Southern Pacific Co. v. Gila River Ranch, Inc.

HATHAWAY, Judge. This appeal is from a judgment entered 'in a lawsuit instituted by Southern Pacific to recover from Gila River Ranch for dam;age to one of the railway company trains. Southern Pacific’s claim was predicated on .a “Private Road Crossing Agreement.” This 1934 agreement gave a license to ‘Gila River’s predecessor in interest, Gillespie Land & Irrigation Co., a corporation, to cross Southern Pacific’s railroad tracks rat a designated point. The licensee was .given permission to construct, maintain and use the private road crossing and was required to maintain and keep the crossing in good repair. The agreement prohibited «se of the crossing by any person or persons except the licensee, licensee’s family, •guests, tenants, employees and business invitees. In 1957 the agreement was assign•ed to Gila River, with the written consent •of Southern Pacific, and Gila River thereby assumed the licensee’s rights and duties. On December 3, 1964, a Southern Pacific train collided with a cotton trailer which had become immobilized on the tracks at the subject crossing. This collision caused damage to the locomotive and demolished the cotton trailer. The railroad company sued the Ranch to recover for its loss occasioned by the collision, claiming it was entitled to indemnification by virtue of the following provision of the crossing agreement: "Licensee shall and hereby expressly agrees to indemnify and save harmless the Licensor and its lessor from and against any and all loss, damage, injury, cost and expense of every kind and nature, from any cause whatsoever, resulting directly or indirectly from the maintenance, presence or use of said crossing.” The defendant filed a third party complaint against one Parrish, owner of the cotton trailer which collided with the train, and House, the employee-driver. The parties stipulated to certain facts, including the following: That the collision occurred at the railroad crossing which was the subject of the crossing agreement, that Southern Pacific had sustained damages in the amount of $1,535.53, and that prior to the accident, the crossing was owned and maintained exclusively by Southern Pacific. The question of whether the crossing agreement covered losses occasioned by the railroad-indemnitee’s negligence was submitted to the court, which ruled that the railroad was not entitled to indemnification for losses caused by its own negligence. The only factual issue was whether any of the parties or their employees were guilty of negligence proximately causing damage to Southern Pacific. At the request of the plaintiff, two interrogatories were submitted to the jury: “Interrogatory No. 1: Was plaintiff negligent in the operation of its train? “If the above question is answered in the affirmative, was such negligence a proximate cause of the collision? [572] “Interrogatory No. 2: Was plaintiff negligent in-failing to maintáin the private road crossing? “If the above question is answered in the affirmative, was such negligence a proximate cause of the collision?” The jury answered Interrogatory No. 1 in the negative and both parts of Interrogatory No. 2 in the affirmative. It was instructed that the crossing agreement did not allow Southern Pacific to be indemnified for damages proximately caused by its own negligence. Three forms of verdict were submitted to the jury: (1) Finding for Southern Pacific and against Gila River in the original action and for Gila River and against third-party defendants in the third-party action; (2) Finding for Gila River and against Southern Pacific; and (3) Finding for Southern Pacific against Gila River in the original action and for third-party defendants in the third-party action. As noted above, the jury found that Southern Pacific was negligent in maintaining the road crossing and that such negligence was the proximate cause of the accident. It returned a verdict in favor of Gila River and against Southern Pacific. Southern Pacific, pursuant to Rule 50(b), as amended, Rules of Civil Procedure, 16 A.R.S., moved for judgment in its favor contending, inter alia, that the jury’s response to the interrogatories compelled judgment in its favor. In other words, its position was that the finding of negligent maintenance brought the loss within the ambit of the crossing agreement. Judgment was entered in favor of Gila River and the third-party complaint against Parrish and his employee was dismissed. The sole question presented is one of contract interpretation. The trial judge was of the opinion that Southern Pacific was under a duty to maintain the crossing without negligence on its part, such duty extending to Gila River and the third-party defendants. He therefore ruled that the indemnity agreement did not cover losses occasioned by Southern Pacific’s negligent maintenance, if such negligence was established. In Graver Tank & Manufacturing Company v. Fluor Corporation, Ltd., 4 Ariz.App. 476, 421 P.2d 909 (1966), we held that express reference to the indemnitee’s negligence is not necessary to cover losses, occasioned thereby if the language of the indemnity contract manifests the parties’ intent to include the negligent act of theindemnitee. In Graver, the language of the contract provided that Graver would indemnify Fluor “ * * * from all claims * * * of whatever nature arising out of the services, labor, equipment and materials furnished by * * * ” Graver and that Graver assumed “ * * * entire responsibility and liability for all losses- * * * in connection with or arising out of any injury * * * sustained in connection with or arising out of the performance * * *” Qf Graver’s work. (421 P.2d at 911.) Other courts have likewise rejected the-“express negligence” doctrine. See e. g.,. Metropolitan Paving Company v. Gordon Herkenhoff & Associates, 66 N.M. 41, 341 P.2d 460 (1959); District of Columbia v. General Heating Engineering Company, 168 A.2d 903 (D.C.1961); Southern Pacific Company v. Morrison-Knudsen Company, 216 Or. 398, 338 P.2d 665 (1959); Atchison, Topeka & Santa Fe Railway Company v. James Stewart Company, 246 Cal.App. 821, 55 Cal.Rptr. 316 (1966); Spence & Howe Construction Company v. Gulf Oil Corporation, 365 S.W.2d 631 (Tex.1963); Jacksonville Terminal Company v. Railway Express Agency, Inc., 296 F.2d 256 (5th Cir. 1961). Although agreements to indemnify for the indemnitee’s negligence are not favorites of the law, Union Pac. Railroad Co., v. El Paso Natural Gas Co., 17 Utah 2d 255, 408 P.2d 910 (1965), they are generally enforceable when the parties have equality of bargaining power and their intent as to. such indemnification is manifestly plain- and unequivocal. Colorado Milling & Elev. Co. v. Chicago R. I. & P. R. Co., 382 F.2d [573] 834 (10th Cir.1967); Jordan v. Eastern Transit & Storage Co., 266 N.C. 156, 146 S.E.2d 43 (1966); Hall v. Sinclair Refining Co., 242 N.C. 707, 89 S.E.2d 396 (1955); See also Annot., 175 A.L.R. 8, §§ 6-10. Here, the indemnitee is a railroad. Were an exemption from its own negligence attempted in its capacity as a common carrier, the indemnity agreement would be invalid. Restatement of Contracts § 575. However, such is not the case where the railroad is acting in a private capacity as a property owner. Miller & Co. of Birmingham v. Louisville & N. R. Co., 328 F.2d 73 (5th Cir.1964); Anthony v. Louisiana & Arkansas Ry. Co., 316 F.2d 858 (8th Cir.1963); Colonial Stores, Inc. v. Central of Ga. Ry. Co., 279 F.2d 777 (5th Cir.1960); Ryan Mercantile Co. v. Great No. Ry. Co., 294 F.2d 629 (9th Cir.1961); Chicago & N. W. Ry. Co. v. Rissler, 184 F.Supp. 98 (D.Wyo.1960); Russell v. Martin, Fla., 88 So.2d 315 (1956); See also Annots., 14 A.L.R.3d 446 and 175 A.L.R. 8. In the absence of a statute or agreement, a railroad is under no duty to construct a private crossing. 74 C.J.S. Railroads § 170b; 44 Am.Jur. Railroads § 117. Therefore, in granting to another a right, not owing to the general public, to make use of its right-of-way, it may impose such conditions it chooses in granting permission. Bohannon v. Southern Ry. Co., 97 Ga.App. 849, 104 S.E.2d 603 (1958); Chicago & N. W. Ry. Co. v. Kramme, 244 Iowa 944, 59 N.W.2d 204 (1953); Chicago Great Western Ry. Co. v. Farmers Produce Co., 164 F.Supp. 532 (N.D. Iowa 1958); Russell v. Martin, supra. The crossing agreement herein involved was executed by Southern Pacific as a property owner and not as a common carrier. In view of its right, as a landowner, to impose any conditions it desired in granting permission to cross its property, we do not find the agreement vulnerable because of any disparity of bargaining power. It was an arms-length transaction between two property owners, and the fact that one was a railroad does not alter the situation. The breadth of the language used in the indemnity provision (“all loss * * * of every kind and nature, from any cause whatsoever resulting * * * from the maintenance, presence, or use of said crossing”), giving due consideration to the subj ect matter and circumstances of the agreement, manifest a clear intention to insure Southern Pacific against all losses, not excepting those occasioned by Southern Pacific’s negligence. The only one who derived benefit from the crossing agreement was the indemnitor, hence it is quite logical that the railroad, which had nothing to gain, would exact as a condition for the benefit conferred exemption from liability for its own negligence. As stated in Southern Pacific Company v. Morrison-Knudsen Company, supra: “Under the circumstances, it was only natural and the exercise of sound business judgment that the Railroad would demand protection including the consequences of its own acts.” 338 P.2d at 673. Insurance companies assume liability for losses occasioned by another’s negligence and it is common knowledge that the device of insuring against one’s own negligence through indemnity contracts is frequently employed in other business ventures. There is no dispute that the insured risk occurred, i. e., damage resulting from the maintenance of the crossing. Since the plain and clear meaning of the language used by the parties evidences an intention to include the indemnitee’s negligent acts, we believe the trial court erred in construing the agreement otherwise. The parties having agreed as to the amount of Southern Pacific’s loss, the judgment must be set aside with directions to enter judgment in Southern Pacific’s favor against Gila River for damages in the amount of $1,535.-53. The crossing agreement also provides: “That in case licensor shall bring suit to compel performance of, or to recover for breach of, any covenant, agreement [574] or condition herein written, licensee shall and will pay to licensor reasonable attorney fees in addition to the amount of judgment and costs.” The pretrial order recites that the parties stipulated that this matter of attorney’s fees and their reasonableness would be left for the court to determine at the conclusion of the case, should it be necessary. The cause is therefore remanded ’for the limited purpose of making this determination. The judgment is reversed1 and remanded for further proceedings not inconsistent herewith. KRUCKER, J., concurs. NOTE: This cause was decided by the Judges of Division Two as authorized by A.R.S. § 12-120, subsec. E. Footnotes [1] Reversal of the judgment as to the third-party complaint is likewise required since reversal of the judgment as to Gila River causes it to fall. 5B C.J.S. Appeal & Error § 1951; 5 Am.Jur.2d Appeal & Error 956.