Royal Indem. Co. v. Southern Cal. Petroleum Corp.

Decision Date10 June 1960
Docket NumberNo. 6562,6562
Citation67 N.M. 137,1960 NMSC 53,353 P.2d 358
PartiesROYAL INDEMNITY COMPANY, Intervening Plaintiff-Appellee. B. J. Service, Inc., a corporation, Third-Party Defendant-Appellee, v. SOUTHERN CALIFORNIA PETROLEUM CORPORATION, Defendant-Appellant.
CourtNew Mexico Supreme Court

Neal & Neal, Hobbs, E. J. Kolb, Dallas, Tex., for appellant.

Atwood & Malone, Charles F. Malone, Roswell, for appellees.

CARMODY, Justice.

Appeal from the dismissal of third-party complaints and from the entry of summary judgment on intervenor's claim for subrogation.

These proceedings are an outgrowth of the principal case arising out of an oil well fire in which two workers were killed and one seriously injured. Initially, three separate cases were filed, but they were subsequently consolidated for trial and later, by stipulation, consolidated for purposes of appeal.

The issues on appeal between the plaintiffs and the defendants, Southern California Petroleum Corporation and Clower Drilling Company, a Corporation, are entirely foreign to the questions hereafter discussed, and the problems involved will be the subject of a separate opinion, in a cause entitled Tipton, et al. v. Clower, 67 N.M. 388, 356 P.2d 46, even though all phases of the case are in this court under one docket number. Inasmuch as there are, in effect, two separate cases, the facts of the main case will not be detailed except to generally clarify the issue with which we are here concerned. These facts will be merely outlined, and should not be considered as covering all of the necessary facts and circumstances of the main case.

Southern California Petroleum Corporation (hereafter referred to as 'Southern California'), as the owner of a lease, employed Clower Drilling Company, a Corporation (hereafter called 'Clower'), to drill an oil well to a certain depth. Upon reaching the 'pay section,' Clower's drilling equipment remained in place and Southern California orally employed B. J. Service Company, Inc., a Corporation (hereafter termed 'B. J. Service') to cement the casing in the well. It was during the cementing process that a fire occurred, resulting in the death of two and injury to one of the employees of B. J. Service. Thereafter three suits were filed, two by the administratrices of the two deceased workmen and one by the injured workman, grounded on negligence, against Southern California and Clower. Royal Indemnity Company (hereafter referred to as 'Royal') intervened as a party plaintiff seeking subrogation for the amounts it had paid for the deaths and the injury under the Workmen's Compensation Act as insurance carrier for B. J. Service. Southern California then filed its third-party complaint against B. J. Service, alleging that the accident was caused by B. J. Service's negligence and was therefore a breach of contract, warranting Southern California's recovery of any judgment obtained against it over and from B. J. Service. This complaint, by a second count, sought similar recovery on the theory of an implied agreement for indemnity in the event of negligence.

The trial court sustained B. J. Service's motion to dismiss the third-party complaint, and granted summary judgment in favor of Royal and against Southern California. The judgment, though ordered earlier, was actually entered after a jury trial of the issues between the various plaintiffs and Clower, inasmuch as Southern California did not participate in the trial because immediately before it had taken a joint tort-feasor's release from the three plaintiffs. Thus, in this particular phase of the case, we are concerned only with Southern California, as appellant, and B. J. Service and Royal, as appellees.

We will first dispose of the legal issue relating to the third-party complaint based on the facts as alleged. This has to do with the effect of the Workmen's Compensation Act on liabilities of an employer arising between the employer and parties with whom he contracts.

To be more specific, the question becomes: Is the exclusive remedy provision of the Workmen's Compensation Act so broad as to grant amnesty to an employer for all causes of action relating to employees' injuries, regardless of the question of independent breach of duty, where there is no express contract of indemnity? Sections 59-10-5 and 59-10-6, N.M.S.A., 1953 Comp., insofar as they relate to the question involved, are as follows:

'59-10-5. Defenses to action by employee. * * *

'Any employer who has elected to and has complied with the provisions of this act [59-10-1 to 59-10-31], including the provisions relating to insurance shall not be subject to any other liability whatsoever for the death of or personal injury to any employee, except as in this act provided; and all causes of action, actions at law, suits in equity, and proceedings whatever, and all statutory and common-law rights and remedies for and on account of such death of, or personal injury to any such employee and accruing to any and all persons whomsoever, are hereby abolished except as in this act provided.'

'59-10-6. Right to compensation is exclusive of other remedies--The right to the compensation provided for in this act [59-10-1 to 59-10-31], in lieu of any other liability whatsoever, to any and all persons whomsoever, for any personal injury accidentally sustained or death resulting therefrom, shall obtain in all cases where the following conditions occur:

'(a) Where, at the time of the accident, both employer and employee are subject to the provisions of this act; and where the employer has complied with the provisions thereof regarding insurance.

'(b) Where, at the time of the accident, the employee is performing service arising out of and in the course of his employment.

'(c) Where the injury or death is proximately caused by accident arising out of and in the course of his employment, and is not intentionally self-inflicted.'

Southern California urges that B. J. Service, by its contract, impliedly agreed to do its work without negligence and is therefore liable or must indemnify for the damage proximately caused by its negligence. As to such basic contentions, we do not feel there need be any discussion. However, the next step in the argument is the determinative one. This is: That assuming liability for negligence, and, therefore, indemnity, under the contract, that injuries to employees of B. J. Service are a recoverable item of damage. This assertion has support in several jurisdictions, on the theory that when the employer breaches an independent duty toward the third party, he has an obligation to indemnify. American District Telegraph Co. v. Kittleson, 8 Cir., 1950, 179 F.2d 946; Rich v. United States, 2 Cir., 1949, 177 F.2d 688; Westchester Lighting Co. v. Westchester Co. S. E. Corp., 1938, 278 N.Y. 175, 15 N.E.2d 567; San Francisco Unified School Dist. v. California Bldg. Main. Co., 1958, 162 Cal.App.2d 434, 328 P.2d 785; Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 1956, 350 U.S. 124, 76 S. Ct. 232, 100 L.Ed. 133. However, none of the statutes construed contained such explicit, definite language as does the New Mexico act, and this is true particularly as to the Ryan case, supra, in which the Supreme Court of the United States construed the provisions of the Longshoremen's Act.

It should also be mentioned that many of the cases distinguish between contribution by the employer, which is not recoverable (see 2 Larson's Workmen's Compensation Law 230, Sec. 76.21) and indemnity, which was allowed in the above cases (see 2 Larson's Workmen's Compensation Law 233, Sec. 76.30).

We pause to observe, however, that such a distinction between contribution and indemnity is more one of words than of substance, in view of the plain, simple language of our Act. We might also mention that a distinction made by some courts as to active and passive negligence of the employer, in allowing recovery for active negligence but not passive, is inclined to confuse the true issue. Sometimes the terms primary and secondary negligence are used. We decline to become involved in matters of terminology which would merely tend to obscure the real issue in contest.

A series of annotations dealing generally with this subject may be found in American Law Reports. See, 53 A.L.R.2d 977 with cases cited therein and references to prior annotations at 978.

In Beal by Boatwright v. Southern Union Gas Company, 1956, 62 N.M. 38, 304 P.2d

566, 568, there was no contract between the parties, so the precise point here involved was not determined. However, our ruling today is merely a logical extension of that decision, wherein we said:

'The limitation of employer's liability for injuries sustained by an employee covered by the Workmen's Compensation Act covers all instances where that injury is sought to be made the basis for further and additional liability by the employee or others in his behalf, and indirect liability for such injury is also foreclosed both by the terms of the act and because the employer's liability for such injury is not in tort.'

The decision in Beal followed a federal court ruling in Hill Lines, Inc. v. Pittsburg Plate Glass Co., 10 Cir., 1955, 222 F.2d 854, 857. On similar, though not identical, facts to those before us, the court affirmed the granting of a summary judgment in favor of Pittsburg the third-party defendant-employer which had paid compensation to the injured workman. The court said:

'The most that can be said of Hill Lines' theory is that by virtue of the contractual relationship between Hill Lines and Pittsburgh with respect to unloading the truck, Pittsburgh became solely liable to its employee for his injuries. The answer is that if Pittsburgh is either solely or jointly liable for those injuries, its liability is limited by the workmen's compensation act. The result is the same. In either event, the workmen's...

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