnify the lessor, appellee, in the event one Vernon, an employee of appellant, was successful in his suit against appellee for injuries sustained while he was operating a TracDril, the machine leased by appellee to appellant under a written lease.

A TracDril is a drilling machine mounted on a half-track crawler that drills holes to contain charges for blasting. About one month after appellant had used the TracDril, Vernon was hurt and he filed a claim against appellant for Workmen's Compensation and apparently was paid.

Vernon also filed a suit against appellee charging that his 'injuries and damages proximately resulted from the negligence of the defendant in negligently designing, negligently maintaining, negligently fabricating or supplying to the plaintiff's said employer a machine which was defective or which they should have known was defective causing said crawler drill to injure plaintiff as aforesaid.' United States Fidelity & Guaranty Company, having paid the Workmen's Compensation claim, intervened as appellant's insurer.

Appellee then filed the instant action, asking for a construction of the lease as to the question of indemnity and defense of the suit and also sought an injunction against Vernon staying the prosecution of his suit against appellee.

A temporary injunction was issued, demurrers to the bill were overruled and answers were filed. The cause was tried on October 26, 1971, and a final decree was entered, holding that appellant and United States Fidelity & Guaranty Company were obligated to indemnify and hold harmless appellee against the claim asserted by Vernon in his suit at law against appellee. We quote from the trial court's opinion:

'The lease agreement, for the most part, is clear in its terms. There are some ambiguities. In a construction of the entire lease contract the Court finds little difficulty in arriving at the intention of the parties and therefore the Court finds that Complainant should be indemnified against any Proven judgment in the law-side case but Complainant's liability only begins with the adjudication and collection of a judgment against Complainant as Defendant in said law-side case. There is no liability upon the Respondent, Eley, to Defend the law-side suit but only to Pay any loss suffered therein by Complainant (Defendant in the law-side suit) as has been aptly expressed in the brief furnished the Court by two of the Respondents herein. To repeat, no liability on the part of Eley arises until after any judgment against Complainant is paid by Complainant.'

The assignments of error raised three contentions, the first being that the indemnity provisions in the lease are ambiguous and should be construed strictly against appellee. The pertinent provisions of the lease are as follows:

'5. The lessee agrees to maintain said machinery and equipment in the same condition as when delivered to it by lessor, and to pay all claims and damages arising from defects therein, or from the use of handling said machinery and equipment, whether from injuries to the person or property, and to pay for all damages to the equipment during the life of this contract, and to return said property in as good condition as when received to the storage yard of the lessor, * * *

'6. The receipt and acceptance by the lessee of said equipment will constitute acknowledgment that said property has been accepted and found in good, safe and serviceable condition, and fit for use, unless the lessee makes claims to the contrary to the lessor by registered mail with return receipt demanded, addressed to the lessor's office in the City of _ _, within three days after receipt of said equipment. The complaint as made shall set forth in detail its complete nature and the condition of the property received.

'15. The lessee further agrees to indemnify the lessor against all loss, damage, expense and penalty arising from any action on account of any injury to person or property of any character whatsoever occasioned by the operation, handling or transportation of any of the equipment during the rental period, and while said machinery and equipment is in the possession or under the custody and control of lessee.

'16. The lessee further agrees to protect the lessor on this contract with full insurance coverage, said insurance to cover damage occasioned by fire, theft, flood, explosion, accident, act of God, or any other cause, that may occur during the life of this lease and to protect the lessor for public liability insurance for coverage to the limits of the State laws in which the equipment leased is being used.'

The final words of the lease just above where appellant signed were these words, which were evidently typed at the bottom of the printed lease: 'We agree to all the above conditions which are thoroughly understood.'

One who has executed a written contract in ignorance of its contents cannot set up his ignorance to avoid the obligation in the absence of fraud or misrepresentation. Grady v. Williams, 260 Ala. 285, 70 So.2d 267; Lester v. Walker, 172 Ala. 104, 55 So. 619. Whether Mr. Eley was aware of the provisions, he was bound by the provisions of the lease because there was no intimation of any fraud, misrepresentation or deceit in the transaction.

We do not think that § 5 of the lease is contrary to, or creates an ambiguity, when considered with § 15. In § 5, appellant agreed 'to pay all claims and damages * * * whether from injuries to the person or property,' while in § 15, appellant agreed 'to indemnify the lessor against all loss, damage, expense and penalty arising from any action on account of any injury to person or property of any character whatsoever.' § 5 is narrower in scope than § 15, but § 15 does not limit § 5, nor vice versa. § 5 applies to a limited situation while § 15 applies to any situation. We agree with the trial court that the lease agreement shows the intention of the parties was that appellant would indemnify appellee in the event of a suit such as Vernon filed against it.

Appellant contends that a party may not by contract absolve itself of liability for its own negligence or the negligence of its servants, and an undertaking to indemnify oneself against one's own negligence must be clearly and unequivocably expressed. Appellant cites Smith v. Kennedy, 43 Ala.App. 554, 195 So.2d 820, cert. den. 280 Ala. 718, 195 So.2d 829. But that rule is not always applied. See Deen v. Holderfield, 275 Ala. 360, 155 So.2d 314, and Republic Steel Corporation v. Payne, 272 Ala. 483, 132 So.2d 581. In the latter case, the exculpatory provision was very similar to the provision in § 15 of the lease in the instant case so far as coverage is concerned.

The second part of the contention is supported by the case of United States Fidelity & Guaranty Co. v. Mason & Dulion Co., 274 Ala. 202, 145 So.2d 711, but we do not think that case is applicable here. There, two provisions in a contract were in conflict and this court said: 'It is difficult to see how both provisions can stand. One of them must fall, and that one is the one favorable to the contractor who prepared the agreement.' Here, there is no such conflict in the lease. Under the terms of the lease the lessee, appellant, agreed that the TracDril was in good condition when he received it and appellant was removing it from the supervision and control of the lessor. Under these conditions, appellee, as lessor, ran the risk of having someone injured or property damaged while the equipment was being operated, and appellee did not have the opportunity of inspecting or repairing the machine, or passing upon the skill of the persons operating it. There was a substantial business reason why the lease should contain an agreement that during the period of the lease, the appellant would accept responsibility for any injury that might result from the use of the machine. This appears to be reasonable and, as already stated, this court has approved exculpatory provisions in contracts where the main purpose of the contract was not to exonerate one of the parties from his own negligence; and in both Payne, 272 Ala. 483, 132 So.2d 581, and Mason & Dulion Co., supra, this court held that the use of the word 'negligence' in an exculpatory or an indemnity provision was not necessary to show that the parties intended the indemnity provisions to be effective.

Appellant also cites the case of Batson-Cook Co. v. Industrial Steel Erectors, 257 F.2d 410 (5 Cir. 1958), but it appears that the 5th Circuit Court of Appeals has followed Payne and Deen, supra, in Black Warrior Electric M. Corp. v. Mississippi Power Co., 413 F.2d 1221 (5 Cir. 1969), and concluded that Alabama courts would follow Payne and Deen, supra, rather than Batson-Cook, supra, in Black Warrior, supra. However, fairness requires us to say that a later case of the 5th Circuit, Transcontinental Gas Pipe L. Corp. v. Mobile Drill. Barge, 424 F.2d 684 (5 Cir. 1970), cited by appellant, cites Batson-Cook with approval. We have not cited any of these 5th Circuit cases with approval, but merely to show how the decisions vary in the same court on the question of what the law is in Alabama. Neither do we try to reconcile or distinguish the various decisions. We leave that to the court which originated the various opinions.

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