S.S. Kresge Co. v. Port of Longview, 2305-II

• Citation: 573 P.2d 1336,18 Wn.App. 805
• Decision Date: 13 December 1977
• Docket Number: No. 2305-II,2305-II
• Parties: , 1979 A.M.C. 1429, 23 UCC Rep.Serv. 431 S. S. KRESGE COMPANY, a corporation, Respondent and Cross-Appellant, v. PORT OF LONGVIEW, a Municipal Corporation, Appellant, Lawrence B. Rice, Leo Gilnett, d/b/a Gilnett Construction Company, and Donna Gilnett, husband and wife, Trussfab, Inc., a corporation, Dick W. Ebeling, and Dick W. Ebeling, Inc., a corporation, Respondents.
• Court: Court of Appeals of Washington

Page 805

18 Wn.App. 805

573 P.2d 1336, 1979 A.M.C. 1429, 23

UCC Rep.Serv. 431

S. S. KRESGE COMPANY, a corporation, Respondent and Cross-Appellant, v. PORT OF LONGVIEW, a Municipal Corporation, Appellant, Lawrence B. Rice, Leo Gilnett, d/b/a Gilnett Construction

Company, and Donna Gilnett, husband and wife, Trussfab,

Inc., a corporation, Dick W. Ebeling, and Dick W. Ebeling,

Inc., a corporation, Respondents.

No. 2305-II.

Court of Appeals of Washington, Division 2.

Dec. 13, 1977.

Charles R. Cusack, Jr., Vancouver, for appellant.

Judson T. Klingberg, Longview, for respondents.

PEARSON, Chief Judge.

The Port of Longview appeals from a directed verdict in favor of S. S. Kresge Company in Kresge's tort action based on the collapse of the roof of the Port's warehouse and resulting damage to goods consigned to Kresge. The major issue concerning liability is whether the superior court erred in applying the vicarious liability of a possessor of land for construction work by an independent contractor, as expressed in § 422 of the Restatement (Second) of Torts (1965), or whether the court should have allowed the jury to apply the common law principles of negligence to conduct of a "warehouseman" under RCW 62A.7-204. A threshold issue is whether the court should have stayed the trial until, under the doctrine of "primary jurisdiction," the Federal Maritime Commission was given the opportunity to decide the validity of certain exculpatory clauses in a tariff the Port had filed with the F.M.C. We believe the court correctly refused to recognize primary jurisdiction in the F.M.C., but we reverse the judgment on the grounds it was improper to impose strict, vicarious liability on the Port, in disregard of common law principles of negligence.

In 1965, the Port hired Gilnett Construction Company to build its Warehouse No. 1 at the Port's dock facility on the Columbia River. The contract specifications called for laminated beams and purlins that were engineered and designed by Dick W. Ebeling, Inc., a structural engineering firm located in Portland, Oregon. The beams and purlins were fabricated by Trussfab, Inc., who sold them to Gilnett for installation in the warehouse roof. The original specifications provided for a standard construction method in which each purlin ¹ would be fitted between two beams by bolting it at each end into a steel hanger, or saddle, fastened to the beam. The Port wanted to accommodate special ceiling lighting, however, and it approved, for that purpose, certain of its architect's changes in the plans.

The purlins became sawed timbers rather than laminated, and the hangers were omitted and replaced by a method of toenailing the purlins to the top of the beams. There was evidence that the change in the method of securing the purlins was contrary to accepted design and standard practice, and that it was the most important factor in the collapse of the roof in 1973. Damage to Kresge's merchandise being stored in the warehouse was in the stipulated amount of $34,561.

Kresge sued the Port, Gilnett Construction Company, the architect for the building, and the designer and manufacturer of the beams and purlins. Summary judgments of dismissal on statute of limitations grounds were granted as to the latter three parties, and the contractor was also awarded summary judgment because it had constructed the building including the installation of the purlins that failed as instructed by the Port's architect.

The Port vigorously pursues the affirmative defense that it had filed a tariff with both the Federal Maritime Commission and the Washington Utilities and Transportation Commission. The tariff, published as a notice to shippers, provided in part:

Use of Terminals, Deemed Acceptance. Use of wharves or facilities shall be deemed an acceptance of this tariff and the terms and conditions named herein.

Liability for Loss or Damage Limited. The terminals will not be responsible for any loss or damage caused by . . . collapse of buildings or structures; . . .

Because the Federal Maritime Commission is charged with "primary jurisdiction and responsibility" to enforce compliance with 46 U.S.C. § 801 et seq. (the Shipping Act of 1916), Federal Maritime Comm'n v. New York Terminal Conference, 262 F.Supp. 225, 228 (S.D.N.Y.1966), the Port contends the superior court had no jurisdiction to proceed with the action until the F.M.C. was able to decide the validity of the tariff provision purporting to exculpate the Port for liability for the roof's collapse.

The function of the primary jurisdiction doctrine is to guide a court in determining whether it should refrain from exercising its jurisdiction until an administrative agency has resolved an issue arising in the proceeding before the court. The doctrine governs whether the court, or an agency with special competence concerning the particular issue, will initially decide the issue. The court may postpone its own action pending the agency's determination, or it may dismiss the case before it and defer entirely to the agency's expertise. If the court retains jurisdiction, it can set aside or modify the agency action based on its own interpretation of questions of law. K. Davis, Administrative Law Text §§ 19.01, 19.06 (3d ed. 1972); see also Annot., 38 L.Ed.2d 796 (1974). In Washington, the application of the doctrine is within the sound discretion of the court. Kerr v. Department of Game, 14 Wash.App. 427, 542 P.2d 467 (1975).

The Port urges that the F.M.C. should be able to determine if the tariff's exculpatory language can relieve the Port of liability. In our state, however, any attempt by a bailee for mutual benefit to disclaim or limit liability for its own negligence contravenes public policy and will not be enforced. Althoff v. System Garages, Inc., 59 Wash.2d 860, 371 P.2d 48 (1962); King Logging Co. v. Scalzo, 16 Wash.App. 918, 561 P.2d 206 (1977). This rule is also found in the federal courts. For example, in applying the rule to the context of maritime towing, the Supreme Court has announced that

(t)he two main reasons for the creation and application of the rule have been (1) to discourage negligence by making wrongdoers pay damages, and (2) to protect those in need of goods or services from being overreached by others who have power to drive hard bargains.

(Footnote omitted.) Bisso v. Inland Waterways Corp., 349 U.S. 85, 91, 75 S.Ct. 629, 632, 99 L.Ed. 911, 918 (1955); accord, Dixilyn Drilling Corp. v. Crescent Towing and Salvage Co., 372 U.S. 697, 83 S.Ct. 967, 10 L.Ed.2d 78 (1963); Dow Chemical Co. v. M/V Charles F. Detmar, Jr., 545 F.2d 1091 (7th Cir. 1976).

We realize that some courts have deferred to the primary jurisdiction of the F.M.C. to interpret exculpatory tariff provisions because the public policy considerations that might lead courts to invalidate private contractual arrangements are not necessarily applicable to provisions in a tariff, inasmuch as the rates in the tariff may be computed on the understanding that the exculpatory provisions have relieved the regulated party of the expense of obtaining liability insurance for the acts of its agents and employees. E. g., Southwestern Sugar & Molasses Co. v. River Terminals Corp., 360 U.S. 411, 79 S.Ct. 1210, 3 L.Ed.2d 1334 (1959); Bird v. S.S. Fortuna, 262 F.Supp. 24 (D.Mass.1966); E. B. Ackerman Importing Co. v. Los Angeles, 61 Cal.2d 595, 39 Cal.Rptr. 726, 394 P.2d 566 (1964). But this line of cases also recognizes that the validity of tariff exculpatory clauses on public policy grounds must ultimately be resolved by the courts.

We hold the trial court did not abuse its discretion in declining to apply the primary jurisdiction doctrine in this case. The public policy of this state is too firmly established to the effect that a professional bailee cannot disclaim or limit liability for its own negligence. Althoff v. System Garages, Inc., supra; King Logging Co. v. Scalzo, supra. It would therefore be a futile exercise for the F.M.C. to give its own interpretation of the exculpatory clause in the Port's tariff. In addition, we agree with the view that an administrative agency should not be accorded primary jurisdiction if the agency is powerless to grant the relief requested. See B. Schwartz, Administrative Law § 169 (1976). Such is the case here, where the F.M.C. could not award a judgment against the Port even if it found the tariff did not relieve the Port of liability.

In reviewing the propriety of the directed verdict granted to Kresge, we should first compare Section 422 of the Restatement (Second) of Torts, relied on by the court, with the terms of RCW 62A.7-204. The Restatement expresses a policy of strict, vicarious liability, as follows:

§ 422. Work on Buildings and Other Structures on Land

A possessor of land who entrusts to an independent contractor construction, repair, or other work on the land, or on a building or other structure upon it, is subject to the same liability as though he had retained the work in his own hands to others on or outside of the land for physical harm caused to them by the unsafe condition of the structure.

(a) while the possessor has retained possession of the land during the progress of the work, or

(b) after he has resumed possession of the land upon its completion.

The statute, on the other hand, contains a statement of ordinary duty of care:

62A.7-204 Duty of care; contractual limitation of warehouseman's liability. (1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he is not liable for damages which could not have been avoided by the exercise of such care.

RCW 62A.7-204 codifies the common law rule of negligence that a warehouseman bailee of goods must exercise due care to safeguard them against damage. Moe v. American Ice & Cold Storage Co., 30...