St. Paul Fire & Marine Ins. Co. v. Amerada Hess Corp.

Decision Date01 February 1979
Docket NumberNo. 9532,9532
Citation275 N.W.2d 304
PartiesST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff and Appellant, v. AMERADA HESS CORPORATION, Defendant and Appellee.
CourtNorth Dakota Supreme Court

Zuger & Bucklin, Bismarck, for plaintiff and appellant; argued by William P. Zuger, Bismarck.

Pearce, Anderson, Thames & Durick, Bismarck, for defendant and appellee; argued by B. Timothy Durick, Bismarck.

PEDERSON, Justice.

St. Paul Fire and Marine Insurance Company appeals from a summary judgment in favor of Amerada Hess Corporation. St Paul Company, as subrogee of KBM Well Service, Inc., sought to recover from Amerada for damages to a well service derrick owned by KBM. The derrick was insured by St. Paul Company, which paid KBM $46,250.00 for damages to the derrick. 1 The district court held that St. Paul Company was not entitled to recover because of a "waiver of negligence" provision contained in the well service contract between Amerada and KBM. We reverse.

The facts surrounding the extensive damaging of the derrick were stipulated. Amerada owns and operates an oil well near New Town that KBM repaired pursuant to a printed-form contract drafted by Amerada. In repairing the oil well, KBM erected a large service derrick over the well hole. The derrick was secured to the ground by four steel "deadmen" anchors furnished and maintained by Amerada. KBM attached the derrick to each of the deadmen with a cable and a steel clamp.

On January 10, 1975, KBM completed its repairs to the oil well and was given permission by Amerada to remove the derrick and its other equipment from the well site. The following morning an Amerada employee discovered that the derrick had been blown over by high winds during the night. There were no eyewitnesses to the accident. An investigation undertaken by employees of both Amerada and KBM disclosed that one of the deadmen was broken and one of the cables securing the derrick to another of the deadmen had slipped through its clamp.

St. Paul Company alleged in its complaint that the failure of Amerada to maintain the deadmen was the proximate cause of the damaging of the derrick and that there were constructional defects in the deadmen that should have been discovered by Amerada. St. Paul Company further asserted that Amerada had a duty to warn KBM, its business invitee, of any defects in the deadmen. Finally, St. Paul Company alleged that Amerada breached its express warranty to KBM that it would provide equipment to repair the well in a "good and workmanlike manner."

The purpose of summary judgment under Rule 56, NDRCivP, is to allow a prompt disposition of a controversy without trial when the salient facts are not disputed or when there is only a question of law involved. Zuraff v. Empire Fire & Marine Ins. Co., 252 N.W.2d 302, 307 (N.D.1977). In granting summary judgment, the court may consider the pleadings, depositions, admissions, affidavits and interrogatories, and the inferences to be drawn therefrom. Albers v. NoDak Racing Club, Inc., 256 N.W.2d 355, 358 (N.D.1977). A motion for summary judgment should be granted only if, (1) after considering the evidence in the light most favorable to the party against whom the judgment is demanded, there is no genuine issue of any material fact, and (2) the moving party is entitled to a judgment as a matter of law. Perdue v. Knudson, 179 N.W.2d 416, 420 (N.D.1970); Rule 56(c), NDRCivP.

The district court based its order for summary judgment on paragraph 4 of the contract which it labeled a "waiver of negligence":

"Amerada shall never be liable for any loss of or damage to any such machinery, equipment or tools furnished by . . . (KBM Well Service), other than uninsured tools lost or damaged down a well hole."

In concluding that the above language precluded St. Paul Company from asserting liability for damages on any theory against Amerada, the district court failed to adequately consider what appears to be an express warranty provision contained in the same paragraph:

"Amerada will furnish, with due diligence and in a good and workmanlike manner, such labor, machinery, equipment, tools, transportation and other items as Amerada specifically agrees to furnish."

As one of its grounds for appeal, St. Paul Company alleges that summary judgment was improperly granted because the provision purporting to waive all liability on the part of Amerada does not bar recovery by St. Paul Company on a contractual theory of breach of warranty. We agree.

Ordinarily the construction of a contract to determine its legal effect is a question of law for the court. Person v. Hass, 273 N.W.2d 710 (N.D.1979). In construing the terms of a contract, the contract should be considered as a whole, "and every clause, sentence or provision, should be given effect consistent with the main purpose of the contract." Delzer Construction Company v. New Marian Homes Corporation, 117 N.W.2d 851, 856 (N.D.1962). See also § 9-07-06, NDCC.

The initial issue is whether the sentence providing that Amerada will furnish its equipment in a "good and workmanlike manner" is an express warranty. An express warranty has been defined as:

" . . . an assurance by one party to a contract of the existence of a fact upon which the other party may rely. It is intended to relieve the promisee of any duty to ascertain the fact for himself, and amounts to a promise to indemnify the promisee for any loss if the fact warranted proves untrue. . . . It is an agreement which refers to the subject matter of the contract, but which is collateral to its main purpose, not being an essential part of it, either from the nature of the case or the agreement of the parties." 17A C.J.S. Contracts, § 342, at 325. See also Dittman v. Nagel, 43 Wis.2d 155, 168 N.W.2d 190, 193 (1969).

In an action for breach of contract for the construction of a house, our court held that contractual language providing that the house builder will supply materials "of top quality . . . to do a proficient workmanlike job" is an express warranty. Dobler v. Malloy, 214 N.W.2d 510, 517 (N.D.1973).

We hold that the express promise on the part of Amerada to provide equipment in a "good and workmanlike manner" is an express warranty. Although the district court made no finding thereon, the word "equipment" necessarily includes any materials, including the deadmen, furnished by Amerada to facilitate KBM's repair function.

The second issue is whether the "waiver of negligence" bars an action against Amerada for breach of warranty. Amerada asserts that the obvious intent of the waiver is to require each party to supply and to pay for damages to their own equipment regardless of the liability of either party for negligence or breach of warranty. St. Paul Company asserts, on the other hand, that the waiver should be interpreted to mean that each party shall replace its own equipment lost or broken as a result of its own negligence only.

When a contractual term is in dispute, a factual question is raised for the court, and this issue should be decided in a manner consistent with the other terms of the contract admitted by the parties. Dangerfield v. Markel, 252 N.W.2d 184, 190 (N.D.1977).

Here, the waiver cannot be construed to exonerate Amerada from all liability. The gist of an action in tort is the breach of a duty imposed by law. See Appeal of Roadmix Const. Corporation, 143 Neb. 425, 9 N.W.2d 741, 745 (1943). The gist of an action on an express warranty in contract is the breach of a promise contained therein.

In construing the contract most favorably to St. Paul Company, we conclude that the parties intended the waiver as a limitation on recovery of damages from Amerada arising...

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