Fireman's Fund Ins. Co. v. Commercial Stand. Ins. Co.
| Decision Date | 15 November 1972 |
| Docket Number | No. B--3157,B--3157 |
| Citation | 490 S.W.2d 818 |
| Parties | FIREMAN'S FUND INSURANCE COMPANY et al., Petitioners, v. COMMERCIAL STANDARD INSURANCE COMPANY et al., Respondents. |
| Court | Texas Supreme Court |
Cantey, Hanger, Gooch, Cravens & Munn, Tolbert L. Greenwood and Howard Barker, Fort Worth, for petitioners.
Garrett, Settle & Callaway, Rufus S. Garrett, Jr., Stone, Tilley, Parker, Snakard Law & Brown, G. W. Parker, Jr., Fort Worth, for respondents.
This is a declaratory judgment action brought by Thomas S. Byrne, Inc. and its liability insurance carrier, Commercial Standard Insurance Company, against Sam P. Wallace Co., Inc. and its insurance carrier, Fireman's Fund Insurance Company, and General Motors Corporation and its insurance carrier, Royal Indemnity Insurance Company, for the construction of certain indemnity provisions in a contract between Wallace and General Motors. The question is whether Wallace was ultimately liable for a sum paid by Byrne and Commercial Standard in settlement of a suit brought by a Wallace employee against General Motors.
The contract contains two indemnity sections (Sec. 12 and Sec. 20). The trial court held that the language of Section 12 was broad enough to indemnify General Motors against losses from injuries sustained by the Wallace employee even if they resulted from the sole negligence of General Motors, and that in any event Wallace was liable because the evidence showed that the accident was due to the sole negligence of Wallace employees and not to any negligence of General Motors. The Court of Civil Appeals affirmed. 478 S.W.2d 811. We disapprove the above mentioned conclusions with reference to Section 12 but affirm on the basis of other findings and conclusions of the courts below.
On October 2, 1964, General Motors executed separate contracts with Thomas S. Byrne, Inc., as general contractor and with Sam P. Wallace Co., Inc., for the mechanical superstructure work on an annex to its Arlington plant. The contracts contained identical liability insurance and indemnity provisions for General Motors' protection. General Motors' contract with Wallace was assigned to Byrne under provisions specifically permitting such assignment. Thereafter, Wallace became a subcontractor under Byrne with no change in the terms of its insurance and indemnity obligations to General Motors.
While working on that part of the job being performed by Wallace, two Wallace employees, R. L. Gamble and Woodrow W. Frith, were injured when they fell from a scaffold which overturned. Both were paid workmen's compensation benefits by Fireman's Fund, which also carried Wallace's compensation insurance. The two employees then filed separate personal injury suits against General Motors, alleging that General Motors negligently permitted an automobile frame on a conveyor in the assembly line to come in contact with and overturn the scaffold. Fireman's Fund intervened seeking recovery of the compensation benefits paid. In both suits General Motors filed third party actions against Byrne for indemnity, and Byrne in turn filed a fourth party action for indemnity against Wallace in the Gamble suit. Thereafter, the collective defendants and their insurance carriers entered agreements whereby Byrne and its carrier, Commercial Standard, would defend the suits against General Motors. It was further agreed that Byrne and Commercial Standard would dismiss Wallace and Fireman's Fund from the Gamble suit; that they would not make Wallace a party to the Frith suit; and that this would be without prejudice to Byrne or Commercial in a subsequent action against Wallace and Fireman's Fund for the purpose of determining ultimate liability, if any, of Wallace under its contract with General Motors.
After the jury failed to agree in Gamble's case, Commercial Standard made a $20,000 settlement with him, having first obtained written consent of Wallace and Fireman's Fund, the latter agreeing not to assert the $9,782 subrogation claim against Gamble and that Byrne and Commercial might bring this declaratory judgment action to determine 'the liability of Wallace to indemnify Byrne or General Motors' for the amount of the settlement and expenses of the defense. It was also agreed that if it were determined that Wallace had no indemnity obligation that Byrne and Commercial Standard would pay the compensation subrogation claim to Fireman's Fund. 1
The relevant sections of the contract between Wallace and General Motors are as follows:
'12. LIABILITY INSURANCE
'The Contractor shall protect the Owner and Architect-Engineer against all liabilities, claims or demands for injuries or damages to any person or property growing out of the performance of work under this specification. The contractor assumes all liability for any injuries or damages occasioned by his agents or employes on the premises of the Owner regardless of whether such agent or employe is, at the time of such injury to (sic) damage, acting within the scope of his employment.
'All insurance policies are to be issued by companies authorized to do business under the law of the State in which the work is to be done and copies of said policies shall be filed with the Owner before work is started.
'Limits for Liability Insurance shall be not less than $100,000.00 for injury to one person, $300,000.00 for injury to more than one person, and $100,000.00 for property damage.
'Contractor shall protect the Owner and Architect-Engineer against all claims arising from the use of passenger automobiles, motor trucks, and other motor vehicles owned and operated by the Contractor and/or employes of the Contractor in connection with the work herein specified. Contractor shall submit to the Owner and Architect-Engineer certificates of insurance evidencing public liability and property damage coverage on all such vehicles.
'In addition to the Liability Insurance for the protection of the Owner and Architect-Engineer, the Contractor shall, during the continuance of the work under this contract and also extra work in connection therewith, maintain Liability Insurance for injury and/or death to any of his employes and/or to other persons, including any liability which may arise by virtue of the statute or law now in force or which may hereafter be enacted.'
The conclusion of the lower courts that Wallace is liable to General Motors under the general language contained in Section 12, regardless of whether the injuries were caused by the negligence of General Motors, is contrary to our recent holding in Joe Adams & Son v. McCann Construction Company, 475 S.W.2d 721 (Tex. 1971). See also Sira and Payne, Inc. v. Wallace and Riddle, 484 S.W.2d 559 (Tex. 1972); Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. 1963); Mitchell's, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 755 (1957); and Westinghouse Electric Corp. v. Childs-Bellows, 352 S.W.2d 806 (Tex.Civ.App., 1961, writ. ref.).
The above cases stand for the general rule followed in Texas and a majority of other jurisdictions that a contract of indemnity will not afford protection to the indemnitee against the consequences of his own negligence unless the contract clearly expresses such an obligation in unequivocal terms. These decisions indicate a progressively stricter application of the rule in this State. Our opinion in McCann, supra, was by a divided court with a vigorous dissent, the author of which later, in Sira and Payne, supra, wrote for the court in applying the McCann decision and in stating its holding,
'. . . that an indemnity agreement will not be held to protect an indemnitee against the consequences of his own negligence unless the obligation is expressed in clear and unequivocal language; and, moreover, the effect of our decision was to hold that parol evidence is not admissible to show that such was the intention of the parties when the obligation is expressed in language which is unclear or equivocal.'
We have, in fact, progressed toward the so-called 'express negligence' rule as near as is judicially possible without adopting it and thereby requiring in all cases that the parties state, in so many words, that they intend to save the indemnitee harmless from liability for his own negligence. In this connection, it should be clear from our opinion in McCann, supra, including its discussion of the leading cases and modification of our opinion in Ohio Oil Co. v. Smith, 365 S.W.2d 621 (Tex.1963), that broad general statements of the indemnity obligation are not sufficient to protect an indemnitee against his own negligence, and that the only presently recognized exceptions are limited to (1) agreements in which one person clearly undertakes to indemnify another against liability for injuries or damages caused by defects in certain premises or resulting from the maintenance or operation of a specified instrumentality as in Mitchell's, Inc. v. Friedman, Supra, and Houston & T.C.R. Co. v. Diamond Press...
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