Zurich Ins. Co. v. CCR and Co., Docket No. 199184

• Decision Date: 25 November 1997
• Docket Number: Docket No. 199184
• Citation: 576 N.W.2d 392,226 Mich.App. 599
• Parties: ZURICH INSURANCE COMPANY, a Michigan Corporation, Subrogee of Michigan Carton and Paperboard Company, Plaintiff-Appellee, v. CCR AND COMPANY, Defendant-Appellant. (On Rehearing)
• Court: Court of Appeal of Michigan — District of US

Page 392

576 N.W.2d 392

226 Mich.App. 599

ZURICH INSURANCE COMPANY, a Michigan Corporation, Subrogee

of Michigan Carton and Paperboard Company, Plaintiff-Appellee, v. CCR AND COMPANY, Defendant-Appellant. (On Rehearing)

Docket No. 199184.

Court of Appeals of Michigan.

Submitted Sept. 3, 1997, at Grand Rapids.

Decided Nov. 25, 1997, at 9:35 a.m.

Released for Publication March 10, 1998.

Smith, Haughey, Rice & Roegge by Elizabeth Roberts VerHey, Grand Rapids, for Plaintiff-Appellee.

Sullivan, Hamilton, Schulz, Letzring, Simons, Kreter, Toth & Lebeuf, P.C. by Kurt F. Letzring, Battle Creek, for Defendant-Appellant.

Before O'CONNELL, P.J., and MacKENZIE and GAGE, JJ.

ON REHEARING

O'CONNELL, Presiding Judge.

In this contract action stemming from two indemnification agreements, defendant CCR and Company appeals as of right the order of the circuit court granting summary disposition in favor of plaintiff, Zurich Insurance Company. ¹ We affirm.

Defendant provided cartage services to Michigan Carton and Paperboard Company pursuant to contract. Two contracts appear in the record. The first contains an integration clause, covering the period February 7, 1991, through February 6, 1992, and thereafter unless canceled by either party upon thirty days' written notice, while the second is dated June 1, 1993, contains a similar thirty-day cancellation provision, but is less extensive and includes neither an integration clause nor a term clause. The second does not declare what effect, if any, it has on the first, that is, whether it is supplemental (in part, it provides for a lease of tractors and trailers, a subject not addressed in the earlier contract) or supplantive. The earlier contract also contains a clause specifying that it can be amended or affected only by a further written contract; we note that such language, although frequently seen, is wholly nugatory. Reid v. Bradstreet, 256 Mich. 282, 286, 239 N.W. 509 (1931).

Both of these contracts contain clauses providing that defendant agreed to indemnify Michigan Carton for all claims for death or personal injuries arising from the defendant's transportation of Michigan Carton's products. ² When an employee of defendant, who was driving a truck owned by defendant, accidentally struck and killed an employee of Michigan Carton, Michigan Carton first referred the matter to its worker's compensation liability insurer, plaintiff Zurich, without evaluating whether it could rely on the indemnification provisions.

Plaintiff paid worker's compensation benefits to the estate of the deceased employee, thereby satisfying Michigan Carton's obligations and removing it from the litigation that was to ensue. Plaintiff, as subrogee of Michigan Carton, then brought suit against defendant. Plaintiff contended that by dint of the fact that it had satisfied what would have been Michigan Carton's financial obligations arising from the death of the employee, it was subrogated to Michigan Carton's right to indemnification against defendant. The circuit court agreed and granted plaintiff's motion for summary disposition pursuant to MCR 2.116(C)(10). Defendant now appeals as of right. Our review is de novo. Pinckney Community Schools v. Continental Casualty Co., 213 Mich.App. 521, 525, 540 N.W.2d 748 (1995).

Defendant first argues on appeal that the circuit court erred in granting plaintiff's motion after it refused to consider parol evidence concerning the intent of the parties when executing the contracts containing the indemnification provisions presently at issue. Defendant averred by affidavits--duly submitted to the trial court in opposition to the motion for summary disposition, and thus properly considered by this Court on appeal, Quinto v. Cross & Peters Co., 451 Mich. 358, 366-367, n. 5, 547 N.W.2d 314 (1996)--that Michigan Carton and defendant at no time "intended to create a duty upon [defendant] to indemnify Michigan Carton ... or its subrogee, for workers compensation benefits paid for injury to its employees...." If the affidavits were competent evidence regarding the issue at bar, a question concerning the weight and credibility to be given to such averments would be presented, and, on familiar principles, summary disposition would then be precluded because of the presence of a triable issue of fact.

An indemnity contract is construed in the same fashion as are contracts generally. Triple E Produce Corp. v. Mastronardi Produce, Ltd., 209 Mich.App. 165, 172, 530 N.W.2d 772 (1995). As stated in Klever v. Klever, 333 Mich. 179, 186, 52 N.W.2d 653 (1952), quoting McIntosh v. Groomes, 227 Mich. 215, 218, 198 N.W. 954 (1924): " 'The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties. To this rule all others are subordinate.' " However, when ascertaining the intent of the parties to a contract,

"[i]t must not be supposed ... that an attempt is made to ascertain the actual mental processes of the parties to a particular contract. The law presumes that the parties understood the import of their contract and that they had the intention which its terms manifest. It is not within the function of the judiciary to look outside of the instrument to get at the intention of the parties and then carry out that intention regardless of whether the instrument contains language sufficient to express it; but their sole duty is to find out what was meant by the language of the instrument."

... We must look for the intent of the parties in the words used in the instrument. This court does not have the right to make a different contract for the parties or to look to extrinsic testimony to determine their intent when the words used by them are clear and unambiguous and have a definite meaning. [Michigan Chandelier Co. v. Morse, 297 Mich. 41, 49, 297 N.W. 64 (1941). Citation omitted.]

Thus, where the terms of a contract are unambiguous, their construction is for the court to determine as a matter of law, Mt. Carmel Mercy Hosp. v. Allstate Ins. Co., 194 Mich.App. 580, 588, 487 N.W.2d 849 (1992), and the plain meaning of the terms may not be impeached with extrinsic evidence. Michigan Chandelier, supra.

It is beyond doubt that the actual mental processes of the contracting parties are wholly irrelevant to the construction of contractual terms. Rather, the law presumes that the parties understand the import of a written contract and had the intention manifested by its terms. Birchcrest Bldg. Co. v. Plaskove, 369 Mich. 631, 637, 120 N.W.2d 819 (1963). Accordingly, a written contract is construed according to the intentions therein expressed, when those intentions are clear from the face of the instrument. Bonney v. Citizens' Mut. Automobile Ins. Co., 333 Mich. 435, 53 N.W.2d 321 (1952); Teeter v. Teeter, 332 Mich. 1, 50 N.W.2d 716 (1952). Thus, these affidavits are extrinsic evidence, not competent evidence, and cannot and do not create a triable issue of fact in avoidance of the motion for summary disposition. No other documentary evidence in opposition to the motion for summary disposition was submitted, and thus summary disposition was properly granted. Quinto, supra, pp. 362-363, 547 N.W.2d 314.

In the present case, the trial court determined that the indemnification agreements at issue suffered no ambiguity, and defendant does not contest this determination on appeal. Rather, defendant asserts that regardless of the precise words used in the instruments, defendant should be allowed recourse to extrinsic evidence to demonstrate that the words used, unambiguous though they may be, do not reflect the intentions of the parties to the agreements. The circuit court, however, ruled, correctly in our opinion, that an unambiguous contract may not be so impeached. ³ When effectuating the intentions of parties to an unambiguous contract, the court looks only to the unambiguous terms of the contract and the intention expressed therein. Id. Here, because defendant tacitly concedes that the indemnification provisions are not ambiguous, neither this Court nor the circuit court should be viewed as possessing the authority to look beyond the four corners of the documents.

Defendant does, however, raise an interesting point that merits further treatment. Relying on this Court's decision in Chrysler Corp. v. Brencal Contractors, Inc., 146 Mich.App. 766, 771, 381 N.W.2d 814 (1985), defendant submits, in effect, that indemnity contracts are construed differently than contracts generally with respect to the point of law discussed above. In support of this argument, defendant quotes the following passage from Chrysler:

There are several well established rules of construction of indemnity contracts. An indemnity contract is construed in accordance with the rules for the construction of contracts generally. The cardinal rule in the construction of indemnity contracts is to enforce them so as to effectuate the intentions of the parties. Intention is determined by considering not only the language of the contract but also the circumstances surrounding the contract, including the situation of the parties. [Id. Emphasis supplied.]

On the basis of this passage it is contended that, with respect to indemnity contracts, the court may consider extrinsic evidence when construing even an unambiguous contract. Accord Triple E, supra, p. 172, 530 N.W.2d 772 ("Indemnity contracts should be construed to effectuate the intent of the parties, which may be determined by considering the language of the contract, the situation of the parties, and the circumstances surrounding the making of the contract."); MSI Constr. Managers, Inc. v. Corvo Iron Works, Inc., 208 Mich.App. 340, 343, 527 N.W.2d 79 (1995) ("In ascertaining [the intentions of the parties], one must consider the language used in the contract as well as the situation of the parties and circumstances surrounding the contract." ); Sherman v. DeMaria Bldg. Co., Inc., 203 Mich.App. 593, 598, 513 N.W.2d 187 (1994) (...