This case involves interpretation of an industrial or side track agreement providing for indemnification by the industry for any loss or damage paid by the railroad to any of its employees when the latter’s injuries are caused by the act or omission of the industry. After settling with its injured employee, Burlington Northern (BN) sued Hughes Brothers (Hughes) claiming indemnity under its agreement; BN now appeals from a jury verdict denying indemnification.
Facts.
On October 29, 1953, Hughes and BN’s predecessor, the Chicago, Burlington and Quincy Railroad, entered into an industrial or side track agreement. The railroad agreed to serve Hughes’ plant in Seward, Nebraska under certain conditions. The relevant conditions are described in portions of paragraphs five, nine, and ten of the agreement:
5. Industry to Keep Siding Free from Obstructions:
The Industry shall, at its own expense, and in a manner satisfactory to the Railroad Company, keep said siding clear of snow, ice, weeds, or other obstructions. Upon failure so to do, the Railroad Company may perform said service and collect the entire expense thereof from the Industry.
9. Clearances, Use, and Safety Requirements:
The Industry agrees not to place or construct an elevator nearer than eight (8) feet from the nearest rail of any track of said siding or to construct, place, or permit any other building, excavation, or obstruction nearer than six (6) feet from the nearest rail.
10. Liability Provisions:
The Industry also agrees to indemnify and hold harmless the Railroad Company for loss, damage, or injury from any act or omission of the Industry, its employees, or agents, to the person or property of the parties hereto and their employees, and to the person or property of any other person or corporation, while on or about said track; and if any claim or liability other than from fire shall arise from the joint or concurring negligence of both parties hereto it shall be borne by them equally.
*282 On February 2, 1976, Richard Coatman, a BN employee, was injured during switching operations at the plant. As the track enters the Seward facility, it descends to approximately three feet below ground level. On both sides of the track as it descends are brick retaining walls. The walls are less than six feet from the nearest rail. Before the walls begin, there is a sign stating, “WARNING STRUCTURES WILL NOT CLEAR MAN ON SIDE OF CAR.” Witnesses testified that BN erected the sign and that its employees knew the walls were too close to the track to allow a person riding on the side of a car to pass safely.
Coatman was riding on the side of a box car which was being pushed into the plant by a locomotive. He knew that he could not pass between the car and the wall. But when he attempted to dismount, first onto the ground before the wall and then onto the wall itself, his feet slipped on accumulated snow and ice. Evidence revealed that Hughes’ employees were aware that railroad employees often walked on the retaining walls. Coatman’s calf was squeezed bеtween the wall and car causing a compound fracture and soft tissue injury. He was unable to work for 14 months and thus lost $27,038 in wages. BN paid his medical bills of $8,533.
Coatman asserted a claim against BN under the Federal Employers Liability Act (FELA), 45 U.S.C. § 51 et seq. BN notified Hughes of the claim, asserting that Hughes was obligated to indemnify BN under the industrial track agreement and offering Hughes an opportunity to defend or negotiate the claim. Hughes denied any obligation. Hughes was notified on several other occasions and continued to deny responsibility. BN settled with Coatman for $55,726.
BN then sued Hughes for indemnification under the side track agreement. A jury trial was held. At the close of the evidence, BN moved for a directed verdict of full indemnity or, alternatively, of one-half the settlement amount. The trial court denied the motion. The trial court instructed the jury that BN had acquiesced in the placement of the wall and therefore if the jury found that its placement was a proximate cause of the injury, BN could only recover one-half the settlement amount. The jury thereafter found that Hughes had no obligation to indemnify BN. BN brings this appeal. We reverse and remand for a new trial.
BN urges: (1) it was reversible error for the trial court to instruct the jury that BN had to establish its liability for the injury; (2) it was reversible error for the court to instruct the jury that if BN was negligent, it had to prove Hughes’ negligence under common law standards in order to recover; (3) the court should have directed a verdict in favor of BN for оne-half its liability; (4) the court should not have granted Hughes’ request for a partial directed verdict on the issue of BN’s concurrent negligence; and (5) there was insufficient evidence to support the jury’s verdict.
Reasonableness of Settlement.
The railroad argues that the trial judge erroneously required it to prove that it was liable for its employee’s injury. The court instructed the jury that it should determine whеther BN’s settlement agreement with Coatman was “reasonable and in good faith.” The court told the jury that if it found the settlement was unreasonable or entered into in bad faith, the jury should render a verdict for Hughes. The court instructed that the jury had to determine whether BN “reasonably thought it would be liable to Mr. Coatman” and then stated the standards of liability under the FELA as well as thе rules governing reduction of an employee’s damages based on his or her contributory negligence.
A party seeking indemnity after settling a claim upon notice to the indemnitor must show that its settlement was reasonable and made in good faith. The fact finder generally must evaluate the reasonableness of the settlement by comparing the nature of the injury and the damages incurred to the size of the settlement. The fact finder should also review the good faith of the settlor by evaluating the probability that it would have been held liable.
See Chicago, R.I. & P.R. Co. v. Dobry Flour
*283
Mills, Inc.,
BN notified Hughes of the claim and requested that it assume responsibility. BN also kept Hughes informed about the settlеment negotiations. Hughes refused to participate in any manner.
In the present case, BN’s potential liability under the FELA was established as a matter of law.
See International Paper,
In determining whether BN’s settlement was rеasonable, the trial court also instructed the jury to consider whether the employee was guilty of contributory negligence which might have diminished the damages BN may have been required to pay. We find this erroneous. In the trial of an FELA case, the jury may diminish an employee’s recovery “in proportion to the amount of negligence attributable to such еmployee.” 45 U.S.C. § 53. Diminution requires comparing proof of the employer’s and employee’s negligence. Requiring a railroad in an indemnity suit to prove the exact nature and consequences of its negligence, to allow comparison with the employee’s alleged negligence, undermines the policy in favor of settlement after due notice to the indemnitor. A showing of reasonableness in an indemnity suit should not involve a plenary trial of the underlying FELA issues. Nor does BN have an obligation to prove its employee’s actual damages. To show the settlement was reasonable, the railroad need only prove its potential liability, a relatively simple showing under the strict FELA standards, and that the sеttlement amount was reasonably related to its employee’s injuries. On remand, BN is required to show only that the size of the settlement was reasonably related to the damages which Coatman suffered. If the jury finds the amount paid was not reasonable, then it should determine what amount would be reasonably related to the employee’s injuries. If such findings are made, the latter amount is BN’s loss fоr purposes of indemnification.
Hughes’ Obligation Under Indemnity Agreement.
BN asserts that the trial court should have directed the jury that Hughes had an obligation to indemnify BN. BN also urges that it was error for the trial judge to instruct the jury that in order to recover one-half of its claim, BN had to prove that Hughes was guilty of common law negligence.
Paragraph 10 of the agreement reads in part:
The Industry also agrees to indemnify and hold harmless the Railroad Compаny for loss, damage, or injury from any act or omission of the Industry, its employ *284 ees, or agents, to the person or property of the parties hereto and th.eir employees, and to the person or property of any other person or corporation, while on or about said track; and if any claim other than from fire shall arise from the joint or concurring negligence of both parties hereto it shall be borne by them equally.
The court told the jury that it should find that Hughes had a duty to fully indemnify BN if it was established that: (1) Hughes’ act or omission caused the injury in question and (2) no negligence on the part of BN caused or contributed to the injury. Alternatively, the court instructed that if the railroad was negligent, it could recover оne-half of its claim only if it could prove that the joint or concurring negligence of BN and Hughes caused the injury.
We find these instructions to be erroneous. The trial court’s interpretation of the indemnity agreement attempts to separate the two clauses contrary to this court’s construction of industrial indemnity agreements.
In
International Paper,
this court held that an industry’s obligation tо indemnify a railroad under an industrial track agreement is a contractual duty and not a duty arising under the common law of tort.
Paragraph 10 of the agreement should be read as a whole. Under our previоus cases, the jury must first determine if an act or omission of the industry caused the injury. If the jury makes an affirmative finding, the railroad is entitled to indemnity under the agreement. In the event the industry can prove the railroad was negligent and its negligence contributed to the injury, then the railroad may only recover one-half its liability.
See International Paper,
In the present case, we find the district court should have granted BN’s motion for a directed verdict as to Hughes’ obligation to indemnify BN for one-half its loss (as explained below). Construing the facts in favor of the defendant, Hughes, we conclude that an act or omission of Hughes was a cause of the injury. In
Rouse v. Chicago, Rock Island and Pacific Railroad Co.,
BN’s Concurring Negligence.
Once Hughes’ obligation is established, the only remaining jury question is whether BN is entitled to full indemnity or one-half of its claim. The answer depends on whether BN was guilty of negligence which was a proximate cause of the injury.
*285 The burden of proof on this issue should have been on Hughes. BN stated a complete cause of action under the first clause of paragraph 10 of the contract without pleading its own freedom from negligence. In its answer, Hughes raised the issue of BN’s negligence. Hughes, in essence, raised a contractual defense which it should have borne the burden of proving. The district court erred in placing this burden on the railroad.
The district court submitted the question of BN’s negligence to the jury, but instructed the jury that if it found that the presence of the retaining wall was a proximate cause of BN’s liability, it could only allow BN to collect one-half its liability from Hughes. The court ruled that BN, as a matter of lаw, had acquiesced in the presence of the wall. BN argues that this was error. 1
A preliminary question, suggested above, is what standards govern the determination of whether the railroad was “negligent” under the joint negligence clause. Some courts, finding that the entire indemnity provision was written in contemplation of the railroad’s duty under the FELA, have held that joint negligenсe means joint violation of the Act’s standards.
See, e.g., Wanser v. Long Island R.R. Co.,
While indemnificаtion is predicated on the railroad being liable to an employee under the FELA, it does not follow that mere proof of the railroad’s liability under the FELA can be enough to constitute negligence.
Booth-Kelly Lumber Co. v. Southern Pac. Co.,
The district court directed the jury if it found the wall was a proximate cause of the injury, to find BN jointly negligent because BN had аcquiesced in the presence of the wall. In supporting this action, defendant relies on the
Rouse
decision in which this court upheld a directed verdict on acquiescence in similar circumstances.
Where a person has become liable with another for harm caused to a third person because of his negligent failure to make safe a dangerous condition of land or chattels, which was created by the misconduct of the other or which, as between the two, it was the other’s duty to make safe, he is entitled to restitution from the other for expenditures properly made in *286 the discharge of such liability, unless after discovery of the dаnger, he acquiesced in the continuation of the condition.
Noteworthy, however, is the comment following § 95 which states:
The fact that the payor knew of the existence of the dangerous condition is not of itself sufficient to bar him from restitution. In many cases it is only because he had knowledge of the condition that he is liable to the person harmed. If, however, the payor not only knew of the condition but acquiesced in its continuance, he becomes in effect, a joint participant with the other in the tortious conduct and hence is barred from indemnity.
Without discussion, the
Rouse
and
Arkansas Oak Flooring
courts import the tort law concept of acquiescence into a set of contractual duties. In this case, the railroad and industry spеcifically contracted that BN would be fully indemnified unless its negligence was a proximate cause of the injury. Thus the question is not simply whether BN acquiesced in the placement of the wall, but whether, considering all the circumstances, proof that the railroad knew of the placement of the wall is sufficient to show that it acted negligently. In answering this question, we must view the evidence in the light most favorable to the party against whom the verdict was directed.
Koch v. Secretary of HEW,
We reverse and remand for a new trial.
Notes
. BN asserts that if it was negligent in acquiescing in the existence of the wall, Hughes must be found negligent in maintaining it.
See Arkansas Oak
Flooring,