United States District Court, Northern District of Illinois, E.D
October 27, 1964
EDWARD RAYMOND SPURR, PLAINTIFF,
ACME STEEL COMPANY, A CORPORATION, ET AL., DEFENDANTS. ACME STEEL COMPANY, A CORPORATION, AND LASALLE CONSTRUCTION COMPANY, A CORPORATION, THIRD-PARTY PLAINTIFFS, V. S.J. REYNOLDS COMPANY, INC., THIRD-PARTY DEFENDANT.
The opinion of the court was delivered by: Decker, District Judge.
While working as a pipefitter on the construction of a facility
for Acme Steel Company (Acme), the plaintiff, Spurr, an employee
of S.J. Reynolds Company, Inc. (Reynolds), fell into an open pit
and was severely injured.
Spurr brought an action for negligence against Acme, as the
owner, American Bridge Division of United States Steel Corp.
(American Bridge), as the prime contractor, and LaSalle
Construction Company (LaSalle), as the general contractor. The
jury found in favor of Spurr against LaSalle and American Bridge
in the amount of $250,000 and found in favor of Acme. American
Bridge's motion for judgment notwithstanding the verdict has been
This is the third-party action by Acme and LaSalle against
Reynolds, which was a sub-contractor on the job. Both third-party
plaintiffs seek costs and attorneys' fees, and LaSalle seeks
indemnity for the judgment rendered against it. This cause of
action is based upon a contract between Reynolds and LaSalle
which inures to the benefit of Acme.
The indemnity agreement in issue states, in part, the
"The Sub-Contractor [Reynolds] shall indemnify and
save harmless the Owner [Acme], the Engineer, the
Contractor [LaSalle] and their respective agents from
any and all liability, payments and expenses of any
nature for injury or death to any person * * * caused
or alleged to have been caused by the Sub-Contractor,
or incidental to the execution of work under this
contract by the Sub-Contractor, his agents or his
employees; and the Sub-Contractor shall
maintain * * insurance * * * such as Workmen's
Compensation * * *."
The agreement clearly covers any injury which is caused or
alleged to have been caused by the sub-contractor; Reynolds
insists that this is the only interpretation. But if the clause
"incidental to the execution of work under this contract by the
Sub-Contractor" is read as suggested by Reynolds, that is, to
include only injuries caused or alleged to be caused by the
sub-contractor, then "or" is not given a natural meaning. In this
case "or" is a conjunction and the "or incidental to" clause must
be read as something different from that which has preceded it.
Every provision in a contract must, if possible, be given effect,
because it is presumed that each was deliberately inserted. Gay
v. S.N. Nielsen Co., 18 Ill.App.2d 368, 376, 152 N.E.2d 468
"Incidental" is generally defined as follows:
"[B]eing likely to ensue as a chance or minor
consequence — usu. used with
to * * *" Webster's Third
New International Dictionary (1963).
"A risk is incidental to the employment when it
belongs to or is connected with what a workman has to
do in the fulfillment of his contract of service, and
it may be incidental to the employment when it is
either an ordinary risk directly connected with the
employment, or an extraordinary risk which is only
indirectly connected therewith." Gustafson Co. v.
Industrial Comm., 348 Ill. 11, 15, 180 N.E. 567, 569
See, also, Northwestern Yeast Co. v. Indus. Comm., 378 Ill. 195,
197, 37 N.E.2d 806 (1941).
The accident which was the basis for Spurr's complaint was
within the language of the indemnity agreement — it was
incidental to the execution of Reynold's work under its contract
Therefore, without further question, Acme's motion for expenses
must be granted.
In the case of LaSalle, the problem now before the Court is
whether the indemnity agreement applies to the accident in
question where LaSalle, the indemnitee, was found negligent.
If the language of the indemnity clause is to be limited so
that it excludes liability for the negligence of the indemnitee,
the limitation either must be based upon the parties' intention
not to include such liability, or must be based upon
considerations of public policy that require a construction which
excludes such liability. As discussed above, it is clear that the
plain language of the agreement of the contract includes this
I now turn to the Illinois law to determine when and how an
indemnitee can be indemnified against his own negligence.
In Westinghouse Electric Elevator Co. v. La Salle Monroe Bldg.
Corp., 395 Ill. 429, 70 N.E.2d 604 (1946), the Illinois Supreme
Court considered this problem in dictum only, because the
contract of indemnity, by its terms, was limited to acts or
omissions of the indemnitor. The appellant based its claim upon
a contract provision by which the appellee was to provide
insurance. The Court said (at pp. 434-435, 70 N.E.2d p. 607):
"Appellant insists that appellee breached its
covenant to provide insurance for appellant's
protection, therefore as a matter of law, appellee
cannot impose upon appellant a loss, which, but for
such breach, would have been borne by an insurance
"To adopt this construction of the contract would
impose on the contractor the duty to indemnify
against injuries entirely without his control, and
such should not be adopted in the absence of clear
language in the contract including injuries arising
from the negligence of appellant's own servants."
The Illinois court considered inclusory language necessary
because it adopted a theory which places the loss upon the party
more likely to be in a position to prevent the particular
In Westinghouse, supra, reliance was placed upon a Pennsylvania
case, Perry v. Payne, 217 Pa. 252, 66 A. 553, 11 L.R.A.,N.S.,
1173 (1907). In this case, the court held that an indemnity
agreement must specifically refer to the acts or negligence of
the indemnitee. The Court stated its reasons as follows (66 A. at
"It is contrary to experience and against reason that
the contractors should agree to indemnify Perry
against the negligence of himself or his employés. It
would make them insurers, and impose a liability upon
the contractors, the extent of which would be
uncertain and indefinite, and entirely in the hands
of Perry. The results of such a liability might
become most disastrous. While the consideration named
in the contract for the construction of the building
and indemnifying the owner was large, yet it was
wholly inadequate to justify the contractors
in assuming liability for his negligence in view of
the responsibility in constructing the building. The
profits to be realized on the contract were entirely
too small to warrant the contractors in agreeing to
assume a liability of such great proportions and of
such unlimited extent."
A review of cases decided under Illinois law subsequent to
Westinghouse leads to the conclusion that the policy
considerations underlying indemnification have shifted. Formerly,
the presumption was that one would not undertake to indemnify
another against a risk not within the former's control; but the
law has evolved because of a realization that accidents are an
almost inevitable incident of a complex mechanical society. It is
now recognized that parties, through indemnity contracts, are
allocating the burden of procuring insurance.
In Russell, for Use of Continental Cas. Co. v. Shell Oil Co.,
339 Ill.App. 168, at pp. 170-171, 89 N.E.2d 415, at p. 416
(1949), the contract of indemnity provided:
"`Contractor shall hold Shell harmless from any and
all claims for injury (including death), to persons
(including Contractor's agents and employees), or
damage to property (including Contractor's property),
resulting from or arising in connection with any of
Contractor's operations, shall defend any such claim
asserted or suit brought against Shell thereon, and
shall pay any judgment against Shell resulting in any
such suit; * * *.'"
The facts in Russell, supra, are substantially similar to the
case at bar; the Court held that the indemnitee's negligence was
included within the broad language of the contract.
In Northern States Co., Inc. v. A. Finkl & Sons Co.,
8 Ill. App.2d 419, 420, 132 N.E.2d 59, 60 (1956), the injury to the
indemnitor's employee was caused by the negligence of the
indemnitee's employees. The indemnity provision was the
"`It is expressly understood and agreed that the
Contractor shall be responsible for any and all
injury due to damage to any person and/or property,
including loss of human life arising directly or
indirectly from or in connection with work performed
or to be performed under this contract, including
extra work, and shall hold the Owner harmless of any
and all loss or damage from such injury, damage or
death.'" (Emphasis in opinion.)
The indemnity was held valid and enforceable.
Another case in point is De Tienne v. S.N. Nielsen Co.,
45 Ill. App.2d 231, 195 N.E.2d 240 (1963). The indemnity agreement
provided (at p. 233, 195 N.E.2d at p. 242):
"`The Sub-contractor shall indemnify and save the
Owner, Architect and General Contractor harmless
against any and all claims for damages to persons,
caused directly or indirectly or occasioned by the
execution of the work included in this order. * * *'"
Employees of the general contractor caused the injury to the
sub-contractor's employee; nevertheless, the broad, all-inclusive
language of the indemnity was held to include this situation.
The Federal courts have also had occasion to consider an
indemnity agreement under Illinois law. The most recent case is
Bentley v. Palmer House Company, 332 F.2d 107 (7th Cir. 1964). In
this case the Court stated (at p. 111):
"The contract in the instant case states that
appellee will indemnify appellants against `any and
all liability and expenses for personal injury * * *
arising from or out of the use by * * * [appellee] of
its exhibit space or its activity in connection
herewith.' (Emphasis added.) This language is clear,
explicit and unambiguous and demonstrates to our
satisfaction that the intention of the parties was to
provide indemnity for appellants
against their own negligence. See De Tienne v. S.N.
Nielsen Company, 45 Ill.App.2d 231, 195 N.E.2d 240
Other cases have been cited by the parties which are
distinguishable. See George Sollitt Const. Co. v. Gateway
Erectors, Inc., 260 F.2d 165
(7th Cir. 1958) (indemnity provision
unclear); Bounougias v. Republic Steel Corporation, 277 F.2d 726
(7th Cir. 1960) (indemnity specifically included negligence of
the indemnitee); Gay v. S.N. Nielsen, 18 Ill.App.2d 368,
152 N.E.2d 468
(1958) (no negligence involved).
Upon this examination of the cases under Illinois law, I have
come to the conclusion that a broad, all encompassing indemnity
provision, such as the one in the case before me, is sufficient
to include the negligence of the indemnitee as the cause of the
Some courts still hold the view that there is a presumption
against one person shifting the burden of damages from his own
conduct to another. See e.g. Pittsburgh Steel Co. v.
Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185
Nevertheless, the attitude toward torts has changed; as one
court stated: "Today, torts are mainly the incidents of industry
and transportation." Moroni v. Intrusion-Prepakt, Inc.,
24 Ill. App.2d 534, 538, 165 N.E.2d 346, 349 (1960).
In Perry v. Payne, supra, the court based its opinion, in part,
upon a feeling that one party would not undertake a very large
indemnity upon a very small job; but today, in reality, the
indemnity agreements do not shift the loss, but shift the burden
of paying for and procuring insurance. Mr. Justice Dempsey
explained this in a recent case which is very similar to the case
now before me:
"Any large construction project involves the
simultaneous work of many subcontractors. The workmen
employed by contractors and subcontractors
necessarily labor in conjunction with or close to one
another. The risk of injury is constant. It is not
uncommon, particularly in complex structures and
highrise buildings, for the contractor and the
subcontractors, and the owner too, to apportion the
risk among themselves." De Tienne v. S.N. Nielsen
Co., supra, 45 Ill.App.2d at p. 236, 195 N.E.2d at p.
See also, Meeks v. George A. Fuller Co., 40 Ill.App.2d 172,
178-179, 189 N.E.2d 387
When a contract is clear on its face, and when there is no
dispute as to the facts which would cause that contract to
operate, the question of construction is a question of law which
the court must decide. Willman v. Alver, 252 F.2d 895, 898 (9th
Cir. 1958); Pittsburgh Railways Co. v. Equitable Life Assur.
Soc., 288 F.2d 640, 642 (3d Cir. 1961).
I therefore grant the third-party plaintiffs' motion for
judgment in their favor on Count I of the third-party complaint.
The third-party plaintiffs will submit an appropriate order
within fifteen days.
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