Steed v. Central of Georgia Railway Company

• Citation: 477 F.2d 1303
• Decision Date: 01 May 1973
• Docket Number: No. 72-2609.,72-2609.
• Parties: J. P. STEED, Plaintiff, v. CENTRAL OF GEORGIA RAILWAY COMPANY, Defendant-Third Party Plaintiff-Appellee, v. RIEGEL TEXTILE CORPORATION, Third Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

477 F.2d 1303 (1973)

J. P. STEED, Plaintiff, v. CENTRAL OF GEORGIA RAILWAY COMPANY, Defendant-Third Party Plaintiff-Appellee, v. RIEGEL TEXTILE CORPORATION, Third Party Defendant-Appellant.

No. 72-2609.

United States Court of Appeals, Fifth Circuit.

May 1, 1973.

James E. Clark, Birmingham, Ala., for appellant.

Will Sadler, Jr., W. J. Sullivan, Birmingham, Ala., for appellee.

Before RIVES, GOLDBERG and MORGAN, Circuit Judges.

RIVES, Circuit Judge :

In this diversity case, Riegel Textile Corporation appeals from a summary judgment granted against it for $403,105.60 on the motion of Central of Georgia Railway Company. We reverse.

The claim arises out of an accident that occurred on December 30, 1966, when J. P. Steed, a trainman-employee of Central, was injured while switching railroad cars for Central to the plant of Riegel in Trion, Georgia. A moving car, on which Steed was riding, derailed causing Steed's legs to be pinned between the side of the car and the loading platform on Riegel's premises. One of Steed's legs was traumatically amputated approximately 31/2 inches below the knee and the other was severely injured.

On March 1, 1967, Steed filed a Federal Employer's Liability Act suit against the Central of Georgia in the Circuit Court of Jefferson County, Alabama. On December 9, 1968, Central filed a third-party complaint in that case against Riegel seeking indemnification from Riegel in the event of a recovery by Steed against Central. The third-party complaint is based upon a written track agreement dated April 24, 1948, which was in effect between Riegel and Central at the time of the accident. The specific language in the agreement made the basis of the third-party claim reads as follows :

"The Tenant (Riegel) also agrees to indemnify and hold harmless the Railway (Central of Georgia) from loss, damage, or injury from any act or omission of the Tenant, its employees or agents, to the person or property of the parties hereto and their employees and the person or property of any other person or corporation, while on or about said track ; and if any claim or liability other than from fire shall arise from the joint or concurring negligence of the parties hereto, it shall be borne by them equally."

Two other provisions of the track agreement pertinent to the case read as follows :

"2. The Tenant (Riegel) will pay for, own and maintain the entire track from the point of the switch to the end of the track, or about 720 feet in length, as shown in green on said print.

* * * * * *

"4. If the Tenant fails to maintain said track in safe operating condition, as prescribed by the railway, the Tenant agrees that the railway may put it in repair at the Tenant\'s expense or may discontinue operating thereover."

On May 1, 1969, Riegel filed a petition for the removal of the entire case to the federal court. On May 2, 1969, the district court, on motion to remand, entered an order remanding the original complaint (Steed v. Central) to the state court, but retaining jurisdiction over this third-party complaint. That action of the district court was affirmed by the Fifth Circuit in Central of Georgia Railway Co. v. Riegel Textile Corp., 1970, 426 F.2d 935.

The trial of the FELA case in the state court occurred in June, 1969, resulting in a judgment in favor of Steed and against Central in the amount of $500,000. On November 21, 1969, the state trial judge entered a remittitur reducing the judgment to $300,000, and otherwise overruled Central's motion for a new trial. The remittitur was accepted by Steed. On April 8, 1971, the Alabama Supreme Court affirmed in Central of Georgia v. Steed, 287 Ala. 64, 248 So.2d 110.

The third-party complaint against Riegel had been held in abeyance pending the final disposition of the primary case (Steed v. Central) in the state courts. The amount of Steed's recovery from Central having been finally established in the state courts, the issue in the district court on the third-party complaint was whether Riegel should reimburse Central as to all, or one-half, or none of Central's total outlay in the case. The parties stipulated that the matter of Riegel's liability must be determined in accordance with the above-quoted provisions of the track agreement and with the laws of the State of Georgia where the accident occurred.

The parties further stipulated that, by certified mail on March 23, 1967, Central made a demand on Riegel based on the terms of the 1948 track agreement. However, Riegel contended that there was an obligation upon Central to promptly notify Riegel, as indemnitor, that an accident had occurred and that Central faced a loss which it expected Riegel to defend and indemnify. Riegel further contended that such notice and demand was not made by...