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06/29/87 Eileen Heinrich, Special v. Peabody International

June 29, 1987

EILEEN HEINRICH, SPECIAL ADM'R

v.

PEABODY INTERNATIONAL CORPORATION ET AL. (SAN-DEE BUILDING MAINTENANCE COMPANY, APPELLANT,

v.

BROOKSHORE



SUPREME COURT OF ILLINOIS

Lithographers, Inc., Appellee)

510 N.E.2d 889, 117 Ill. 2d 162, 109 Ill. Dec. 821 1987.IL.919

Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Paul F. Elward and Hon. Thomas J. O'Brien, Judges, presiding.

APPELLATE Judges:

JUSTICE MILLER delivered the opinion of the court. JUSTICE GOLDENHERSH took no part in the consideration or decision of this case.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MILLER

Eileen Heinrich brought an action in the circuit court of Cook County to recover for the death of her husband, Frank Heinrich, who was killed in an industrial accident on the premises of his employer, Brookshore Lithographers, Inc. Among those named as defendants in Mrs. Heinrich's action were San-Dee Building Maintenance Company and one of its employees, who allegedly activated a trash compactor while Heinrich was inside it, causing his death. San-Dee brought the instant third-party action against Brookshore, seeking both indemnity and contribution. The circuit Judge granted Brookshore's motion to strike the indemnity count. The appellate court initially held that it did not have jurisdiction of San-Dee's appeal of that ruling (110 Ill. App. 3d 1198 (order under Supreme Court Rule 23 (87 Ill. 2d R. 23))), but this court reversed (99 Ill. 2d 344), and on remand the appellate court upheld the dismissal of San-Dee's indemnity count (139 Ill. App. 3d 289). We allowed San-Dee's petition for leave to appeal (103 Ill. 2d R. 315(a)).

The plaintiff's husband was killed on December 11, 1979, at Brookshore's plant in Northbrook, Illinois. The plaintiff's second amended complaint alleged that Ignacio Ayala, an employee of San-Dee who was performing janitorial work at the plant on the day in question, activated the trash compactor while the plaintiff's decedent was working inside it. As grounds for recovery from San-Dee and Ayala, the plaintiff alleged that San-Dee was negligent in hiring, training, and supervising Ayala, and that Ayala was negligent in his operation of the machine. The plaintiff also sued, on grounds of negligence and strict liability, the companies that manufactured, sold, installed, and maintained the machine.

San-Dee's third-party complaint against Brookshore was in two counts, one for indemnification and the other for contribution; the contribution count is not at issue in this appeal. In the indemnity count, San-Dee alleged that Ayala was subject to Brookshore's control at the time of the occurrence, that San-Dee had lent Ayala to Brookshore, that Ayala was Brookshore's employee and agent and acting under its orders, and that Brookshore had the right and duty to control and supervise Ayala. San-Dee also alleged in the indemnity count specific acts of negligence on Brookshore's part, and Brookshore's breach of a duty to provide workers in its plant with safe equipment and a safe worksite.

The trial Judge granted Brookshore's motion to strike the first count of San-Dee's third-party complaint. The trial Judge believed that implied indemnity had been replaced by contribution as a result of this court's decision in Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill. 2d 1, and the legislature's subsequent enactment of "An Act in relation to contribution among joint tortfeasors" (Ill. Rev. Stat. 1985, ch. 70, pars. 301 to 305) (Contribution Act). In addition, the trial Judge concluded that San-Dee's allegations regarding Ayala's status as a loaned servant would be more appropriate as an affirmative defense to the underlying wrongful death action than as a basis for recovery from Brookshore.

Initially the appellate court dismissed, on jurisdictional grounds, San-Dee's appeal of the order striking its indemnity count. In an earlier appeal of the matter, however, this court reversed the appellate court's decision and held that the appeal was proper. Also in the previous appeal, this court considered arguments by Brookshore concerning the substance of San-Dee's indemnity claim. The court construed the indemnity count of San-Dee's third-party complaint as actually setting forth two separate theories of recovery: one was for "implied indemnity under the common law alleging a pre-tort relationship and active negligence on the part of Brookshore," and the other was based on the allegations "that the allegedly negligent employee (Ayala) was a servant loaned by San-Dee to Brookshore and thus Brookshore was responsible for his conduct." (99 Ill. 2d 344, 347.) With respect to the first theory, the court considered, but did not decide, Brookshore's argument that there could be no basis here for finding that it was actively negligent and San-Dee passively negligent. That argument presupposed the continued recognition of actions for implied indemnity, but because the parties had not addressed the issue, the court remanded the action to the appellate court so that the question could be presented there. The court also considered Brookshore's argument that San-Dee's loaned-servant theory was better understood as an affirmative defense to the underlying action than as a basis for a third-party action. The court noted that the loaned-servant rule was a principle of agency law rather than a ground for indemnity. Still, the court believed that allowing San-Dee to use the loaned-servant theory as a basis for a third-party action was preferable to requiring San-Dee to present the theory as an affirmative defense without also being able to bring the borrowing employer into the case as a codefendant.

On remand, the appellate court ruled that the Contribution Act had entirely supplanted the doctrine of implied indemnity. (139 Ill. App. 3d 289, 296.) After considering at length the relationship between implied indemnity and contribution, the appellate court concluded that contribution provided a full and adequate remedy to a third-party plaintiff and that the continued recognition of a cause of action for implied indemnity would be inconsistent with one of the purposes of the Contribution Act, that of encouraging settlements. Also, the appellate court believed that San-Dee's loaned-servant allegations stated a cause of action for contribution and therefore instructed San-Dee to replead the theory in that form.

As a preliminary matter, San-Dee and Brookshore agree that the appellate court erred in holding that the loaned-servant allegations should be repleaded here as a contribution claim. The appellate court apparently assumed that San-Dee's loaned-servant theory was a species of indemnity and would therefore fall with the demise of that doctrine. In the previous appeal, however, this court recognized San-Dee's loaned-servant theory as distinct from its claim for indemnity. Under that view, then, the loaned-servant theory was found to provide an independent basis for a third-party action, and therefore it would not be affected by the curtailment or elimination of implied indemnity.

Brookshore also contends that San-Dee's loaned-servant theory does not provide a logical basis for a third-party action and should be pleaded instead as an affirmative defense to the original action for wrongful death. In the previous appeal this court noted the imprecision of regarding San-Dee's loaned-servant allegations as a cause of action for indemnity: if the allegations were true, then San-Dee would owe no damages for which it would need to be indemnified. (99 Ill. 2d 344, 351.) Nevertheless, the court allowed San-Dee to maintain a third-party claim against Brookshore on a loaned-servant theory, reasoning that such a procedure would prevent the possibility of inconsistent results in successive actions against the lending and borrowing employers and would avoid an unnecessary dissipation of judicial resources. (99 Ill. 2d 341, 352.) This court is no less concerned now than in 1984 about the potential for inconsistent results and wasted resources, and upon reconsideration we do not believe that San-Dee should be allowed to use the loaned-servant theory as the basis for a third-party action against Brookshore. San-Dee is free to ...


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