Sira & Payne, Inc. v. Wallace & Riddle

• Decision Date: 12 July 1972
• Docket Number: No. B--3016,B--3016
• Citation: 484 S.W.2d 559
• Parties: SIRA & PAYNE, INC., Petitioner, v. WALLACE & RIDDLE, a partnership, Respondent.
• Court: Texas Supreme Court

Page 559

484 S.W.2d 559

SIRA & PAYNE, INC., Petitioner, v. WALLACE & RIDDLE, a partnership, Respondent.

No. B--3016.

Supreme Court of Texas.

July 12, 1972.

Rehearing Denied Oct. 4, 1972.

Strasburger, Price, Kelton, Martin & Unis, Henry Strasburger and Patrick F. McGowan, Dallas, for petitioner.

Finklea & Finklea, Robert W. Finklea, Dallas, for respondent.

CALVERT, Chief Justice.

This is a suit on an indemnity contract brought by Sira & Payne, Inc., against Wallace & Riddle, a partnership, to recover a sum paid by Sira & Payne in settlement of a suit against it by one Tommie McDonald an employee of Wallace & Riddle, and expenses incurred in defense of the suit. Both parties moved for summary judgment. The trial court overruled Sira & Payne's motion and granted Wallace & Riddle's motion, and decreed that plaintiff take nothing and that the defendant recover all costs of the suit. The court of civil appeals affirmed. 470 S.W.2d 793. We reverse the judgments of the courts below and remand the case for a conventional trial.

The summary judgment proofs disclose that Sira & Payne, being under contract with the State of Texas for highway construction work, entered into a subcontract with Wallace & Riddle for excavating ditches. McDonald was seriously injured when the walls of a ditch in process of excavation collapsed upon him. He collected workmen's compensation benefits and medical expenses from American Mutual Liability Insurance Company, his employer's insurer; and then he and the insurer sued Sira & Payne and its superintendent, Foy Wardell, for damages for his injuries. Sira & Payne tendered defense of the suit to Wallace & Riddle, who declined. Trial of the suit resulted in a verdict which was set aside by the district judge. Thereafter, Sira & Payne settled McDonald's suit and filed this suit to recover the sum paid in settlement, plus attorneys' fees and other expenses incurred and paid in defense of the suit.

Any right which Sira & Payne may have to contractual indemnity must be found in its contract with Wallace & Riddle, and particularly in section II thereof, which reads:

'Subcontractor agrees to indemnify and hold Contractor harmless from any and all costs or damages arising out of any wrongs or injuries for damages, either real or asserted, claimed against Contractor that may be occasioned by the negligence or fault of Subcontractor, its agents, servants or employees.'

It will be noted that Wallace & Riddle agreed to indemnify Sira & Payne only for damages and costs arising out of injuries caused by the indemnitor's negligence or fault, or by the negligence or fault of its agents, servants or employees. The contractual provision is in all material respects identical with provisions in an indemnity contract considered by us in City of Beaumont v. Graham, 441 S.W.2d 829 (Tex.1969), which decision was given controlling effect in this case by the court of civil appeals.

In Graham, the City of Beaumont contracted for repairs to its water tower, and provided in the agreement that the contractor would indemnify the City from all claims for injuries or damages sustained 'on account of any negligent act or fault of CONTRACTOR . . .,' or 'arising out of his acts in connection with the construction of the said improvements, or occasioned by said CONTRACTOR, his agents, servants or employees.' A jury found that negligence of both the City and the contractor was a proximate cause of the death of Graham, an employee of the contractor. In a suit by Graham's beneficiaries, we held as a matter of law that in that fact situation the City was not entitled to indemnity from the contractor, saying (441 S.W.2d 838--839):

'We believe the two provisions . . . were only intended to indemnify the contractee-City against damages or claims resulting solely from acts or conduct of Texas Tower (contractor) . . . that the language used . . . does not evidence an intention of the parties that Texas Tower should indemnify City for the consequences of its own (City's) negligent conduct, or for the consequences of the joint negligence of the parties, or for the consequences of the negligent conduct of City and the non-negligent conduct of Texas Tower.'

Our primary purpose in granting a writ in this case was to review the quoted holdings in Graham. Having done so in light of our subsequent opinion in Joe Adams & Son v. McCann Construction Company, 475 S.W.2d 721 (Tex. 1971), we are satisfied that, except for misplaced emphasis, our decision in Graham was correct. In deciding Adams v. McCann, we reiterated the rule earlier expressed in Mitchell's, Inc. Friedman, 157 Tex. 424, 303 S.W.2d 775 (1957), and Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. 1963), that an indemnity agreement will not be held to protect an indemnitee against the consequences of his own negligence unless the obligation is expressed in clear and unequivocal language; and, moreover, the effect of our decision was to hold that parol evidence is not admissible to show that such was the intention of the parties when the obligation is expressed in language which is unclear or equivocal. ¹

Applying the rule in this case, it seems obvious that the contract between the parties does not, in clear and unequivocal language, express an obligation on the part of Wallace & Riddle to indemnity Sira & Payne against the consequences of its own negligence, whether such negligence was the sole proximate cause of McDonald's injuries, or jointly or concurrently with the negligence of Wallace & Riddle or another was only a proximate cause of such injuries. This is so even though in the factual context in which the contract was negotiated and executed there was little or no possibility of liability on the part of the indemnitee, and inclusion of the obligation for indemnity may, for that reason, have been meaningless. Viewed in the context of our decision in McCann, our conclusion as here stated is a sounder basis for our holding in Graham than the one there given, i.e., that the language of the contract there under consideration established, as a matter of law, an intention to indemnify 'against damages or claims resulting solely from acts or conduct' of the indemnitor. It follows from our decision in Graham, as here interpreted and in the absence of some other decisive consideration, that Wallace & Riddle are not required by their contract to indemnify Sira & Payne for the consequences of the concurrent negligence of the parties.

A few courts of other jurisdictions have interpreted contracts similar to that in the instant case as imposing an obligation on the indemnitor to indemnify for injuries proximately caused by the concurrent negligence of the parties when the negligence of the indemnitor is active and the negligence of the indemnitee is only passive. We have found no Texas cases making that distinction. As a matter of fact, the only finding of negligence of the indemnitee pointed out by us in City of Beaumont v. Graham was passive, but we held there was no right to indemnity. See also Humble Oil & Refining Company v. Wilson, 339 S.W.2d 954 (Tex.Civ.App.--Waco 1960, writ ref'd n.r.e.), and St. Louis & S.W. Ry. Co. of Texas v. Arnold, 32 Tex.Civ.App. 272, 74 S.W. 819 (1903), writ ref'd). We do not believe we should enter the actice-passive negligence thicket.

In its appeal to the court of civil appeals, Sira & Payne assigned error to the overruling of its motion for summary judgment as well as to the granting of the motion of Wallace & Riddle.

Sira & Payne could establish its right to summary judgment only by proving as a matter of law that it was not guilty of any engligence which was the sole proximate cause or a proximate cause of McDonald's injuries, and that the settlement with McDonald was reasonable, considering the risk involved, and was made in good faith. Mitchell's, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775 (1957). This it failed to do and its motion for summary judgment was properly overruled.

Wallace & Riddle could establish its right to summary judgment only by proving as a matter of law that Sira & Payne was guilty of negligence which was either the sole proximate cause or a proximate cause of McDonald's injuries, or that the settlement made by Sira & Payne was, as a matter of law, either unreasonable or not made in good faith. Rule 166--A(c) Texas Rules of Civil Procedure; Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.1970). Wallace & Riddle made no such proof. Its motion was erroneously granted and the take-nothing judgment was erroneously rendered and affirmed.

The judgments of the court of civil appeals and trial court are reversed and the cause is remanded to the trial court.

Concurring opinion by WALKER, J., in which REAVLEY, J., joins.

WALKER, Justice (concurring).

I concur in the judgment of reversal and remand but do not agree with the Court's construction of the indemnity agreement. The holding in Joe Adams & Son v. McCann Construction Co., Tex.Sup., 475 S.W.2d 721, is quite narrow. This was recognized in the first dissenting opinion in that case, where it was pointed out that 'the majority opinion carefully limits its holding to situations in which the indemnitee's negligence is the sole cause of the injuries.' It seems quite strange then that those who protested the McCann holding so vigorously should now extend the same to its extreme limits and so deprive many indemnity agreements of the meaning and effect intended by the parties.

The majority holding is based on the rule, reiterated in McCann, that an indemnity agreement will not protect the indemnitee against the consequences of his own negligence unless the obligation is expressed in unequivocal terms. This rule is ordinarily applied and serves a useful purpose in...