Travelers Indem. Co. v. American Ins. Co.

Decision Date03 May 1977
PartiesTRAVELERS INDEMNITY COMPANY, a corporation, Appellant, v. The AMERICAN INSURANCE COMPANY, a corporation, Respondent.
CourtOregon Supreme Court

Michael J. Gentry, Portland, argued the cause for appellant. With him on the briefs were Paul R. Duden and Tooze, Kerr, Peterson, Marshall & Shenker, Portland.

Mark H. Wagner, Portland, argued the cause for respondent. With him on the brief were Ridgway K. Foley, Jr., and Souther, Spaulding, Kinsey, Williamson & Schwabe, Portland.


BRYSON, Justice.

Plaintiff (Travelers) brought this action to recover contribution from defendant (American) for monies paid and legal expenses incurred in the settlement of a third-party claim. Defendant counterclaimed on an express contract of indemnity for legal expenses incurred by it in connection with the same third-party claim. The circuit court granted summary judgment for defendant on its counterclaim and against the plaintiff on its claim. Plaintiff appeals.

Travelers is the insurer of To-Ro Enterprises (To-Ro) and additionally insured the city of Portland by and through its Exposition-Recreation Commission. American is the insurer of the city of Portland (City) 'by and through its Exposition-Recreation Commission.' To-Ro entered into a permit agreement with the City (through its Exposition-Recreation Commission), granting To-Ro the right to use the Memorial Coliseum to conduct its 1973 International Boat, Trailer & Sports Show.

The voluntary permit agreement provided:

'* * *.

'* * * COLISEUM is hereby expressly relieved and discharged from any and all liability for any loss, injury or damage to persons or property that may be sustained by reason of the occupancy of said building or any part thereof under this permit * * *.

'* * *.

'* * * PERMITTEE (To-Ro) agrees to conduct its activities upon the premises so as not to endanger any person lawfully thereon; and to indemnify and save harmless the COLISEUM against any and all claims for loss, injury or damage to persons or property including claims of employes of PERMITTEE or any contractor or subcontractor, arising out of the activities conducted by the PERMITTEE, its agents, members or guests. The PERMITTEE shall be required to furnish satisfactory evidence of liability insurance, including a copy of the endorsement adding the COLISEUM as an additional insured. * * *.

'* * *.'

Plaintiff alleges that a paying patron attending the boat show fell and injured herself; that the patron brought an action against the City and To-Ro; that plaintiff expended money for the settlement of said action and for attorney fees and costs. Plaintiff further alleges that this accident and caused by the negligence of the City and contends that American, as the insurer of the City, is liable for contribution to plaintiff under Lamb-Weston et al v. Or. Auto. Ins. Co., 219 Or. 110, 341 P.2d 110, 346 P.2d 643 (1959).

Defendant alleges the above indemnity provisions in the permit and contends that under the terms of the indemnity provision it is To-Ro, and not the City, which must bear the cost of the third party claim and that consequently plaintiff has no right to contribution as the funds expended by plaintiff were for the benefit of its insured, To-Ro, and not for the benefit of the parties' common insured, the City.

As hereinafter explained, the case was presented to the court in an informal manner, and the only issue to be decided was the proper interpretation of the permit agreement's indemnity provision. We understand defendant, by its conduct and argument, to have accepted the facts as presented in plaintiff's pleadings. Defendant contends that even if the accident was due to the negligence of the City, the defendant must still prevail, as a matter of law, under the terms of the indemnity agreement and our holding in Waggoner v. Oregon Auto. Ins. Co., 270 Or. 93, 526 P.2d 578 (1974).

The trial court reviewed the cases cited by counsel and the indemnity provisions of the permit agreement and rendered its opinion from the bench as follows:

'The indemnity clause provides that the Permittee agrees to indemnify and save harmless the indemnitee against any and all claims for loss, injury or damage to persons or property arising out of the activities conducted by the Permittee.

'The question which I must determine is whether that means that the indemnitee, the Coliseum, is protected against any and all claims for loss, injury or damage to persons or property which arise out of the Boat Show being held at the Coliseum, or whether that means that the indemnity clause only protects the indemnitee against injuries arising out of the primary activities of the Permittee. In other words, whether it only covers injuries which would be occasioned by the specific activities of the Boat Show people.

'And in reviewing the law in Waggoner versus Oregon Automobile Insurance Company, you will recall that the case again adopted the language taken from Southern Pacific versus Morrison Knudsen, an earlier case, in which they held that in an action for indemnity on an indemnity agreement, the common law distinction between active and passive negligence, and between primary and secondary negligence, becomes inappropriate, and apparently, as I interpret that case, it holds in favor of the general coverage in the indemnity agreements.

'Under those circumstances, I would interpret this to mean that the indemnity protected against all claims for loss, injury or damage to persons or property, which arises out of the general activities of the Boat Show, and consequently, under those circumstances, I would have to hold in favor of the defendant on that issue.'

Plaintiff argues that the trial court's interpretation cannot stand because, as a matter of law, 'this court uniformly and consistently has refused to allow indemnity for losses solely caused by indemnitees' negligence.'

Contrary to plaintiff's contentions, this court, in Waggoner v. Oregon Auto. Ins. Co., supra, wherein the lessor indemnitee was also negligent, held, at page 97, 526 P.2d at page 581, 'that the...

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