Northern Natural Gas Company v. Roth Packing Company

Citation323 F.2d 922
Decision Date25 October 1963
Docket NumberNo. 17240-17244,17304-17307.,17240-17244
PartiesNORTHERN NATURAL GAS COMPANY, Appellant, v. ROTH PACKING COMPANY, Appellee. ROTH PACKING COMPANY, Appellant, v. NORTHERN NATURAL GAS COMPANY, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

James W. R. Brown, Omaha, Neb., F. Vinson Roach and Ralph P. Blodgett, Omaha, Neb., Emmet Tinley, Council Bluffs, Iowa, and James J. Fitzgerald, Jr., and Joseph J. Barmettler, Omaha, Neb., on the brief, for Northern Natural Gas Co.

L. J. Tierney, of Cassem, Tierney, Adams & Henatsch, Omaha, Neb., and Keith Howard of Story, Pilcher, Howard & Hickman, Omaha, Neb., Harry Welch, of Gross, Welch, Vinardi, Kauffman & Schatz, Omaha, Neb., on the brief, for Roth Packing Co.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and DAVIES, District Judge.

VAN OOSTERHOUT, Circuit Judge.

Timely appeals separately taken by Northern Natural Gas Company (Northern) and Roth Packing Company (Roth) from final judgments1 entered by the district court in these five consolidated cases are before us for consideration.

Separate complaints were filed by Rabbi Block, an independent contractor with respect to kosher meat, and by four of Roth's employees wherein they sought compensation for injuries caused by an explosion of gas on Roth's premises, the gas having leaked from a private pipe line leading to Roth's plant. The gas was furnished by Northern by virtue of a contract and delivered to Roth's pipe line at a meter located some one-half mile distant from the plant. Liability was predicated on negligence. Rabbi Block sued both Roth and Northern. The employees' actions were brought against Northern alone. Northern brought in Roth as a third party defendant. Jurisdiction, based upon diversity of citizenship, is established.2

Pursuant to stipulation, the claims of Rabbi Block and the four employees have been settled, Roth paying $5,000 on the Rabbi Block settlement and Northern having paid the balance required to settle all the claims. Such settlements were made without prejudice to the rights of Northern and Roth as against each other.

The issues remaining in these cases are those relating to the claims of Roth and Northern against each other. Such issues which were tried to the district court without a jury may be briefly summarized as follows:

1. Roth's claim that Northern by reason of its negligence was liable to it for damages caused by the explosion to its buildings and personal property and for business interruption, and Roth's additional claim that it was entitled to reimbursement for the $5,000 that it had paid on the claim of Rabbi Block.

2. Northern's claim that it was entitled to indemnity from Roth for all sums it had paid in settlement of the claims of Rabbi Block and the four employees. Northern's position is that it is entitled to indemnity on the basis of a valid contract of indemnity, and alternatively, that it is entitled to relief upon the basis of equitable indemnity.

The trial court in its memorandum opinion thoroughly discusses the evidence bearing on negligence and concludes: "It is our opinion that the joint or concurrent negligence of Northern and Roth caused the explosion and resulting damages."

Northern's negligence is based upon its unreasonable delay in answering a service call to check the leak which call it had accepted. Northern, on these appeals, accepts the court's finding that it is negligent. Roth's negligence is based upon its failure to exercise reasonable care to provide for the safety of its employees and business invitees upon the premises. Roth challenges the finding that it is negligent.

The court denied Roth's claim for damages to its property and for business interruption and denied its claim for recovery of the $5,000 it had paid on the $30,000 settlement made with Rabbi Block. The court required Roth to pay Northern $10,000 as the balance of its half share of the settlement made of the Rabbi Block claim. Roth has appealed from the foregoing provisions of the judgment.

Northern's appeal is from the denial of its claim for contractual indemnity and equitable indemnity. The claims and defenses with respect to such issues will appear in the course of this opinion.

This is a diversity case. The explosion occurred in Iowa; the asserted indemnity contract appears to have been made in Iowa. The parties agree that Iowa law controls.

I.

We shall first consider Roth's appeal. Under Iowa law, the burden is upon the claimant to prove as an essential element of his cause of action that he is free from negligence on his part which contributes in any way or in any degree to his damage and injury. Beezley v. Kleinholtz, 251 Iowa 133, 100 N. W.2d 105, 107. The court found that Roth was guilty of such negligence. This finding, if supported by substantial evidence, precludes any recovery by Roth on its claim for damages.

A careful review of the entire record convincingly establishes that the court's finding of negligence on the part of Roth, which contributed to its injury, is supported by substantial evidence. No purpose will be served in setting out the rather extensive evidence bearing upon this issue. The trial court's memorandum opinion demonstrates that its negligence findings are supported by substantial evidence. The trial court's denial of Roth's claim for property damage and business interruption is affirmed.

The remaining issues raised by Roth's appeal are covered and controlled by our disposition of the indemnity issue raised by Northern's appeal. Our findings on that issue, that contractual indemnity exists, affords an additional basis for affirmance on Roth's appeal.

II

Northern's principal point in support of its appeal is that the trial court erred in denying it contractual indemnity. Northern in support of its claim for contractual indemnity relies upon a contract entered into between Northern and Roth on December 15, 1954,3 and particularly paragraph 3 thereof reading:

"Company agrees to exercise due diligence in maintaining delivery of natural gas but does not guarantee an uninterrupted delivery. It is expressly agreed that Company shall not be held liable in damages or otherwise for any interruption or failure, in whole or part, in gas delivery; nor shall Company be liable for damages to persons and/or property due to or on account of any such interruption or failure in gas delivery, or due to, or on account of any leakage or escape of gas or in any manner connected with the transportation or handling thereof beyond point of delivery to Customer hereunder, which point is hereby mutually agreed to be at Outlet of meter." (Emphasis added.)

The district court found that the purpose of this contract "was to save the gas company harmless from any obligation to respond for damages to persons and property, and that insofar as this was the intended effect, the provision was and is invalid and void."

Although we agree with the interpretation of the purpose of this contract, we do not agree with the conclusion that it is invalid. Inasmuch as the precise reason for voiding the contract is not clearly set out or explained in the court's opinion, we shall attempt to dispose of the attacks upon its validity as they are made in Roth's brief. We have heretofore upheld the trial court's determination that both Roth and Northern were guilty of negligence which caused the injuries here involved and such finding, so far as material, applies to the indemnity issue. Roth's defense to the contractual indemnity claim is thus summarized in its brief: "The contract * * * does not constitute an indemnity agreement. It does not exempt the gas company from the consequences of its own negligence and is void as against public policy." Roth claims that a contract of indemnity must contain language which clearly shows an intention to indemnify against a certain loss or liability. The lack of the words "negligence" and "indemnity" in the contract in question is pointed out.

In Fire Association of Philadelphia v. Allis Chalmers Mfg. Co., N.D.Iowa, 129 F.Supp. 335, a case involving Iowa law, Judge Graven extensively reviews the pertinent authorities bearing on the requisites of an indemnity contract and states:

"It seems clear that it is not necessary that the parties make use of the word `negligence\' in a provision in order to make the provision applicable to a party\'s own negligence and that it is sufficient if the parties by `apt language\' include such negligence." 129 F.Supp. 335, 355.

In that case Judge Graven went on to hold that under Iowa law the supplier and Iowa Public Service Company could validly contract to limit the liability of the supplier for negligence in the furnishing of equipment and that the words used in the contract are to be given their usual and ordinary significance and that when such test is applied, the contract provision would exempt the supplier from liability for its own negligence.

In Weik v. Ace Rents, Inc., 249 Iowa 510, 87 N.W.2d 314, plaintiff lessee sought to recover against his lessor for injuries caused by a defective mower delivered to him pursuant to the lease upon the basis of negligence. The lease provided that the lessee "exonerate, indemnify, and save harmless the company from all claims and liabilities to all parties for damage or loss to any person, persons or property in any way arising out of or during the use of said equipment." The Iowa court upheld the dismissal of the negligence action upon the basis that the quoted provision indemnified the lessor from the consequences of his own negligence. The court, in response to plaintiff's contention that the contract provision against responsibility for one's own negligence should be strictly construed and that instruments should be strictly construed against the party preparing them, holds:

"The foregoing statements are correct. However, they are expressly limited to instruments and contract provisions which are subject to
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