Summary
In Price v. Shell Oil Co., 79 Cal.Rptr. 342 (1969), the court held, at 348: "In the light of the rationale in [the leading case], we perceive that the doctrine of strict liability in tort enunciated is equally applicable to non-sellers, and... to lessors and bailors."
Summary of this case from Thorpe v. Robert F. Bullock, Inc.Opinion
As Modified on Denial of Rehearing July 25, 1969.
Bledsoe, Smith, Catheart, Johnson & Rogers, San Francisco, for cross-defendant and respondent Flying Tiger Line, Inc., Robert A. Seligson, San Francisco, of counsel.
O'Connor, Moran, Cohn & Lynch, San Francisco, for appellant, Cyril Viadro, San Francisco, of counsel.
Werchick & Werchick, Jack H. Werchick, San Francisco, for respondent Merton H. Price.
Mullen & Filippi, San Francisco, for respondent and intervenor Pacific Emp. Ins. Co.
MOLINARI, Presiding Judge.
Plaintiff, an employee of Flying Tiger Line, Inc. (hereinafter referred to as "Flying Tiger"), filed this action for injuries he sustained as a result of falling from a ladder attached to a fuel truck leased by defendant Shell Oil Company (hereinafter referred to as "Shell") to Flying Tiger. Shell cross-complained against Flying Tiger for indemnity. Shell appeals from the judgment in favor of plaintiff for his injuries, from a judgment in favor of intervenor Pacific Employers Insurance Company (hereinafter referred to as "Pacific Employers"), the workmen's compensation carrier for Flying Tiger, and from the judgment of nonsuit in favor of Flying Tiger on the cross-complaint.
The complaint set out two causes of action, one based on the alleged negligence of Shell in maintaining the truck and its equipment, and the second, alleging breach of the warranty that the truck and ladder were merchantable and fit for the purpose intended. The trial court nonsuited plaintiff on the pleaded causes of action based on negligence and breach of warranty and
Facts
Plaintiff was employed by Flying Tiger as a licensed mechanic at the San Francisco International Airport on March 12, 1964. At some time after midnight on that date, the ladder connected to a fuel truck was placed up against the wing of a Flying Tiger airplane at the airport. Plaintiff went up the ladder to discharge his duty to check the hydraulic oil. When he was about half way up the ladder it broke and he fell, hitting the truck and sustaining injuries.
Shell had leased the gasoline tank truck to Flying Tiger beginning approximately January 1, 1958. The truck had a ladder anchored to its top for purposes of access to the wing of an airplane for fueling operations. Under the terms of the lease agreement, Flying Tiger was required to maintain the equipment in "good, safe and efficient" operating condition and to make certain specified repairs and all repairs necessitated by neglect, abuse or accident, while all other repairs and replacements were the responsibility of Shell. Some time in 1961 or 1962, Flying Tiger notified Shell that the roller assembly on the truck ladder was worn and after inspection by Shell personnel, the ladder was replaced. This replacement ladder was made of aluminum rather than steel, but the record does not indicated who manufactured it. However, it is clear that the ladder was installed for Shell by Oliver's Auto Parts of San Francisco. Additionally, there was testimony that Oliver's Auto Parts might not have been the only party involved in the installation, and that it was possible that Shell employees might have had something to do with the project. Representatives of Shell and Flying Tiger inspected the new ladder for purposes of ascertaining that it was the right size for the purposes for which it was needed. There was expert testimony to the effect that the quality of welding was poor and that this poor welding predisposed the ladder to failure because of concentrated stress. The poor design of the ladder, when combined with the aforementioned welds, also predisposed it to fracture. For purposes of the appeal, Shell concedes that the ladder had been improperly welded "by whoever had welded it."
The exact date is difficult to ascertain. Raymond Brendemuhl, the plant superintendent for Shell, testified the ladder was replaced in 1961 at the expense of Shell. But the invoice of installation is dated July 1962.
Merit Tank & Body was originally sued as manufacturer but was dismissed by stipulation.
The facts particular to the issue of indemnity will later appear in the discussion of that issue.
Strict Liability
Shell contends that the trial court erred in submitting the case to the jury on the theory of strict liability in tort because that theory has no application to a lessor of personal property. In considering this Greenman v. Yuba Power Products, Inc.,
The trial court instructed the jury as follows: "In this action, the plaintiff has the burden of proving the following: That Shell Oil Company, as lessor, leased the ladder as part of the equipment on the truck to which said ladder was attached to the Flying Tiger Line, plaintiff's employer, knowing it was to be used without inspection; that plaintiff was injured on March 11, 1964, as a proximate result of a defect in the design or manufacture of said ladder, and that plaintiff's injury happened while the ladder was being used in the way it was intended to be used, and that plaintiff was unaware of the defect, making the ladder unsafe for its intended use; the elements of his damage; the amount thereof; and the nature and extent of his injuries."
In California the duty of a lessor of personal property has been expressed in terms of an implied warranty of the fitness of the chattel for the use intended either as a warranty implied from the common law of bailments or upon the obligations of a letter of personal property as set out in Civil Code section 1955. (Tierstein v. Licht, 174 Cal.App.2d 835, 841, 345 P.2d 341; Holmes Packaging Mach. Corp. v. Bingham, 252 Cal.App.2d 862, 868-869, 60 Cal.Rptr. 769.) There is ample authority in this state that this warranty is not an absolute one making the lessor an insurer or guarantor, but a warranty by the lessor that he as exercised reasonable care to ascertain that the chattel is safe and suitable for the purpose or use for which he knew it was hired. (Dam v. Lake Aliso Riding School, 6 Cal.2d 395, 400, 57 P.2d 1315; Rae v. California Equipment Co., 12 Cal.2d 563, 569, 86 P.2d 352; McNeal v. Greenberg, 40 Cal.2d 740, 742, 255 P.2d 810; Sproul v. Cuddy, 131 Cal.App.2d 85, 93, 280 P.2d 158; Rohar v. Osborne, 133 Cal.App.2d 345, 353, 284 P.2d 125; Tierstein v.Licht, supra; Holmes Packaging Mach. Corp. v. Bingham, supra.) Accordingly, the duty imposed on the lessor in terms of these implied warranties finds its basis in the duty to exercise ordinary care which is due to everybody under principles declared in Civil Code sections 1708, 1714 and 3281. (Holmes Packaging Mach. Corp. v. Bingham, supra; Tierstein v. Licht, supra.)
Civil Code section 1955, in pertinent part, reads as follows: "One who lets personal property must * * * put it into a condition fit for the purpose for which he lets is, * * *."
The rule that the liability of a lessor for personal injuries resulting from the leased property is based upon the duty to exercise ordinary care is also the rule of Restatement. (See McNeal v. Greenberg, supra, 40 Cal.2d 740, 742, 255 P.2d 810; Rae v. California Equipment Co., supra, 12 Cal.2d 563, 569, 86 P.2d 352.) Under the rule set out in section 408 of the Restatement Second of Torts, liability is imposed in cases of physical harm caused by a chattel only if the lessor fails to exercise "reasonable care" in relation to the leased
Notwithstanding the foregoing established principles applicable to the duty of a lessor or bailor of a chattel, plaintiff urges that, although the cases in California have thus far involved only sellers of chattels, the doctrine of strict liability in tort is equally applicable to non-sellers such as commercial bailors and lessors. Plaintiff points to the increasing use of lease agreements to accomplish commercial ends and particularly relies on the New Jersey case of Cintrone v. Hertz Truck Leasing, etc. Service, 45 N.J. 434, 212 A.2d 769, in support of his position that the trial court did not err in applying the doctrine of strict liability.
In a recent survey of the law of strict liability in California, Professor William Prosser states that it is "quite probable" that decisions in other states applying strict liability to non-sellers will be accepted in California. (Prosser, Strict Liability to the Consumer in California (1966) 18 Hastings L.J. 9, 29.)
In Cintrone a lessor of trucks was held liable under the doctrine of strict liability upon the rationale that the nature of the "U-'Drive-It" type rental business is such that the lessor who "puts motor vehicles in the stream of commerce in a fashion not unlike a manufacturer or retailer" exposes the bailee, his employees, passengers and the traveling public "to a greater quantum of potential danger of harm from defective vehicles than usually arises out of sales by the manufacturer." (P. 450, 212 A.2d p. 777.) It should be noted here that in Conroy v. 10 Brewster Ave. Corp., 97 N.J.Super. 75, 234 A.2d 415 the doctrine of strict liability was rejected in the case of a lessor of a residence upon the rationale that the holding in Cintrone applies only to the mass producer or the mass lessor and not to cases involving isolated sales or leases. (P. 418, 212 A.2d 769.)
The Cintrone case was cited in Martinez v. Nichols Conveyor etc. Co., 243 Cal.App.2d 795,799, 52 Cal.Rptr. 842, 844, with the statement "We shall assume for the purpose of this opinion that the rule of strict liability in tort applies also to lessors and bailors." The decision in Martinez turns, however, upon the finding of the jury that the plaintiff's injury was not proximately caused by the lessor of the equipment. The "assumption" made by the Martinez case was noted in Barth v. B.F. Goodrich Tire Co., 265 A.C.A. 253, 278, 71 Cal.Rptr. 306, 308, a case involving the application of the doctrine of strict liability to a tire manufacturer.
In Greenman, supra, the Supreme Court made it clear that where the rule of strict liability is applicable, liability is not governed by the law of contract warranties (59 Cal.2d at p. 63, 27 Cal.Rptr. 697, 377 P.2d 897), and that where the sales act definition of implied warranties (former Civ.Code, § 1735, now covered by Com.Code, §§ 2314 to 2316), had been invoked in defining the defendant's liability it was done "because they provided appropriate standards for the court to adopt under the circumstances presented." (P. 61, 27 Cal.Rptr. p. 699, 377 P.2d 899.) Civil Code section 1955, applicable to bailors, and former Civil Code section 1735, applicable to sellers, contain similar language with respect to the implied warranty of the fitness of the chattel or goods for the use intended. Accordingly, it follows, upon analogy that, as in the case of former section 1735, section 1955 does not provide legislative limitation upon the law of strict liability. In sum, the law governing the manufacturer's liability for those injured Greenman v. Yuba Power Products, Inc.,
In the light of the rationale in Greenman, we perceive that the doctrine of strict liability in tort therein enunciated is equally applicable to non-sellers and, therefore, to lessors and bailors. That doctrine, originally applied to manufacturers, has since been applied to sellers in any stage of the production and distribution of goods. (Barth v. B. F. Goodrich Tire Co., supra, 265 A.C.A. 253, 278-279, 71 Cal.Rptr. 306; Kriegler v. Eichler Homes Inc., supra, 269 A.C.A. 224, 227, 74 Cal.Rptr. 749.) These extensions of the strict liability in tort doctrine were justified on the basis of overriding policy considerations in terms of today's society. (See Kriegler v. Eichler Homes, Inc., supra, at pp. 227-228, 74 Cal.Rptr. 749.) Accordingly, if the distinctions between lessors and sellers of personal property make no sense in today's society, they should be accommodated to meet changing needs and conditions. In Kriegler it was noted, in the light of changing needs and mores, that there was no meaningful distinction between the mass production and sale of homes and the mass production and sale of automobiles which came within the aegis of strict liability in tort. (At pp. 227-228, 74 Cal.Rptr. 749.) By the same token we preceive no meaningful distinction between the mass lessor of motor vehicles and the mass producer and seller of motor vehicles.
We do not apprehend, however, that the doctrine of strict liability depends upon whether the personal property is sold or leased in mass or large quantities. The criterion, as pointed out in the Greenman case, is whether the article or chattel is placed on the market knowing that it is to be used without inspection for defects. (59 Cal.2d at p. 62, 27 Cal.Rptr. 697, 377 P.2d 897.) The term "market" means "The course of commercial activity by which the exchange of commodities is effected." (Webster's New Internat. Dict. (3d ed. 1961). ) It assumes the existence of trade and implies competition and the existence of supply and demand. (Lilac Variety, Inc. v. Dallas Texas Company (Tex.Civ.App.) 383 S.W.2d 193, 196; State v. Penniman, 224 La. 95, 68 So.2d 770, 773; In re Flint's Will, 148 Misc. 474, 266 N.Y.S. 392; Zemel v. Commercial Warehouses, 132 N.J. Law 341, 40 A.2d 642, 643.) A casual sale does not established or create a market. (Le Blume Import Co. v. Coty, C.A., 293 F. 344, 351.) Accordingly, we perceive with respect to lessors and bailors that the inquiry in each instance is, as delineated in Cintrone, whether the lessor or bailor has put the chattel in the stream of commerce in the fashion of manufacturer or retailer.
In this state the cases have recognized a meaningful distinction between the seller who puts goods in the course or stream of commercial activity and the seller involved in a casual, isolated or single transaction. Thus in Conolley v. Bull, supra, 258 Cal.App.2d 183, 195-197, 65 Cal.Rptr. 689, the doctrine of strict liability in tort was held not to be applicable to the seller of a single parcel of real estate; and in Halliday v. Greene, 244 Cal.App.2d 482, 486-487, 53 Cal.Rptr. 267, the doctrine was held not to apply in favor of tenants as against the builder of a single apartment house. On the other hand, the doctrine was applied, in Kriegler v. Eichler Homes, Inc., supra, 269 A.C.A. 224, 227-228, 74 Cal.Rptr. 749, to a mass producer and seller of homes. The basis for the distinction appears to rest upon the rationale that the seller who places goods and chattels on the market is in the better position to insure against the liability and to distribute it to the public by adding the cost of such insurance to the price of his product. (See Seely v. White Motor Co., 63 Cal.2d 9, 18-19, 45 Cal.Rptr. 17, 403 P.2d 145; Prosser, Strict Liability to the In the instant case there is nothing in the record that indicates that Shell was in the business of leasing trucks, or that it put trucks in the stream of commerce in the fashion of a manufacturer or retailer, or that it had leased any trucks other than the one involved in this case. Accordingly, Cintrone is distinguishable from the present case. Since the record discloses an isolated lease, we hold that the doctrine of strict liability in tort was not applicable and that the trial court should have submitted the case to the jury upon the rule governed by Civil Code section 1955 which predicates the liability of a lessor for personal injuries resulting from the leased property upon the duty to exercise ordinary care. Plaintiff, however, should not be penalized because the trial court refused to instruct the jury either upon negligence or breach of warranty as requested by him, but limited him to strict liability instructions. Therefore, the case must be remanded for retrial.
In directing a retrial we make clear that plaintiff is not precluded from producing evidence purporting to show that the lease of the truck was made in the course of commercial activity which requires the application of the doctrine of strict liability in tort.
Indemnity
The agreement by which the truck was leased to Flying Tiger included the following paragraph: "Lessee shall indemnify Shell against any and all claims and liability for injury or death of persons or damage to property caused by or happening in connection with the equipment or the condition, maintenance, possession, operation or use thereof."
On the basis of this indemnity agreement, Shell cross-complained against Flying Tiger, averring that Shell should be indemnified from all liability, costs and charges in case plaintiff recovered damages. Flying Tiger answered that Shell was not entitled to indemnity because of active negligence in supplying a defective ladder. The trial court essentially agreed with Flying Tiger and granted its motion for a nonsuit on Shell's cross-complaint. The trial court reached this conclusion on the ground that the agreement set out above was not sufficiently specific to allow for indemnity in either a situation where Shell was actively negligent or where Shell was liable on the theory of strict liability in tort.
Shell contends that the trial court erred in granting the nonsuit because the agreement was intended by its clear terms to cover precisely the type of claim established in this case, regardless of any active negligence on the part of Shell. Flying Tiger claims that it has no obligation to idemnify Shell essentially because Shell was the wrongdoer in providing defective equipment and because the lease did not specifically mention the original ladder or the replacement ladder which was involved in the accident.
Alternatively, Shell argues that strict liability in tort is analogous to "passive" negligence against which Shell could be indemnified. In light of our conclusion the inapplicability of the doctrine of strict liability, it is unnecessary for us to consider this contention.
Before considering these arguments in more detail we will first discuss the general rules applicable to indemnity agreements of the type utilized in the instant case. Also, we initially note that in a case of this sort where there is no conflicting extrinsic evidence relating to the contract, the interpretation of the terms of the agreement is a question for this court. (Parsons v. Bristol Development Co., 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839; Markley v. Beagle, 66 Cal.2d 951, 962, 59 Cal.Rptr. 809, 429 P.2d 129.) Next, we note that since the parties to this agreement expressly contracted on the subject of indemnity, the extent of the duty to indemnify must be ascertained from the agreement itself and not from the application Markley v. Beagle,
The basic rule on general indemnity clauses is succinctly set forth in Markley v. Beagle, supra, 66 Cal.2d 951, 59 Cal.Rptr. 809, 429 P.2d 129: "An indemnity clause phrased in general terms will not be interpreted, however, to provide indemnity for consequences resulting from the indemnitee's own actively negligent acts. [Citations.] Mere nonfeasance, however, such as a negligent failure to discover a dangerous condition arising from the work will not preclude indemnity under a general clause such as the one in this case. [Citations.]" (P. 962, 59 Cal.Rptr. p. 816, 429 P.2d p. 136; see also Cahill Bros., Inc. v. Clementina Co., 208 Cal.App.2d 367, 382, 25 Cal.Rptr. 301; King v. Timber Structures, Inc., 240 Cal.App.2d 178, 181-182, 49 Cal.Rptr. 414.)
Flying Tiger contends that Shell was actively negligent because Shell was responsible for the design of the ladder. In this regard it appears that the applicable rule in determining what is active negligence is, by analogy, the same rule applied in cases of implied indemnity. That rule is that a person cannot seek indemnification if he personally participates in an affirmative act of negligence, or is physically connected with an act or omission by knowledge or acquiescence in it on his part, or fails to perform some duty in connection with the omission which he may have undertaken by virtue of his agreement. (Cahill Bros., Inc. v. Clementina Co., supra, 208 Cal.App.2d 367, 382, 25 Cal.Rptr. 301; Goldman v. Ecco-Phoenix Elec. Corp., 62 Cal.2d 40, 44, 41 Cal.Rptr. 73, 396 P.2d 377; Harvey Mach. Co. v. Hatzel & Buehler, Inc., 54 Cal.2d 445, 449, 6 Cal.Rptr. 284, 353 P.2d 924; see 8 Santa Clara Lawyer, pp. 167-168.) In the instant case the evidence was uncontradicted that the manufacturer of the ladder was told to make the ladder of aluminum and that it was to be patterned and copied from the old ladder. In light of this evidence the trial court was entitled to conclude as a matter of law that Shell participated in the conduct or omission which caused the injury beyond the mere failure to perform a duty imposed upon it by law and that, therefore, there was active fault on Shell's part. (See Cahill Bros., Inc. v. Clementina Co., supra, at p. 381, 25 Cal.Rptr. 301.)
However, the foregoing rules concerning general indemnity clauses are not applicable where the parties have contracted with the intention and contemplation of indemnifying from the precise risk from which the injury arose, and the agreement providing for such indemnification is clear and explicit. (Goldman v. Ecco-Phoenix Elec. Corp., supra, 62 Cal.2d 40, 44, 41 Cal.Rptr. 73, 396 P.2d 377; Harvey Mach. Co. v. Hatzel & Buehler, Inc., supra, 54 Cal.2d 445, 449, 6 Cal.Rptr. 284, 353 P.2d 924; John E. Branagh & Sons v. Witcosky, 242 Cal.App.2d 835, 839, 51 Cal.Rptr. 844.) Accordingly, in the instant case if by a clear and explicit agreement the parties intended that Shell be indemnified by Flying Tiger for an accident resulting from supplying a defective ladder, then it matters not if Shell was actively negligent, passively negligent, or liable under the theory of strict liability. (See Harvey Mach. Co. v. Hatzel & Buehler, Inc., supra, at pp. 448-449, 6 Cal.Rptr. 284, 353 P.2d 924; Schackman v. Universal Pictures Co., 255 Cal.App.2d 857, 862-863, 63 Cal.Rptr. 607; Atchison, T. & S. F. Ry. Co. v. James Stewart Co., 246 Cal.App.2d 821, 830, 55 Cal.Rptr. 316.) As the court said in Atchison, "The clearly expressed intention of the parties will be enforced." (At p. 830, 55 Cal.Rptr. at p. 321.) Or as the court stated in Harvey Mach. Co., supra, "The question is one of interpretation of contracts" and it is the intent of the parties which the court seeks to ascertain and make effective." (Pp. 447, 449, 6 Cal.Rptr. p. 286, 353 P.2d p. 926.)
In the instant case the trial court simply equated Shell's strict liability for the defective ladder with negligence and concluded Flying Tiger, relying on Kwikset Locks Inc. v. Stewart Commissaries, 225 Cal.App.2d 146, 37 Cal.Rptr. 248, argues that Shell should be precluded from obtaining indemnity from Flying Tiger because Shell breached its contract with Flying Tiger by furnishing Flying Tiger with a defective laddder. Its reliance on Kwikset is misplaced. That case reiterates the rationale we have employed in the instant case when it observes that "If breach of contractual duty is treated in the same category as active negligence, it would follow that absent an express agreement for indemnification the indemnitee may not recover from the indemnitor where the indemnitee has breached a contractual duty." (P. 151, 37 Cal.Rptr. p. 251.) This statement in Kwikset is predicated upon our discussion in Cahill Bros., Inc. v. Clementina Co., supra, 208 Cal.App.2d 367, 382, 25 Cal.Rptr. 301, 309 where we observed, with respect to contractual implied indemnity, that a person cannot seek indemnification if he "fails to perform some duty in connection with the omission which he may have undertaken by virtue of his agreement, * * *." Thus, in Clementina, we equated breach of contract with active negligence as precluding a right of indemnity premised upon implied contractual indemnity. Accordingly, in the instant case, absent the express agreement for indemnification, Shell's breach of its implied contractual duty to furnish a safe and non-defective ladder would preclude indemnity if the [Shell's] breach caused the damage. But, as pointed out above, Flying Tiger expressly agreed to indemnify Shell from liability for the precise type of accident which occurred in the instant case even if it resulted from Shell's fault and irrespective of whether that fault finds its genesis in active negligence or breach of contract.
We conclude, therefore, that at the time the motion for nonsuit was interposed, the state of the record was such that, as a matter of law, the indemnification agreement was clear and explicit that Flying Tiger agreed to indemnify Shell for the accident which occurred, and that, therefore, it was inconsequential whether Shell was actively or passively negligent in supplying the defective ladder. Accordingly, the evidence was such as to support a verdict for Shell at the time the nonsuit was granted and it was, therefore, error to grant the motion. In this posture the case should have proceeded so as to permit Flying Tiger to present any proper defense to the prima facie case established by Shell that it was entitled to be indemnified by Flying Tiger.
The judgments against Shell in favor of plaintiff Merton Price, and Pacific Employers and Flying Tiger are reversed and the cause is remanded for a new trial as to all parties. Shell shall recover one-half of its costs as against Price and one-half as against Pacific Employers and Flying Tiger.
Since the preparation of this opinion the Fourth Division of this court has filed an opinion in McClaflin v. Bayshore Equipment Rental Company, Cal.App., 79 Cal.Rptr. 337, holding the doctrine of strict liability in tort applicable to a lessor engaged in the business of renting ladders.
SIMS and ELKINGTON, JJ., concur.