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Patent Scaffolding Co. v. Standard Oil Co.

MARCH 1, 1966.

THE PATENT SCAFFOLDING CO., INC., A CORPORATION, PLAINTIFF,

v.

STANDARD OIL COMPANY OF INDIANA AND ARTHUR G. MCKEE AND COMPANY, DEFENDANTS AND THIRD-PARTY PLAINTIFFS-APPELLEES. STANDARD OIL COMPANY OF INDIANA AND ARTHUR G. MCKEE AND COMPANY, THIRD-PARTY PLAINTIFFS-APPELLEES,

v.

JOHNS-MANVILLE SALES CORPORATION, A CORPORATION, THIRD-PARTY DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Madison County; the Hon. HAROLD R. CLARK, Judge, presiding. Judgment affirmed. EBERSPACHER, J.

This is an action originally brought by The Patent Scaffolding Company, Inc., a corporation, plaintiff to recover for damage to its patented scaffolding when two catalytic tanks, a reactor and a regenerator, fell with the scaffolding around them on December 31, 1958. The suit was brought by The Patent Scaffolding Company against Standard Oil Company of Indiana (hereinafter referred to as Standard), the owner of the premises, at Wood River, Illinois, on which the tanks were being constructed, Arthur G. McKee & Company, hereinafter referred to as McKee & Company, the general contractor, Chicago Bridge & Iron Company, a subcontractor, and Johns-Manville Sales Corporation, (hereinafter referred to as Johns-Manville), a subcontractor of McKee & Company, alleging negligence against each defendant. Following a trial before the court without a jury, judgment was rendered in favor of the plaintiff against Standard and McKee & Company for the sum of $15,481.82 and costs of suit. The court found the issues in favor of the defendants, Chicago Bridge & Iron Company and Johns-Manville. That judgment against Standard and McKee & Company has now become final.

Both Standard and McKee & Company had filed their third party actions against Johns-Manville; the court deferred decision on the third party actions pending the trial of the original case, but subsequently on the strength of the evidence in that case, and briefs filed by both parties, found in favor of Standard and McKee & Company, third party plaintiffs and against Johns-Manville, the third party defendant, and denied the motion for summary judgment of Johns-Manville against Standard and McKee & Company. The judgment, from which Johns-Manville has perfected its appeal, is for the sum of $15,481.82, plus interest from date of judgment and court costs, together with an allowance of $1,275 to third party plaintiffs for attorney fees and the sum of $75 for expenses. No questions are raised on the pleadings except the court's actions with respect to the motions for summary judgments, and the amount of damages awarded is not questioned.

In May 1958, McKee & Company had forwarded an offer in the form of a purchase order to Johns-Manville wherein Johns-Manville was to perform certain insulation work, sheet metal work, etc., and was required to furnish "all necessary labor, materials, tools and equipment, scaffolding erected and dismantled, warehouse and change office facilities, as will be required to insulate field erected pressure vessels," which Johns-Manville accepted. The accepted order also contained the following pertinent provisions:

"You agree to assume liability, be responsible for and indemnify and save harmless ourselves and the owner, for any liability for death or injury to any person or persons or for any property damage or loss of use thereof resulting from or in connection with performance of the work specified."

"You will assume the full responsibility for and hold ourselves and the owner harmless from any loss or damage to tools and equipment used by the workmen and/or your sub-contractors."

Johns-Manville in September contracted with The Patent Scaffolding Company to furnish and erect the scaffolding necessary to perform the insulation and sheet metal work, and entered into a subcontract with J.H. Walters Co. to perform the sheet metal work. On December 31, 1958, McKee & Company in conjunction with Standard, was testing the tanks for leaks by filling them with water, when the tanks collapsed, doing extensive damage to the scaffolding, for which The Patent Scaffolding Company has recovered the $15,481.82 judgment against Standard and McKee & Company. At the time of the collapse no Johns-Manville men were working on the job, but four employees of J.H. Walters Co., Johns-Manville's subcontractor, were using the scaffolding in performance of the sheet metal work.

Johns-Manville in prosecuting this appeal from the judgment in the third party action, contends that it is not liable to Standard and McKee & Company because the contract does not indemnify the third party plaintiffs for their own negligence; contending that the quoted indemnity provisions do not encompass liability except for the work that Johns-Manville contracted to do, and that the indemnity provisions of the contract do not clearly show the intention of Standard and McKee to protect themselves from their own acts of negligence nor an intention of Johns-Manville to assume those obligations, as required by the authorities. Appellant points out that Johns-Manville did nothing to affect the strength of the structure that fell, for as the evidence shows, there was no possibility of their operation in applying the insulating blankets affecting the structural strength or stability of the pressure vessels, and that the collapse of the units and the damage to the patent scaffolding resulted solely from the negligence of the owner, Standard, and the general contractor, McKee & Company, and it was so adjudicated when Patent Scaffolding Company was awarded judgment against Standard and McKee & Company and was denied recovery against Johns-Manville.

The public policy reasons which validate and make desirable an indemnification provision as indemnifying against the indemnitee's own negligence are well expressed in United States Steel Corp. v. Emerson-Comstock Co., 141 F. Supp. 143 (ND Ill) when the court said:

"While there are early cases in some states expressing a public policy against indemnifying a tort feasor for his own negligence it is today well established that the parties may so contract. Modern legal theory does not ignore the desirable objective of accident prevention which motivated the earlier decisions. But it finds nothing in the financial arrangements by which the business community through insurance and indemnity agreements allocates losses, inconsistent with that objective. The one on whom the contract imposes the liability has the same incentive to prevent the losses. Increased premiums and increased cost of services or materials act to deter the insured or indemnitee in the long run. At the same time society benefits through the spreading of the burdens of these unfortunate events and business does not have to risk the uncertainties of uninsured or unindemnified losses."

"Once it is determined that such agreements are to be deemed perfectly legitimate business arrangements, the only issue is that of determining whether the parties intended that the negligence of the indemnitee be a covered risk. For the leading cases applying Illinois and Indiana law in construing indemnity agreements to determine whether the language used should be fairly construed as encompassing the indemnitee's negligence, see Insurance Co. of North America v. Elgin, J. & E. Ry. Co., 7 Cir, 229 F.2d 705; Chicago & N.W.R. Co. v. Chicago Packaged Fuel Co., 7 Cir, 1950, 183 F.2d 630, 632; Russell for Use of Continental Casualty Co. v. Shell Oil Co., 1949, 339 Ill. App. 168, 89 N.E.2d 415. In each of these cases it was held that language used was broad enough to include the risk of the indemnitee's negligence although there was no express reference to that risk. . . ."

In that case the indemnitor agreed:

"To provide all proper safeguards in performing the work, to save harmless and defend American Bridge Company from and against all suits, actions, legal proceedings, claims, demands, damages, costs, expenses and attorney's fees, in any manner caused by, arising from, incident to, connected with or growing out of the performance of this contract."

The court observed that the language in the indemnification agreement was all-inclusive and indemnified against even the indemnitee's own negligence. Judge Hoffman, in discussing the intent to be found in such inclusive language used by sophisticated business concerns, observed that "Businessmen do not draft contracts using such all-embracing language if they have any such unexpressed reservations (as exempting the negligence of the indemnitee) in mind." (141 F Supp at 145.)

Appellant contends that Westinghouse Elec. Elevator Co. v. LaSalle Monroe Bldg. Corp., 395 Ill. 429, 70 N.E.2d 604, is the leading case in Illinois and latest reported expression on this subject by our Supreme Court. We consider the indemnification agreement in the Westinghouse case to be distinguishable from the one we have before us. In the Westinghouse case the indemnification clause was expressly limited to acts or omissions of ...


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