Olch v. Pacific Press & Shear Co.

• Decision Date: 23 January 1978
• Docket Number: No. 4011-I,BUCKNER-WEATHERBY,4011-I
• Citation: 19 Wn.App. 89,573 P.2d 1355
• Court: Washington Court of Appeals
• Parties: Bruce E. OLCH, Respondent, v. PACIFIC PRESS & SHEAR COMPANY, a division of Cantron, Inc., Appellant, and the Portland Machinery Company, Defendant.COMPANY, INC., a Washington Corporation, Appellant, and Pacific Press & Shear Company, a division of Cantron, Inc., Appellant, v. COLLATOR CORPORATION, Respondent.

Page 89

19 Wn.App. 89

573 P.2d 1355

Bruce E. OLCH, Respondent, v. PACIFIC PRESS & SHEAR COMPANY, a division of Cantron, Inc., Appellant, and the Portland Machinery Company, Defendant.

BUCKNER-WEATHERBY COMPANY, INC., a Washington Corporation, Appellant, and Pacific Press & Shear Company, a division of Cantron, Inc., Appellant, v. COLLATOR CORPORATION, Respondent.

No. 4011-I.

Court of Appeals of Washington, Division 1.

Jan. 23, 1978.

Leo A. Anderson, Jr., James W. Ruddy, Seattle, for Buckner-Weatherby co.

Elvidge, Veblen, Tewell, Bergmann & Taylor, Duane Tewell, Thomas A. St. Pierre, Seattle, for Pacific Press & Shear Co.

Graham, McCord, Dunn, Moen, Johnston & Rosenquist, Stephen A. Crary, William R. Smith, Seattle, for Collator Corp.

CALLOW, Judge.

Pacific Press & Shear Company (Pacific Press) and Buckner-Weatherby Company (Buckner-Weatherby), third parties in an employee's suit for damages resulting from an industrial accident, appeal from a summary judgment dismissing their common-law claim for indemnity against Collator Corporation (Collator), the allegedly negligent employer of the injured workman, Bruce E. Olch.

This appeal presents the question of a third party's right to indemnity from an employer in an employee's action against the employer whose negligence allegedly was the primary cause of the injury.

The facts for the purposes of this appeal are not in dispute and may be summarized as follows: On August 24, 1971, Bruce E. Olch was employed by Collator to operate a hydraulic power press. He was injured when he accidentally actuated the foot pedals causing the power press to close on his hand and arm, requiring amputation. Collator paid all industrial insurance premiums due for the period of time pertinent to this case. Following receipt of full workmen's compensation benefits for such injury, Olch sued both Pacific Press, the manufacturer of the hydraulic power press involved in the accident, and Buckner-Weatherby, who sold the machine to Collator. He alleged that the design and manufacture of the power press was negligent, dangerous and defective, and that when it was sold to the plaintiff's employer it lacked proper safety devices to protect the operator from injury.

Pacific Press and Buckner-Weatherby both denied liability and filed a third-party complaint and cross-claim against Collator seeking indemnity and alleged that if the hydraulic press was in any way dangerous, defective, or in violation of safety regulations due to the absence of safeguards or safety devices, it was due to the sole active and primary negligence of Collator in failing to provide the press with such safeguards or safety devices.

Collator denied liability and moved for summary judgment on the basis of the Industrial Insurance Act, RCW 51, which Collator contends is the exclusive remedy and bars actions over for indemnity against an employer covered by the act in the absence of an independent indemnification agreement. Collator's motion was granted, and this appeal by both Pacific Press and Buckner-Weatherby followed entry of judgment dismissing their common-law indemnity action.

The third-party appellants assign error to the order granting summary judgment and contend (1) that sound public policy dictates against extending the immunity provided by the Workmen's Compensation Act to an employer whose negligence is a primary cause of injury to an employee and denying to the third-party outsider, a stranger to the Industrial Insurance Act, his common-law remedy of indemnity; and (2) that the precise issue presented by this appeal has not been decided by any Washington court, nor is it dictated by our decision in either Montoya v. Greenway Aluminum Co., 10 Wash.App. 630, 519 P.2d 22 (1974), or Tucci & Sons, Inc. v. Carl T. Madsen, Inc., 1 Wash.App. 1035, 467 P.2d 386 (1970).

RCW 51.04.010 states in part:

The state of Washington, . . . declares that all phases of the premises are withdrawn from private controversy, and sure and certain relief for workmen, . . . is hereby provided regardless of questions of fault and to the exclusion of every other remedy, proceeding or compensation, except as otherwise provided in this title; and to that end all civil actions and civil causes of action for such personal injuries and all jurisdiction of the courts of the state over such causes are hereby abolished, except as in this title provided.

Greenleaf v. Puget Sound Bridge & Dredging Co., 58 Wash.2d 647, 658, 364 P.2d 796 (1961), quoting from Stertz v. Industrial Ins. Comm'n, 91 Wash. 588, 158 P. 256 (1916), said:

When the employer, for his part, pays his share into this fund, all obligation on his part to anybody is ended.

(Italics ours.)

The exclusivity of the employer's liability to anyone for damages arising out of injuries suffered by an employee was recently reemphasized in West v. Zeibell, 87 Wash.2d 198, 550 P.2d 522 (1976), and Ledesma v. A. F. Murch Co., 87 Wash.2d 203, 550 P.2d 506 (1976). These opinions reinforce the position that tort actions against an insured employer after disbursement of a compensation award pursuant to RCW Title 51 cannot be maintained. It has been noted however, that where an independent duty or obligation is owed by the employer to a third party the exclusivity provisions of the workmen's compensation act will not bar recovery by the third party. In such situations, third party actions against insured employers have been allowed when an express written contract of indemnification existed, Tucci & Sons, Inc. v. Carl T. Madsen, Inc., supra, 1 Wash.App. at 1040-41, 467 P.2d 386, and actions requesting indemnity have been disallowed when no special relationship existed. Stevens v. Silver Mfg. Co., 41 Ill.App.3d 483, 355 N.E.2d 145, 151 (1976); Diekevers v. Brekel Incorporated, 73 Mich.App. 78, 250 N.W.2d 548, 550 (1976); Montoya v. Greenway Aluminum Co., supra, 10 Wash.App. at 631-32, 519 P.2d 22. We must inquire whether a contract of indemnification may be implied under the present circumstances.

Indemnity requires full reimbursement and transfers liability from the one who has been compelled to pay damages to another who should bear the entire loss. Hales v. Green Colonial, Inc., 402 F.Supp. 738, 739 (W.D.Mo.1975), modified on other grounds, 544 F.2d 331 (8th Cir. 1976); Stuart v. Hertz Corp., 302 So.2d 187, 190 (Fla.Dist.Ct.App.1974). Indemnity may be permitted on the basis of an express contract, by virtue of vicarious liability, because of a breach of an independent duty between the indemnitor and the indemnitee, and because of the primary or "active" tortious conduct of an indemnitor as compared to the secondary or "passive" tortious conduct of the indemnitee. Hysell v. Iowa Public Serv. Co., 534 F.2d 775, 782 (8th Cir. 1976).

The third party plaintiffs claim a right to recovery under an implied contract of indemnification based upon a breach of an independent duty. They assert that the employer-buyer owed to the third party plaintiffs a duty to operate the machine in a safe manner and to provide the machine with all necessary safeguards or safety devices. It is true that such a duty might exist in the abstract, but it does not run by implication to a machinery manufacturer when an employee is injured by a purchased machine operated by the employee. As noted by Judge Learned Hand in Slattery v. Marra Bros., Inc., 186 F.2d 134, 139 (2nd Cir.), cert. denied, 341 U.S. 915, 71 S.Ct. 736, 95 L.Ed. 1351 (1951):

(W)e shall assume that, when the indemnitor and indemnitee are both liable to the injured person, it is the law of New Jersey that, regardless of any other relation between them, the difference in gravity of their faults may be great enough to throw the whole loss upon one. We cannot, however, agree that that result is rationally possible except upon the assumption that both parties are liable to the same person for the joint wrong. If so, when one of the two is not so liable, the right of the other to indemnity must be found in rights and liabilities arising out of some other legal transaction between the two.

Here, pursuant to RCW 51, the employer is not liable directly to the employee and no liability exists from the employer to the manufacturer-seller from the contract of sale.

The third party plaintiffs rely upon cases holding a contract of indemnification may be implied where an employer is "testing" a third party's machine (United States Fidelity & Guar. Co. v. Kaiser Gypsum Co., 273 Or. 162, 539 P.2d 1065 (1975)), or where an independent duty existing between an employer-buyer and a manufacturer-seller is breached (e. g., Pust v. Union Supply Co., Colo.App., 561 P.2d 355 (1976); Dole v. Dow Chem. Co., 30 N.Y.2d 143, 282 N.E.2d 288, 331 N.Y.S.2d 382, 53 A.L.R.3d 175 (1972)). A comparable special relationship or independent duty has not been shown to exist here. Independent duties from the buyer to the seller should not be implied to exist where the parties have not contracted for such duties expressly. As noted in 2A A. Larson, The Law of Workmen's Compensation § 76.44 (1976), at pages 14-404 and 14-405:

The "independent duty" in Dole (Dole v. Dow Chem. Co., 30 N.Y.2d 143, 282 N.E.2d 288, 331 N.Y.S.2d 382 (1972)) could not very well be held to be based on contract, although there was a contract between the parties. The contract was simply one of sale in this instance, of a poisonous fumigant. Clearly certain independent obligations run with the sale from the manufacturer to the buyer. But it seems unlikely that any court would be prepared to hold that independent contractual obligation runs from the buyer to the manufacturer. To do this a court would have to announce the following doctrine: "Whenever a buyer purchases an article from a manufacturer, the buyer assumes an independent contractual obligation to the manufacturer not to use the article in such a way as to bring liability upon the manufacturer."

The fact that one party settled a claim against another...