HARVEY MACHINE CO v. HATZEL BUEHLER INC

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District Court of Appeal, Second District, Division 1, California.

HARVEY MACHINE CO., Inc., a corporation, and Pacific Indemnity Company, a corporation, Plaintiffs and Respondents, v. HATZEL & BUEHLER, INC., a corporation, and Charles A. Langlais Co., a corporation, Defendants and Appellants.*

Civ. 23760.

Decided: December 30, 1959

Crider, Tilson & Ruppe, Garvin F. Shallenberger and Abe Mutchnik, Los Angeles, for appellants. Ball, Hunt & Hart, by Clark Heggeness, Long Beach, for respondents.

This is an appeal from a declaratory judgment wherein the court declared that by virtue of an indemnification clause, the appellants (indemnitors) are in effect obligated to indemnify the respondents (indemnitees) against respondents' own negligence.

There being no dispute as to the facts, the cause was submitted to the trial court for determination upon an agreed statement of facts. There was no testimony.

A reśume ́of the facts is as follows:

Respondent, Pacific Indemnity Company (hereinafter referred to as ‘Pacific’) is the insurance carrier for respondent, Harvey Machine Company (hereinafter referred to as ‘Harvey’). Under the terms of a contract of insurance, Pacific agreed to defend actions and to insure Harvey against ‘liability imposed by law.’

In order to have an aluminum remelt plant constructed on a parcel of land it owned near Torrance, Harvey awarded construction contracts to various contractors, among which are appellants. On or about January 18, 1956, appellants undertook to perform certain electrical installations for respondent, Harvey, and on said date executed an applicable agreement, designated ‘Purchase Order,’ with appellants referred to as ‘Seller’ and respondent, Harvey, as ‘Buyer.’ The entire agreement prepared by Harvey, is ten pages long, and designated numerous ‘conditions' under which the electrical installations were to be performed by appellants.

The provisions of the contract with which we are concerned are the ‘Accident Prevention’ and ‘Indemnity’ provisions, set forth as follows:

‘Accident Prevention:

‘(a) In order to provide safety controls for protection to the life and health of employees and other persons; for prevention of damage or property, materials, supplies and equipment; and for avoidance of work interruptions in the performance of his contract; the Seller shall comply with all pertinent provisions and Safety Requirements of Federal and State Laws building codes and regulations in effect during the course of the work, and will also take or cause to be taken such additional measures as the Buyer may determine to be reasonably necessary for the purpose.

‘(b) Seller agrees to indemnify and hold harmless Harvey Machine Co., Inc., and its officers and employees, against liability, including all costs and expenses, for bodily or personal injuries including death at any time resulting therefrom, sustained by any person or persons including employees of Seller, and arising from the use of the premises, facilities of services of Harvey Machine Co., Inc., its officers or employees.

‘(c) Compliance with the provisions of this Article by Subcontractors will be the responsibility of the Seller.

‘Insurance:

‘Seller shall obtain at his own expense adequate Workmen's Compensation Insurance, Contractor's Public Liability Insurance, and Automobile Liability Insurance, and have satisfactory proof of same on file with Harvey Machine Co., Inc.’

Pursuant to the aforementioned agreement, appellants subsequently commenced their electrical installation work. While this was in progress, and on or about March 14, 1956, one Sam Mann, employed by appellants as an electrician, while pursuing his duties on the premises of Harvey, fell into a pit maintained by said respondent. This pit was approximately 20 feet square and 20 feet deep. It was provided with a mechanically operated steel platform which could be raised or lowered within the pit. At the time of Mann's fall, the platform was on the bottom of the pit. Mann sustained injuries for which he was subsequently awarded workmen's compensation.

On March 8, 1957, Mann filed an action (Superior Court No. 675480) against respondent Harvey, as a third person tortfeasor. Said action prays for $75,000 general damages, and unspecified sums for loss of earnings and medical expenses.

After the action against Harvey was filed, Harvey made a demand upon appellants to defend the action under the indemnity provisions of the aforementioned contract. Appellants refused and thereafter Harvey and Pacific Indemnity brought this action for declaratory relief requesting a declaration that appellants were required to indemnify and hold them harmless from Mann's claim. The trial court gave judgment in part as follows:

‘1. Defendants to pay any and all costs and expenses of plaintiff Harvey Machine Co., Inc., in the action entitled Sam Mann, plaintiff, vs. The Harvey Machine Company, et al, defendants, number 675480 files of the Superior Court of the State of California, in and for the County of Los Angeles, and any judgment that may be rendered against said Harvey Machine Co., Inc.’

Appellants have appealed and contend that ‘as a matter of law, the ‘hold harmless' clause at issue herein cannot be interpreted as intending to indemnify respondent Harvey against its own negligence.’

When the case was called for trial all parties adjourned to the judge's chambers where the matter was discussed with the judge. It was thereupon stipulated that the cause should be submitted upon a stipulated set of facts, points and authorities and upon the exhibits. All of such were ultimately filed.

No witness was ever sworn, and no testimony ever taken pertaining to the intent of the parties in respect to the indemnification clause at issue.

It is thus apparent that the trial court evolved its ultimate interpretation of the legal effect of the provisions solely from an examination of the language therein expressly recited. Under these circumstances the construction of the provisions of the agreement is a question of law and the trial court's determination is not binding upon a court of review. Southern California Gas Co. v. Ventura Pipe Line Construction Co., 150 Cal.App.2d 253, 257, 309 P.2d 849; Fox v. Fox, 42 Cal.2d 49, 52, 265 P.2d 881; In re Estate of Platt, 21 Cal.2d 343, 352, 131 P.2d 825.

This case is, in our opinion, governed by the rules set out in Vinnell Co. v. Pacific Electric Railway Co., 52 Cal.2d 411, 340 P.2d 604, 606, decided June 26, 1959 (Rehearing denied July 22, 1959). In all fairness to the trial court it must be pointed out that the court did not have the benefit of the Vinnell case when it reached its determination.

The question presented here is substantially the same as that in the Vinnell case, namely:

‘* * * whether such an indemnity clause operates to exculpate the defendant from the the consequences of its own negligence where the clause does not expressly state that damage caused by the defendant's negligence is intended to be included in the coverage of the clause.’ (Emphasis added.)

The Supreme Court said at page 414 of 52 Cal.2d, at page 607 of 340 P.2d:

‘It would appear that ‘to be sufficient as an exculpatory provision against one's own negligence, the party seeking to rely thereon must select words or terms clearly and explicitly expressing that this was the intent of the parties.’ Sproul v. Cuddy, 131 Cal.App.2d 85, 95, 280 P.2d 158, 164. The language of the present clause, prepared on behalf of the defendant railroad, falls short of so expressing the defendant's intention to exculpate itself. As stated in Basin Oil Co. of California v. Baash-Ross Tool Co., 125 Cal.App.2d 578, 595, 271 P.2d 122, 132, from the consequences of its own negligence Elec. Works, Ltd., 29 Cal.App.2d 260, 274, 84 P.2d 313, ‘The defendant itself wrote the provision into the contract for its won benefit. It could have plainly stated, if such was the understanding of the parties, that the plaintiff agreed to relieve it in the matter from all liability for its own negligence. As it did not do so, we resolve all doubt, as we should, in favor of the plaintiff, and hold that it was not the intent of the parties to give to the contract as written the effect claimed by the company.’ See also City of Oakland v. Oakland Unified Sch. Dist., 141 Cal.App.2d 733, 736–738, 297 P.2d 752; Barkett v. Brucato, 122 Cal.App.2d 264, 264 P.2d 978; Butt v. Bertola, 110 Cal.App.2d 128, 140, 242 P.2d 32; Guy F. Atkinson Co. v. Merritt, Chapman & Scott Corp., D.C., 126 F.Supp. 406, 407.

‘The rule in this state, as expressed in the cases referred to, is in accord with the weight of aughority. ‘In the overwhelming majority of the cases the result reached by their interpretational efforts can be condensed into the simple rule that where the parties fail to refer expressly to negligence in their contract such failure evidences the parties' intention not to provide for indemnity for the indemnitee's negligent acts.’ Annotation, 175 A.L.R. 8. (Emphasis added.)

‘* * * the question is not whether the defendant should have been so protected, but whether by their agreement the parties intended to afford that protection. * * *

‘Both by precedent and good reason, if an indemnitor such as the plaintiff is to be made responsible for the negligent acts of an indemnitee over whose conduct it has no control, the language imposing such liability should do so expressly and unequivocally so that the contracting party is advised in definite terms of the liability to which it is exposed.

‘The indemnification clause in the present case, by not expressly stating that the defendant was protected against acts of its own negligence, failed to meet this requirement.’

While the indemnity agreement in the case before us is carefully drawn and very broadly worded, the test as set forth by the Supreme Court is also very explicit. Under this test, which is predicated upon policy considerations requiring very strict construction of such agreements, the agreement is fatally defective in attempting to exculpate the indemnitee from its own negligence.

This strict construction should not surprise respondents. It is stated by the general counsel for Pacific Indemnity Company in an article in 25 Insurance Counsel Journal 326, where the California cases are carefully analyzed, at page 333:

‘Although there have been some deviations in the attitude of our courts concerning such agreements, it is perhaps safe to say that for an agreement of this nature to be effective and fully binding it must be spelled out with infinite clarity as to that which is being assumed by the indemnitor. Some courts have permitted the use of broad general terms to include the negligence of all parties (including that of the indemnitee), to be included within the indemnity agreement; but it would be safer in drawing such agreements to specifically spell out that the indemnity contract holds harmless the indemnitee even from the acts of his own negligence.’ (Emphasis added.)

In view of the above, it is unnecessary to consider appellants' other contentions.

The judgment is reversed.

FOURT, Justice.

WOOD, P. J., and LILLIE, J., concur.

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