Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co.

• Decision Date: 03 April 1962
• Citation: 202 Cal.App.2d 99,20 Cal.Rptr. 820
• Court: California Court of Appeals Court of Appeals
• Parties: SAFEWAY STORES, INCORPORATED, a corporation, Plaintiff and Respondent, v. MASSACHUSETTS BONDING & INSURANCE COMPANY, a corporation, and M. J. King, Defendants and Appellants. Civ. 19936.

Page 820

20 Cal.Rptr. 820

202 Cal.App.2d 99

SAFEWAY STORES, INCORPORATED, a corporation, Plaintiff and Respondent, v. MASSACHUSETTS BONDING & INSURANCE COMPANY, a corporation, and M. J. King, Defendants and Appellants.

Civ. 19936.

District Court of Appeal, First District, Division 1, California.

April 3, 1962.

Rehearing Denied April 16, 1962.

Hearing Denied May 29, 1962.

Harold C. Brown, Elton C. Lawless, John G. Evans, Lloyd J. Cosgrove, San Francisco, for appellants.

Ackerman, Johnston, Johnston & Mathews, Willard S. Johnston, San Francisco, for respondent.

SULLIVAN, Justice.

This is an appeal by the defendants M. J. King, a contractor and Massachusetts Bonding & Insurance Company, the corporate surety on his performance bond, from a judgment against said defendants and in favor of the plaintiff Safeway Stores, Incorporated allowing recovery under the indemnity provisions of a written construction contract. Judgment was also rendered on the cross-complaint in favor of the surety and against the contractor as cross-defendant but no appeal has been taken from such latter judgment. We shall hereafter refer to the plaintiff as Safeway or owner, to the defendant M. J. King as contractor and to the remaining defendant as bonding company.

On December 9, 1953, Safeway and defendant King entered into a written contract for the construction by the contractor for Safeway of a new store building in Redwood City. Such contract contained a hold harmless and indemnification clause out of which this present controversy arises. It also imposed on the contractor the obligation of furnishing to the owner, at the contractor's expense, a performance bond in the sum of $204,129 written by a satisfactory surety company. Such a bond was secured from the defendant bonding company. The contractor agreed to completely perform the contract no later than 180 days from the owner's notice to commence work. By a subsequent change order, the original completion date of July 16, 1954, was extended to August 5, 1954.

Work on the job commenced in February. In accordance with the general conditions and specifications, the contractor entered into a written subcontract with Timber Structures, Inc. for the furnishing of six wood bowstring trusses for the roof of the building to be erected complete in place with truss connections to the walls. The truss materials were delivered to the job in April for assembly and installation. Evidence was introduced below to the effect that both Soholt, the contractor's superintendent on the job, and Stevenson, Safeway's construction supervisor, thought that the truss material was of poor quality. Nevertheless, the roof trusses were erected with such materials. Four days later, on May 7, 1954, the trusses collapsed, injuring six employees of the defendant King.

The six employees thereafter instituted legal actions for damages against Timber Structures, Inc. and Safeway. King could not be joined as a defendant. (Lab.Code, § 3601.) One action resulted in a judgment of nonsuit for Safeway; four others were dismissed after a compromise settlement in connection with which Safeway paid $9,167 as its share; and the sixth action was settled after trial, Safeway paying $8,666.67 as its share. At first, the contractor offered his own counsel to Safeway and thus undertook defense of the litigation on Safeway's behalf under the indemnity provisions of the contract. Subsequently Safeway employed its own counsel, apparently because it felt that King's counsel might urge a position unfavorable to Safeway on the question of the contractor's obligation under the indemnity clause. Thus Safeway incurred loss and expense not only for the amounts paid out by it in compromise settlement of the litigation but also for legal fees and litigation expenses. In addition, Safeway incurred costs and expenses due to delay in the construction of the building for a period of 100 days.

The trial court concluded that Safeway was entitled to be indemnified under the provisions of the construction contract for all of such loss, damage and expense and accordingly rendered judgment against King and the bonding company in the sum of $40,502.37.

Defendants contend here that: 1) Safeway cannot recover upon the indemnity provisions of the contract, since it was guilty of affirmative and active negligence proximately contributing to the collapse of the building; 2) the contractor did not refuse to defend Safeway under the indemnity provisions of the contract; 3) the court committed prejudicial error in admitting certain evidence; and 4) the damages awarded Safeway were improper. We consider these contentions in the above order. ¹

The contractor's obligation to indemnify.

The construction contract provides that in its performance the 'contractor shall occupy the relation of an independent contractor' and that the owner shall not be answerable or accountable for violations of laws, ordinances or regulations or for injury, death, loss or damage arising from the negligence of the contractor, his employees, subcontractors or 'any person or persons whomsoever.' Such clause is essentially an exemption provision. The contract then continues: 'Contractor agrees to indemnify and save owner harmless from and against any and all liability, loss, costs or expenses incurred by owner in connection with or as a result of any claims, demands, actions, or causes of action that are made or brought against owner for or on account of any injury to or death of any person or for loss of or damage to any property when such injury death, loss or damage results from or occurs in connection with the performance of this contract by contractor, his agents, employees or subcontractors.' This last provision is one of indemnity. Both provisions visions are basically exculpatory in nature. Neither, however, specifically provides for or covers liability or loss arising from the negligence of the owner.

Such provisions are the fundament of the trial court's decision. The court found that the defendant King violated his construction contract with Safeway in the following four ways: a) By causing roof trusses and framing to be installed which were inferior and not of the best quality; b) by causing such installation to be made without required bracing; c) by failing to maintain safeguards against accidents and injuries; and d) by overloading the building in a manner that endangered its safety. As a proximate result of such violations, so the court found, the building collapsed and Safeway incurred and suffered the loss, damage and expense, which we have pointed out above. The court further found that the defendants, in further violation of the construction contract, failed and refused to indemnify and hold harmless Safeway for such loss, damage and expense and that Safeway had duly performed all provisions of the contract on its part to be performed. The trial court concluded that the contractor was guilty of negligence proximately causing the collapse of the building and the resultant damage and loss but that Safeway 'has exercised due care, and has not been guilty of negligence.' The last quoted language, although it does not specifically so state, obviously refers to the exercise of due care by Safeway in connection with the incident in controversy. Although made as a conclusion of law, it would therefore appear to be a finding of ultimate fact and sufficient as such. (Arrelano v. Jorgensen (1921) 52 Cal.App. 622, 625, 199 P. 855; Pierce v. Wright (1953) 117 Cal.App.2d 718, 727, 256 P.2d 1049.) We will therefore consider the above quoted language as a valid and effectual finding of fact. (Petersen v. Cloverdale Egg Farms (1958) 161 Cal.App.2d 792, 797, 327 P.2d 127.) In summary, then, the trial court found that the defendant King was negligent but that Safeway was not.

Appellants concede King's negligence but contend that Safeway was guilty of affirmative and active negligence and hence was not entitled to recover from King or the bonding company on the indemnity agreement. In the face of the above findings, such contention is actually that the evidence, even though viewed by us in the light most favorable to the respondent (Primm v. Primm (1956) 46 Cal.2d 690, 299 P.2d 231; Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 45 P.2d 183) shows that Safeway was guilty of affirmative and active negligence as a matter of law. Indeed appellants urge that the evidence as to the installation of the trusses is 'clear and uncontradicted.'

The record contains abundant proof that the trusses were defective. Both Soholt, who was King's job superintendent and Stevenson, who was Safeway's representative, saw that the truss material was of inferior quality and both complained to the foreman for Timber Structures, Inc. Appellants urge that the court's finding to the effect that King caused the trusses to be installed is entirely unsupported since it appears that Safeway permitted their installation after receiving a collateral guarantee from Timber Structures, Inc. Such argument is predicated upon an exchange of letters between Safeway, through its Bramwell Construction Company division and such subcontractor. Referring to the controversy over the trusses which had arisen between the representatives of Timber Structures, King and itself, Safeway stated that it would be unable to accept the trusses unless it received a report from a certified lumber grader that the lumber met the specifications of the job or a certificate of guarantee against failure from such subcontractor. Timber Structures responded with a letter of guarantee. Copies of both letters went to the architect for the job, to King and to Stevenson.

We must however consider the above two letters in the light of King's existing contractual obligations, Under his contract he agreed to comply with all laws, ordinances and regulations and therefore was obligated to comply with the Redwood City Building Ordinance...