*1 362 February
Argued 6, 1972, reversed November CO., FIRE INSURANCE UNITED STATES Respondent, v. CHRYSLER MOTORS Appellant.
CORP., P2d 1137 *2 argued Body Portland, the cause for felt, E. Richard him on the briefs were appellant. Tooze, Kerr With Peterson. & argued Joseph,
George Portland, the cause M. were respondent. Bemis, the brief Breathonwer & On Cheney Kelley. Joseph Kriesien, Fewless, & Mize, and McALLISTER, J. n Berger purchased Jeanette and her husband Chrysler Westway Chrysler-Ply- automobile mouth, Inc. The automobile had been sold to Corp. the defendant, Motors damages personal injuries filed an action for against Westway Chrysler alleging that while driving the automobile she was involved in a head-on collision and that as a result of a defect in the auto- personal injuries. mobile she suffered extensive She alleged that the automobile was defective because, impact, pinned seat left front its track and steering her wheel and beneath the dashboard. The complaint proceeding was in three counts, on theories warranty, liability of breach of strict for sale of a negligence product, part on defective of both following particulars: failing design “(1) In and construct the front seat of proper automobile its track of said materials so *3 disengaged it would become as that so above failing alleged. (2) dangers In to warn of the inherent alleged. (3) as use of the automobile herein in the In failing properly test the front seat and its track so impact alleged.” withstand the would above that it prayed She special damages $2,235.20 in for and $50,000 damages. general liability
Westway and its insurer U. S. Fire Berger the defense tendered Insurance Co. ac- Chrysler. The tender was declined and tion U. S. on the defense behalf of undertook its Fire insured. Berger complaint, filed a second later amended Mrs. warranty omitting proceeding only and count on liability negligence. and strict the theories IT. S. again defense of tendered action Fire Chrysler Chrysler again S. declined the tender. U. defense of the action. Fire continued with the then Berger’s Chrysler before settled Mrs. action paying both received a release of $1,250 and trial, Chrysler. Westway The release recited that West- liability way Chrysler expressly for both denied Berger’s arising damages out of Mrs. accident. subrogee Westway’s action Fire as
In this U. S. by Chrysler for to be indemnified claims the in action incurred $1,995.90 stipulated parties have was a reasonable which the defending prior the action to settlement. amount for jury court a de- without overruled trial complaint, Chrysler’s plaintiff’s denied mo- murrer to plaintiff’s “per- the close of for a tion made at case finding emptory in favor of defendant” and rendered Chrysler appealed. judgment plaintiff. obligated issue is whether expenses defending Fire for its in S.
reimburse U. brought damage Ber Mrs. allegations ger merely Berger’s because proof might complaint such were have shown primarily liable and injuries. Berger’s secondarily liable Mrs. It should Westway’s Fire mind that S. stands in U. be borne only Westway to recover entitled and is could shoes Chrysler. have recovered
Chrysler contends that S.U. Fire cannot re pleaded nor it neither because ele cover action for common-law ments § Restatement, Restitution, 76: summarized part, *4 person in whole or who, in has “A dis- charged which is owed him but a which as and another should himself have been dis- between 366
charged by indemnity is entitled to other, payor wrong- the other, unless the barred ful nature of his conduct.” consistently applied principles, cases Our have these required indemnity and have claimant action discharged legal obligation to show that he has to a party obligated, third to whom the indemnitor was also ought and that as between the two the indemnitor to obligation. ‹ discharged applied have As to this simply case the rule means that U. S. Fire can re only by pleading proving cover and that both West- way Chrysler and were liable to Mrs. and that, Westway, Chrysler ought as between pay. necessary
It is axiomatic that if the facts right indemnity create a common law were not es- Berger’s they pleaded tablished in Mrs. must be in this action. Fulton Ins. Co. v. White Corp., Motor 261 493 (1972). 206, 212, Or P2d 138, 141 It is obvious that no common law Berger’s was established in Mrs. case because it was equally settled without trial. It is obvious that U. S. prove Fire has failed to this case the essential ele- ments of an action for attempt do so. made no brings only
This
us to U. S. Fire’s
contention,
‹
Signal
Co.,
294,
Citizens Ins. Co. v.
Ins.
261
298,
Or
493 P2d
(1972); Owings
Rose,
46
247,
v.
262 Or
(1972);
367
Berger’s complaint
alle
contained
that because
gations
proved,
if
established
could have
which,
secondary
liability
primary
lia
as to
bility
Westway,
duty to defend
as to
has a
accepted
this
were
it would
the action. If
contention
place
duty
virtually
on manufacturers
defend
all
liability
brought against
products
actions
their dealers,
whether or not those actions were well-founded. It
duty
a
would also create
non-eontractual
to defend
involving potential
variety
indem
of other situations
nity
support
theory and
of this
of the trial
claims.
Ferguson
judgment plaintiff relies on
court’s
v. Bir
mingham
(1969)
496,
460
342
Co.,
Ins.
Or
P2d
Fire
Fire Marine Insurance
v.
Paul
&
Co. Crosetti
St.
(1970).
whether
is based
an
or an
express agreement, is that when a claim is made
against an indemnitee
which
for
he is entitled to
indemnification,
the indemnitor is liable for
expenses
reasonable
incurred
the indemnitee in
defending against
regardless
such claim,
of whether
* * *”
ultimately
is
indemnitee
held not liable.
The above statement is not this case for By applies only two reasons. its terms the statement against to claims indemnitee which is he entitled It to indemnification. has never been established in this case that is entitled to Chrysler. In St. Paul Crosetti case had shown that the Port of insured, Portland, its was entitled to in- demnity agreement under the terms an of which re- indemnify quired Crosetti save the Port of harmless from all “claims, Portland demands and ac- against complaint tions.” The Port Portland
369 allegations would make true, which, contained party. injured primarily Crosetti, liable to the Crosetti under the a defense owed Port of Portland therefore, agreement express to “hold contract. An terms of their obligation generally to include an held harmless” when defense, or to costs defend, reimburse agreement is filed an action within the terms New York Railroad Co. the indemnitee. Central (ND Corp., 291 Ohio 273, 182 FS General Motors v. 1960); Repeating U.S., v. 51 Arms Co. Winchester (1916). 118 Ct Cl support nor the cases cited
Neither Crosetti quoted above that the un- the statement hold mere allegations party third establish a of a allegations in the defense of those absence of an agreement claims to hold in- to defend all or harmless. demnitee Birmingham Company v. Miller Louisville (5th 1964), Co., R. F2d 73 Cir cert denied N. 328
& 12 L 2d 737, 84 Ed 966, 1648, US S Ct Com Cleveland, 86 Ariz P2d mercial Standard v. (1959) express involved “hold harmless” both recognized agreements. Standard Commercial *7 agreement, under the terms of the indemnitor, pay provide services or to defense costs of a Company defense. Miller case successful duty recognizes only to reimburse for costs against judgment event of a indemnitee. Refrigeration York Arizona Co. v. Bush Southern (9th 1964) Mfg. was a F2d 1 Cir Co., common-law judgment indemnity had in which a been case recovered require who then sued to indemnitee, paid it for the amount to reimburse indemnitor attorney judgment satisfy and for costs and fees. only plaintiff The court held that if the established its right indemnity it was entitled to recover its costs, including attorney defending fees, incurred in the third party action. In O’Connellv. Jackson, 273 Minn 91, 140 (1966) NW2d 65 it not clear whether court re garded the action as one for common-law or damages as an action for under Restatement, Torts, § recovery which authorizes for costs incurred in litigation by necessary made the tortious act or breach duty of another. In the case event, holds no plaintiff more than that a who has established his right judgment may to reimbursement for a also re cover his defense costs. Neither O’Connell v. Jackson Refrigeration nor Southern Arizona York Co. v. Bush Mfg. involved the Co. recover defense costs liability when had not been established. Paliaga
The dissent relies on v. Luckenbach Steamship Company, (2d 1962), 301 F2d 403 Cir also holding parallel cited in Crosetti, as that under facts, including a settlement the indemnitor, indem- nitee is entitled to recover its defense costs without a showing liability injured party. to the third We do Paliaga, dispensing not read as however, with the need showing for a that the costs were incurred on account wrongful part of some act on the of the indemnitor. decided on The case was the basis of the stevedore’s duty indemnify shipowner under maritime law to arising operations, claims out of the stevedore’s arising implies law which the out of the contract express for services even absence of an indem- nity agreement. implead- The stevedore, who had been shipowner, settled ed the defendant the injured longshoreman jury while the was deliber- shipowner’s ating. denied the The trial court motion with the trial of the to continue issues and *8 right shipowner’s recover defense to the determine was held appeal motion denial of this costs. the On holding the not that The was be an discretion. abuse of shipowner but defense costs, entitled to recover 'was question determined that was entitled to have it question proceedings. the whether in the same shipowner, and to the breached his stevedore had shipowner’s responsible costs for was therefore litigation, in the trial court. still to be determined obligation appeal the stevedore’s on said that The court any shipowner “indemnify loss incurred was to shipowner caused stevedore’s failure proper F2d at 410. use care.” propo not stand for the case does
The Crosetti express agreement, plaintiff had sition absent an that, its defense be indemnified for costs party’s showing complaint alleged that the third mere might have been facts under which entitled any Paliaga indemnity, nor does or of the other authority Plaintiff has cited no cases cited Grosetti. proposition, for that stand we which does have found none. pro Commercial Code makes
The Uniform some rights buyers against sellers under vision for any right does not establish circumstances, but these (5) provides: costs. ORS 72.6070 recover buyer sued for breach of a war- “Where obligation ranty which his or other seller is over: answerable may give
“(a) his seller written He notice litigation. the notice states that If the seller and that may in and defend the seller come does any bound so he will be not do by him buyer determination of fact his common litigations, unless then the seller two to the after receipt
seasonable defend notice does come in and ishe so bound.” *9 change requiring proof This section makes no in the law establishing right indemnity, the of facts a of obviously contemplates no to defend in advance proof. such of are
There circumstances under which defense may party costs be recovered another without special indemnity. resort rules of the As summar Damages ized in on 246: McCormick “* * * present by where the defendant has wrongful conduct, his be it or tort breach of con- present plaintiff caused the tract, to defend or * * * legal prosecute proceedings, previous the law plaintiff expense, allows to recover all in- cluding reasonably counsel fees, incurred him litigation.” prior in the recognizes specifically The author that a seller’s breach quality may warranty purchaser of of entitle litigation. recover costs Id. at 250. The rule is adopted § Restatement of in the 914: Torts, through person the tort protection
“A who of another has required in the been to act of his inter- by bringing defending ests or an a person compensation is entitled to recover third necessary reasonably attorney loss of time, fees expenditures thereby and other suffered or in- curred.” § Restatement of Contracts,
and also in the
334:
litigation
“If
of contract
the cause
a breach
plaintiff
parties
and third
between the
had
to foresee
defendant
reason
when the contract
plaintiff’s
made,
expenditures
reasonable
was
litigation
estimating
in
included
such
are
in
Ms
damages.”
Damages
ground
§
This
50 e.
See, also,
787-788,
CJS
recovery
recognized
v.
Lind,
stutter
was
Huff
(1968).
how
case,
It is so dissenting. C. O’CONNELL, J., liability majority opinion pay sees the The resting entirely upon proven the the cost of resulting liability exclusively for loss a of its conduct. from problem differently. upon I think the look
I expenditures indemnity liability made the liability defending is distinct the from judg- indemnity as a result of loss suffered a alleged upon against indemnitee based the ment question alleged conduct. Where indemnitor’s of indemnity liability arises of out transaction the involving goods, present as in the sale I case, explain my position would as follows. If the action- brought against alleges consumer the dealer only a goods defect in the manufacture of the but also resulting a loss from misconduct of the dealer for which the dealer indemnity, would not be entitled to imposition the dealer is threatened with of a loss which right could be his alone, without of reimbursement from the manufacturer. Under these circumstances he should be made to bear his own cost of defense.
On the other hand, if the action alleges only dealer as the cause of the loss a defect in goods, allegations proven manufacture of the will visit the loss on the manufacturer and, as between him and the that loss will dealer, be the manufacturer’s exclusively prove unless he can that dealer is barred his own misconduct. brought
An action so can be looked not as primarily the dealer’s lawsuit but as the manufac already turer’s lawsuit for the reasons stated. Thera always possibility, looming is, course, sued, future at the time the dealer is that the'manu facturer will assert a defense to the dealer’s claim to , indemnity, unless statistics would but that .the show assertion of such successful a defense is common I would still insist that the lawsuit is the manufacturer’s primary pay and he should concern defend it or the cost doing so. ‹ based'upon equit- principle non-voluntary one who makes a able *11 ‹ reasoning apply brought .would where The same the action only alleges against defect, a not the dealer manufacturer’s but inspect. failure to Since the dealer also has a to the.dealer’s indemnity against even the manufacturer where the loss to'the n , to have been suffered is deemed as consumer a-result inspect, brought against the action to failure dealer’s the dealér " n n - primarily regarded as manufacturer’s can be lawsuit. expenditure the benefit another be en- should prin- I titled to reimbursement this for it. believe that ciple applicable in is I have situation which de- In scribed. the case us it is that before shown complaint against brought Westway in the action al- leged Westway facts which would have entitled indemnity against Chrysler judgment had there been a in favor of and her husband, Jeanette assum- ing Chrysler did of course that not have Westway’s against indemnity. claim to these Under Chrysler would circumstances I hold that did not have against Westway’s indemnity. a defense claim to Chrysler these Under circumstances I would hold that pay must cost defense. join dissenting opinion
I filed Mr. Justice Denecke. dissenting. J.,
DENECKE, majority opinion that holds an action to indemnity, Westway as recover the costs of defense Westway prove Chrysler must both that were Berger, liable to Mrs. between themselves, Chrysler ought pay. my opinion that is incorrect in the context The action this case. costs of defense. pay anything
Westway Berger. did Mrs. Berger’s alleged complaint cause of action Westway which both would Chrysler. entitled have allega- has In this made no any proof or offered tions was inde- Berger. pendently to Mrs. In that liable state of the opinion plaintiff I am of record is en- indemnity. titled
(cid:127) n Westway Chrysler alleged Berger and that negligent: strictly and were liable failing design “(1) to and the front In construct proper ma- in its track automobile of seat of said disengaged as it would not become terials so failing alleged. (2) warn of the In to so above dangers in inherent the use of automobile failing alleged. (3) properly test the to herein front seat the it withstand and its track so that would alleged.” impact above Westway has I believe Westway though Chrysler failed to test even from danger. If of the warn Mrs. seat and to alleged Chrysler proved which would and facts had jointly Westway independently liable or have made Westway probably not recover. For ex- could liable," Westway ample, that it warned had remedy relied the defect of do has failed to so. not defect but present case. this in the done (1) Restatement of Restitution Section provides: *
“* * application The usual how- rule, persons who are reference to under a with ever, is persons duty third who are made of care inspec- failure to use in of a care liable because dangerous the seller of a Thus, chattels. tion of the normally duty under a of care to make chattel selling (see inspection before the chattel some Re- 400-402). A master Torts, is under statement of inspect his care to servants tools which (see persons purchases from third Restatement he 502). Agency, § In such cases the fact that the negligent respect with to the claimant was person prevent obtaining him from in- harmed does supplier, negligence demnity if his con- failing inspection merely make an sisted repre- his failure was because his belief due to supplier sentations the chattels were * * not defective. Restatement Restitu- (1). § tion 93 provides: Comment this section a. of applies “The rule stated this Subsection *13 person where a has sold or rented to claimant, the machinery, utensils or other chattels which have injured during person by a third their use or the injured person the claimant, some other person to whom the sold, claimant rented or lent applies only sup- them. The rule where both the plier injured other are in the liable tort the to person.” supra, Restatement, Restitution, at 408. Illustration to this 3 section states: purchase gallons
“A contracts to
from B 1000
carelessly supplies gaso-
of kerosene
B
for resale.
lene to A in containers marked kerosene. A care-
inspection
gasolene
ful
would have revealed that
supplied.
gasolene
A
was
some
sells
of the
to C
seriously
as kerosene and as a
is
result, C
harmed.
judgment against
pays
C recovers
A who
judgment.
A is entitled to
B
from unless
failing
inspect.”
reckless,
A
in
was
to
Examples
application
.
this section are
Quality
Valley
Champ.
v.
Market
Fruit, 127
562,
Vt
(1969),
wholesaler. nity paid and its de- for the amount it settlement indemnity for costs. The court awarded both fense urged that the retailer could The wholesaler items. retailer was inde- because the not obtain pendently The court liable. answered: light the that can said this most be
“In plaintiff’s [retailer] misconduct a failure presence operation, the retail its discover, thermometer Valley Camplain which the defendant [wholesaler] This had inserted banana. plaintiff’s shortage, of will not defeat the itself, indemnity against [wholesaler] right seller * * put in motion. *. the harmful cause who is* ^ * “* * plaintiffs’ appears that Since it injured person sec- in its to the fault negligence ondary defendant, the initial Restatement, restitution.is established. its Restitution, 93(1).” at 564-566. Vt (171 supra Yandle, Cal La Forest v. De *14 repairs. App2d 59), needed He had a trailer that Mast purpose. La for such De Forest to De La Forest took it repairmen. repairmen made The work to sublet the repairs La Forest returned it to De who and the the Mast used trailer and as it to Mast. turn delivered repairs person lolled was of defective a result widow sued Mast and De La decedent’s The trailer. repairmen defend that them. demanded who Forest They De La and Forest settled and and Mast refused against repairmen brought for indem- action this nity.
(cid:127) against complaint decedent’s widow The they alleged negligent were Forest De La and Mast “ ownership, driving, operating, manufac sale, ‘in repair, inspection, ture, control and maintenance of said trailer.5 The court stated:
“* * * charged De La Forest was with the duty inspecting installing their work before charged axle on Mast trailer and Mast was with inspecting the axle before reinstallation according allegations and use. Nevertheless, to the complaint, appellants reasonably relied respondents [repairmen] the care of and such re justified. ap liance was pellants Under circumstances indemnity.55 App2d are entitled to 171 Cal at 61.
To the same effect see London Guar. & Acc. v. Co., Co. Scale 322 Mo 502, 512-513, SW2d 766 (1929). majority holds that in this transaction in Berger’s which judgment, Mrs. action never went to Westway cannot recover its costs of defense until and proves unless it in this action that both it Chrysler reality and were in liable to Mrs.
Chrysler “primarily liable.”
Logically, it seems me to follow that the ma- jority Westway would also have to hold that if suc- cessfully Berger’s defended Mrs. action it also could not recover its defense costs unless it against Chrysler Westway Chrysler Berger. were liable to Mrs. It would also successfully defending against me that after seem to Berger’s claim collaterally would be contrary taking position estopped and contend- ing it were liable. collaterally estopped were not
If or Chrysler, Westway, as in this case, or settled Mrs. usually Berger’s practical will claim, it not be for West- prove way Westway’s it and liable. costs *15 which ended before trial because of 380 Westway’s
Chrysler’s cost to settlement $1,995.90. go through prove Chrysler liable trial itself and substantially would have exceed this amount. accepted recover its law is that indemnitee cannot establishing indemnitor. costs in its claims its App2d Chick, 708, Tel. Co. v. Tel. & Cal Pacific Rptr (1962); Casualty 21 Cal Continental 719, Company (Fla App 239, 241 Reddick, v. 196 S2d 1967). ‹ cost more for For this reason it would West- attempt way indemnitee to or other would-be sought indemnity to be than the amount re secure practical is as a matter result covered. The Westway position in its will not secure indem or one nity. majority support its cites decision
§ of Restitution and footnote of the Restatement The distinction between the decisions this court. majority is and this case authorities cited seeking indemnity party paid cited cases claiming liability something party and the a third to' seeking seeking party reimbursement is for present Westway paid. case In the neither that sum Berger any- paid Fire Ins. Co. Mrs. nor United States thing.
. significant.- If made This distinction liability,- which it payment had no to Mrs. volunteer, and would be there no a rank it would be anyone. being justification its reimbursed If Berger, were not liable conferring paying no benefit on be would ‹ indemnity cases; however, if costs contract are These are they payable are not a fortiori payable in contract indemnity. implied to secure in ..actions *16 Berger; Westway being Mrs. so is no for there basis by Chrysler. › reimbursed expenditure by The United States Fire Ins. Co. category. Chrysler is in defense a different would Westway. Westway not defend If did not its defend, liability Berger by to Mrs. would be established de- Westway fault and and Ins. United States Fire Co. they pay Berger could recover had whatever to Mrs. Chrysler Chrysler pleaded unless and Westway independently “primarily” was to liable Berger. expenditure Mrs. United States Fire Ins. Co.’s Chrysler’s for defense inured to benefit because Chrysler obligation Berger had no to Mrs. if United States Fire Ins. defense was Co.’s successful. why Westway’s
There are several reasons in- granted Fire Ins. surer, Co., United States should be indemnity for its defense costs.
A refusal to allow until and unless Westway Chrysler proves really that it and were liable Berger substantially to would shrink the extent indemnity. is sued. It tenders the de- Chrysler. Chrysler duty accept fense has a any liability Westway defense because must be re- by Chrysler. Chrysler That imbursed has a the fact defend evidenced if it fails to judgment against and Mrs. secures a defend, Westway, does independently prove not liable to Mrs. pay Berger, judg- must the amount of Westway’s as well costs. ment “* * * original liability seller’s in rela- › I omitting reference to the situation in am which in that, proves good the settlement was reasonable and in demnitee present indemnitor, Chrysler, case the In the faith. the in demnitee, the settlement. made damages thereto sustained his
tion
extends
injuries
persons
purchaser because of
to third
property
proximately
was resold
whom the
caused
* *
by breach of the warranties.
*.
liability
original
“In
of the
situations,
such
against
judgment
concluded
obtained
seller is
purchaser
latter
his
in an action
provided
the seller was
warranties,
breach
duly
prior
notified of the commencement of
* *
action and was tendered
defense thereof.
*.
liability under
ex
The seller’s
such circumstances
judgment
to the amount of the
obtained
tends
purchaser
necessary
against his
ex
also the
attorney’s
penses, including
by
Liberty
*17
and
incurred
fees,
costs
* *
purchaser
in defense of the action.
R.
Co.,
Mutual Insurance Co. v. J.
Clark
(1953).
511,
239 Minn
Robert “* * * types of to Other commonly quasi arising contractual, or called are Indemnity implied law.’ be- a ‘contract out of type persons this for a tort falls within liable tween persons, obligation such As to case. between indemnify one; it is consensual based is not a al- upon together law’s notion—influenced proper background—of equitable what is fair and * * quasi parties. *. The contrac- between unjust course enrichment of underlies idea tual compelled holding any discharging who one has been in legal obligation pay to off a his own good claim which in fairness and conscience should paid can be another secure from reimbursement * * In Leflar, that other. Contribution demnity Between L Tortfeasors, 81 Pa Rev 130, (1932). 146-147 years in
About later William Prosser wrote similar vein:
“* * * Indemnity shifting responsibility is a person from shoulders of one another; indemnify recognized will in be cases opinion community where would consider that justice responsibility upon should rest one * * than the rather other. Law of Prosser, (4th ed) § Torts 52. eminently At least to me it seems “fair and proper” and in line with what I would consider to be community opinion “justice” Chrysler pay Westway’s Westway should costs of defense. “fighting Chrysler’s battle.” the event Mrs. Chrysler would
won, have to reimburse including Why full, costs of its unsuccessful defense. completely proper” is it not “fair pay Westway’s successful defense? If prevents any liability being is successful and im- posed Chrysler, why proper” is it “fair and require pay Westway’s for this service? *18 Chrysler. majority was for the defense benefit of The Westway holds if for that successful the benefit of Westway expense. Chrysler, must bear the If West- way Chrysler, unsuccessful the detriment of is. expense. must reimburse for its majority of the authorities
None cited the position majority espouses. hold the the or advocate majority pay- the cites All the authorities concern injured party, payment the not ments to of the costs 384 successfully defending against claim, a which
of obligation prosecuted the. indemnitor. would he opinion, I as was the trial court, was of the already one in the had decided that this court indemnity. position was entitled to Bros., 576, & Marine 256 Or St. Paul Fire v. Crosetti (1970), and indemnitor, P2d 69 the defendant rejected defense the tender of Bros., Crosetti the action later settled however, Crosetti indemnitee; brought indemnitee indemnitee. The it and the costs. We held for the indemnitee’s defense an action facts The are identical indemnitee could recover. except in case Crosetti there was an those in this indemnity agreement. opinion, express however, Our upon this distinction. was not based distinguish majority attempts to Crosetti. The distinctions made are valid. The believe the I do not quoted paragraph complete ma- context jority is follows: £[T]he contends: also terms of
“The defendant require payment not do clause has indemnitee where the incurred costs defense “damages,” by way obligation either of a some judgment.’ sup Defendant cites in or a settlement port Missouri-Kansas-Texas Rail Hunter v. thereof (ND Supp Company, 936, 276 P Okla road language 1967). that contract in present was similar to that case case support po does decision defendant’s sition. Bank, Fire Nat. 251 Or Paul v. U. S. “In St. (1968), recently we awarded
446 P2d although the indemnitee ob an indemnitee costs to judgment and, in his favor did therefore, tained not obligation damages. pay No is incur however, was raised in case on this sue, particular point. *19 jurisdictions, regardless
“The rule in most
of
indemnity
upon
implied
whether
is based
an
or an
express agreement, is that when a claim is made
against an indemnitee
which
he is entitled to
the indemnitor is
indemnification,
liable for
expenses
reasonable
incurred
in
indemnitee
defending against
regardless
such claim,
of whether
* *
ultimately
the indemnitee is
held not liable.
*.”
The basis of our was that an indemnitee is entitled to reimbursement for its defense costs re- gardless of whether it is ever the in- party demnitee is liable to a third and this rule should apply implied. whether the be contractual or
Section 80 of the Restatement of Restitution is Recovery” indemnity. entitled “Amount of Com- ment b. states: “* * * brought against person If suit is surety upon obligation
liable as notify he can principal obligor give the to defend the opportunity him an principal suit; failure of the obligor secondary obligor so to do the is entitled to expenses all of suit, .whether successful- or unsuc- cessful, if the conduct of the suit is reasonable. * (In § Restatement Restitution 80. .appears this the Restatement to use section synonymous “surety” “payor,” synonym with its . .. for “indemnitee.” Judgments of Section 107 the Restatement pro- n - (cid:127) part: . .....f-; vides, . action, ah per “In between two. sons stand in such relation to each-other who indemnifying -one has a them the other if, person, upon, thi,rd.person a claim a third judgment'on bas obtained a valid this claim in a n '": separate action “(a) the indemnitee, both are bound as to the liability of the indem- existence extent gave if the indemnitee indemnitor nitee, requested him reasonable notice to *20 * * participate it or in the defense; defend to Judgments § 107. Restatement section i. this states: Comment right indemnity exists, a of the relation “Where ordinarily parties the entitles the indem- between nitee to merely judg- of recover not the amount the against him but also the amount the ex- ment of attorney’s penses judgment fees. This is true if even agent favor. Thus where
is in his request party a to a contract at the of the the becomes principal and sued for breach of contract is contracting party, if is the breach without his other indemnity principal from the is entitled to fault he for the fense expense maintaining of a successful de- (see Agency 439). § the Restatement of This depend any principle does not of res result supra, judicata.” Judgments, Restatement, at 518. right indemnity phrase, a exists,” “Where The right “Where the would read, must be suing party pre- the indemnitee had if the third exist meaning must be the otherwise the This vailed.” phrase “This statement, would be inconsistent with judgment [indemnitee] in his is is even true judgment is in the indemnitee’s favor If the favor.” indemnity except no for the cost be there can defense. of the successful Paliaga majority v. construes Luckenbach
The (2d 1962), Company, Steamship F2d 403 Cir dif- longshoreman ship ferently sued I A a than do. impleaded contending ship injuries. the stevedore longshoreman it was en- were liable if it that stevedore because the titled to the stevedore. There was no fault ultimate long- indemnity. settled the The stevedore contract against longshoreman’s claim shoreman’s claim and the ship There was no decision that was dismissed. any liability ship stevedore had either the or the longshoreman. party, These are facts the third exactly parallel The court held to those onr case. ship recover its costs of defense was entitled to from the stevedore. majority opinion incorrect
I believe discourage settle- further reason that it would for the normally encourage law seeks to whereas, the ments, gain by settling. nothing to has settlement. Westway’s put up posture “half-hearted” is to best hope it can thwart West- defense and loses. judgment. settling way by If at time before West- way agree itself and will not dismissal *21 majority, Westway according goes win, on to go prove itself were must on it before can recover defense to Mrs. liable costs. purposes of the law the fundamental
Based unsatisfactory prac- indemnity, I to be what believe majority consequences and the decision, tical past and the other authorities, of this court decisions majority opinion decision is incorrect. I am of also dissents. Tongue, J.,