Lamoille Grain Co., Inc. v. St. Johnsbury and Lamoille County R. R.

• Decision Date: 21 December 1976
• Docket Number: No. 294-75,294-75
• Citation: 135 Vt. 5,369 A.2d 1389
• Court: Vermont Supreme Court
• Parties: LAMOILLE GRAIN COMPANY, INC. v. ST. JOHNSBURY AND LAMOILLE COUNTY RAILROAD.

Page 1389

369 A.2d 1389

135 Vt. 5

LAMOILLE GRAIN COMPANY, INC. v. ST. JOHNSBURY AND LAMOILLE COUNTY RAILROAD.

No. 294-75.

Supreme Court of Vermont.

Dec. 21, 1976.

James C. Gallagher of Downs, Rachlin & Martin, St. Johnsbury, for plaintiff.

Sargent & White, Morrisville, for defendant.

Before BARNEY, C. J., DALEY, LARROW and BILLINGS, JJ., and SHANGRAW, C. J. (Ret.), Specially Assigned.

BARNEY, Chief Justice.

A railroad car of the defendant went off the end of a siding track and knocked over several grain storage bins that the plaintiff grain company maintained there on land leased from the railroad. The grain had to be sold in bulk to salvage any value, and there was evidence of damage and loss to the extent of more than twelve thousand dollars.

The railroad claimed it was not liable because the 'stops' belonging at the end of the siding had been removed, unbeknownst to the railroad, by third persons. It also claimed that the lease agreement contained an indemnity clause saving the railroad harmless from any liability for damage, injury or loss to the grain company or its personnel.

The lower court found in favor of the grain company and awarded damages. In so doing, it held that the indemnity clause could not excuse the railroad for liability due to damage to the grain company's property. The appeal is now here.

The basis of the lower court's holding was that, as a matter of law, 'the indemnification agreement could not be applied where the negligence is that of the indemnitee.' With this, we cannot agree.

Under the common law, public policy forbids a railroad from restricting its liability to the public, but this rule does not extend to the railroad's private undertakings. In private dealings the railroad has the right to grant or withhold the privilege to use or occupy its lands or premises on such terms and conditions as it deems appropriate. Boston & Maine R. R. v. Howard Hardware Co., 123 Vt. 203, 206, 186 A.2d 184 (1962).

In Osgood v. Central Vermont Ry., 77 Vt. 334, 60 A. 137 (1905), this Court has already upheld the propriety of a contract which contained an indemnity provision whereby the railroad was held harmless from all liability for loss, damage or injury resulting from the negligence of the defendant or in any other manner. We affirm this holding.

On determining that an indemnity clause protecting a railroad against its own negligence is not per se unconscionable, the question becomes one of whether the parties' agreements in this particular case provide such protection. Appellee argues that if a railroad may be excused from its own negligence, it may only be by virtue of 'clear and unequivocal' language to that effect. He would have us hold that absent a specific reference to negligence, present in Osgood, the requirement of 'clear and unequivocal' language is not met and the defendant may not be excused for its negligence.

We do not find that the failure of the contract to literally and specifically excuse the railroad for its own negligence precludes other verbiage from having that same effect. Instead, we treat this as we would other questions of contractual construction. Where the language of the agreement is clear, the intention and understanding of the parties must be taken to be that which their agreement declares. Stevens v. Cross Abbott Co., 129 Vt. 538, 283 A.2d 249 (1971).

The court below, in Finding of Fact No. 24, stated that 'paragraph 4 of the lease agreement if literally interpreted would require the Plaintiff to indemnify the Defendant for Plaintiff's claim and to save the Defendant harmless from Pl...