Westinghouse Elec. Co. v. Murphy, Inc.
| Decision Date | 18 April 1967 |
| Citation | 228 A.2d 656,425 Pa. 166 |
| Parties | WESTINGHOUSE ELECTRIC CO. v. MURPHY, INC., Appellant. |
| Court | Pennsylvania Supreme Court |
T. E. Byrne, Jr., Robert K. Wood, Krusen Evans & Byrne Philadelphia, for appellant.
Edward W. Madeira, Jr., Aaron D. Blumberg, B. H. Carter Philadelphia, for appellee, Pepper, Hamilton & Scheetz Philadelphia, of counsel.
Before BELL, C.J., and MUSMANNO, JONES, EAGEN, O'BRIEN and ROBERTS, JJ.
James Rhodes was an employee of Murphy, Inc., a concern engaged in the painting and glazing business. On December 14, 1962, Rhodes was injured while engaged in work which Murphy had agreed to perform for Westinghouse Electric at the Westinghouse plant in Lester, Pennsylvania. Rhode sued Westinghouse for the injury and Westinghouse joined Murphy as an additional defendant. The action by Rhodes was settled for $67,500, half of which was paid by Murphy's insurer and half by Westinghouse's insurer. At the time of settlement, it was agreed by Westinghouse and Murphy, that the dispute between them as to the liability for Rhodes' claim should be determined in subsequent litigation between them.
Thereafter, Westinghouse filed an action in assumpsit for $33,750 against Murphy alleging that the terms of the contract between them required Murphy to indemnify Westinghouse for the amount paid by it in settlement of Rhodes' injury despite the fact that the injury was due to the negligence of Westinghouse. Murphy's answer denied this contractual obligation and counterclaimed for the $33,750 paid by its insurer in settlement of Rhodes' claim. A jury trial was waived, no testimony taken and the case submitted to the court below on a stipulation. This is an appeal from the judgment of the court below granting the prayer of Westinghouse's complaint and denying that of Murphy's counterclaim.
Stated simply the legal question before us is whether the contract under which Murphy was performing work for Westinghouse included an enforcible term providing that Murphy would indemnify Westinghouse for liability arising out of the job created by Westinghouse's negligence. In order to answer this question it is necessary to describe in some detail the history of business relations between Murphy and Westinghouse prior to the date of Rhodes' accident.
Westinghouse is the owner of a large facility located at Lester, Pennsylvania which requires continuing maintenance. On some eighty occasions between November 1956 and November 1962 Westinghouse had contracted with Murphy to perform aspects of this work. In connection with each of these eighty jobs, Westinghouse issued to Murphy a purchase order form. On the face of the purchase order form under the heading 'INSTRUCTION TO SUPPLIER' are seven items each in fine print. Item number seven is as follows: 'TERMS. Subject to terms and conditions printed on the back, and to specifications, drawings and additional terms and conditions referred to herein and/or attached hereto.' The reverse side of the purchase order is almost completely taken up by fifteen finely printed 'terms and conditions'. The fifteenth item is as follows:
Appendix D in pertinent part provides: [1]
'(b) Seller shall * * * indemnify and save harmless the Buyer against and from any and all claims, demands, actions, courses of action, suits and all other liabilities whatsoever on account of, or by reason of, or growing out of personal injuries or death to seller or its employees, or property damage suffered by Seller and its employees, Whether the same results from negligence of Buyer or Buyer's Employees or otherwise, it being the intent of this provision to absolve and protect Buyer from any and all loss by reason of the premises.
'(c) Buyer, at its option, may require Seller to supply evidence of insurance satisfactory to Buyer covering the liabilities and indemnification included in paragraphs (a) and (b) above.' (Emphasis supplied.)
On six occasions--the earliest being November 12, 1956 and the latest being November 4, 1960--a copy of Appendix D was physically attached to the purchase order sent by Westinghouse to Murphy. On the twenty-two occasions between November 4, 1960 and November 7, 1962, on which Westinghouse contracted for Murphy's painting and glazing services, the Westinghouse purchase order Had typed on its face the notation 'APPENDIX D&S APPLY YOU HAVE COPIES.'
On January 3, 1962, Murphy furnished to Westinghouse a certificate of insurance applicable to the calendar year 1962. Murphy claims that this certificate did not insure it for loss occasioned by Westinghouse's negligence and asserts that the lack of such coverage was evident on the face of the certificate. Murphy further claims that it was never informed by Westinghouse of this deficiency in coverage, but admits in its brief that the deficiency was brought to its attention by another source before the Rhodes' accident so that by that time its insurance included coverage for loss caused by Westinghouse's negligence.
It would appear from the record that on most occasions on which Westinghouse and Murphy did business, a purchase order was issued to Murphy and a signed 'acknowledgement' copy returned by Murphy to Westinghouse before work was actually begun by Murphy on a particular job. Sometimes, however, the need for dispatch was such that Murphy actually began work after oral negotiations and before issuance of the purchase order.
The job on which Rhodes was injured was one of those on which work began before the purchase order was issued. Specifically, the sequence of events which led up to that job was as follows: Late in October 1962, Westinghouse orally invited Murphy to bid on a job. Murphy responded with an oral bid which was, in turn, confirmed by a letter by Murphy to Westinghouse dated October 30, 1962. In that letter Murphy stated 'we are fully covered with Workmen's Compensation, Liability and Property Damage Insurance.' Oral acceptance of the terms of this letter was made by Westinghouse on October 31, 1962 and work was begun the same day. On November 7, 1962, Westinghouse prepared and sent to Murphy a purchase order (No. 51--466614) on the form described above. [2] The record contains no evidence, however, that the attached acknowledgment was signed and returned by Murphy to Westinghouse. Nonetheless, when Murphy on February 28, 1963--some two and a half months after Rhodes' accident--submitted its invoice to Westinghouse for payment, the invoice bore the heading 'Replacing broken glass in accordance with your Order No. 51--466614.'
In its brief, Murphy seeks to avoid liability to Westinghouse on the theory that its contract never included Appendix D. Murphy thus takes the position that the specific terms of its obligation had been fixed when Westinghouse on October 31, 1962 orally accepted its written bid of October 30, 1962. At that point, Murphy insists, there is no evidence that the contract contained any reference to or inclusion of Appendix D and therefore, after that, the contract could not have been modified by the inclusion of Appendix D absent new consideration. [3]
We do not agree with Murphy. The fact that there is no evidence of record showing explicit reference to Appendix D in the parties' negotiations up to November 7, 1962 does not preclude us from concluding it to have been included. The existence of a contractual term may be shown by acts of the parties as well as precise words, where to do so would not violate the words used in a contract, see Yezbak v. Croce, 370 Pa. 263, 266, 88 A.2d 80, 81 (1952); 3 Corbin, Contracts § 556 (1960). Especially if evidence of the contract is not an integrated document, and, moreover, one partly or wholly composed of oral communications, the precise content of which is not of record, courts must look to surrounding circumstances and the course of dealings between the parties, Silverstein v. Hornick, 376 Pa. 536, 103 A.2d 734 (1954), to ascertain the intention of the parties. [4] Given the frequency of the issuance by Westinghouse of its purchase order forms referring to Appendix D, we think there can be little doubt that Westinghouse intended this particular contract to include Appendix D. If by no other means, Murphy's assent to the inclusion of Appendix D is shown by the statement in its letter of October 30, 1962 that it was 'fully covered' with insurance coupled with the fact that it had obtained insurance covering the contingency which actually occurred. Moreover, while nothing in the record shows that Murphy signed and returned the 'acknowledgement' copy of the purchase order form--thereby formally assenting to it as the written embodiment of the parties' dealings--the fact that Murphy accepted without objection the purchase order form and, later, headed its demand for payment with the legend 'Replacing broken glass in accordance with your Order No. 51--466614' in itself virtually compels the conclusion that Murphy also considered that the purchase order embodied its contract with Westinghouse. Joseph v. Atlantic Basin Iron Works, Inc., 132 N.Y.S.2d 671 (Sup.Ct.1954), aff'd mem., 285 A.D. 1147, 143 N.Y.S.2d 601 (1955).
Even assuming the reference to Appendix D was incorporated into its contract west Westinghouse, Murphy contends it should not be held liable for an injury caused by the...
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