McLouth Steel Corp. v. A.E. Anderson Const. Corp., Docket No. 13661--4

• Decision Date: 24 July 1973
• Docket Number: No. 1,Docket No. 13661--4,1
• Citation: 48 Mich.App. 424,210 N.W.2d 448
• Parties: McLOUTH STEEL CORPORATION, a Michigan corporation, Plaintiff- Appellee and Cross-Appellant, v. A. E. ANDERSON CONSTRUCTION CORPORATION, a New York corporation, Defendant- Appellant and Cross-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 448

210 N.W.2d 448

48 Mich.App. 424

McLOUTH STEEL CORPORATION, a Michigan corporation Plaintiff- Appellee and Cross-Appellant, v. A. E. ANDERSON CONSTRUCTION CORPORATION, a New York corporation, Defendant- Appellant and Cross-Appellee.

Docket No. 13661--4.

Court of Appeals of Michigan, Division No. 1.

July 24, 1973.

Released for Publication Oct. 2, 1973.

John R. Secrest, Davidson, Gotshall, Kohl, Nelson, Secrest, Wardle & Lynch, Detroit, for defendant-appellant.

William A. Joselyn, Martin, Bohall, Joselyn, Halsey & Rowe, Detroit, for plaintiff-appellee.

Before J. H. GILLIS, P.J., and McGREGOR and ADAMS, ^* JJ.

J. H. GILLIS, Presiding Judge.

This appeal involves the application of jury verdicts in two separately tried cases which were originally all part of a single lawsuit.

Defendant, A. E. Anderson Construction Corporation (hereinafter referred to as Anderson), was hired by plaintiff, McLouth Steel Corporation (hereinafter referred to as McLouth), to tear down and reline a blast furnace. Defendant agreed to furnish workmen, tools, and equipment and to supervise the project. The contract between plaintiff and defendant provided:

'If this order covers the performance of labor for the Buyer, the Seller agrees to indemnify and protect the Buyer against all liabilities, claims, or demands for injuries or damages to any person or property growing out of the performance of this contract: The Seller further agrees to furnish a Certificate from its insurance carriers showing that it carries adequate Workmen's Compensation, Public Liability, and Property Damage insurance coverage: Said Certificate must show the amount of coverage, number of policy and date of expiration. If Seller is self-insurer, he must have the Department of Labor and Industry of the state in which said labor is to be performed furnish Certificates of same direct from their offices to the Buyer.' (Emphasis supplied.)

During the course of performance of the contract a charge of dynamite was exploded insider the furnace, a customarily employed practice for this type of operation. Anthony White, an employee of defendant Anderson, was injured by the blast. White and his wife sued McLouth, alleging a claim of negligence and gross negligence, a claim that McLouth was liable for the negligence of Anderson due to the inherently dangerous nature of Anderson's operation, and a claim of strict liability against McLouth because of the ultrahazardous activity of its contractor, Anderson.

McLouth added Anderson as a third-party defendant seeking indemnification under the contractual agreement quoted above, and at common law. Anderson's motion for summary judgment was granted by the trial court, but that decision was reversed on appeal. See White v. McLouth Steel Corp., 18 Mich.App. 688, 171 N.W.2d 662 (1969). However, during the pendency of that appeal, trial was held on the Whites' claims against McLouth.

In this trial, the trial judge explained the theories of possible liability thusly:

'Plaintiffs claim negligence on the part of McLouth in failing to gas-free the furnace; misrepresenting, expressly and impliedly, that the furnace was gasfree; failing to provide blasting mats; failing to require that Anderson employ blasting mats; failing to warn plaintiff of the blasting in timely fashion; allowing blasting while plaintiff was on the premises; and allowing a herd of men to gather at the blasting scene at a critical time.

'Plaintiff also claims the work in question was inherently dangerous and that under the law of Michigan pertaining to such cases, defendant McLouth must answer for the negligence of any contractor hired to do the work, such as A. E. Anderson.

'Plaintiffs also claim that under the particular circumstances of extreme and inherent dangers, the behavior of the defendant was so wanton and so careless in relation to human life and limb at stake as to constitute a matter of gross negligence.

'Lastly, the plaintiffs claim that the work being done was an ultrahazardous activity for which McLouth is absolutely and strictly liable regardless of fault and negligence on its own part or on the part of Anderson.'

The jury was instructed to return a general verdict in favor of the prevailing party. However, at the rendition of the verdict, the foreman announced,

'Your Honor, we the jury find the defendant McLouth Steel Guilty of negligence, compensation to Mr. White in the amount of $200,000.00; Mrs. White $25,000.' ¹ (Emphasis supplied.)

After the decision against McLouth at trial, the instant case was instituted wherein McLouth asserted its right to indemnification by Anderson. The case was submitted to the jury on four special verdicts. See GCR 1963, 514. The four questions and the jury's answers are as follows:

'Was McLouth Steel negligent in the occurrence causing injury to the Whites?

'Answer: Yes.

'If the answer is yes, was their negligence A proximate cause of the injury to the Whites?

'Answer: No.

'Was Anderson Company negligent in the occurrence causing injury to the Whites?

'Answer: Yes.

'If the answer is yes, was their negligence A proximate cause of the injury to the Whites?

'Answer: Yes.' (Emphasis supplied.)

The trial court entered judgment in favor of McLouth on the basis of Anderson's agreement to indemnify, principles of common-law indemnity, and breach of an implied promise by Anderson to do its work in a safe and workmanlike manner. Defendant Anderson appeals.

First, we stress that our analysis deals with principles of indemnity, Not contribution among joint tortfeasors. In this situation, contribution is not available since the Workmen's Compensation Act provides the only basis of recovery by the Whites against Anderson. Husted v. Consumers Power Co., 376 Mich. 41, 135 N.W.2d 370 (1965).

Second, even though the Workmen's Compensation Act precludes contribution, indemnification of McLouth by Anderson is permissible under either a properly drawn contractual agreement, Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956), or at common law, Husted v. Consumers Power Co., Supra; Indemnity Insurance Co. of North America v. Otis Elevator Co., 315 Mich. 393, 24 N.W.2d 104 (1946); see also Dale v. Whiteman, 388 Mich. 698, 202 N.W.2d 797 (1972).

The underlying principle of indemnity rests on the notion that when one is compelled to pay money another ought to pay, the former may recover the sum so paid from the latter If the one making the payment is free from causal negligence. Consequently, contractual agreements to indemnify have been strictly construed to prevent a casual interpretation that would allow indemnification for the consequences of a party's own negligence. Geurink v. Herlihy Mid-Continent Co., 5 Mich.App. 154, 146 N.W.2d 111 (1966). And at common law, a party seeking indemnification must prove himself free from personal fault. Husted v. Consumers Power Co., Supra, 376 Mich. at 51, 135 N.W.2d at 374.

Defendant contends the verdict as announced by the foreman in the first trial that McLouth was 'guilty of negligence' precludes McLouth's subsequent assertion of 'innocence' necessary to support an action for indemnification. We do not agree. In that case the jury was instructed they could find for the plaintiffs under any one of the three theories of liability, at least two of which involved McLouth's liability for Anderson's negligence. The decision in favor of the plaintiffs in that case should be viewed only as the establishment of the Whites' right to recovery and not as a determination of which of two sources of recovery occasioned the injury through its negligence. Indemnity Insurance Co. of North America v. Otis Elevator Co., Supra, 315 Mich. at 398, 24 N.W.2d at 106. The jury, in that prior case, was not called upon to decide whether mcLouth Or Anderson was negligent and we decline to give such an interpretation to the improvident words of the jury foreman.

The finding of negligence on McLouth's part in the second case, likewise does not preclude indemnification since the jury expressly found such negligence Not a proximate cause of the injury. See Dale v. Whiteman, Supra, 388 Mich. at 705, 202 N.W.2d at 800. Therefore, either the contractual agreement to indemnify, or common-law principles of indemnification provide an adequate basis for the judgment entered against Anderson.

In response to plaintiff McLouth's assertion on cross appeal that it is entitled to interest on the award from the date of the filing of the third-party complaint against Anderson, we note that the judgments against McLouth entered June 5, 1969, in favor of the original plaintiffs have been settled. ² Although M.C.L.A. § 600.6013; M.S.A. § 27A.6013, indicates interest on money judgments is to be awarded from the date of filing the complaint, we hold the modification ordered by the trial judge which would allow interest to accrue from the date of judgment against McLouth was proper. ³ The purpose of an action seeking indemnification is to restore to the indemnitee that amount which he has paid which another ought to have paid.

The amount for which the indemnitor is liable is necessarily determined by the judgment sustained by the indemnitee, which amount would then Include interest payable to the original plaintiff from the date of the filing of his complaint, pursuant to M.C.L.A. § 600.6013, Supra. That portion of time between the filing of the third-party complaint by the indemnitee was therefore already burdened by statutory interest in this case. In such a setting it is proper not to further augment the indemnitor's liability by adding more interest to an amount that had not yet been determined nor paid out by the indemnitee. See Vannoy v. City of Warren, 26 Mich.App. 283, 182 N.W.2d 65 (1970), aff'd, 386 Mich. 686, 194 N.W.2d 304 (1972).

Affirmed. Costs to appellee.

ADAMS, Judge (dissenting).

The crux of this appeal involves a jury verdict in an action by ...