Ruby Lumber Co. v. K.V. Johnson Co.

• Decision Date: 16 January 1945
• Citation: 187 S.W.2d 449,299 Ky. 811
• Parties: RUBY LUMBER CO. et al. v. K. V. JOHNSON CO.
• Court: Kentucky Court of Appeals

187 S.W.2d 449

299 Ky. 811

RUBY LUMBER CO. et al. v. K. V. JOHNSON CO.

Court of Appeals of Kentucky

January 16, 1945

Rehearing Denied June 5, 1945.

Appeal from Circuit Court, Warren County; Hon. Robert M. Coleman Judge.

Action by the Ruby Lumber Company, a trading copartnership, and others, against K. V. Johnson Company, for a declaration of rights as to plaintiffs' right to recover from defendant money paid out by plaintiffs to their injured employee. From an adverse judgment, plaintiffs appeal.

Reversed.

Gordon & Gordon & Moore, of Madisonville, and Harlin & Harlin, of Bowling Green, for appellants.

Allen McElwain, Dinning & Clark, of Louisville, for appellee.

MORRIS Commissioner.

Appellant a trading copartnership, was plaintiff below; appellee Johnson (Construction Company) during October, 1942, was principal contractor engaged in building a state highway. The Lumber Company subcontracted with Johnson to build culverts, and in doing its work had employed laborers to fill in about culvert abutments. One of its employees was Arrington, operating a tamping machine. While thus engaged one of Johnson's trucks ran against him, breaking his leg and ankle.

The Lumber Company later filed a Declaration of Rights petition, making Johnson defendant, in which the above facts were set out, further alleging that the injury was caused by the negligence of Johnson. The petition showed that both contractors were operating under our Compensation Act, KRS 342.001 et seq., and Arrington had accepted its provisions. The pleading alleged that while Johnson's negligence had caused the injury, yet by reason of the provisions of the Act the Lumber Company was liable for compensation, and this being so it had paid and was continuing to pay him during his disability, as well as expenses for medical and surgical treatment. It was said that Arrington, still disabled, was not claiming compensation, or asserting liability for compensation as against defendant.

The remainder of the pleading sets out the contentions of parties, and clearly presents the issue; that is the application of law to the facts which, of course, are admitted on demurrer. Appellant relies solely upon common law principles as applied to the facts, and in the light of our construction of certain sections of our statutes. Appellant is not asserting any right to subrogation, but is claiming its right to be indemnified on the broad ground that it is entitled to recompensation for money paid out by it, only by virtue of the statute, but for a loss imposed upon it solely by the negligent act of a principal, the real tort feasor. It contends that as a matter of law, wholly apart from any statute, ruling of the court or express contract, it is under the facts entitled to indemnity, 'regardless of any operation whether the wrongdoer owed the other any particular or special duty not to be negligent or not.' There is no question presented of contribution or duties resting upon joint tort feasors, nor rights and duties as between principal and independent contractors. The defendant disputes the legal claim of plaintiffs in toto, and denies any liability on the ground that the common law has no application because the rights and remedies of all parties operating under the Act are fixed and determined by that law as we have construed particular sections, to which reference will be made.

The principle relied on by appellant is clearly stated in 42 C.J.S., Indemnity, §§ 20, 21:

'The obligation to indemnify may grow out of an implied contractual relation or out of a liability imposed by law. Thus, where one is compelled to pay money which in justice another ought to pay, * * * the former may recover from the latter the sums so paid, unless the one making the payment is barred by the wrongful nature of his conduct. * * *

'It is a well-recognized rule that an implied contract of indemnity arises in favor of a person who without any fault on his part is exposed to liability and is compelled to pay damages on account of the negligence or tortious act of another, the former having a right of action against the latter for indemnity, provided they are not joint tort-feasors * * *. This right of indemnity is based on the principle that every one is responsible for his own negligence, and if another person has been compelled by the judgment of a court * * * to pay the damages which ought to have been paid by the wrongdoer they may be recovered by him. It exists independently of statute, and whether or not contractual relations exist, * * * and whether or not the negligent person owed the other a special or particular legal duty not to be negligent.'

The general rule is that before one who has paid damage may be entitled to indemnity or restitution from another, it is essential that such other should be primarily responsible for the negligent act which caused the injury. 31 C.J., Indemnity, § 50; 42 C.J.S., Indemnity, § 24. In support of the principle appellant cites many domestic cases, the majority being those in which a municipal corporation having paid damages for injuries proceeded at law against others, chiefly property owners or contractors who were shown to have been primarily responsible for the tort: City of Georgetown v. Cantrill, 158 Ky. 378, 164 S.W. 929; Board of Councilmen of Harrodsburg v. Vanarsdall, 148 Ky. 507, 147 S.W. 1; Robertson v. Paducah,

146 Ky. 188, 142 S.W. 370, 40 L.R.A.,N.S., 1153; Blocker v. Owensboro, 129 Ky. 75, 110 S.W. 369; City of Georgetown v. Groff, 136 Ky. 662, 124 S.W. 888; City of Louisville v. Metropolitan Realty Co., 168 Ky. 204, 182 S.W. 172.

The citation of the numerous municipal cases draws from appellee the observation that these involved the right of the City to recover damages, or indemnity from third persons for moneys paid or to be paid where the injury was due to negligence of contractors or owners of property directly responsible. This is true, but the principle is not limited to the rights of municipal corporations. It is also remarked that there is an entire absence from appellant's brief of any fitting case arising under compensation laws. However, a casual reading will manifest that the principle has been upheld generally in most jurisdictions, and in our own. Among ours there are Middlesboro Home Tel. Co. v. Louisville & N. R. Co., 214 Ky. 822, 284 S.W. 104; Whitney v. Louisville & N. R. Co., 296 Ky. 381, 177 S.W.2d 139; Parker v. Stewart, 296 Ky. 48, 176 S.W.2d 88; Louisville & N. R. Co. v. Southern R. Co., 237 Ky. 618, 36 S.W.2d 20; Livingston & Co. v. Philley, 155 Ky. 224, 159 S.W. 665. The principle is well established in this jurisdiction, and we agree with counsel that there is no necessity to indulge in an academic discussion. We also agree that the only question presented is whether or not under our construction of certain sections it applies in the instant case; whether our construction precludes a subcontractor who has paid compensation to his employee by virtue of the Act, from recovering damages (to the extent only of compensation paid) from the general contractor whose negligence caused the injury.

It is argued by appellee that if it be held to be an 'employer' within the meaning of the Act (342.015, K.R.S.) he is released from all liabilities to the injured employee, other than by way of compensation. We need not discuss at length the question of whether or not the principal contractor is the 'employer' who is subject to pay compensation to the injured employee. There is no contention that the direct employer (subcontractor) is not primarily liable to compensate. Under our construction of the section we have held that when the employer and employee are working under the Act the employee, and his personal representatives, are bound by the election and must proceed thereunder and not otherwise, Taylor's Adm'r v. Bates & Rogers Construction Co., 196 Ky. 206, 244 S.W. 693, except in cases to which the exceptions apply when suit may be brought at law, and then there can be no claim for compensation. This applies to the rights and remedies of employees for compensation as against the direct employer who is made liable for compensation, and has no application to the question as to whether the one who is primarily liable for compensation to an injured employee may or may not recover damages of another guilty of the negligence which caused the injury.

It is then argued by appellee that by our construction of K.R.S 342.055, 342.060, the right of a subcontractor to sue the principal is established; that any right to common law remedy is excluded by implication by the granting of such right only as against a third party in whom legal liability for the injury and consequent damages exists. It is pointed out that we held in McEvilly v. L. E. Myers Co., 211 Ky. 31, 276 S.W. 1068, the principal contractor was not 'such other' person as could be sued for damages by the employee of the subcontractor. Counsel for appellee asserts that the reason the employee (McEvilly case) could not there sue the general contractor was that no 'liability existed against such general contractor because all the parties had elected to operate under the Compensation Act,' which makes the general contractor also an employer. The chief reason for holding that the employee did not state a cause of action was that 'there was no pretense that the defendant (general contractor) was in anywise responsible for the defective condition of the brakes on the engine of its subcontractor.' We did say that had it been otherwise there would not have existed legal liability in favor of the employee as against the general contractor, because the words 'some other person' relate to a stranger to the contract, to the employee and the operating parties, if all are...