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05/09/88 Burlington Northern v. Pawnee Motor Service

May 9, 1988

BURLINGTON NORTHERN RAILROAD COMPANY, PLAINTIFF-APPELLANT

v.

PAWNEE MOTOR SERVICE, INC., DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

525 N.E.2d 910, 171 Ill. App. 3d 1043, 121 Ill. Dec. 603 1988.IL.702

Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court. BUCKLEY and O'CONNOR, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CAMPBELL

Plaintiff, Burlington Northern Railroad Co. (Burlington), appeals from an order dismissing its declaratory judgment action brought against defendant, Pawnee Motor Service, Inc. (Pawnee). Burlington sought a determination that pursuant to the indemnity provision contained in a Trailer Interchange Agreement (the Agreement) entered into between Burlington and Pawnee, Pawnee was required to defend and indemnify Burlington in connection with a personal injury action brought against Burlington by Pawnee's employee, Michael Favia. The trial court granted Pawnee's motion to strike and dismiss Burlington's complaint on the ground that Burlington had failed to state a cause of action. The sole issue before this court is whether the indemnity provision in the Agreement requires Pawnee to defend and indemnify Burlington in a personal injury action brought by Pawnee's employee predicated on Burlington's alleged negligence in the maintenance of its premises. For the following reasons, we reverse the judgment of the trial court and remand the cause for further proceedings.

The underlying events which resulted in this appeal are as follows. On September 23, 1983, Favia, employed by Pawnee as a truck driver, was on Burlington's premises for the purpose of picking up a tractor-trailer pursuant to the Agreement entered into between Pawnee and Burlington. While performing the required inspection of the tractor-trailer, Favia fell into a hole and suffered injuries. As a result, Favia filed a personal injury action against Burlington. Pursuant to the indemnity provision in the Agreement, Burlington timely requested that Pawnee defend and indemnify Burlington in the action filed by Favia. The indemnification provision of the Agreement provides as follows:

"8. Other Indemnification by Truck Line.

Truck line [Pawnee] shall assume all liability for, and shall defend, indemnify, and hold harmless Railway [Burlington] from and against any and all loss, liability, damages, claims, demands, costs, and expenses of whatsoever nature that may be suffered by Railway or any other person or persons, firm, corporation, or association, on account of:

a. Injury to or death of any and all persons whomsoever, including but not limited to officers, agents, or employees of Railway or Truck Line, and any and all loss or destruction of or damage to property, including the conversion thereof, to whomsoever belonging, including property owned by, rented to, or in the care, custody, or control of the parties hereto, arising out of or in any manner connected with the interchange, use or handling of trailers, or the highway movement thereof, by Truck Line under its tariffs or this agreement, or from any act or omission of Truck Line or any of its officers, agents, employees, servants, or otherwise in performing or failing to perform any of the duties on Truck Line's part under its tariffs or this agreement, or caused or occasioned in whole or in part by reason of the presence of the property of Truck Line, its officers, employees, servants, agents, or otherwise, upon or in proximity to the property of Railway, or while going to or departing from the same, whether any of the same shall be contributed to by the sole or partial negligence of Railway, its officers, employees, servants, agents, or otherwise . . .."

Pawnee rejected Burlington's tender of defense and denied that the Agreement required Pawnee to provide for the defense of Favia's action against Burlington or to pay any judgment which may be entered against Burlington. As a result, Burlington filed its declaratory judgment action.

Under Illinois law, contracts of indemnity against one's own negligence are generally valid and enforceable (Halperin v. Darling & Co. (1967), 80 Ill. App. 2d 353, 225 N.E.2d 92), provided that the indemnitor's obligations are set forth in clear and explicit language. (Zadak v. Cannon (1974), 59 Ill. 2d 118, 319 N.E.2d 469; Tatar v. Maxon Construction Co. (1973), 54 Ill. 2d 64, 294 N.E.2d 272; Westinghouse Electric Elevator Co. v. La Salle Monroe Building Corp. (1946), 395 Ill. 429, 70 N.E.2d 604.) In reviewing the contract's language, courts will look to the agreement as a whole and give words their usual and customary meaning. Marshall Field & Co. v. J. B. Noelle Co. (1967), 81 Ill. App. 2d 409, 226 N.E.2d 454.

In the present case, the parties agree that the indemnification provision provides for indemnification of Burlington by Pawnee for Burlington's own negligence. The disagreement arises as to what limitations, if any, are imposed on Burlington's acts of negligence which are to be indemnified by Pawnee. Burlington argues that the indemnity provision clearly indicates that the parties intended the provision to be broad-based and to cover all aspects of the parties' relationship and to govern all conceivable conduct of both parties when transacting business under the Agreement. Burlington specifically refers to that portion of the indemnity provision which states that Pawnee "shall assume all liability for, and shall defend, indemnify and hold harmless [Burlington] from and against any and all loss, liability, damages, claims, demands, costs and expenses of whatsoever nature that may be suffered by [Burlington] . . . on account of: a. Injury to . . . any and all persons whomsoever, . . . caused or occasioned in whole or in part by reason of the presence of the property of [Pawnee], its officers, employees, . . . upon or in proximity to the property of [Burlington], . . . whether any of the same shall be contributed to by the sole or partial negligence of [Burlington]." Both parties agree that Favia's accident occurred while he was on Burlington's property performing services related to the Agreement.

In response, Pawnee completely ignores that portion of the indemnity provision which states that it shall assume liability to defend and indemnify Burlington for injuries caused by the presence of a Pawnee employee on Burlington property and focuses solely on the clause, "arising out of or in any manner connected with the interchange, use or handling of trailers." Pawnee then separates the clause into four parts and refers to it as the "four-pronged test of the indemnity agreement." According to Pawnee, the four prongs are: "(1) A claim must arise out of; (2) The use, handling, or interchange of a trailer; (3) By Pawnee; (4) Even if contributed to by plaintiff." In adopting this position, not only has Pawnee conveniently ignored the clause pertaining to a Pawnee employee's presence on Burlington's property, it has ignored the other three clauses of the indemnity provision. Pawnee's argument that the other clauses in the indemnification provision merely qualify the "arising out of" clause overlooks the use of the disjunctive word "or," which clearly indicates that Pawnee's liability to defend and indemnify will arise, regardless of Burlington's own negligence, when the underlying act occurs as a result of any one of the following general circumstances: (1) arising out of or in any manner connected with the interchange, use, handling or highway movement of trailers by Pawnee under its tariffs or the Agreement, or (2) from any act or omission of Pawnee or any of its officers, agents, employees, servants, or ...


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