Gulf, Colorado & Santa Fe Railway Co. v. McBride

• Decision Date: 22 October 1958
• Docket Number: No. A-6759,A-6759
• Citation: 322 S.W.2d 492,159 Tex. 442
• Court: Texas Supreme Court
• Parties: GULF, COLORADO & SANTA FE RAILWAY COMPANY, Petitioner, v. G. C. McBRIDE et al., Respondents.

Page 492

322 S.W.2d 492

159 Tex. 442

GULF, COLORADO & SANTA FE RAILWAY COMPANY, Petitioner, v. G. C. McBRIDE et al., Respondents.

No. A-6759.

Supreme Court of Texas.

Oct. 22, 1958.

Rehearing Denied March 25, 1959.

Further Rehearing Denied April 22, 1959.

Woodruff & Holloway, Brownwood, Hudson, Keltner & Sarsgard, Fort Worth, Joe Bruce Cunningham, Fort Worth, with Hudson, Keltner & Sarsgard, Fort Worth, for petitioner.

McMahon, Smart, Sprain & Wilson, Abilene, J. M. Lee, with McMahon, Smart, Sprain & Wilson, Abilene, for G. C. McBride.

Richey, Sheehy & Teeling, Waco, for Central Surety & Ins. Corp.

GRIFFIN, Justice.

This is a suit in which a summary judgment in favor of respondents was given by the trial court. The suit involves liability under an indemnity contract and kindred issues.

The petitioner, hereinafter called Santa Fe, on October 28, 1952, owned a certain tract of land near Brownwood, Texas. On a part of this tract Santa Fe owned and operated a rock crusher plant which made crushed rock, screenings, rip-rap and other similar material. Santa Fe also owned certain spur tracks which were used in the rock crushing business and the transportation of the finished product from the plant to its place of use.

G. C. McBride, d/b/a as G. C. McBride Co., hereinafter called McBride, was experienced in the business of rock crushing. On October 28, 1952, Santa Fe and McBride entered into a lease agreement whereby the land owned by Santa Fe, together with the rock crusher and its equipment, was leased to McBride for a term of years upon the terms and conditions set out in the agreement. The contract had attached thereto a plat showing the land leased to McBride together with an inventory listing all machinery, equipment and supplies leased. The first paragraph of the lease defined the 'plant' as the land shown by the plat and the machinery listed in the inventory.

The spur track was shown on the plat as part of the property leased. Located on this spur track and on the land shown on the plat was a loading ramp some 10 or 12 feet above the level of the spur track. In conducting switching operations in, on and around the 'plant' there were times when the operating employees of Santa Fe had to climb upon the loading ramp in order to transmit signals to the train crew. This practice was well known to McBride, and no objection or protest was made to such procedure.

On April 10, 1954, C. F. England, Jr., who was employed as an engine foreman by Santa Fe-while climbing this ramp for the purpose of transmitting signals to a switching crew-fell and sustained serious injuries to his back. As a result of the injuries received it was necessary to perform a serious operation on his back. England was unable to work for approximately 18 months, and he was making from $400 to $450 per month at the time of his injury. He lost in wages alone some $7,500 as a result of his inability to work. England made a claim against Santa Fe under the Federal Employees' Liability Act, 45 U.S.C.A. Sec. 51 et seq.

On April 25, 1956, Santa Fe sent a letter to McBride notifying him of the nature and extent of England's injury and asked McBride to take over the handling of England's claim for damages, or to authorize Santa Fe to handle the same for the account of McBride. On July 31, 1956, McBride notified Santa Fe that he would not take over the claim and denied any liability under the indemnity agreement. Santa Fe on this same date settled England's claim for the sum of $8,495. Santa Fe thereafter filed this suit against McBride and respondent, Central Surety & Insurance Corporation, who had signed a performance bond with McBride that he would carry out the lease contract.

McBride denied any liability under the indemnity provision of the contract upon various grounds. Surety Corporation filed a general denial and adopted the answer of McBride. Santa Fe and McBride each filed unverified motions for summary judgment upon the pleadings, depositions of England, depositions of E. A. McBride and a stipulation of facts entered into between the parties. The trial judge overruled Santa Fe's motion for summary judgment and sustained McBride's motion. As a result judgment was entered that Santa Fe take nothing against McBride, and it naturally followed judgment was rendered in favor of the Surety Corporation. This was reversed and the cause remanded by the Court of Civil Appeals. 309 S.W.2d 846.

One of McBride's defenses-and a ground urged in his motion for summary judgment-was that the injury to England did not arise from, grow out of and was not in any manner incident to the use, operation and maintenance or state of repair of the plant, and was not, therefore, within the terms of the indemnity agreement. McBride, in his reply to the application for writ of error, says 'the Court of Civil Appeals held that the injury suffered by England came within the terms of the indemnity agreement upon which plaintiff based its cause of action.' Santa Fe also states this was the holding of the Court of Civil Appeals on this point. Both parties so construe the opinion of the Court of Civil Appeals, and we agree. Respondents have not appealed from this holding.

The indemnity agreement, in so far as it is pertinent to our cause, reads as follows: McBride agreed 'to release and discharge railway company from all liability because of * * * injury to or death of persons whomsoever * * * and to promptly repay any sum or sums which railway company may pay or be compelled to pay, and discharge any judgment or judgments which may be rendered against it because thereof.' (Emphases added.) McBride claims he is not liable because Santa Fe made a voluntary payment to England without any judicial ascertainment of Santa Fe's liability to England and McBride seeks to uphold that part of the Court of Civil Appeals' opinion holding that in this suit for indemnity, Santa Fe must establish its liability to England before it can recover from McBride. In this holding the Court of Civil Appeals was in error.

In our recent case of Mitchell's, Inc., v. Friedman, Tex.1957, 303 S.W.2d 775, 779, we held that where an indemnitor denies any obligation under the indemnity agreement and obtains a summary judgment, the indemnitor waives any right to insist upon a judicial determination of the liability of the indemnitee to the injured party. As to the status of the indemnitee in a case wherein a settlement was made with the injured party, after denial of liability on the part of the indemnitor, we said:

'* * * Having settled the claim without obtaining a judicial determination of its liability, petitioner assumed the risk of being able to prove the facts which might have rendered it liable to the plaintiff as well as the reasonableness of the amount which it paid. It will be necessary, therefore, for petitioner to establish that from its standpoint the settlement was made in good faith and was reasonable and prudent under the circumstances. See Luton Mining Co. v. Louisville & N. R. Co., 276 Ky. 321, 123 S.W.2d 1055; Thermopolis Northwest Electric Co. v. Ireland, 10 Cir., 119 F.2d 409; St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U.S. 173, 26 S.Ct. 400, 50 L.Ed. 712.' (Emphasis added.)

In the case of Luton Mining Co. v. Louisville & N. R. Co., 276 Ky. 321, 121 S.W.2d 1055, 1060, cited by us in the above case, the Court, in speaking of a voluntary settlement made by the railway company which was seeking indemnity from the mining company, said, '* * * As appellant (mining company) denied liability under this contract, the railroad company was justified in making a reasonable and prudent settlement of the claim. The only thing remaining to determine is whether or not the railroad company acted in good faith in making the settlement.' See also the following cases which sustain this rule: New York Cent. & H. R. R. Co. v. T. Stuart & Son Co., 260 Mass. 242, 157 N.E. 540, 543(5, 6); Chicago, R. I. & P. R. Co. v. Dobry Flour Mills, Inc., 10 Cir., 211 F.2d 785, 787(1, 2); Chicago, Rock Island & Pacific Railway Company v. United States, 7 Cir., 220 F.2d 939; Thermopolis Northwest Electric Co. v. Ireland, 10 Cir., 119 F.2d 409, 412(5, 6). These authorities also adversely dispose of McBride's contention that, under the terms of the indemnity provision of the contract, Santa Fe had no right, without the consent of McBride, to make the settlement with England and therefore Santa Fe cannot recover.

Santa Fe claims that its motion for summary judgment should be sustained by this court and judgment rendered in its favor against McBride. McBride counters with the proposition that the action of the trial court in refusing Santa Fe's motion for summary judgment was interlocutory and therefore not appealable. McBride relies upon the cases of Wright v. Wright, 154 Tex. 138, 274 S.W.2d 670 and Rogers v. Royalty Pooling Company, Tex., 302 S.W.2d 938, as authority for his position. These cases do sustain that position, but in the later case of Tobin v. Garcia, Tex., 316 S.W.2d 396, and motion for rehearing overruled on October 1, 1958, this Court took another look at the Rogers case, supra, and after a thorough study overruled that case. The Rogers case cited the Wright case as authority. When we overruled the Rogers case, of necessity, we overruled that part of the Wright case relied upon as authority in the Rogers case. We held that where there was a final judgment rendered in a cause, which was appealable (and was appealed), the appellate court could act upon a denied motion for summary judgment, if the point has been properly preserved.

We will therefore examine this record to determine whether or not Santa Fe's motion for summary judgment should be sustained. We hold it should be sustained. Santa Fe claims that under the wording of Paragraph 5 of its contract with McBride, it had an absolute right to compromise England's claim against it; that it would be entitled to...