Ke-Wash Co. v. Stauffer Chemical Co.

• Decision Date: 05 May 1970
• Docket Number: No. 53623,KE-WASH,53623
• Citation: 177 N.W.2d 5
• Parties: COMPANY, Appellee, v. STAUFFER CHEMICAL COMPANY, Appellant.
• Court: Iowa Supreme Court

Page 5

177 N.W.2d 5

KE-WASH COMPANY, Appellee, v. STAUFFER CHEMICAL COMPANY, Appellant.

No. 53623.

Supreme Court of Iowa.

May 5, 1970.

Schulman, Phelan, Tucker, Boyle & Mullen, Iowa City, for appellant.

John D. Randall, John D. Randall, Jr., and John R. Hughes, Cedar Rapids, for appellee.

MASON, Justice.

This is an appeal by defendant Stauffer Chemical Company from the trial court's judgment requiring the company indemnify plaintiff Ke-Wash Company for expenditures made in settling an earlier law action in which both parties were named as defendants.

In the spring of 1965 Ke-Wash sold a liquid chemical known as 'Knoxweed 42', a product manufactured by Stauffer, to Cleo Hall, a Johnson County farmer. Use of the chemical, a pre-emergence weed killer, on certain corn fields resulted in crop damage. Hall's complaint of this adverse effect was referred to Stauffer who advised Ke-Wash by letter that complaints were Stauffer's responsibility.

When Hall's complaint was not successfully settled he commenced a law action in the Johnson district court to recover $4871.26 from Stauffer as manufacturer and Ke-Wash as distributor of the weed killer. Both defendants filed answer in the Johnson County case and Ke-Wash filed cross-petition against Stauffer asking for indemnification on the theory that its liability to Hall, if any, was only vicarious and secondary to Stauffer's liability.

Stauffer filed motion to dismiss and strike the cross-petition alleging the action asserted by Ke-Wash in its cross-petition was for indemnity, was a separate and distinct cause of action and did not constitute a proper joinder of actions under rule 33(a), Rules of Civil Procedure.

Trial of Hall's lawsuit against Ke-Wash and Stauffer commenced October 24, 1966. October 26, the third day of trial, the court sustained Stauffer's motion to dismiss Ke-Wash's cross-petition and November 7 Hall dismissed his action against both parties with prejudice as a result of a settlement agreement reached between the parties. Ke-Wash paid $676.85, Stauffer $1000. The parties agree ruling on Stauffer's motion to dismiss, payment of the settlement figure and Hall's dismissal were all part of one transaction culminating in settlement, not separate and distinct acts one following the other before settlement.

Ke-Wash's action here is for reimbursement from Stauffer for the amount plaintiff contributed to the Hall settlement and for legal fees, court reporting service and mileage expense.

Ke-Wash alleges in Division I of its petition that its liability to Hall was only vicarious, based on implied warranty of fitness of the product sold and therefore secondary to Stauffer's direct liability; and Stauffer, manufacturer of the product, owed a duty to plaintiff as distributor not to subject it to this vicarious liability and having violated this duty should be required to indemnify Ke-Wash.

In the other division Ke-Wash alleges defendant agreed it was responsible for the 'Knoxweed 42' complaint as evidenced by exhibit a, a letter to Stauffer from KeWash advising of complaints received by it from purchasers and users of Knoxweed, and exhibit b, a letter to Ke-Wash from Stauffer in reply advising that the company wished to handle any grower complaints directly with the grower as it felt this was its obligation, not that of the distributor Ke-Wash. Plaintiff alleges this correspondence created a contract which defendant breached and plaintiff should now be awarded damages sustained.

Stauffer filed motions to dismiss and to strike, alleging Ke-Wash was seeking indemnity for contribution voluntarily made in settlement of the lawsuit originally filed in Johnson County by Hall against both as defendants; that Ke-Wash voluntarily contributed to the settlement and is now barred and estopped from bringing the present action. It moved to strike that paragraph from plaintiff's petition in which it was alleged Ke-Wash had incurred certain expenses necessary in defense to Hall's action and to strike Division II in its entirety because the theory of recovery asserted in this division was merged in the settlement of the Hall suit and plaintiff was barred and estopped from asserting such right. The motions were overruled.

Answering Ke-Wash's petition Stauffer admits some foundation allegations, denies others and alleges affirmatively in a separate division that Ke-Wash's petition fails to state a cause of action against Stauffer under the law of indemnity in either division. Defendant further alleges Ke-Wash is estopped from seeking indemnity from it because Ke-Wash voluntarily contributed to the Hall settlement, is now seeking recovery of its settlement money and expenses in an action in which plaintiff and Stauffer were both named as co-defendants under allegations of joint and concurring negligence.

The matter was submitted to the trial court on the pleadings in the instant case, the pleadings and interrogatories in the action brought by Hall and the stipulation of Stauffer and Ke-Wash.

In the trial court Stauffer contended the parties here were party defendants in the Hall case, the settlement was voluntarily made by both parties and under the law where settlement is voluntarily made plaintiff is barred and estopped from bringing this action for indemnification.

Plaintiff, on the other hand, claims the settlement makes no difference; that under the facts and circumstances here the settlement was not voluntary in the sense used by defendant and Ke-Wash is entitled to Indemnification or damages.

The trial court concluded that sustaining Stauffer's motion to strike and dismiss Ke-Wash's cross-petition against Stauffer in the Hall case on the ground Ke-Wash had alleged a cause of action which was a separate and distinct cause of action from the Johnson County suit and was not a proper joinder of actions under rule 33(a), R.C.P., constitutes an adjudication between the parties that the cause of action alleged in the cross-petition was a 'separate and distinct cause of action', compelling one to reach the conclusion the matter was res judicata.

The court further concluded the Hall settlement was not voluntary in the sense it would be a bar to indemnification; Stauffer's liability was a direct liability and it owed a duty to Ke-Wash not to subject it to this vicarious liability and, having violated this duty, should be required to Reimburse Ke-Wash.

The court determined that Stauffer by assuming the complaint and directing Ke-Wash not to become involved created a contract between Stauffer and Ke-Wash which Stauffer breached (Division II) and Ke-Wash should be Indemnified by Stauffer.

There was no dispute as to the amount Ke-Wash was compelled to pay and the court awarded judgment against Stauffer in the sum of $3247.08 with interest and costs.

In seeking reversal Stauffer asserts the court erred in (1) overruling its motion to strike and dismiss Ke-Wash's petition on the ground it failed to state a cause of action, (2) basing its judgment entry upon erroneous findings of fact and conclusions of law and (3) failing to hold the contribution toward settlement by plaintiff was voluntary and precluded a subsequent action for indemnification.

I. In support of its first assignment of error Stauffer maintains it is essential to a cause of action for indemnity which arises out of a settlement rather than an adjudication and judgment by the court that the party alleging a right of indemnity must plead with specificity the (1) basis of his own liability when he has settled the disputed claim with the injured third party and (2) the grounds upon which the indemnitor should be held accountable. Having elected to settle the disputed claim short of judgment Ke-Wash as indemnitee must assume the same burden of pleading and proof its original claimant bore. Stauffer contends Ke-Wash failed to state anywhere in its petition necessary allegations showing liability of either it or Stauffer toward Cleo Hall.

In appraising the sufficiency of a petition certain rules govern our review.

Where a doubtful pleading is directly attacked by motion before issue is joined or in the answer as permitted by rule 72, R.C.P., it will be resolved against the pleader. If, however, the petition does allege ultimate facts upon which plaintiff might recover and states a claim under which evidence may be introduced in support thereof, or if attack is delayed, the petition should be construed in the light most favorable to the plaintiff with doubts resolved in his favor and the allegations accepted as true.

A motion to dismiss is sustainable only where it appears to a certainty a plaintiff would not be entitled to any relief under any state of facts which could be proved in support of the claims asserted by him.

Grounds of a motion to dismiss a pleading because it does not state a cause of action must be based on the contents of the pleading assailed. Facts not so appearing, except those of which judicial notice must be taken, must be ignored. Such motions must specify wherein the pleading they attack is claimed to be insufficient. Rule 104(d), R.C.P. Halvorson v. City of Decorah, 258 Iowa 314, 319, 138 N.W.2d 856, 860 (1965); Hagenson v. United Telephone Company, 164 N.W.2d 853, 855 (Iowa 1969); and Nelson v. Wolfgram, 173 N.W.2d 571, 573 (Iowa 1970), and authorities cited in these opinions.

Furthermore a party seeking indemnity has the burden of pleading and providing he is entitled to that relief. Mineke v. Fox, 256 Iowa 256, 262--263, 126 N.W.2d 918, 921.

The following portion of defendant's motion specifies wherein it contends Ke-Wash's petition was insufficient:

'2. Plaintiff's petition seeks indemnity for contribution voluntarily made in the settlement of a law suit originally filed in Johnson County, Iowa, by one Cleo Hall, against both plaintiff and defendant herein in Cause No. 37345. By reason of the fact, as shown on plaintiff's petition, that plaintiff herein voluntarily...