Smith Radio Communications, Inc. v. Challenger Equipment, Ltd.

• Decision Date: 05 November 1974
• Citation: 527 P.2d 711,270 Or. 322
• Parties: , 16 UCC Rep.Serv. 69 SMITH RADIO COMMUNICATIONS, INC., a corporation, Appellant, v. CHALLENGER EQUIPMENT, LTD., Respondent. . *
• Court: Oregon Supreme Court

Page 711

527 P.2d 711

270 Or. 322, 16 UCC Rep.Serv. 69

SMITH RADIO COMMUNICATIONS, INC., a corporation, Appellant, v. CHALLENGER EQUIPMENT, LTD., Respondent.

Supreme Court of Oregon, In banc. ^*

Argued and Submitted Dec. 4, 1973.

Decided Nov. 5, 1974.

Edward H. Warren of Hershiser, Mitchell & Warren, Portland, argued the cause and filed briefs for appellant.

Marshall C. Cheney, Jr., of Mize, Kriesien, Fewless, Cheney & Kelley, Portland, argued the cause and filed a brief for respondent.

McALLISTER, Justice.

This is an action for common law indemnity brought by a retailer, Smith Radio Communications, Inc., to recover sums paid to defend an action and pay a judgment for personal injuries caused by a defective electronic signaling device which plaintiff purchased from defendant and sold to the employer of the injured workman. The court tried the action without a jury and found for defendant. Plaintiff appeals.

The parties filed in this court an agreed narrative statement which includes the following facts.

Defendant Challenger Equipment, Ltd., is a Canadian corporation engaged in designing, manufacturing and selling electronic signaling devices called 'Electrobugs' for use in logging operations. In May, 1966 plaintiff was the exclusive retail dealer in Oregon for the Electrobugs manufactured by defendant. On May 2, 1966 defendant sold to plaintiff an Electrobug receiver and two transmitters and on or about May 13, 1966 plaintiff sold the same equipment without alterations to the United States Plywood Corporation.

On or about May 9, 1967, one Bill Mace, while employed as a choker setter by U.S. Plywood near Mapleton, sustained personal injuries when he signalled with the Electrobug for a slack line and the machine operator tightened the line instead.

Bill Mace sued plaintiff Smith Radio in the circuit court for Lane county on the sole theory of strict liability as retail seller and distributor of the Electrobug. His complaint alleged that 'because of a defect in or in the design of said signaling device, a false signal was transmitted to the machine operator with the result that he caused the line to be taken in rather than slackened' and that as a result Bill Mace was injured.

We need not detail the complex evidence concerning the notice to defendant Challenger Equipment and the tender to Challenger by plaintiff of the defense of the Mace action. It is sufficient to quote from the findings of the trial court as follows:

'By this letter (from counsel representing plaintiff Smith Radio), the defendant was advised pursuant to the provisions of ORS 72.6070 that the manufacturer of the Electrobug should come in and defend the litigation between Bill Mace and Smith Radio Communications and advised that if it did not do so, it would be bound in any action against it by the plaintiff by any determination of facts common to the litigation subsequently commenced by Smith Radio Communications against the manufacturer. The defendant, after reasonable receipt of said notice, did not come in and defend, but neglected and refused to do so.'

The above finding was supported by substantial evidence and is binding on us.

In the Mace action against Smith Radio the jury found in favor of Bill Mace and awarded him general damages of $4,579.70 and answered the following special interrogatory:

'Q Did the Electrobug signaling device being used by the plaintiff have a defect in manufacture or design which contributed to plaintiff's injuries?

'A Yes.'

The court entered judgment on the verdict and awarded costs in the sum of $149 and plaintiff satisfied the judgment. It is agreed that plaintiff incurred expenses in investigating and defending the Mace action amounting to $5,879 and that said amount was reasonable. In this action Smith Radio asks to be indemnified by Challenger Equipment for all of said sums.

There is no doubt that if Smith Radio merely delivered the Electrobug to U.S. Plywood as received by it from Challenger U.S. Plywood as received by it from Challenger device, it was merely passively or secondarily liable and entitled to indemnity. See: Astoria v. Astoria & Columbia River R. Co., 67 Or. 538, 547--548, 136 P. 645, 49 L.R.A.,N.S., 404 (1913); Kennedy v. Colt, 216 Or. 647, 653--654, 339 P.2d 450 (1959); Fulton Ins. Co. v. White...