White v. McLouth Steel Corp.

18 Mich. App. 688 (1969) 171 N.W.2d 662

WHITE
v.
McLOUTH STEEL CORPORATION

Docket Nos. 4,448, 4,449, 4,450, 4,451.

Michigan Court of Appeals.

Decided August 26, 1969. Rehearing denied October 15, 1969. Application for leave to appeal filed October 28, 1969.

Leonard C. Jaques, for plaintiffs Anthony and Ruby White.

Goodman, Eden, Robb, Millender, Goodman & Bedrosian (Paul A. Rosen, of counsel), for plaintiffs Clarence and Marie White.

Johnson, Campbell & Moesta, for intervening plaintiff Zurich Insurance Company.

Martin, Bohall, Joselyn, Halsey & Rowe, for defendant McLouth Steel Corporation.

Davidson, Gotshall, Halsey, Kohl, Nelson, Secrest & Wardell, for third-party defendant A.E. Anderson Construction Company.

Before: FITZGERALD, P.J., and LEVIN and T.M. BURNS, JJ.

FITZGERALD, P.J.

Despite the apparent confusion soon forthcoming in the recitation of the facts of this multi-party litigation, the basic issues on appeal are not difficult. Plaintiffs were injured while at work on a blast furnace at McLouth Steel Corporation, hereinafter referred to as McLouth. They were hired by A.E. Anderson Construction Company, hereinafter referred to as A.E. Anderson, the general contractor, to assist in the general work of relining the McLouth furnace. A provision of the contract between McLouth and A.E. Anderson provided indemnity to McLouth in the event that it became subject to claims, demands or liabilities for injuries connected with the work. Plaintiffs' injuries were allegedly caused by an explosion set off by another employee of A.E. Anderson. They obtained workmen's compensation from A.E. Anderson, their employer, and then sued McLouth, first in general and gross negligence, then amending their complaint to charge that there was an inherent danger in the ultra-hazardous activities being carried on by A.E. Anderson on the premises of McLouth for which McLouth was liable. Plaintiffs' wives are also before us, having brought separate actions proclaiming the same issues of law and fact.

Zurich Insurance Company, hereinafter referred to as Zurich, was the workmen's compensation insurer of A.E. Anderson. It intervened in the action by plaintiffs against McLouth, alleging the same grounds for recovery in order to protect its compensation lien provided by statute. Seeking to invoke the indemnity clause of the contract, McLouth filed an action, later amended, impleading A.E. Anderson as a third-party defendant.^[1] Definitely not wishing to get involved, A.E. Anderson moved for summary judgment against McLouth based on McLouth's alleged failure to state a claim upon which relief to it could be granted.^[2] The motion was heard and granted by the lower court. To reiterate with the continuing intent of simplification, we note that McLouth is the plaintiff-appellant on this appeal and A.E. Anderson is the defendant-appellee.

The question presented is whether the "exclusive remedy" provision of the workmen's compensation act prevents McLouth from obtaining indemnification (1) at common law, or (2) under a contract with the employer Anderson, and (3) if the act does not prevent recovery under a contract, does the McLouth-Anderson contract provide indemnification against the particular claims asserted by the plaintiffs White?

It was manifest to the lower court that, given the "exclusive remedy" provisions of the workmen's compensation act,^[3] an employer such as A.E. Anderson should not be subject to actions apparently founded on negligence liability brought by its employees. Referring to the case of Geurink v. Herlihy Mid-Continent Company (1966), 5 Mich App 154, the court then determined that A.E. Anderson should not have been joined by McLouth in defense of this claim made by the employees. It must be seen, however, that the Geurink court evaluated an indemnity contract which had weathered the examination of a trial as to its validity and applicability. Such a contract made between the principal defendant and the otherwise immune employer, who may have relinquished his shield under the workmen's compensation act so that he might win the probable battle for the construction contract, may have some effect as shall be seen. But as we do not have before us any litigated aspect of the contract of indemnity, we may only decide whether the trial court erred in finding that a determination of possible obligations under such a contract shall not be included along with the principal suit. Thus, those several questions which arise on this appeal that involve matters which would necessarily require an evaluation of the terms of the indemnity contract, or a determination of disputed facts, will be disregarded.^[4]

The definitive case on third party joinder of employers by a principal defendant where the provisions of the workmen's compensation act serve to defeat such joinder is that of Husted v. Consumers Power Company (1965), 376 Mich 41. Therein the Court notes that since GCR 1963, 204, does not create substantive rights of recovery from the third-party defendant, such a right must exist independently of the claim and may take the form of indemnity. There being no contract of indemnity in Husted, nor claim of common-law tort indemnity, that court found first that the two cases based upon such a contract cited by Consumers Power^[5] were inapplicable and, second, that in the absence of a contract of indemnity^[6] while there may be cases where recovery might be had by application of common-law tort indemnity where there is proven proof of freedom from fault involved, Husted was not such a case.

Before analysis of McLouth's argument that the present case is an exception to the general rule as noted in Husted, it is convenient to delineate the holding of this Court in Geurink, supra. There an indemnitee was prevented by the Court from recovering under an indemnification contract containing terms similar to those in this case because there were no provisions included which expressly permitted recovery by the indemnitee in the event of his own negligence.^[7] Alleging that the plaintiffs White are suing it for vicarious and strict liability^[8] and not for personal fault, McLouth asserts that it is entitled to both protection under the contract and common-law indemnity. Therefore, the omission of the language in this contract dealing with negligence of the indemnitee is not necessarily fatal as McLouth is being sued for vicarious and strict liability and not solely for negligence. McLouth also alleges in the alternative that the contract of indemnification protects it to the extent that it is held liable because of Anderson's actions or nonactions. It is argued that the substance of the action against McLouth cannot be determined until the trial, and we agree. However, we deduce that given for the moment McLouth's argument that the actions by plaintiffs White against McLouth are not founded solely in negligence, then where, in the alternative, does the fault and the duty to compensate for the injuries lie? By including a shifting of these burdens by contract or by the law of torts to the employer, would the principal action then only be a disguised and prohibited action by an employee against his employer? We think not necessarily, and hold that the joinder of the employer as a third-party defendant in a case where vicarious or strict liability is being charged against a principal defendant is permissible where it appears before trial that the employer and the defendant stand in a unique relationship which may have created certain duties and obligations by reason of contract or tort.

We agree with the Husted Court that the cases of Lunderberg v. Bierman (1954), 241 Minn 349 (63 NW2d 355, 43 ALR2d 865)^[9] and Westchester Lighting Co. v. Westchester County Small Estates Corp. (1938), 278 NY 175 (15 NE2d 567), may apply where the issue of common-law indemnity is properly pleaded. McLouth did meet its burden of showing that the indemnitor has been charged with some fault or negligence which allegedly caused the breach of its duty to McLouth.^[10] Reference to the pleadings filed by the Whites and Zurich shows that a case of vicarious or strict liability has been set out against McLouth.^[11] It is noted that the failure of Consumers Power to employ the claim of common-law tort indemnity in Husted was caused by its not pleading facts that would justify a finding upon proof that it was free of fault. Such an objection cannot be made here as McLouth's charges against A.E. Anderson were certainly detailed and sufficiently made.

Unlike the situation in most of the cases studied by this Court, we do not know the merits of the contentions made by the Whites, Zurich or McLouth as to who really is primarily liable for the injuries. Basis for recovery has been asserted, but as final determination must await the wisdom of a trial court or a jury, it is impossible to know whether and on what grounds recovery may be allowed to the Whites. Only a thorough examination of the charges made at the trial will determine the likelihood of subsequent success for McLouth in obtaining indemnity from A.E. Anderson on the theories of contractual indemnity or common-law tort indemnity as herein set forth.^[12]

Reversed and remanded. Costs to appellants.

All concurred.

NOTES

[1] GCR 1963, 204.

[2] GCR 1963, 117.2(1).

[3] MCLA § 411.4 (Stat Ann 1968 Rev § 17.144); MCLA § 416.1 (Stat Ann 1968 Rev § 17.212).

[4] See 1 Honigman & Hawkins, Michigan Court Rules Annotated, committee notes to GCR 1963, 117, p 353.

[5] Blackford v. Sioux City Dressed Pork, Inc. (1962), 254 Iowa 845, (118 NW2d 559); Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Corp. (1955), 350 US 124 (76 S Ct 232, 100 L Ed 133).

[6] On suits for indemnity between property owners and contractors for injuries to third parties on the job where no contract of indemnity is involved, see 97 ALR2d 616.

[7] Meadows v. Depco Equipment Company (1966), 4 Mich App 370.

[8] On secondary and primary liability in cases alleging a duty to maintain safe premises, see Builders Supply Co. v. McCabe (1951), 366 Pa 322 (77 A2d 368, 24 ALR2d 319); 41 Am Jur 2d, Indemnity, §§ 17, 20, pp 704, 706-710.

[9] Although the case and the annotation deal with liabilities as between owners of motor vehicles and employees of indemnitor employers and injured persons, the principles involved are here relevant. Also, see Burris v. American Chicle Co. (CA 2, 1941), 120 F2d 218; 2 Larson, Workmen's Compensation, 1968 Supp, § 76.48; Prosser on Torts (3d ed), § 48, Indemnity, pp 279, 280, and cases cited therein.

[10] Mesle v. Kea S.S. Corp. (CA 3, 1958), 260 F2d 747.

[11] Mulcahy v. Argo Steel Construction Company (1966), 4 Mich App 116.

[12] See Brady v. Stanley Weiss & Sons, Inc. (1958), 6 App Div 2d 241 (175 NYS2d 850), and the concurring opinion of Justice BLACK in Husted, supra.