Willard v. Interpool, Ltd.

• Decision Date: 15 August 2000
• Parties: Diane Smart WILLARD, Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. INTERPOOL, LTD., Columbus Line, Inc., Transact Corporation, Holt Cargo Systems, Inc., Trac Lease, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Appellees, v. Fruehauf Trailer Corporation, Holt Cargo Systems, Inc., Appellees, v. Hamburg Sudamerikanische D.G., Appellee, Inchcape Shipping Services, Inc., Appellant. Diane Smart Willard, Ind. and as Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. Inchcape Shipping Services, Inc., Appellant. CY Agency, Inc. Southern Steam, Inc., Appellees, v. Hamburg Sudamerikanische D.G., Interpool, Ltd., Holt Cargo Systems, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Fruehauf Trailer Corporation, Columbus Line, Inc., Transact Corporation, Trac Lease, Inc., Appellees. Diane Smart Willard, Ind. and as Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. Hamburg Sudamerikanische D.G., Columbus Line, Inc., Appellees, v. Inchcape Shipping Services, Inc., Appellant. Interpool, Ltd., Holt Cargo Systems, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Fruehauf Trailer Corporation, Appellees.
• Court: Pennsylvania Superior Court

758 A.2d 684

Diane Smart WILLARD, Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. INTERPOOL, LTD., Columbus Line, Inc., Transact Corporation, Holt Cargo Systems, Inc., Trac Lease, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Appellees, v. Fruehauf Trailer Corporation, Holt Cargo Systems, Inc., Appellees, v. Hamburg Sudamerikanische D.G., Appellee, Inchcape Shipping Services, Inc., Appellant.

Diane Smart Willard, Ind. and as Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. Inchcape Shipping Services, Inc., Appellant.

CY Agency, Inc. Southern Steam, Inc., Appellees, v. Hamburg Sudamerikanische D.G., Interpool, Ltd., Holt Cargo Systems, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Fruehauf Trailer Corporation, Columbus Line, Inc., Transact Corporation, Trac Lease, Inc., Appellees.

Diane Smart Willard, Ind. and as Administratrix of the Estate of Peter Smart, Deceased, Appellee, v. Hamburg Sudamerikanische D.G., Columbus Line, Inc., Appellees, v. Inchcape Shipping Services, Inc., Appellant.

Interpool, Ltd., Holt Cargo Systems, Inc., Blue Star Pace, Ltd., Blue Star (North America) Ltd., Blue Star Line, Inc., Fruehauf Trailer Corporation, Appellees.

Superior Court of Pennsylvania.

Argued June 28, 2000.

Filed August 15, 2000.

Robert B. White, Philadelphia, for Inchcape, appellant.

Charles J. Daly, Philadelphia, for Columbus Line and Hamburg, appellees.

Before KELLY, MUSMANNO and HESTER, JJ.

HESTER, J.:

¶ 1 Inchcape Shipping Services, Inc. ("Inchcape") appeals the trial court's order finding that Appellees had no obligation to indemnify Appellant in an underlying action. We affirm.

¶ 2 The trial court has succinctly set forth the undisputed facts as follows.

On March 18, 1993, plaintiff, Peter Smart, was operating a forklift to unload a container at the Pattison Avenue loading dock in Philadelphia. As he worked, the chassis on which the container was sitting began to roll away from the loading dock, causing the forklift to fall between the loading dock and the trailer.

As a result of serious injuries and the subsequent death of the plaintiff, Mr. Smart and his personal representative initiated these lawsuits. The plaintiff alleged that had Inchcape Shipping Services, Inc. ("Inchcape") recommended to Columbus Line, Inc. ("Columbus Line") that mechanical brakes, known as "spring brakes" or "maxi-brakes", be retrofitted onto the cargo chassis, the accident would have been prevented. Hamburg Sudamerikanische, D.G. ("Hamburg Sud") retained Columbus Line as its general agent in the United States to purchase and lease cargo containers and chassis for use in the container trade. See generally, Stipulated Record for Trial, Items 1a-1v.

Following the settlement of the litigation, Inchcape asserted its claim for indemnification from Columbus Line and Hamburg Sud for $200,000, plus legal fees and expenses in the amount of $77,958.96. See generally, Stipulated Record for Trial, Items 1w-1ac.

The three defendants agreed to submit their dispute to this Court by the presentation of a stipulated non-jury trial, their legal briefs, and oral argument. After careful consideration of the facts and the legal arguments presented by the parties, the claims for indemnification, legal fees and expenses by Inchcape Shipping Services, Inc. must be DENIED.

Trial Court Opinion, 9/22/99, at 1. Appellant timely filed post-trial motions which were denied on November 8, 1999. This appeal followed.

¶ 3 We note initially that the complaint in the original lawsuit was filed by the decedent's estate on June 29, 1993. On May 8, 1997, Appellees settled with Mr. Smart's estate for $1,200,000. Thus, the only remaining defendant in the action was Appellant. On July 1, 1997, Appellant settled with Mr. Smart's estate for $200,000 but expressly retained the right to proceed to trial on its indemnity claim against Appellees. After a trial was conducted on this issue, the trial court decided the indemnity claim in favor of Appellees. That is the subject of the underlying appeal.

¶ 4 Appellant raises two issues before us. The first issue surrounds whether the trial court erred in not applying §§ 438 and 439 of the Restatement (Second) of Agency. Appellant alleges in his second issue that the trial court erred in holding that Appellant had no duty of care and liability to the decedent. For reasons to follow, we find both of these issues to be without merit.

¶ 5 Appellant asserts that under §§ 438 and 439 of the Restatement (Second) of Agency, an agent may settle a tort claim with a third party and recover indemnity from its principal without first establishing its liability to the third party. While it is true that these sections stand for that proposition, Appellant concedes, and our own independent research has confirmed, that Pennsylvania has not adopted these Restatement sections as part of its jurisprudential interpretation of agency law. Appellant therefore requests this Court to formally adopt them. The pertinent sections Appellant cites to are as follows.

§ 438. Duty of Indemnity; the Principal

(1) A principal is under a duty to indemnify the agent in accordance with the terms of the agreement with him.

(2) In the absence of terms to the contrary in the agreement of employment, the principal has a duty to indemnify the agent where the agent

....

(b) suffers a loss which, because of their relation, it is fair that the principal should bear.

§ 439. When Duty of Indemnity Exists Unless otherwise agreed, a principal is subject to a duty to exonerate an agent who is not barred by the illegality of his conduct to indemnify him for:

....

(c) payments of damages to third persons which he is required to make on account of the authorized performance of an act which constitutes a tort or a breach of contract;

(d) expenses of defending actions by third persons brought because of the agent's authorized conduct, such actions being unfounded but not brought in bad faith[.]

Restatement (Second) of Agency. For reasons stated below, we reject Appellant's invitation to adopt these sections.

¶ 6 The trial court did consider these sections before making its determination but chose not to apply them. The only authority Appellant cites in support of why now we should adopt these specific sections are three Pennsylvania federal district court cases decided in 1966, 1978, and 1986, respectively. Although Appellant admits that no Pennsylvania court has incorporated these sections into its case law, it cites to several of our sister state courts that have adopted them.

Thus, we are aware that appellant's position is supported by some state and federal case law; however, we note that none of the cases on this topic is binding on this court. All of them have only persuasive, not precedential, value in the matter before us. Commonwealth v. Griffin [Giffin], 595 A.2d 101, 107 (Pa.Super.1991) ("While decisions of the lower federal courts have a persuasive authority, they are not binding on Pennsylvania courts even where they concern federal questions"); Appeal of Penn-Lehigh Corp., 159 A.2d 56 (1960) (decisions of other states with identical issues are not binding on Pennsylvania courts).

Eonda v. Affinito, 427 Pa.Super. 317, 629 A.2d 119, 122, n. 2 (Pa.Super.1993). See also Appeal of Patricia Leed, 754 A.2d 702, 711, 2000 WL 729956, at *8 (Pa.Super.2000) (decisions of the federal district courts and courts of appeal, including those of the Third Circuit Court of Appeals, are not binding on Pennsylvania courts, even when a federal question is involved).

¶ 7 Despite the lack of controlling precedent, Appellant asks us to adopt these sections from the Restatement (Second) Agency nevertheless. Appellant argues that under the facts of this case, sections 438 and 439 would impose liability upon Appellees. "We reiterate that we are not bound by [this] section of the Restatement (Second), as it has not been adopted by the Pennsylvania Supreme Court." Brandjord v. Hopper, 455 Pa.Super. 426, 688 A.2d 721, 724 (1997) (emphasis in original) (citing Clayton v. McCullough, 448 Pa.Super. 126, 670 A.2d 710, 713 (1996)). Therefore, since our Supreme Court has yet to adopt these sections, and since our legislature has not seen fit to enact these sections into law, we decline to adopt them as well.

¶ 8 It is undisputed that Appellant was an agent for Appellees. Appellee Columbus Line was acting on behalf of its principal Hamburg Sud during the period it leased the chassis on which Mr. Smart was injured. In turn, Appellee Columbus Line retained Appellant to inspect containers and the chassis and to determine if they were in a state of good repair. However, the record does not contain any written or oral indemnity agreement between Appellant and Appellees. Appellant admits that no such agreement was made but contends that fairness should require us to rule that implicitly an indemnity agreement existed. Appellants brief at 12-13. In the absence of an express agreement between Appellant and Appellees, we disagree with Appellant's reasoning that we should read into their contract that an implicit indemnity clause existed.

¶ 9 The seminal case in Pennsylvania concerning a suit for indemnification by an agent against a principal is Tugboat Indian Company v. A/S Ivarans Rederi, 334 Pa. 15, 5 A.2d 153 (1939). The trial court found this case to be dispositive of the underlying issues and we are compelled to agree. In that case, our Supreme Court held, "[I]n order for a party to recover indemnity where there has been a voluntary payment [settlement], it must appear that the party paying the settlement was himself legally liable and could have been compelled to satisfy the claim." Id. 334 Pa. at 21, 5 A.2d 153.

¶ 10 In Tugboat, the defendant Tugboat settled with the plaintiff for $2,500.00. Tugboat also expended $1,290.30 for defense of the suit. Before settling, however, counsel...