Stern v. Larocca

• Decision Date: 11 April 1958
• Docket Number: No. A--674,A--674
• Citation: 49 N.J.Super. 496,140 A.2d 403
• Parties: Benjamin STERN and Samuel Rudin, individually and trading as United News Transportation Company, a partnership, Plaintiffs-Appellants, v. Alfonso LAROCCA and John Larocca, individually and partners trading as J. A. Larocca Brothers, Defendants-Respondents. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 496

49 N.J.Super. 496

140 A.2d 403

Benjamin STERN and Samuel Rudin, individually and trading as United News Transportation Company, a partnership Plaintiffs-Appellants, v. Alfonso LAROCCA and John Larocca, individually and partners trading as J. A. Larocca Brothers, Defendants-Respondents.

No. A--674.

Superior Court of New Jersey.

Appellate Division.

Argued Dec. 9, 1957.

Decided April 11, 1958.

Frank Fink, Newark, argued the cause for plaintiffs-appellants (James J. Carroll, Newark, attorney).

William George Jersey City, argued the cause for defendants-respondents (John H. Jobes, Jersey City, attorney).

Before Judges GOLDMANN, FREUND and CONFORD.

The opinion of the court was delivered by

CONFORD, J.A.D.

This is an action by the owners of a building to recover on an indemnification agreement for certain losses charged to have arisen out of an accident to an employee of the defendants, who had contracted with plaintiffs to convert a one-story brick building in Jersey City into a garage, in accordance with specific plans and specifications. The contract for the alteration work contains the following indemnification agreement:

'Responsibility for Accidents.

'The Contractor shall bear all loss or damage from accidents which may occur to any person or persons, by or on account of the prosecution of the work, until possession is taken by the owner. The Contractor must provide all legal and necessary guards, railings, lights, warning signs, etc., during the progress of the work.'

Under the heading, 'General Conditions,' and sub-heading, 'Examination of Premises,' the contract further provides as follows 'The contractor shall carefully examine the premises before submitting his bid. No allowance will be made him for lack of full knowledge of all conditions, except (sic) such underground conditions as are indeterminable before the beginning of the work.

'The submission of a proposal will be construed as evidence that such a visit and investigation has been made and later claims for labor, equipment or materials required or difficulties encountered will not be considered.'

On September 13, 1949, one Landolfi, an employee of defendants, was injured while at work, when a part of the ceiling fell on him. It is plaintiffs' contention that this happened as a result of the stripping of a partition wall of plaster by heavy blows of a crowbar or hammer administered by Landolfi, the stripping of the plaster being part of the work specified by the contract. Landolfi instituted an action against these plaintiffs on May 16, 1951 to recover damages for his injuries on the theory that they failed to provide a safe place for him to work, particularly in that the ceiling was in a weakened condition due to disrepair. On October 23, 1951 plaintiffs, by their insurance carrier, wrote to defendants, citing the indemnification clause quoted above and demanding that they 'take over the defense' of the Landolfi action and 'pay any judgment which may be returned,' failing which plaintiffs would defend the action and hold defendants liable for any judgment and expenses incurred in defense of the action. Defendants ignored the notice, and plaintiffs defended the action, denying negligence or the breach of any duty to Landolfi, and asserting that his contributory negligence and that of the present defendants and their employees caused the accident.

After a trial of several days the Landolfi action was dismissed on motion at the end of the plaintiff's (in that action) case. Upon appeal this court reversed, finding that there was sufficient evidence from which the jury might find that Landolfi was an invitee on the premises and was injured by reason of a defect in the ceiling of which the defendants (present plaintiffs) had notice, constructive or actual. Landolfi v. Stern, 23 N.J.Super. 286, 288, 92 A.2d 804 (App.Div.1952). Certification was denied by the Supreme Court 11 N.J. 592, 95 A.2d 645 (1953). Thereafter the present plaintiffs' insurance carrier settled Landolfi's claim by payment of a sum stated in a release executed by him to the plaintiffs to be $33,500, but which is contended by plaintiffs in the pretrial order and on this appeal to have actually been $53,000. No notice of this settlement was given to the present defendants in advance of its negotiation or execution.

Cross-motions were made for summary judgment in the present action by both parties, in each case on the basis that there existed no genuine issue as to any material fact and that the moving party was entitled to judgment as a matter of law. The motions were submitted upon the basis of a stipulation of facts setting forth the history of the controversy and of the previous litigation, including the pleadings and judicial determinations. Nothing was stipulated concerning the cause of or circumstances surrounding the accident other than that a part of a ceiling fell upon Landolfi on September 13, 1949 while he was upon the premises in the employ of defendants. The basis of plaintiffs' claim is stated to be as recited in the complaint and pretrial order. The complaint is not clear, sounding both in contract on the indemnity clause and in negligence. In the pretrial order the claim for both the amount paid in settlement and for the expenses of defending against the Landolfi action is based, alternatively, on the agreement of indemnity, and on a cause of action for defendants' negligence in failing to inspect the property in advance of commencing the alteration work and to take such precautions as were required by good building practice and would have prevented the accident.

Upon the argument of the motions plaintiffs made no serious attempt to support the negligence or tort theory of recovery. The stress was upon the indemnity clause. Defendants argued that the contract should not be construed to indemnify plaintiffs as to losses arising out of their own negligence citing George M. Brewster & Son v. Catalytic Const. Co., 17 N.J. 20, 109 A.2d 805 (1954), and that the indemnification provision was operative as against the contractors only if there were a prior adjudication of a 'liability imposed by law' against the owners, a condition asserted to be forever impossible of fulfillment because of plaintiffs' settlement of the Landolfi action without an adjudication of liability. The trial court held the indemnification agreement not effective in favor of the owners insofar as any loss might be due to their own negligence, the agreement not so providing in 'unequivocal terms'; that as to the claim for the sum paid in settlement, defendant was entitled to summary judgment, apparently for the reason that the voluntary settlement had prevented the possibility of any adjudication as between Landolfi and the owners of the issue of the latters' negligence; but that as to plaintiffs' expenses incurred in the defense of the Landolfi action liability would accrue under the agreement if the trial of the case Sub judice should show that the owners had been free from negligence. Summary judgment was accordingly denied the defendants as to the expense aspect of the claim asserted.

I.

Provisions in a contract whereby one party agrees to indemnify or hold harmless another for claims or suits for damages on account of accidents arising out of the effectuation of the contractual undertaking between the parties are a commonplace in the business world. See Potamkin and Plotka, 'Indemnification against Tort Liability,' 92 U. of Pa.L.Rev. 347 (1944), Passim. But the extent to which they will be held available in favor of the indemnitee where his own negligence has contributed to the casualty giving rise to the claim is based predominantly upon the results of an application of the fundamental rule of construction of contracts which calls for the ascertainment of the intent of the parties in the light not only of the language used but also of the surrounding circumstances and the objects sought to be attained by the parties by their agreement. George M. Brewster & Son v. Catalytic Const. Co., supra (17 N.J. at page 32, 109 A.2d at page 811). Hartford Accident & Indemnity Co v. Worden-Allen Co., 238 Wis. 124, 297 N.W. 436 (Sup.Ct.1941); Pacific Indemnity Co. v. California Electric Works, 29 Cal.App.2d 260; 84 P.2d 313 (D.Ct.App.1938); Thompson-Starrett Co. v. Otis Elevator Co., 271 N.Y. 36, 2 N.E.2d 35 (Ct.App.1936); Salamy v. New York Central System, 1 A.D.2d 27, 146 N.Y.S.2d 814 (3d Dept. 1955).

There will frequently be found in the cases the statement that an indemnification clause will not cover the indemnitee in respect to a claim against it arising out of its own negligence unless the contract contains a clear and unequivocal expression of such intent. George M. Brewster & Son v. Catalytic Const. Co., supra (17 N.J. at page 33, 109 A.2d at page 811); Longi v. Raymond-Commerce Corp., 34 N.J.Super. 593, 603, 113 A.2d 69 (App.Div.1955); Annotation, 175 A.L.R. 8, 30 (1948); 27 Am.Jur., Indemnity, § 15, p. 464; Note, 14, U. of Pitt.L.Rev. 419 (1953); 12 Fordham L.Rev. 70 (1943). However, a critical evaluation of the cases in the widely variegated types of transactions and indemnity clauses involved will show that the rule referred to is not generally applied to necessarily frustrate coverage of the indemnity clause as against losses partially attributable to negligence of the indemnitee, if the language of the agreement and the surrounding circumstances are indicative of that broad a contractual intent; but that the rule is commonly stated in support of conclusions against coverage in cases where the precise nature of the relationship between the indemnitee's negligence and the particular loss or claim is such as to negate any intent that the parties designed to cover it by their agreement of indemnification. The new Jersey cases which mention the rule of construction are good exemples in point.

In the Brewster case, supra, the contracting parties were lessor and...