U.S. Fidelity & Guaranty Co. v. Mason & Dulion Co.

• Decision Date: 26 July 1962
• Docket Number: 6 Div. 417
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY v. MASON AND DULION COMPANY, Inc.
• Court: Alabama Supreme Court

Page 711

145 So.2d 711

274 Ala. 202

UNITED STATES FIDELITY AND GUARANTY COMPANY v. MASON AND DULION COMPANY, Inc.

6 Div. 417.

Supreme Court of Alabama.

July 26, 1962.

Rehearing Denied Oct. 25, 1962.

Ralph B. Tate, S. R. Starnes and Spain, Gillon & Young, Birmingham, for appellant.

Jas. E. Clark and London, Yancey, Clark & Allen, Birmingham, for appellee.

COLEMAN, Justice.

This is an appeal by complainant from a declartory decree.

The appellant is the liability insurer of a contractor, Daniel Construction Company, Inc., which will be herein sometimes referred to as Daniel, or as the contractor or indemnitee. Appellant, by subrogation, stands in the shoes of Daniel, and appellant has all the rights Daniel had, but no more, so far as this case is concerned.

Daniel, the contractor, was building a plant for American Brake Shoe Company, the owner. Daniel made a subcontract whereby appellee undertook to do a part of the work. Appellee will sometimes be referred to as subcontractor or indemnitor.

The agreement between contractor and subcontractor contains the following provision:

'7. Indemnity Agreement: The Subcontractor covenants to indemnify and save harmless and exonerate the Contractor and the Owner of and from all liability, claims and demands for personal injury and property damage arising out of the work undertaken by the Subcontractor, its employees, agents, its subcontractors, and arising out of any other operation no matter by whom performed for and on behalf of the Subcontractor.'

It is alleged in the bill and admitted in the answer that Dallas J. Faulkner was an employee of the subcontractor, that Faulkner fell from a scaffold and was injured on the job while working for the subcontractor, that Faulkner filed an action against the contractor charging that Faulkner was injured through the negligence of the contractor, that Faulkner recovered judgment against the contractor, that appellant has paid the judgment and is entitled, as subrogee of Daniel, to all the rights of Daniel. Appellant claims a right to be reimbursed by the subcontractor because, appellant contends, the Indemnity Agreement quoted above requires the subcontractor to indemnify the contractor for contractor's liability for the injury to Faulkner.

The record is bare of further facts to show the circumstances of the injury. The parties appear to concede, however, that Faulkner's injury did arise out of the work and was the result of the negligence of the contractor, and that the subcontractor was not negligent. We will so consider the case.

The decree appealed from declared that appellant is subrogated to the rights of Daniel, but that the subcontractor did not agree to indemnify Daniel for loss occasioned by Daniel's negligence, and that appellant is not entitled to recover from appellee the amount paid to Faulkner.

Appellant says that the contractor is entitled to indemnity because the contract provides for indemnity, although the liability of contractor resulted from the negligence of the contractor, the indemnitee.

Appellee says the contractor is not entitled to indemnity for two reasons. First, appellee says the Indemnity Agreement does not contain language sufficient to entitle indemnitee to indemnity for a loss occasioned by its own negligence. Second, appellee says that the contract has other provisions besides the Indemnity Agreement quoted above and that when the entire contract is considered, the contractor is not entitled to be indemnified for a loss which resulted from contractor's own negligence.

Appellant contends that Eureka Coal Co. v. Louisville & N. R. Co., 219 Ala. 286, 122 So. 169, holds that the Indemnity Agreement in the instant case entitles the contractor to indemnity for its own negligence. We do not think that Eureka is decisive of the instant case. There the indemnitor was guilty of primary negligence causing the injury. Here the only causative negligence appears to be that of the indemnitee. We are of opinion that Eureka does not require us to hold that Daniel is entitled to be indemnified for its own negligence.

Appellant insists further, however, that the plain language of the agreement entitles the contractor to indemnity, and cites many cases from other states in support of the contractor's right to indemnity. Among them are: Payne v. National Transit Co., 3 Cir., 300 F. 411; National Transit Co. v. Davis, 3 Cir., 6 F.2d 729; Buckeye Cotton Oil Co. v. Louisville & N. R. Co., 6 Cir., 24 F.2d 347; Baltimore & O. R. Co. v. Youngstown Boiler & Tank Co., 6 Cir., 64 F.2d 638; Cavanaugh v. C. P. Boland Co., 149 Misc. 576, 268 N.Y.S. 390; Southern Pac. Co. v. Fellows, 22 Cal.App.2d 87, 71 P.2d 75; Kokusai Kisen Kabushiki Kaisha v. Columbia Stevedoring Co., D.C., 23 F.Supp. 403; Northern Pac. Ry. Co. v. Thornton Bros. Co., 206 Minn. 193, 288 N.W. 226; Smoke v. Turner Const. Co., D.C., 54 F.Supp. 369; Griffiths v. Henry Broderick, Inc., 27 Wash.2d 901, 182 P.2d 18; Buffa v. General Motors Corp., D.C., 131 F.Supp. 478; James Stewart & Co. v. Mobley, Tex.Civ.App., 282 S.W.2d 290; Turner Const. Co. v. Belmont Iron Works, D.C., 158 F.Supp. 309. Appellee, on the other hand, relies heavily on Batson-Cook Company v. Industrial Steel Erectors, 5 Cir., 257 F.2d 410, where the court held that the indemnity agreement did not require indemnitor to indemnify the indemnitee for a loss occasioned by indemnitee's negligence. Batson-Cook probably represents the weight of authority but, appellee says that the instant case '* * * is a case of first impression in the appellate courts of Alabama.' In that situation our duty is to ascertain and apply the law of this state.

The so-called majority rule of strict construction appears to be that the parties are presumed to intend that the indemnitee shall not be indemnified for a loss caused by his own negligence unless the language of the contract affirmatively expresses an intent to indemnify for such olss. See Batson-Cook Company v. Industrial Steel Erectors, supra; and Mostyn v. Delaware, L. & W. R. Co., 2 Cir., 160 F.2d 15. Reference to 175 A.L.R. 8, 143 A.L.R. 312, and related annotations will disclose cases in point. One annotator has said:

'Where a subcontractor expressly agrees to indemnify the general contractor, he will be bound by the clear terms of his undertaking. No question of interpreting the agreement arises where the terms of the contract are considered by the courts to be clear and unequivocal. (Citations omitted.)'

This court has said:

'* * * when the language is plain and unambiguous there is no room for interpretation, as it is not the province of the courts to make contracts for the parties. * * *' Williams v. Johns-Carroll Lumber Co., 238 Ala. 536, 539, 192 So. 278, 280.

We do not decide that the contractor is not entitled to recover for that the contract fails to contain.

'* * * the talismanic words 'even though caused, occasioned or contributed to by the negligence, sole or concurrent' of the Indemnitee, or like expressions, * * *.' Batson-Cook Company v. Industrial Steel Erectors, supra, at page 412 of 257 F.2d.

We do decide that the contract is ambiguous and must be construed against the contractor who wrote it. So construed, the contract does not disclose a right in the contractor to recover for a loss occasioned by contractor's negligence.

The contract contains provisions other than and in addition to the Indemnity Agreement quoted above. This court has said:

'* * * where contracts contain extraneous references of fact and to other documents, the same enters therein to the extent that it is pertinent, and the parties are bound thereby. And he who omits to inform himself as to such fact or contents and extent of such other writing referred to, in so far as it is reasonable and in contemplation of parties to contract, is bound thereby. (Citations omitted.)' Ben Chesseman Realty Co. v. Thompson, 216 Ala. 9, 12, 112 So. 151, 153.

Appellant relies on the rule that an indemnity contract when ambiguous is to be resolved in favor of the party intended to be indemnified, and in support of the rule cites Eureka Coal Co. v. Louisville & N. R. Co., 219 Ala. 286, 122 So. 169, and Louisville & N. R. Co. v. Cullman Warehouse, 226 Ala. 493, 147 So. 421. The cited cases do state the rule as contended for by appellant. Both cases cite as authority Alabama Fidelity & Casualty Co. v. Alabama Penny Sav. Bank, 200 Ala. 337, 76 So. 103, where this court said:

'Independent of any possible effect of the statutes the rule is that in the interpretation or construction of contracts of this character all fair doubts are to be resolved in favor of the party indemnified, just as is the practice in interpreting or construing contracts of insurance. Bank [of Tarboro] v. Fidelity [and Deposit] Co., 126 N.C. 320, 35 S.E. 588, 83 Am.St.Rep. 682, 690, 691; Amer. Surety Co. v. Pauly, 170 U.S. 133, 144, 18 Sup.Ct. 552, 42 L.Ed 977.' [200 Ala. 337, 341, 342, 76 So. 103, 107]

In Bank v. Fidelity Co., supra, the court quoted from American Surety Co. v. Pauly, supra, as follows:

'* * * In the latter case, Justice Harlan, speaking for a unanimous court, says on page 144: 'If, looking at all its provisions, the bond is fairly and reasonably susceptible of two constructions, one favorable to the bank and the other favorable to the surety company, the former, if consistent with the objects for which the bond was given, must be adopted, and this for the reason that the instrument which the court is invited to interpret was drawn by the attorneys, officers, or agents of the surety company. This is a well-established rule in the law of insurance: National Bank v. Insurance Co., 95 U.S. 673 ; Western Ins. Co. v. Croper, 32 Pa.St. 351, 355, 75 Am.Dec. 561; Reynolds v. Commerce etc. Ins. Co., 47 N.Y. 597, 604; Travellers' Ins. Co. v. McConkey, 127 U.S. 661, 666, 8 Sup.Ct.Rep. 1360 ; Fowkes v. Manchester etc. Assn., 3 Best & S. 917, 925. As said by Lord St. Leonards, in Anderson...