Loper v. Standard Oil Co.

Decision Date29 November 1965
Docket NumberNo. 20373,No. 2,20373,2
Citation138 Ind.App. 84,211 N.E.2d 797
PartiesRobert C. LOPER, Appellant, v. STANDARD OIL COMPANY, R. Scurta and Anna Maguran Scurta, Appellees
CourtIndiana Appellate Court

[138 INDAPP 85]

Philip M. Cagen, William W. Andersen, Jr., Valparaiso, for appellant.

Daniel F. Kelly, Allen W. Teagle, Hammond, Tinkham, Beckman, Kelly & Singleton, Hammond, G. Edward McHie, Hammond, of counsel, for appellee Standard Oil Co.

Peters, McHie, Enslen & Hand, Hammond, of counsel, for appellees Scurtas.

HUNTER, Judge.

This is an appeal from the Porter Superior Court wherein the court sustained both the appellees' demurrers to the appellant's third amended complaint. The appellant refused to plead further and judgment was rendered. The appellant then brought this appeal.

On a demurrer in the absence of a motion to make more specific, we should take all facts well pleaded as true. Seaney v. Ayres (1963), 135 Ind.App. 585, 189 N.E.2d 826; Ebbeskotte v. Tyler (1957), 127 Ind.App. 433, 142 N.E.2d 905.

The facts as pleaded are as follows: on or about November 15, 1951 the owners-appellees Scurtas entered into a lease with the appellee Standard for ten (10) years with the right to renew for ten (10) years. In that lease the landlord covenanted to make repairs on the leased premise. Said lease is not before us on this appeal. On September 10, 1955 the appellant Loper entered into a lease with Standard. The lease was renewed from year to year. This lease, the only one [138 INDAPP 86] before us on this appeal, contained a 'hold harmless clause' indemnifying the landlord from liability for his negligence.

"3. Lessor, its agents and employees shall not be liable for any loss damage, injuries, or other casualty of whatsoever kind or by whomsoever caused to the person or property of anyone (including the lessee) on or off the premises, arising out of or resulting from the Lessee's use, possession or operation thereof, or from the installation, existence, use, maintenance, condition, repair, alteration or removal of any equipment thereon, whether due in whole or in part to negligent acts or omissions of the Lessor, its agents or employees; and the Lessee for himself, his heirs, executors, administrators, successors and assigns, hereby agrees to indemnify and hold Lessor, its agents and employees, harmless from and against all claims, demands, liabilities, suits or actions (including all reasonable expenses and attorneys' fees incurred by or imposed on the Lessor in connection therewith) for such loss, damage, injury or other casualty. The Lessee also agrees to pay all reasonable expenses and attorneys' fees incurred by the Lessor in the event that the Lessee shall default under the provisions of this paragraph."

The appellant (sub-lessee) also covenanted to repair as follows:

"That Lessee will pay all water, light and other operating expenses and will keep said premises, buildings, equipment, machinery and appliances, together with the adjoining sidewalks and entrance driveways in good order and repair."

Standard (sub-lessor) at various times inspected the premise and made repairs at its own expense. Standard specifically inspected the furnace on the leased premise at the request of the appellant. Standard told the appellant that the furnace was working properly and that they would inspect it from time to time. If they found that it needed repairs, they would do so. The appellant also avers that he told the owners Scurtas of the defective furnace. On February 15, 1961 the furnace exploded causing damage to the appellant's property. The appellant avers various acts of negligence on the part of [138 INDAPP 87] the appellees as the direct and proximate cause of the explosion.

The appellant assigns as error the lower court's action in sustaining the separate demurrers of the appellees. Said demurrers were directed to the plaintiff's failure to state facts sufficient to constitute a cause of action in his complaint.

The appellee Standard in the memorandum to its demurrer stated that the indemnification provision acted as a bar to the cause of action as brought by the appellant against the appellee Standard as a sub-lessor. The appellant contends that such provision contravenes public policy.

The case law as it relates to the matter at bar indicates that the appellant's contentions are in error.

This court in construing an indemnification provision similar to the one on this appeal, stated in Franklin Fire Ins. Co. v. Noll (1945), 115 Ind.App. 289, 58 N.E.2d 947:

'We know of no provision in the state constitution or statutes, and have been unable to find any Indiana decision which declares that a clause in a contract, or a lease, between landlord and tenant, similar to the one under consideration, is null and void as against the public policy of this state. On the contrary, the uniform trend of the decisions in Indiana clearly upholds the right of freedom of contract, guaranteed by both the Federal and State constitutions. * * *

Therefore, it is our opinion that under the Indiana authorities the clause in the lease under consideration is not void as against public policy and that the facts stated in appellant's complaint are insufficient to constitute a cause of action. * * *' (Our emphasis.)

See also Niederhaus v. Jackson, (1923), 79 Ind.App. 551, 137 N.E.2d 623.

The appellant cites Freigy v. Gargaro Company, Inc. (1945), 223 Ind. 342, at p. 353, 60 N.E.2d 288, as supporting his proposition that a party may not contract against its own negligence for such would contravene public policy. Our Supreme Court stated therein that 'A party may not contract[138 INDAPP 88] against his own negligence. 31 C.J., p. 433, n. 22.' However, in reviewing this authority, we find that the authority cited does not support this rule. Also, in 42 C.J.S. Indemnity Sec. 7, p. 573, the authority states:

'Negligence. The parties may lawfully bind themselves by contract to indemnify against to relieve from liability on account of future acts of negligence, whether the negligence indemnified against be that of the indemnitor or his agents or that of the indemnitee or his agents.'

In addition the above statement in Freigy, supra, was not necessary to the holding of the court. Consequently, it should be considered as dictum. This particular phrase of the court in the Freigy case was also analyzed in Indemnity Insurance Co. v. Koontz-Wagner Electric Co., 233 F.2d 380 (CCA 7th Ind. 1956) where the court states at p. 383:

'As the authority cited does not support the rule as stated by the Court, and as the statement itself was not necessary for the decision of the Court, we do not consider the quoted statement in Freigy v. Gargaro Co., Inc., supra, to be the established rule of law in Indiana.'

It seems quite clear from this analysis that the Freigy case is not valid authority for the principle that a party may not contract against his own negligence.

The appellant also relies on Pennsylvania Railroad Company v. Kent (1964), Ind.App., 198 N.E.2d 615, in support of his argument. This case held that a railroad could not by the terms of a contract exonerate itself from liability to third parties for its negligence as long as it is acting as a common carrier. At p. 619, this court states:

'Further, we believe the rule to be well established that a railway company acting as a common carrier may not contract for indemnity against its own tort liability when it is performing either a public or quasi public duty such as that owing to a shipper, passenger, or servant, and that such contracts are void as against public policy.'

[138 INDAPP 89] This court explicitly qualified the decision by stating at p. 622:

'It is understood, of course, that we do not now speak of or have reference to the right of a lessee to release the railroad company, as lessor from claim for damages to the person or property of the lessee.'

Thus, the case is in no way authority for a fact situation involving contract provisions operating between a lessor and a lessee in private capacities as opposed to instances where the lessor is in the capacity of a common carrier.

As exemplified herein there is nothing within the Constitution, statutes, or case law of Indiana which compels a finding that a party cannot contract against his own negligence or that such a contract would be contrary to public policy under circumstances such as are presented in the case at bar. The Pennsylvania Railroad Company v. Kent case, supra, cited by the appellant as supporting his contention recognizes the rule as being adverse to the appellant's position.

Consequently, insofar as the lease provision presented on this appeal indemnifies the sub-lessor Standard from liability for its negligence as to the sub-lessee Loper, the lease contract does not contravene public policy. We hold therefore that appellant by his third amended complaint did not state facts sufficient to constitute a cause of action against appellee Standard.

The appellant's remaining contention of error is to the effect that the lower court erred in sustaining the appellees Scurtas' demurrer. It should be noted at this point that the appellant contends that he is a third party beneficiary under the lease between the appellees Scurta and appellee Standard, thereby contending that the covenant in lease of the owners Scurta with appellee Standard wherein the owners Scurta agreed to repair the premises should be construed as a matter of law to be for his benefit as sub-lessee.

[138 INDAPP 90] The appellant does not include said lease or any part thereof in his brief. He merely avers to its contents. This was brought to the appellant's attention by the appellee's motion to dismiss or affirm. In dismissing the motion, this court stated:

'Appellees assert that the appellant, although setting forth a third amended complaint in its entirety in his brief, failed to include the lease which was attached thereto...

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