Husted v. Consumers Power Co., HERTEL-DEYO

• Decision Date: 07 June 1965
• Docket Number: Nos. 10,11,HERTEL-DEYO,s. 10
• Citation: 135 N.W.2d 370,376 Mich. 41
• Parties: Claude A. HUSTED, Plaintiff and Appellee, v. CONSUMERS POWER COMPANY, Defendant, Third-Party Plaintiff and Appellee, v.COMPANY, Third-Party Defendant and Appellant. Marie HUSTED, Plaintiff and Appellee, v. CONSUMERS POWER COMPANY, Defendant, Third-Party Plaintiff and Appellee, v.COMPANY, Third-Party Defendant and Appellant.
• Court: Michigan Supreme Court

Page 370

135 N.W.2d 370

376 Mich. 41

Claude A. HUSTED, Plaintiff and Appellee, v. CONSUMERS POWER COMPANY, Defendant, Third-Party Plaintiff and Appellee, v. HERTEL-DEYO COMPANY, Third-Party Defendant and Appellant.

Marie HUSTED, Plaintiff and Appellee, v. CONSUMERS POWER COMPANY, Defendant, Third-Party Plaintiff and Appellee, v. HERTEL-DEYO COMPANY, Third-Party Defendant and Appellant.

Nos. 10, 11.

Supreme Court of Michigan.

June 7, 1965.

Cicinelli, Mossner, Majoros & Harrigan, by Peter F. Circinelli, Saginaw, for plaintiffs and appellees.

Baker & Baker, Bay City, for plaintiffs and appellees.

Smith, Brooker & Harvey, Carl H. Smith, Sr., Bay City, J. M. Smith, Jackson, for third-party plaintiff and appellee, Consumers Power Co.

McDonald, Anderson & Dykema David W. Swets, Grand Rapids, for third-party defendants and appellants.

Before KAVANAGH, C. J., and DETHMERS, KELLY, BLACK, SOURIS, SMITH, O'HARA and ADAMS, JJ.

PER CURIAM.

One of our new rules of court is headed 'Third-Party Practice.' It is cited properly as GCR 204. Under its auspices appellant Hertel-Deyo., employer of plaintiff Claude A. Husted up to the time of sustenance by the latter of personal injuries upon which he declares, was drawn ex parte into these consolidated Midland county lawsuits. Hertel-Deyo moved promptly for summary dismissal of the primary defendant's third-party complaints and, upon leave granted, reviews an order denying said motion. The order of denial is quoted in full, infra.

Plaintiff Claude A. Husted declared under the 1952 amendment (P.A.1952, No. 155; C.L.S.1961, § 413-15) against primary defendant Consumers for personal injuries sustained December 3, 1959 during the course of his work for Hertel-Deyo. Plaintiff Marie Husted, wife of plaintiff Claude, declared against Consumers for loss of consortium and companionship occasioned by the same injuries. The suits were commenced November 13, 1962.

The declarations allege that plaintiff Claude A. Husted was working at the bottom of an excavation made for the purpose of constructing a new bridge; that the work required lowering of buckets of mixed cement to him by means of an overhead crane operated by a fellow employee; that on account of specified acts of negligence of defendant Consumers 'the crane boom came into contact with some electrical poles, wires and apparatus, owned, operated, controlled and maintained by defendant' [Consumers]; that the overhead wires thus owned and maintained by Consumers were both negligently energized and negligently maintained and, on account of such contact, that he was electrically shocked to unconsciousness and severely injured.

The third-party complaints allege duty of third-party defendant Hertel-Deyo and breach of such duty 'in the operation of said crane, boom, and bucket so as to prevent the same from coming in contact with the electric lines of the said defendant and third-party plaintiff so as to prevent injury to persons in and about the construction project including the plaintiff, Claude A. Husted.' Such third-party complaints go on to allege the purely legal conclusion that, in the event of entry of judgments for the plaintiffs 'against the defendant and third-party plaintiff,' the third-party defendant would, 'on principles of indemnity and otherwise, be liable therefor to this defendant and third-party plaintiff.'

Orders granting leave to implead Hertel-Deyo as third-party defendant having entered, the latter moved for summary dismissal assigning failure of the third-party plaintiff to state, in the third-party complaints, claims upon which relief could be granted. Plaintiffs supported the motion. Judge Holbrook denied it. The difficulty of decision faced by the judge was and now is higlighted by unusual provisos which, upon insistence of the judge, appear in such order:

'It is hereby ordered, That said motions be and the same are hereby denied; provided, however, if the defendant Hertel-Deyo Company is found to be negligent in the trial of this matter, and a judgment is rendered against the Hertel-Deyo Company, the amount of liability of the defendant Hertel-Deyo Company to the plaintiff and/or the defendant Consumers Power Company, by right of contribution, indemnification, or otherwise, shall not be in excess of the amount of workmen's compensation benefits paid or payable to the plaintiff, at the time such judgment is rendered; and provided, however, if the defendant Hertel-Deyo Company for itself and on behalf of its workmen's compensation carrier will file in said cause a disclaimer of any right to reimbursement for compensation paid and to be paid the plaintiff Claude A. Husted, said motion for summary judgment and to dismiss may then be renewed and will be granted.'

The decisive question brought to review is whether the third-party plaintiff's complaints state causes upon which relief may be granted. We hold they do not.

Some preliminary observations are in order. The first is made by reference to specific comment Honigman & Hawkins have appended to the third-party rule. They say of the rule, and we agree (1 Honigman and Hawkins, Mich.Ct. Rules Annotated, p. 508):

'Rule 204 does not create substantive rights. The substantive basis for defendant's claim against the third-party party defendant must be found elsewhere before the rule becomes operative. That basis may be found in principles of indemnity, subrogation, contribution, warranty, or other substantive right.'

The next is that the substantive rights and liabilities of all present parties are determinable properly according to the law as it stood when the causes alleged by the two plaintiffs accrued in 1959. At that time, and quite aside from the remedies equity then provided (and yet provides despite the 'merger' of law and equity) ¹ for reimbursement, subrogation, exoneration and indemnity (see authorities considered in Hack v. Concrete Wall Co., 350 Mich. 118 at 123, 124, 125, 126, 85 N.W.2d 109; Hack Inv. Co. v. Concrete Wall Co., 356 Mich. 416, 421, 422, 423, 97 N.W.2d 106, and Ellis v. Phillips, 363 Mich. 587, 110 N.W.2d 772), the only remedy available to a joint tortfeasor against his brother in guilt was by chancery action for contribution taken in pursuance of the act of 1941 (C.L.1948, § 691.561 et seq.). The act of 1941 was changed in minor degree (to accommodate the new procedure only and not to change the substance) and re-enacted as section 2925 of the Revised Judicature Act of 1961 (C.L.S.1961, § 600.2925).

This must be the essence of Consumers' position as third-party plaintiff. It relies particularly on Blackford v. Sioux City Dressed Pork Inc., 254 Iowa 845, 118 N.W.2d 559. Blackford's specific underpinning is Ryan Stevedoring Co. v. Pan-Atlantic SS Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133. Neither case has application here, there being no allegation by Consumers upon strength of which this Court might conclude that a contractual relationship, express or equitably implied, for indemnity by Hertel-Deyo in favor of Consumers, existed at the time plaintiff was injured.

The specific link between Blackford and Ryan appears in the beginning sentences of division IV of Blackford's opinion:

'An authority directly in point on its facts and law is Ryan Stevedoring Company v. Pan-Atlantic Steamship Corporation, supra. It was there held that the action over against the employer by the third party held negligent to the employee, was not based upon the employer's negligence, but on its breach of a duty owed by the employer to the third party arising out of the contract between them.' (italics by present Court).

Referring back to Ryan: The Supreme Court based its decision upon the fact of a contract of indemnity, saying (350 U.S. p. 130, 76 S.Ct. p. 235):

'In the face of a formal bond of indemnity this statute clearly does not cut off a shipowner's right to recover from a bonding company the reimbursement that the indemnitor, for good consideration, has expressly contracted to pay. Such a liability springs from an independant contractual right. It is not an action by or on behalf of the employee and it is not one to recover damages 'on account of' an employee's 'injury or death.' It is a simple action to recover, under a voluntary and self-sufficient contract, a sum measured by foreseeable damages occasioned to the shipowner by the injury or death of a longshoreman on its ship.'

The dissenting opinion of Ryan, dealing as it does with the legal position of an employer sued as here by third-party complaint, is of interest as we pass to the main question of effect upon this third-party complaint of the Michigan Workmen's Compensation Law. That opinion was prepared by Mr. Justice Black. It bears, with his signature, the signatures of Chief Justice Warren and Justices Douglas and Clark.

On pages 140 and 141 of the report, 76 S.Ct. on pages 240 and 241, after having depicted what employers gain and what they lose by the principle of workmen's compensation, and then having alluded to the right of third-party suit which the Longshoremen's and Harbor Workers' Compensation Act provides in favor of injured employees, ² the opinion proceeds to conclusion that there was not in fact a contract for indemnity by plaintiff Palazzolo's employer in favor of the third-party shipowner which paid Palazzolo's judgment. Upon that conclusion the four Justices held (p. 141, 76 S.Ct. p. 241):

'But the end result here is that this employer is actually mulcted in damages because its employee successfully prosecuted a third-party action. Liability is thus imposed because of the negligence of the employer's other employees. This the Act forbids. Whether called 'common-law indemnity,' 'contribution,' 'subrogation,' or any other name, the result is precisely the same. The employer has to pay more 'on account of' an injury to his employee than Congress said he should.

'I agree, of course, that if the employer here had made a contract, oral or written...