220 Pa. Super. 308 | Pa. Super. Ct. | 1971
Lead Opinion
Opinion by
This is an appeal from an order of the lower court granting defendant-appellee’s motion for summary judgment.
In 1957 appellant and appellee’s predecessor, Emblem Oil Company, executed an equipment loan agreement covering an oil and gasoline dispensing system previously installed at appellant’s bus garage by Emblem in 1950. As consideration for Emblem’s loan of the dispensing system, appellant promised to use the equipment only to sell or deliver petroleum products purchased from Emblem.
On May 29, 1969, while the equipment loan agreement was still in effect, two of appellee’s repairmen were sent to service the dispensing system at appellant’s bus garage. While at the garage, appellee’s employees were requested to change the hose on the gasoline dispensing pump covered by the equipment loan agreement. Approximately ten minutes after this was accomplished, a gasoline explosion occurred where defendant’s employees had been working, resulting in extensive damage to appellant’s properly.
Appellant instituted this action in trespass against appellee seeking recovery for the property damage which it sustained. Appellee filed an answer containing new matter pleading an indemnity clause in the
The lower court held that this indemnity clause exonerated appellee from all liability, and having so held, the court granted appellee’s motion for summary judgment. Appellant argues that appellee’s negligence is not excused by the indemnity clause for three reasons. We will consider each of these arguments separately.
I. The Validity of the Indemnity Clause
Appellant’s first argument is that the indemnity clause cannot exculpate appellee for a violation of a governmental regulation promulgated pursuant to statutory authority. Our Supreme Court recently reviewed the general validity of exculpatory clauses. In Employers Liability Assurance Corporation, Ltd. v. Greenville Business Men’s Association, 423 Pa. 288, 224 A. 2d 620 (1966), the Court said “[a]n exculpatory clause is valid if: (a) ‘it does not contravene any policy of the law, that is, if it is not a matter of interest to the
Appellant contends that the indemnity clause in the equipment loan agreement contravenes public policy insofar as it was intended to exculpate appellee for its negligent installation and maintenance of a gasoline dispensing system in violation of the State Fire Marshal’s regulations. These regulations require that an automatic control must be provided on gasoline dispensing systems which stops the pump when all nozzles have been returned to their brackets, and that electrical equipment used in connection with such systems must conform to the applicable provisions of the National Electrical Code. Pa. State Police Reg. for the Storage, Handling and Use of Flammable and Combustible Liquids, §§9-234-1 and 9-51 (1965) (promulgated pursuant to Section 1 of the Act of April 27, 1927, P. L. 450, as amended, 35 P.S. 1181).
Appellant alleges that the nozzle hook-up and electrical switch installed by appellee did not conform to these standards. Assuming that appellant can prove these alleged violations and can show that they were the proximate cause of the explosion and fire, the question is whether the negligent violation of a duly promulgated regulation intended for the protection of the
Any attempt by a negligent party to exculpate himself for a violation of a statute intended for the protection of human life is invalid. Boyd v. Smith, 372 Pa. 306, 94 A. 2d 44 (1953).
The widespread use of property and liability insurance does not invalidate the policy argument against contracts transferring responsibility for the violation of public safety measures enacted or authorized by the Legislature. If all that were involved was the shifting of ultimate loss from one insurer to another, we would not be concerned with the private transfer of risk by
The appellee in the present case was clearly in a position to most effectively control the risk associated with the sale and storage of an inherently dangerous fuel by reason of its expertise, skill and ability to diversify its exposure to risk through its dealers. Appel-lee’s attempt to transfer its liability to appellant placed the burden of compliance with the applicable regulations on the party which had neither the knowledge nor the experience to properly comply.
Appellee created an unacceptable risk to life by violating regulations intended for the protection of the public, and, therefore, we hold that appellee cannot contractually relieve itself of liability for resulting property damage proximately caused thereby.
II. The Applicability of the Indemnity Clause
Appellant’s second argument is that the indemnity clause was intended to hold appellee harmless only for acts of negligence related to items of equipment specified in the equipment loan agreement. The agreement lists a “Tokheim Pump, Model 46; [Serial No.] 02527;
The Supreme Court of this Commonwealth has held that where an exculpatory clause is valid, it still must meet the following standards: “(1) contracts providing for immunity from liability for negligence must be construed strictly since they are not favorites of the law (Galligan v. Arovitch, supra, p. 303; Crew v. Bradstreet Co., 134 Pa. 161, 169, 19 A. 500 (1890)); (2) such contracts ‘must spell out the intention of the parties with the greatest of particularity’ (Morton v. Ambridge Borough, 375 Pa. 630, 635, 101 A. 2d 661 (1954)) and show the intent to release from liability ‘beyond doubt by express stipulation’ and ‘[n]o inference from words of general import can establish it’ (Perry v. Payne, 217 Pa. 252, 262, 66 A. 553 (1907)); (3) such contracts must be construed with every intendment against the party who seeks the immunity from liability (Crew v. Bradstreet, supra, p. 169); (4) the burden to establish immunity from liability is upon the party who asserts such immunity (Dilks v. Flohr Chevrolet, supra, p. 436).” Employers Liability Assurance Corporation, Ltd. v. Greenville Business Men’s Association, supra, 423 Pa. at 292-293, 224 A. 2d at 623, quoted with approval in Kotwasinski v. Rasner, 436 Pa. 32, 39, 258 A. 2d 865, 868 (1969).
In Schroeder v. Gulf Refining Co. (No. 2), 300 Pa. 405, 150 A. 665 (1930), the Pennsylvania Supreme
“The contract here related to a pump installed by the defendant company, and the casualties provided for were those resulting from the use of that particular device. The tank was separate and apart and owned hy plaintiff', and though the pump was employed to draw gasoline therefrom when required, yet the act causing the loss did not result from its operation, hut from the negligence of the servant of defendant in permitting the overflow at the intake when transferring gasoline from his truck. The filling of the tank cannot be construed to be an operation of the pump. The defendant provided, in its agreement [,] for a release, from the consequences of an improper installation of the article which it supplied, and also for injury occurring from its [the pump] actual employment in drawing the supply from the tank. Defendant properly protected itself from damages; for this act would he solely within the
Schroeder clearly establishes that the grant of summary judgment in the instant case was error. It is doubtful that the parties intended to release appellee from liability for its own negligence where the acts complained of are alleged to have been solely within the control of appellee and where these acts are alleged to have been in connection with the installation and repair of equipment not covered by the agreement. However, we do not wish to prevent appellee from having an opportunity to show that the parties intended such a release. Therefore, as to any acts of negligence which are not in violation of regulations intended for the protection of the public, we find that the applicability of the indemnity clause is not clear on its face and must be determined at trial.
III. Retroactive Application of the Indemnity Clause
Finally, appellant argues that the indemnity clause was not intended to save appellee harmless from acts of negligence or negligent conditions which occurred or were created prior to the date of the equipment loan agreement.
In Employers Liability Assurance Corporation, supra, and Kotwasinski, supra, the Pennsylvania Supreme
The equipment loan agreement fails to disclose any intention by the parties thereto to exculpate appellee from prior acts of negligence. Again, we believe that appellee should have an opportunity to establish otherwise at trial.
For the above reasons the court below should not have entered a summary judgment.
Judgment reversed and record remanded for proceedings consistent with this opinion.
The clause provides for exculpation and indemnification. We will use the terms “indemnity clause” and “exculpatory elause” interchangeably when referring to it. “While an exculpatory clause . . . differs somewhat from an indemnity clause . . . yet there is such a substantial kinship between both types of contracts as to render decisions dealing with indemnity clauses applicable to decisions dealing with exculpatory clauses, and vice versa.” Dilks v. Flohr Chevrolet, 411 Pa. 425, 435 n. 11 (1963).
We do not intend by this to make any statement as to whether the regulations at issue in the present ease were intended for the protection of human life, but for the purposes of argument we will assume that they were.
Boyd involved an action for personal injuries resulting from a landlord’s failure to provide the leased premises with an adequate fire escape. The landlord relied on an exculpatory clause in the lease as an affirmative defense to the lessee’s negligence action. Chief Justice Stern held that the exculpatory clause was “legally inoperative and void” because the landlord had violated a statute “intended for the protection of human life”. Boyd v. Smith, 372 Pa. at 310, 94 A. 2d at 46 (1953).
In Pennsylvania, statutes and regulations grounded upon public health and safety have been given the same legal effect insofar as a violation of either is negUgenee per se. Berkebile v. Brantly Helicopter Corporation, 219 Pa. Superior Ct. 479, 281 A. 2d 707 (1971).
Most liability insurers wUl provide complete loss prevention engineering for any customer whose premiums (or losses) warrant the expenditure. An insured may have the benefit of regular inspections with detailed recommendations for loss control in his particular case. Mehr and Sedges, Rislc Management in Business Enterprise, 47 (1963). It is more likely that these services would be requested by an insured or suggested by an insurer where the insured is the party who controls the risk and is responsible for any loss occasioned by it.
Furthermore, it should be noted that the mere attempt to transfer liability increases the risk to the public. This occurs because the “ultimate responsibility for given risks becomes very difficult to ascertain”, and neither party is motivated to take corrective action. See Mehr and Sedges, supra at 86.
Our research has disclosed only one case which considered this question. In an action by customers against a distributor of propane gas for property damage resulting from a fire, the Court of Appeals of Georgia held that plaintiff’s petition was sufficient to state a cause of action where the fire was proximately caused by the distributor’s negligence in violating regulations of the State Fire Commissioner. The Court invalidated an agreement between the customers and the distributor relieving distributor from liability for damage or loss caused directly or indirectly by escaping gas: “Where, as here, the defendant made the installation on the plaintiff’s property, it would be contrary to the regulations, and accordingly contrary to law, for the parties to agree that it be made in violation thereof. Such agreement would be against public policy and therefore void.” Bishop v. Act-O-Lane Gas Service Company, 91 Ga. App. 154, 166, 85 S.E. 2d 169, 177 (1954).
“That the party of the second part shaU indemnify and save harmless the party of the first part of and from any and aU liability for loss, damage, injury or other casualty, to persons or property, caused or occasioned by any leakage, fire or explosion of gasoline stored in said tanks, or drawn through said pump, or any other casualty in any way growing out of or resulting from the installation and operation of said equipment; whether due to imperfection in said equipment, or to any fault in the installation and operation thereof, whether the same arises from negligence or otherwise.” Schroeder v. Gulf Refining Co. (No. 2), 300 Pa. at 410, 150 A. at 667 (1930).
Dissenting Opinion
Dissenting Opinion by
I disagree with the reasoning of the majority in parts II and III of its opinion.
The language of the indemnity clause here involved can be and must be declared as a matter of law not to constitute a release of appellee’s liability for its own negligence. The case of Schroeder v. Gulf Refining Co. (No. 2), 300 Pa. 405 (1930), as quoted and relied on by the majority, so determined the issue when a similar clause was before it for consideration. In that
The Supreme Court of Pennsylvania interpreted that clause as not intending to release the defendant from liability for its own negligence, the court saying: “‘A party may contract for indemnity against the results floAving from his OAvn acts, but no inference from words of general import can establish it; on the contrary, the intent' of both parties to that effect must be made apparent by clear, precise and unequivocal language’: Camden Safe Dep. & Tr. Co. v. Eavenson, 295 Pa. 357. ‘In all cases such contracts should be construed strictly with every intendment against the parties seeking their protection’: Crew v. Bradstreet Co., 134 Pa. 161; P. R. R. Co. v. Roydhouse, 267 Pa. 368. Though an agreement of indemnity for loss or damage is enforceable (Rundell v. Lehigh Valley R.R. Co., 254 Pa. 529; Atherton v. Clearview Coal Co., 267 Pa. 425), the purpose to so relieve from liability must clearly appear, and the words used must be construed in connection with the circumstances attending the parties and their object in making the instrument: Perry v. Payne, 217 Pa. 252."
The court then applied that rule to the clause there in question and concluded: “The apparent purpose of the release was to provide against negligence of others, such as the plaintiff, the manufacturer who supplied
I see no reason for distinguishing the Schroeder decision in the instant case. Nor does the majority, which relies on and approves of the Schroeder decision, state any reason for not following the conclusion there reached. In fact, the language of the clause interpreted in the Schroeder case was broader in scope in that it included the further phrase, “whether due to imperfection in said equipment, or to any fault in the installation and operation thereof,” and yet it was determined that the language was insufficient to evidence an intent to relieve defendant from liability for its own negligence.
I see no reason, therefore, for the majority’s remand for a determination as to the intent of the parties when under applicable law we must construe the clause as insufficient to evidence an intent to release the defendant from liability for its own acts of negligence. The case should not be remanded for parol evidence as to intent when the courts have already declared the clause in question as not containing “the clear, precise and unequivocal” language needed to evidence an intent to release defendant from liability for its own negligence.
For similar reasons I dissent from the holding in part III of the majority’s opinion in which the case is remanded for evidence as to intent to release defendant from liability for conditions which occurred or
I would therefore hold that the indemnity clause in question must be interpreted as a matter of law as not relieving defendant from liability for its own negligence and not relieving defendant from liability for past negligent conduct. I would reverse and remand for proceedings only on the other issues of fact involved.
