Joe Adams & Son v. McCann Construction Company , 15 Tex. Sup. Ct. J. 16 ( 1971 )

WALKER, Justice.

The question to be decided is whether subcontractor-petitioner, Joe Adams & Son, is legally obligated to indemnify general contractor-respondent, McCann Construction Company, Inc., against the consequences of the respondent’s own negligence. The trial court answered the question in the negative and rendered a summary take-nothing judgment in McCann’s suit for indemnity. The Court of Civil Appeals answered the question in the affirmative, reversed the trial court’s judgment, severed the issue of indemnity from the issues of attorney’s fee, costs, etc., rendered summary judgment in favor of McCann for indemnity in the first cause and remanded the remaining cause to the trial court. 458 S.W.2d 477. We reverse the judgment of the Court of Civil Appeals and affirm that of the trial court.

McCann was the general contractor for the erection of a building and contracted with Adams to do certain concrete work. McCann built wooden forms extending some eighteen to twenty feet above ground level into which forms employees of Adams were to pour concrete from above for piers, beams and canopies. While three of Adams’ employees were on top of the forms pouring concrete, the forms collapsed, and they, the wet concrete and the three employees all fell to the ground. The employees were injured and they collected workmen’s compensation benefits from Adams’ insurer. They then sued McCann who called on Adams to defend the suit and filed a third party indemnity action against Adams. The trial court severed out the third party action and tried the damage suit to a jury. All three plaintiffs recovered judgments against McCann for substantial sums as damages upon findings by the jury that certain acts and omissions by McCann in connection with the construction and use of the forms were negligent and proximate causes of the injuries.

After the judgment for damages against McCann became final, both McCann and Adams moved for summary judgment in the severed third-party indemnity action. The trial court overruled McCann’s motion and granted Adams’ motion. As heretofore indicated, the Court of Civil Appeals reversed.

McCann’s right to indemnity from Adams, and therefore the correctness of the Court of Civil Appeals’ judgment, turns on the proper interpretation of the written contract under which Adams was doing the concrete work. The relevant provisions are as follows:

Article V. The Contractor [Adams] shall effectually secure and protect its work and shall bear and be liable for all loss or damages of any kind which may happen to the work or any materials to be incorporated therein at any time prior to the final completion and acceptance thereof. McCann Construction Company, Inc., shall not be responsible for any damage done to the work or property or [of] the Contractor, unless such damage shall be caused by the direct negligence of McCann Construction Company, Inc.

* * * * * *

Article VIII. The Contractor shall protect, indemnify and save McCann Construction Company, Inc., and Owner harmless from any and all claims, suits and actions of any kind or description, for damage or injuries to persons or property received or sustained by any party or parties through or on account of any act or in connection with the work of the Contractor or its agents or servants or subcontractors, or any default or omission of the Contractor, or its agents or servants or subcontractors in the performance of this contract, or through the use of improper or defective materials or tools or on account of injury or damage to adjacent buildings or property occasioned by work under this contract, or through failure to give the usual requisite and suitable notices to all parties, whose persons, estates or premises may be, in any way, interested in or affected by the performance of this work, and at its own cost shall defend any and all suits or actions that may be brought against McCann Construction Company, Inc., or Owner by reason thereof, and in the event of the failure of the Contractor to defend such suits McCann Construction Company, Inc., shall have the right and power to defend same and charge all costs of such defense to the Contractor or its Surety.

McCann directs our attention to the italicized language quoted above. It then points out that the work being performed at the time of the injuries was that of pouring concrete, that the forms were constructed for Adams to pour concrete into, that the latter’s contract could not be performed without the forms, and that the filling of the forms by Adams’ employees was the immediate cause of their collapse. The injuries were thus received, we are told, through or on account of “an act or in connection with the work” of Adams within the meaning of the contract. We do not agree. McCann’s liability arises from the fact that the accident was proximately caused by its own want of care, and there is no suggestion that Adams or anyone under its supervision or control was at fault in any way. We thus have a casualty that would not have occurred but for the negligence of the indemnitee and to which the indemnitor contributed in no way except by doing its work in a careful and prudent manner.

Texas follows the general rule that an indemnity agreement will not protect the indemnitee against the consequences of his own negligence unless the obligation is expressed in unequivocal terms. It is not necessary for the parties to say, in so many words, that they intend to save the indemnitee harmless from liability for his own wrongs, but it is necessary for that intention to clearly appear when all the provisions of the contract are considered in the light of the circumstances surrounding its execution. This was pointed out in Spence & Howe Construction Co. v. Gulf Oil Corp., Tex.Sup., 365 S.W.2d 631, where we stated that:

* * * Ordinarily, however, one does not contract against the results of his own negligence. Such agreements, except for insurance contracts, must be regarded as exceptional rather than usual in the majority of business transactions. Before such indemnity contracts may be enforced it must clearly appear that the contracting parties intended that the in-demnitor would be held liable for damages resulting from the negligence of the indemnitee.

******

In Mitchell’s, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775, this Court discussed the rule that an indemnity agreement will not protect the indemnitee against the consequence of his own negligence unless the obligation is expressed in unequivocal terms. The obvious purpose of this rule is to prevent injustice A contracting party should be upon fair notice that under his agreement and through no fault of his own, a large and ruinous award of damages may be assessed against him solely by reason of negligence attributable to the opposite contracting party. See, Perry v. Payne, 217 Pa. 252, 66 A. 553. Texas does not, however, follow the refinement of the rule which requires that the agreement, in order to effectually embrace the negligence of the indemnitee, should expressly so state.

******

The general rules relating to the construction of contracts are applicable to indemnity contracts. We agree with the statement of the Court of Civil Appeals that, “In construing contracts we must seek the intention of the parties from the language used in the contract. All of the language used is to be considered. Too, consideration may be given to the subject matter of the contract and the surrounding facts and circumstances, not for the purposes of varying or adding to the contract but in order to find out the intention with which words are used.”

In some cases it is fairly easy to discern an intention to afford protection even against the consequences of the indemni-tee’s negligence. The intent is usually clear, for example, where one person undertakes to indemnify another against liability for injuries or damage caused by defects in certain premises or resulting from the maintenance or operation of a specified instrumentality. When the indemnity agreement is expressed in these terms, the indemnitor ordinarily knows and certainly should be aware that he is assuming full responsibility for the particular premises or instrumentality. See Mitchell’s, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775; Houston & T. C. R. Co. v. Diamond Press Brick Co., 111 Tex. 18, 222 S.W. 204, 226 S.W. 140; Stewart & Co. v. Mobley, Tex.Civ.App., 282 S.W.2d 290 (writ ref.).

The situation is somewhat different where both parties to the contract will be working on a project and the obligation to indemnify is expressed in general terms that simply purport to protect the indemni-tee against liability arising out of acts or in connection with the work of the indemnitor. The indemnity provisions in this case are not part of a contract of insurance but are incident to an undertaking by a subcontractor to do certain concrete work for the prime contractor. Agreements of that nature are usually made primarily to protect the general contractor against loss or liability resulting from operations or physical conditions over which he has no control and which are under the control of the subcontractor. See North American Ry. Const. Co. v. Cincinnati Traction Co., 7th Cir., 172 F. 214. A stipulation in such a contract that refers merely to injuries or damage resulting from the acts or in connection with the work of the subcontractor does not in itself clearly indicate an intention to protect the general contractor against liability for a casualty caused solely by the latter’s negligence. It will not be given that effect unless the other provisions of the contract fairly warrant the conclusion that the parties expected to shield the indemnitee even against the consequences of his own wrong.

The contract in the present case contains nothing to justify that conclusion. Aside from the language upon which Mc-Cann relies, it purports to afford protection against liability arising from (1) any default or omission of Adams or its agents, servants or subcontractors in the performance of the contract; (2) injury or damage to adjacent buildings or property occasioned by work under the contract; or (3) through failure to give requisite and suitable notices to persons who might be interested in or affected by the performance of the work. None of these provisions fairly and clearly indicate an intention to protect the indemnitee against liability for damages caused solely by its own negligence, and it is our opinion that the general provision concerning injuries or damage received or sustained through or on account of an act or in connection with the work of Adams is not subject to the construction urged by McCann.

If there were any doubt in this respect, it would be dispelled by the provisions of Article V. Adams’ duty to protect and secure the work and be responsible for “all loss or damages of any kind that may happen to the work” is there defined in terms fully as general and sweeping as those now in question. It is clear, however, that the parties did not contemplate that this stipulation would immunize McCann from liability for damage done by it to the work. They accordingly added a provision that McCann would not be responsible for damage done to the work unless caused by its direct negligence.

The indemnity agreement in Spence & Howe, which contained language similar to that in the present case, was held to protect the indemnitee against liability for its own negligence. There the accident was caused by negligence of the indemnitee’s employee while operating a crane owned by the indemnitee, and the indemnitor was not at fault. As pointed out in the opinion, however, the indemnitor had supervision of the entire operation and was actively using the indemnitee’s crane and employee to do the work it had undertaken to perform. We therefore held that the contract and the operations conducted in pursuance thereof could not be so divided as to make two operations, one conducted by the indemnitee and the other by the indemnitor. The contrary is true in the present case, and the accident here was caused solely by the fault of the indemnitee in performing an operation for which it was exclusively responsible and which was completed before the indemnitor began doing its work under the contract.

McCann also relies on Ohio Oil Co. v. Smith, Tex.Sup., 365 S.W.2d 621, where the contractor had agreed to save the owner harmless from any and all claims and damages of every kind arising out of or attributed, directly or indirectly, to the operations of the contractor. The contract was for workover operations on a well of the owner, and an employee of the contractor was injured when he fell from a test tank furnished by the owner for use in the operations. It was held that the indemnity undertaking mentioned above, which was fully as general as the one relied upon by McCann in the present case, entitled the indemnitee to protection against liability arising solely from its own passive negligence. That conclusion appears to be entirely sound even under the views here expressed, because it reasonably appeared from another provision of the contract that the parties intended to afford the owner rather broad protection with respect to injuries sustained by employees of the contractor. The latter provision was quoted in the opinion, but there is no suggestion that it was considered in determining the effect of the general indemnity clause.

The opinion in Ohio Oil might thus leave the impression that the rights of the parties to an indemnity agreement may properly be determined by examining only one provision of the contract and then deciding that the words used can be construed to include the liability for which indemnity is sought. In this respect it is inconsistent with the views here expressed and with the opinion in Spence & Howe, which was handed down the same day. To that extent the opinion in Ohio Oil will not be followed, because to do so would often lead to harsh and unjust results that were not contemplated by the parties when the agreement was made. It would also place a premium on vague and uncertain language that might trap an unwary subcontractor who failed to obtain a legal opinion on every printed form submitted to him by a general contractor. If we are to do anything more than give lip service to the rules declared in Spence & Howe, a general contractor who wishes to be protected against liability for damage caused solely by his own negligence must arrange for the obligation to be expressed in clearer terms than those used in the agreement now in question.

The judgment of the Court of Civil Appeals- is reversed, and that of the trial court is affirmed.

Dissenting opinion by CALVERT, C. J., in which STEAKLEY, McGEE and DENTON, JJ., join.