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Patton v. T.o.f.c.

OPINION FILED DECEMBER 10, 1979.

THOMAS F. PATTON ET AL., TRUSTEES, PLAINTIFFS-APPELLANTS,

v.

T.O.F.C., INC., DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. ALLEN HARTMAN, Judge, presiding.

MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Thomas F. Patton and Ralph S. Tyler, Jr., trustees of the estate of the Erie Lackawanna Railway Company (Erie), filed a complaint for declaratory judgment against defendant, T.O.F.C., Inc., asking a declaration that defendant was contractually required to defend and indemnify Erie in a personal injury action which an employee of defendant had brought against Erie. This personal injury action included claims based on Erie's alleged strict products liability and violation of the Federal Safety Appliance Act. (45 U.S.C. § 1 et seq. (1976).) On defendant's motion, the trial court dismissed Erie's complaint for failure to state a cause of action. Erie appeals.

The issues are: (1) whether the contractual language relied on by Erie for indemnification is specific enough to require defendant to assume Erie's defense and indemnify Erie for the underlying claims, and (2) whether public policy precludes defendant from having to defend and indemnify Erie.

• 1 Erie's appeal is from an order dismissing its complaint. Therefore, all facts well pleaded by Erie are accepted as true. (Johnson v. Nationwide Business Forms, Inc. (1976), 41 Ill. App.3d 128, 359 N.E.2d 171.) Defendant and Erie signed an "Operating Agreement" on June 1, 1961, which gave defendant the exclusive right to load and unload piggyback trailers on and off railroad flat cars at Erie's Chicago railroad yard. On July 30, 1969, Erie executed an "Equipment Lease" with GATX-Armco-Booth (GATX), a partnership, under which Erie leased two "piggypackers" from GATX. A piggypacker is a mechanical device used to load and unload piggyback trailers on and off railroad flat cars. On February 20, 1970, Erie and defendant entered into a "Sublease" under which Erie leased the two piggypackers to defendant. This sublease specifically incorporated all of the terms of Erie's equipment lease with GATX.

On May 25, 1977, Eugene Brosmore, one of defendant's employees, filed suit in the circuit court of Cook County for injuries he allegedly sustained on or about May 24, 1975, when he was allegedly run over by one of the piggypackers while it was being operated by another employee of defendant at Erie's Chicago railroad yard. In his complaint, Brosmore sued F.W.D. Wagner, Inc., the alleged manufacturer of the piggypacker; Raygo Wagner, Inc., the alleged distributor; GATX, the alleged purchaser and lessor; and Erie, the alleged lessee and sublessor. Brosmore asserted they were all members of the distribution chain, and strictly liable to him because his injuries were due to the piggypacker having been designed, manufactured and sold in an unreasonably dangerous condition. Brosmore also alleged in his complaint that Erie was liable to him for his injuries under the Federal Safety Appliance Act. 45 U.S.C. § 1 et seq. (1976).

After Brosmore had filed his suit, Erie requested defendant to assume Erie's defense and indemnify Erie for any liability Erie might incur to Brosmore. Erie based its request on paragraphs 7 and 8 of its operating agreement with defendant, and also on paragraphs 10.2 and 13.1 of its sublease with defendant, which, in pertinent part, respectively provide:

OPERATING AGREEMENT

"7. TOFC covenants and agrees to protect, indemnify and hold harmless Erie from and against any and all claims, actions, losses, damages, costs and expenses which may be suffered or incurred by Erie or for which Erie might be held liable by reason of personal injury to or the death of any person or for theft, loss or destruction of or damage to any property which is caused by or results from or arises or grows out of any acts or omissions of TOFC, its officers, agents or employees in connection with the operation or use of the terminal facilities.

8. TOFC assumes the entire risk and responsibility for the safety of its employees, officers and agents while on the terminal facilities and agrees to indemnify and save harmless Erie from any liability whatsoever by reason of injury to or death of any of TOFC's officers, agents or employees while on the terminal facilities even though the operation of Erie's railroad may have caused or contributed thereto."

SUBLEASE

"10.2 Lessee [TOFC] assumes all risks and liability for the Equipment lease hereunder and for the use, operation and storage thereof, and for injuries or deaths of persons and damage to property, howsoever arising from or incident to such use, * * *. Lessee shall save and hold Lessor [Erie] harmless from and against any and all losses, damages, claims, penalties * * * including attorney's fees howsoever arising or incurred because of or incident to any item of Equipment or the use, operation or storage or alleged use, operation or storage thereof."

"13.1 Lessee agrees to indemnify, reimburse and hold Lessor and any assignee of its interest in this Lease harmless from and against any and all claims, losses, liabilities, demands, suits, judgments, or causes of action and all legal proceedings, * * * and any costs and expenses in connection therewith, including attorney's fees and expenses, which may result from or grow or arise in any manner out of the condition, use or operation of the Equipment, during the term hereof, or which may be attributable to any defect in the Equipment arising from the material or any article used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul, or testing of the Equipment, regardless of when such defect shall be discovered, whether or not such Equipment is at the time in the possession of the Lessee; provided, however, that Lessee shall be subrogated to all rights and remedies which Lessor may have against the manufacturers of the Equipment, which are hereby assigned by Lessor to Lessee. * * *."

Defendant refused to assume Erie's defense or agree to indemnify Erie. Erie then filed its complaint against defendant for declaratory judgment pursuant to section 57.1 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 57.1). In its complaint, Erie asked the court to construe the rights of the parties under the operating agreement and sublease and to declare that each agreement required defendant to defend and indemnify Erie. Defendant subsequently filed its motion to dismiss Erie's complaint for failing to state a cause of action. At the hearing on defendant's motion, defendant argued that the indemnification language in both the operating agreement and the sublease was not specific enough to require defendant to defend and indemnify Erie with respect to either of Brosmore's claims, and that public policy also prohibited Erie from being indemnified by defendant. After a hearing, the trial court granted defendant's motion to dismiss. Erie appeals from the dismissal of its complaint. We reverse and remand.

• 2 As a preliminary matter, Erie maintains, and defendant apparently agrees, that Brosmore's claim against Erie under the Federal Safety Appliance Act should be characterized as a strict liability action, without regard to the fact that when Brosmore asserted in his complaint that Erie had violated the Federal Safety Appliance Act he made several references to alleged negligent acts or omissions by Erie. We agree that a cause of action for an alleged violation of the Federal Safety Appliance Act is not based on negligence, but rather upon "strict" or "absolute" liability. (Chicago, Rock Island & Pacific R.R. Co. v. Chicago, Burlington & Quincy R.R. Co. (N.D. Ill. 1969), 301 F. Supp. 72, aff'd (7th Cir. 1971), 437 F.2d 6, cert. denied (1971), 402 U.S. 996, 29 L.Ed.2d 161, 91 S.Ct. 2173; Jenkins v. Chicago & Eastern Illinois R.R. Co. (1972), 5 Ill. App.3d 954, 284 N.E.2d 392.) In this instance, it is preferable to characterize Brosmore's ...


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