De Vries v. City of Austin

• Decision Date: 08 September 1961
• Docket Number: 38115,Nos. 37983,38338,38005,s. 37983
• Citation: 110 N.W.2d 529,261 Minn. 52
• Court: Minnesota Supreme Court
• Parties: Floyd DE VRIES, Respondent, v. CITY OF AUSTIN, Defendant and Third-Party Plaintiff, Appellant and Respondent, Board of Water, Electric, Gas & Power, Austin, Minn., Respondent and Appellant, Jordan Builders, Inc., Appellant and Respondent, Thompson and Lewison, Copartnership, Respondent, SEABOARD SURETY COMPANY, Third-Party-Defendant, Respondent.

Page 529

110 N.W.2d 529

261 Minn. 52

Floyd DE VRIES, Respondent, v. CITY OF AUSTIN, Defendant and Third-Party Plaintiff,

Appellant and Respondent,

Board of Water, Electric, Gas & Power, Austin, Minn.,

Respondent and Appellant,

Jordan Builders, Inc., Appellant and Respondent,

Thompson and Lewison, Copartnership, Respondent,

SEABOARD SURETY COMPANY, Third-Party-Defendant, Respondent.

Nos. 37983, 38005, 38115, 38338.

Supreme Court of Minnesota.

Sept. 8, 1961.

Syllabus by the Court

1. Where public contractor assumed responsibility of locating gas service lines below street in which it was to excavate trench for curb, but failed to do so, and in consequence a line was severed by a worker while in performance of work under the contract, Held contractor liable to adjacent property owner whose residence was destroyed as result of such severance and gas explosion which followed.

2. Where municipality reserves right to control every detail of contract to be performed by independent contractor in connection with street excavations; and further reserves right to discharge employees engaged in such work and undertakes to assist contractor in performance of part of contract, Held such facts would render municipality liable to adjacent property owner whose property is destroyed as a result of contractor's negligence in performance of contract.

3. Where municipality imposed upon public contractor responsibility of locating gas service lines, and provided that contractor was to indemnify municipality for any liability it had to persons or property owners for damages arising out of performance of contract, Held fact that under doctrine of respondeat superior municipality became liable to adjacent property owner for damages arising out of contractor's negligence would not bar its right to indemnity therefor from contractor since it had not been guilty of active negligence causing such damage.

4. Obligation resting upon distributor of gas, whether a municipality or private company operating under franchise, is not that of an insurer but requires that it exercise due care to prevent escape of gas, proportionate to danger which it is its duty to avoid. Under such rule, Held municipal agency furnishing gas for 7,500 customers was not negligent because it failed to keep accurate records showing depth of each of such 7,500 service lines, particularly where changes in street, grades, and surfaces constantly taking place would make such records confusing and inaccurate.

5. Where public contractor is to perform excavation for curbs in street under which gas distributor maintains service lines, and under contract assumes responsibility for locating such lines, and where distributor advises contractor to ascertain their location by digging under street surface, Held under such circumstances gas distributor would not have further duty of furnishing employees to constantly watch operations of contractor or to ascertain depth of gas service lines and to advise contractor with reference thereto, or to be available for turning off gas in case such lines were severed by contractor's negligence in not locating them.

6. Bond furnished to assure payment of all claims for labor or material furnished or to assure faithful performance of contract Held not to protect obligee therein against liability for damages arising because of negligence of contractor or his subcontractors in performance of work. Mahoney & Mahoney, Minneapolis, Harry H. Peterson, Minneapolis, for appellant City of Austin.

Alderson, Catherwood, Kelley & Ondov, Austin, for appellant-respondent Jordan Builders, Inc. and respondent Seaboard Surety Co.

Elmer R. Peterson, John R. Peterson, Peterson & Peterson, Albert Lea, for appellant Board of Water, Electric, Gas & Power.

Kenneth K. McMillan, Austin, Baudler & Baudler, Austin, for respondent DeVries.

Wm. J. Nierengarten, Austin, for respondent Jordan Builders, Inc.

Tyrrell, Jardine, Logan & O'Brien, St. Paul, Donald M. Jardine, St. Paul, for respondent Thompson and Lewison.

THOMAS GALLAGHER, Justice.

Floyd DeVries brought this action against the city of Austin, hereafter referred to as the city; the Board of Water, Electric, Gas and Power of Austin, hereafter referred to as the board; Jordan Builders, Inc., hereafter referred to as Jordan; and Thompson and Lewison, a copartnership, hereafter referred to as Thompson, on the ground that their negligence in excavating a trench for curb and gutter on the street in front of plaintiff's residence in Austin damaged the gas service line so that gas escaping therefrom exploded in such residence, completely destroying it and its contents. The jury returned a special verdict finding against all defendants except Thompson and assessing damages in the sum of $21,000, which was reduced by the court to $20,741.

On April 10, 1958, Jordan entered into a contract with the city for installation of curbs and gutter in front of plaintiff's residence. Thereunder, Jordan was to furnish the labor and material required and to give personal and direct attention to the work. The contract provided:

'The Contractor undertakes to indemnify and save harmless the City, and for or on account of the City to make defense against all claims for damages to persons or to property alleged to have been caused through the negligent performance of any part of the work herein, whether such default be asserted to have been in the performance of a duty of employees, to the owners of property or to the members of the public.

'The Contractor shall be responsible to the City for the acts and omissions of all persons, firms or corporations directly or indirectly employed by him in connection with the work.'

It also provided:

'The City shall have the right to control every detail of the work, whether performed by the Contractor or by a Subcontractor, and shall have the right to require the Contractor to discharge any employee on the work whom it may deem objectionable.'

The specifications accompanying and incorporated into the contract included the following special provision: 'The City Engineer will provide and set survey stakes for line and grade.' One of the general specifications provided in part:

'The Contractor shall preserve and protect all properties of public utility companies or municipalities, such as pole lines, conduits, gas or water pipes, sewers and tile lines which run over, through, or under any part of the right of way. The Engineer shall cooperate in locating the above mentioned properties, but it shall be the responsibility of the Contractor to contact the various public utility companies and municipalities and locate their properties before construction shall commence in that locality, and he shall assume full responsibility for reimbursing the owners thereof for any damage or injury to such properties which may be caused by his operation.'

Pursuant to the laws of Minnesota ¹ and the charter of the city of Austin, ² at the time the contract was executed Jordan executed and delivered a bond to the city for its use and the use of 'all persons doing work or furnishing tools, skill, machinery or materials under or for the purpose of this contract.' This bond provided:

'The bondsmen shall be liable for all damages resulting from any failure of the principal * * *. Any person showing himself injured by such failure may maintain an action upon this bond in his own name * * *.'

'* * * If said Principal shall faithfully perform said contract and pay all damages which may accrue by reason of the failure to Complete the work in accordance with the contract, and shall pay * * * all just claims to all persons doing work or furnishing skill, tools, or materials or insurance premiums or equipment and supplies for the completion of said contract * * * and in case the Principal saves the City of Austin harmless from all costs and charges that may accrue on account of the doing of the work specified in the contract * * * then this bond shall be void; otherwise to remain in full force and affect.'

The contract contained the further provision that:

'* * * The Contractor shall take out and maintain during the life of this contract such public liability and property damage insurance as shall protect the City, himself, and any subcontractor performing work covered by this contract from claims for personal injury, including accidental death, as well as claims for property damages, which may arise from operations under this contract, whether such operations be by himself, or by a subcontractor, or by anyone directly or indirectly employed by either of them, and the amount of insurance shall be as follows:

'Public liability insurance in an amount of not less that $25,000 for injuries * * * and property damage in an amount not less than $5,000.'

It is not disputed that such liability insurance was furnished the city by Jordan. In the performance of the contract, Jordan entered into an arrangement with Thompson, under which the latter would furnish an excavating device known as a 'backhoe' together with an employee of Thompson by the name of Albert Sauer who would operate the 'backhoe' and do the excavation required under the contract. Jordan agreed to pay Thompson therefor on an hourly basis. The board, as an independent subsidiary of the city, operated, controlled, and supervised the Austin gas system and maintained the equipment and pipes required therein.

When summons was first served upon the city, it tendered defense of the action to Jordan and its surety, Seaboard Surety Company, under the contract and bond described. The latter both declined to assume such defense. Thereafter, the city interposed a separate answer to the complaint denying that it was negligent; and interposed a third-party complaint against Seaboard Surety Company as third-party defendant based on the claim that any liability of the city arising out of Jordan's negligence was covered under the bond. The surety company answered,...