Tri-State Gas Co. v. Kansas City Southern Ry. Co.

• Decision Date: 11 September 1972
• Docket Number: TRI-STATE,No. 1,No. 56188,56188,1
• Citation: 484 S.W.2d 252
• Parties: GAS CO., Inc., Appellant, v. KANSAS CITY SOUTHERN RAILWAY COMPANY, Respondent
• Court: Missouri Supreme Court

Page 252

484 S.W.2d 252

TRI-STATE GAS CO., Inc., Appellant, v. KANSAS CITY SOUTHERN RAILWAY COMPANY, Respondent.

No. 56188.

Supreme Court of Missouri, Division No. 1.

Sept. 11, 1972.

Neale, Newman, Bradshaw & Freeman, O. J. Taylor, Richard Owensby, Springfield, for appellant.

Thomas J. Wheatley, Robert D. Youle, Maurice J. O'Sullivan, Jr., Lathrop, Koontz, Righter, Clagett, Parker & Norquist, Kansas City, for respondent.

GERALD M. SMITH, Special Judge.

Appellant, Tri-State Gas Company, appeals from the action of the Circuit Court in entering a summary judgment against it it its negligence action against respondent Kansas City Southern Railway Company.

A Kansas City Southern train was approaching Noel, Missouri, on August 3, 1969, with a load of explosives, when the cars became ignited. The train proceeded on along the main track until it reached a point adjacent to Tri-State's premises. The train stopped at that point and a violent explosion occurred, causing extensive damage to Tri-State's property, a plant for the storage and handling of butane and propane gas. Prayer was for $150,000.

The land occupied by Tri-State is owned by the railroad and leased to Tri-State under a 'Lease Agreement for Industrial Site' at an annual rental of $120. The premises leased adjoin a side track which services Tri-State and other businesses. The premises are in close proximity to the railroad's main track on land owned by the railroad. The lease contains the following provisions:

'(25) The lessee agrees to indemnify the Railway Company and save it harmless from any and all claims and expenses that may arise or that may be made for death, injury, loss or damage resulting to the Railway Company's employees or property, or to the Lessee or Lessee's employees or property, or to other persons or their property, arising from or happening in connection with or during the occupancy or use of said premises by the Lessee, whether or not caused by the negligence of the Railway Company, and resulting from fire or any other cause, excepting only loss or damage to the premises of the Railway Company, or to rolling stock, or to Lessee's shipments in the course of transportation, when such loss or damage is caused solely by fire set by locomotives operated by the Railway Company.'

It is the meaning of this provision upon which the parties have joined issue and upon which the trial court based its summary judgment. Appellant contends that the provision is ambiguous in that if it is literally interpreted Tri-State would, during the period of the lease, be bound to indemnify the railroad for claims based upon the railroad's negligence anywhere on the railroad's line--no matter how far distant from Tri-State's premises or by whom made. Such an absurd result can be avoided, appellant contends, by interpreting the phrase 'arising from or happening in connection with or during the occupancy or use of said premises . . .' as if the italicized word was 'and.' Such interpretation would then require a causal connection between the use or occupancy of the Tri-State premises and the damage or claim covered by the provision.

Leasehold provisions by which railroads are exempted from the consequences of their own negligence are valid and binding on the parties. Ordelheide v. Wabash R. Co., 175 Mo. 337, 75 S.W. 149; Wabash R. Co. v. Ordelheide, 172 Mo. 436, 72 S.W. 684.

The difficulty with the provision before us is, of course, its all inclusiveness. The parties have attempted in one sentence to cover two related, but nevertheless, distinct legal concepts--indemnity and release. The absurd result envisioned by appellant is the product of this attempt. That result occurs because in failing to separate the two differing legal concepts, factual situations where only release could have been intended are included under indemnity. In such situation we must determine the meaning and scope of the provision. And this meaning and scope must be based upon the intent of the parties when the lease was made. In searching for this intent we consider the entire instrument, subsidiary agreements between the parties, and external circumstances which cast light on the intent. Ruysser v. Smith, Mo., 293 S.W.2d 930. With the provision here before us, we do not believe the intent can be determined by simply changing one of the disjunctives to a conjunctive, nor do we believe such a change is warranted. Pettit Grain & Potato Co. v. Northern Pac. Ry. Co., 227 Minn. 225, 35 N.W.2d 127, l.c. 130.

In addition to the 'Lease Agreement for Industrial Site' in which the above quoted provision appears, the parties had also entered into an 'Industry Track Agreement' which dealt with the side track actually servicing Tri-State's facility. That agreement contains extensive provisions dealing with the obligation of Tri-State to protect the railroad from damages arising from the construction, maintenance, and operation of the side track. Some of these provisions are set out in the margin. ¹ Of particular interest are the provisions of paragraph 9 entitled 'Liability.' Those provisions furnish protection to the Railroad in two situations: (1) injury to Tri-State from fire caused by Railroad' locomotives on the side track and (2) damage or injury to the parties or third parties caused by the acts or omissions of Tri-State. Although not as broad or as inclusive in its protection as paragraph 25, that provision does evidence the scope of the protection granted by the agreements of the parties: (1) release for damage done to Tri-State by the railroad and (2) indemnity for liability of the railroad as a result of the acts or omissions of Tri-State. That document also recognizes in its preamble that the operation of cars and engines 'involves the risk of damage to or destruction of property and injury to or death of persons . . .'

Provision 29 of the 'Lease Agreement for Industrial Site' provides: 'The provisions of this lease are for the benefit of The Kansas City Southern Railway Company, or any other railway company operating trains over the tracks in the vicinity of the leased premises against whom any claim may be asserted, suit brought or by whom any expenses may be incurred, and any one or more of said companies, when interested, may enforce by suit or otherwise, the provisions of this lease.'

We also note that the rental provided in the lease is nominal and that the nature of Tri-State's operation can be regarded as hazardous, or at least as having a greater degree of risk from fire or explosion than other operations. It is clear this added danger was in the minds of the parties for they added two typewritten paragraphs to the printed lease involving safety regulations in the handling of butane and propane gas. It is additionally apparent from the cases that railroads frequently seek to protect themselves from...