Hoskins v. Midland Ins. Co.

• Decision Date: 27 January 1981
• Docket Number: No. 80-1257,80-1257
• Citation: 395 So.2d 1159
• Parties: Delbert HOSKINS and Martha Hoskins, Appellants, v. MIDLAND INSURANCE COMPANY a/s/o Resolute Insurance Company, Appellee.
• Court: Florida District Court of Appeals

Page 1159

395 So.2d 1159

Delbert HOSKINS and Martha Hoskins, Appellants, v. MIDLAND INSURANCE COMPANY a/s/o Resolute Insurance Company, Appellee.

No. 80-1257.

District Court of Appeal of Florida, Third District.

Jan. 27, 1981.

Rehearing Denied April 13, 1981.

Blackwell, Walker, Gray, Powers, Flick & Hoehl and James C. Blecke, Miami, for appellants.

Corlett, Merritt, Killian & Sikes and Gerald E. Rosser, David E. Stone, Miami, for appellee.

Before HENDRY, NESBITT and FERGUSON, JJ.

HENDRY, Judge.

In an action on a contract of indemnity, we reverse the order of the court below on the ground that the prevailing party was collaterally estopped to seek the verdict ultimately obtained.

Appellee Midland Insurance Company brought the action below as subrogee of Resolute Insurance Company. Resolute was, among other things, a surety; Eddie Hoskins was an agent who wrote bail bonds for Resolute; and appellants Hoskins are his surviving son and wife, who agreed, as a precondition to Resolute's allowing them to continue Eddie's business, to indemnify Resolute for all losses which accrued to it through Eddie's agency. Included among such losses was a $97,000 estreature by an Iowa court, occasioned by the non-attendance of one Willie Sellers, for whom Eddie's employee Wilson had fraudulently posted bond. It is that loss for which Midland seeks contractual indemnity.

Because of the disfavor in which Florida courts hold agreements to indemnify parties against their own wrongful acts, enforcement of such agreements is denied in the absence of clear and unequivocal contractual expression of such an intent; without such an expression, a contractual indemnitor's obligation is negatived by any fault of the indemnitee as legal cause of its own loss. Charles Poe Masonry, Inc. v. Spring Lock Scaffolding Rental Equipment Co., 374 So.2d 487 (Fla.1979). Since the contract of indemnification signed by appellants Hoskins did not purport to indemnify Resolute for its own wrongful acts, the primary issue became whether or not Resolute was responsible in any degree for the loss for which it sought indemnification.

Resolute had appealed the Iowa estreature on the basis that Wilson's posting the bonds was a fraudulent act beyond his authority, and that Iowa officials were on constructive notice that the bonds were invalidly issued. It was ultimately decided in Iowa's Supreme Court that the bonds were indeed fraudulently issued, but that they nonetheless properly were estreated; essential to the court's judgment was its conclusion that the fraud was facilitated by Resolute's negligence, inter alia, in the drafting of its bond documents. State v. Sellers, 258 N.W.2d 292, 297-99 (Iowa 1977).

The question before this court relates to the precedential effect in the trial below of the Iowa court's findings and conclusions relating to Resolute's negligence.

It is clear that a judgment against an indemnitee, arising from a suit in which the indemnitor has knowledge and opportunity to defend, is binding (res judicata) on the indemnitor on all essential issues decided (in the absence of fraud or collusion). Wright v. Fidelity and Casualty Co. of New York, 139 So.2d 913 (Fla. 1st DCA 1962). That rule ordained the result in Westinghouse Electric Corp. v. J. C. Penney, Inc., 166 So.2d 211 (Fla. 1st DCA 1964), where the department store sought contractual indemnification for damages paid by it, the result of a judgment obtained by a customer for injuries sustained on a store escalator maintained by Westinghouse. In that earlier action, which Westinghouse declined to defend, it was adjudged that the customer's injuries were proximately caused by negligent maintenance of the escalator. The store won its claim for indemnification on the basis that the former judgment adverse to the store was res judicata, insofar as Westinghouse's ability to deny its negligent maintenance was concerned.

But Florida courts appear not to have encountered the question of the precedential effect of the earlier judgment on the indemnitee, in his action over against his indemnitor.

Having studied the question, and its resolution in other jurisdictions, we come to the conclusion cogently expressed by an annotator, 24 A.L.R.2d 329, 330:

Irrespective of whether a judgment obtained by an injured person against an indemnitee is conclusive upon the indemnitor under the general rules governing the conclusiveness of judgments, the authorities which have considered the subject ... as a distinct question hold unanimously that an indemnitee, in his action to recover from the indemnitor the amounts paid in satisfaction of a judgment obtained against him by an injured person, is bound by all findings without which the judgment could not have been rendered, and that, if the judgment in the earlier action rested on a fact fatal to recovery in the action over against the indemnitor, the latter action cannot be successfully maintained.

We adopt the rule expressed by the Restatement of Judgments § 107 (1942):

In an action for indemnity between two persons who stand in such relation to each other that one of them has a duty of indemnifying the other upon a claim by a third person, if the third person has obtained a valid judgment on this claim in a separate action against

(a) the indemnitee, both are bound as to the existence and extent of the liability of the indemnitee, if the indemnitee gave to the indemnitor reasonable notice of the action and requested him to defend it or...