Sorenson v. Safety Flate, Inc.

• Decision Date: 05 December 1975
• Docket Number: No. 45236,45236
• Citation: 306 Minn. 300,235 N.W.2d 848
• Parties: Stanley L. SORENSON, et al., Plaintiffs, v. SAFETY FLATE, INC., et al., Defendants, Jack P. Hennessy Company and Three Star Sales Corporation, Respondents, Standard Oil, a Division of American Oil Company, Appellant.
• Court: Minnesota Supreme Court

Page 848

235 N.W.2d 848

306 Minn. 300

Stanley L. SORENSON, et al., Plaintiffs, v. SAFETY FLATE, INC., et al., Defendants Jack P. Hennessy Company and Three Star Sales Corporation Respondents Standard Oil, a Division of American Oil Company Appellant.

No. 45236.

Supreme Court of Minnesota.

Dec. 5, 1975.

Syllabus by the Court

1. Where plaintiff claims a breach of identical express warranties by both purchaser and seller, the court may properly disallow attorneys fees in an indemnity action between the purchaser and seller on the basis that the purchaser was defending against a claim involving its own breach of express warranty and not solely that of the seller.

2. Where plaintiff claims a breach of express warranty by the purchaser and an indemnity contract between the seller and the purchaser makes no reference to indemnification for breach of express warranty but only as to negligence, the contract cannot be found to include indemnity for attorneys fees resulting from purchaser's own act of giving an express warranty to a buyer.

3. Where a purchaser fails to tender defense to codefendant seller and insists on handling its own defense, thereby giving the seller no opportunity to control the litigation, purchaser is not entitled to attorneys fees and expenses either under common-law or contractual indemnity.

Alderson, Catherwood, Ondov & Leonard, and Gary E. Leonard, Austin, for appellant.

Lasley, Gaughan, Reid & Stich, and Robert T. Stich, Minneapolis, for respondents.

Heard before OTIS, PETERSON, and SCOTT, JJ., and considered and decided by the court en banc.

SCOTT, Justice.

This is an appeal by defendant Standard Oil from a dismissal of its cross-claim to recover attorneys fees from codefendants Jack P. Hennessy Company and Three Star Sales Corporation in a personal injury-products liability case. On May 24, 1972, plaintiff Stanley L. Sorenson and the Hartford Accident and Indemnity Company (intervenor) obtained a judgment for breach of express warranty against Jack P. Hennessy Company, Three Star Sales Corporation, and Standard Oil, a division of American Oil Company. Plaintiff also obtained a judgment against Safety Flate, Inc., and Standard Metal Products Company. All defendants cross-claimed against each other. On June 5, 1972, the trial court granted the cross-claim for indemnity asserted by Jack P. Hennessy Company and Three Star Sales Corporation against Safety Flate, Inc., and Standard Metal Products Company. The trial court also granted the cross-claim for indemnity asserted by Standard Oil against all other defendants. All other cross-claims were dismissed. On August 31, 1972, the trial court entered its order denying defendant Standard Metal Products Company's amended alternative motion for new trial, judgment notwithstanding the verdict, or an amended order for judgment. Defendant Standard Metal Products Company appealed from that order and the judgment entered on September 20, 1972. This court ruled on that appeal in Sorenson v. Safety Flate, Inc., 298 Minn. 353, 216 N.W.2d 859 (1974). Standard Oil's cross-claim for attorneys fees and expenses against Jack P. Hennessy Company and Three Star Sales Corporation was dismissed with prejudice on May 31, 1974, by the district court. Defendant Standard Oil appeals from that order and the judgment entered thereon.

The issues presented are as follows:

1. Is a purchaser entitled to recover attorneys fees and expenses from a seller where plaintiff claims a breach of identical express warranties by both purchaser and seller?

2. Does a contract for indemnity against claims based on negligence of seller-indemnitor entitle purchaser-indemnitee to recover attorneys fees and expenses from seller in an action where plaintiff claims a breach of express warranty by purchaser?

3. Does failure by defendant to tender defense to codefendant preclude recovery for attorneys fees in a cross-claim brought by defendant for indemnity?

The facts of this case are set out in detail in Sorenson v. Safety Flate, Inc., supra. Plaintiff Sorenson was injured when a ring retainer known as a 'Safety Flater' blew off the rim of a tire he was inflating while employed at Jay's Truck Stop in Albert Lea, Minnesota. The device was manufactured by Safety Flate, Inc., and Standard Metal Products Company. Jack P. Hennessy Company, an Illinois corporation, which later merged with Three Star Sales Corporation, also an Illinois corporation, distributed the ring retainer. (Hereinafter these corporations will be referred to as Hennessy-Three Star.) Standard Oil purchased a 'Safety Flater' from Hennessy-Three Star and sold the device to Jay's Truck Stop, Sorenson's employer. The contract between Standard Oil and Hennessy-Three Star contained the following terms:

'DEFECTIVE MATERIAL:

'Seller warrants that the merchandise sold by Seller to Buyer hereunder will be of merchantable quality; will conform to applicable specifications, drawings, or descriptions furnished by Buyer; will be free from defects in material and workmanship; and will be sufficient and fit for the purposes intended by Buyer. Buyer's approval of designs furnished by Seller shall not relieve Seller of its obligations under this paragraph. The warranties of Seller, together with its service guarantees, shall run to Buyer and its jobbers, dealers, and customers. In addition, Seller shall indemnify and hold Buyer and its employees, jobbers and dealers harmless from and against any and all claims, suits, judgments, or expenses, including attorneys' fees, which are grounded or based wholly or partially upon alleged negligence or actual negligence in the formulation or manufacture of any merchandise sold by the Seller to Buyer hereunder, or upon any alleged defect or actual defect in the merchandise, or upon a claim that the merchandise was not of merchantable quality or that it was not fit for the purposes for which it was intended.' (Italics supplied.

In selling the 'Safety Flater' to Jay's Truck Stop, Standard Oil presented a flyer printed by Hennessy-Three Star containing an express warranty, and provided to Standard Oil by Hennessy-Three Star.

After incurring injury from the ring retainer, Sorenson brought an action against the various defendants alleging negligence, breach of implied warranties, strict liability, and, as to defendants Standard Oil Company and Hennessy-Three Star, Breach of express warranty in the sale to Jay's Truck Stop.

The various defendants in interposing the cross-claims sought indemnity and contribution from each of the other defendants. Among these cross-claims was a claim asserted by defendant Standard Oil against Hennessy-Three Star for indemnity and attorneys fees and expenses. Standard Oil provided its own defense to all claims brought against it and did not tender defense to defendant Hennessy-Three Star at any time. The trial court awarded indemnity to defendant Standard Oil against Hennessy-Three Star with respect to verdicts in favor of plaintiffs under common-law indemnity.

In Sorenson v. Safety Flate, Inc., supra, this court compared the nature of the obligations to plaintiff breached by defendants Standard Oil and Hennessy-Three Star. Discussing the breach of express warranty by Standard Oil, this court stated:

'One of the purchasers of Safety Flaters from Hennessy-Three Star was defendant Standard Oil, a division of American Oil Company. Standard Oil in turn sold the device directly to users. In making its sales presentation to Standard Oil, Hennessy-Three Star used a descriptive printed 'flyer' which they had prepared, illustrating and describing the Safety Flater. The flyer contained the following language:

'Whether you change one or fifty tires a day the danger of exploding lock rings always exists. Everyone knows the damage or serious injury that may occur. It only has to happen once. THE THREE STAR SAFETY FLATER will protect your man and enable you to meet insurance underwriters specifications for safety.'

The flyer also depicted alternative ways of protecting oneself while changing a truck tire, but suggested that the Safety Flater was the preferable method. No test of the Safety Flater was ever made by either Hennessy-Three Star or Standard Oil.

'Plaintiff's employer, who had purchased the Safety Flater for use in his service station, testified that he had seen and relied upon the flyer prior to his purchase of the Safety Flater from Standard Oil. He said he did not know where the flyer came from, but assumed that it had been provided by Standard Oil.' 298 Minn. 355, 216 N.W.2d 861.

This court further noted:

'While a written express warranty was prepared and circulated by the distributors in this case, thereby placing them in a position of some active participation beyond merely selling the product, it essentially did nothing more than reiterate the guarantees already encompassed within the implied warranties which accompany any product produced by a manufacturer, i.e., that the product is fit for the ordinary purposes for which such goods are to be used.' 298 Minn. 360, 216 N.W.2d 863.

Because the acts of Standard Oil were found to be secondary to those of Hennessy-Three Star, this court affirmed an order granting indemnity to Standard Oil for damages incurred by plaintiff. No issue was raised in that case regarding attorneys fees.

1. The rule in Minnesota regarding the award of attorneys fees in an indemnity case was stated in Fidelity & Cas. Co. v. Northwestern Tel. Exch. Co., 140 Minn. 229, 233, 167 N.W. 800, 802 (1918), where the Minnesota court recited the holding of Inhabitants of Westfield v. Mayo, 122...