Case Title: SWEET v COLBORN SCHOOL SUPPLY

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1982-01-28T00:00:00Z

Document:
No. 81-298 IN THE SUPREME COURT OF THE STATE OF MONTANA JOANIE SWEET, Plaintiff and Respondent, COLBORN SCHOOL SUPPLY, BURLINGTON NORTHERN INC., & M & L REALTY COMPANY, Defendansand Appellants. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone Honorable William J. Speare, Judge presiding. Counsel of Record: For Appellants: K. Kent Koolen, Billings, Montana Anderson, Brown, Gerbase, Cebull & Jones, Billings, Montana For Respondent: Hennessey Law Office, Billings, Montana Submitted on briefs: November 5, 1981 Decided: January 28, 1982 Filed: JAN 2 8 1982 r @ Clerk M r . J u s t i c e Fred J. Weber delivered t h e Opinion of t h e Court. Joanie Sweet (Sweet) sued Burlington Northern, Inc. (BN) and Colborn School Supply and M&L Realty Co. (Colborn) i n Yellowstone County D i s t r i c t Court f o r personal i n j u r i e s s u f f e r e d while crossing t h e BN t r a c k adjacent t o t h e Colborn building located on BN property. BN s e t t l e d by t h e payment of $60,000 t o Sweet. BN c r o s s claims a g a i n s t Colborn claiming indemnification under t h e BN-Colborn l e a s e . The D i s t r i c t Court granted summary judgment t o Colborn a g a i n s t BN on t h e c r o s s claim. BN appeals. W e a f f i r m t h e D i s t r i c t Court. The i s s u e s a r e : (1) Does t h e BN-Colborn l e a s e indemnify BN a g a i n s t damages s u f f e r e d a s a r e s u l t of t h e s o l e negligence of BN? ( 2 ) Is BN estopped from denying t h a t Colborn a t a l l t i m e s was i n f u l l compliance with t h e BN-Colborn l e a s e ? S w e e t claimed t h a t she sustained i n j u r y i n t h e course of her employment a s a d e l i v e r y van d r i v e r f o r United Parcel Service, while enroute t o Colborn's building i n B i l l i n g s , Montana, f o r purposes of pick-up and d e l i v e r y on A p r i l 12, 1976. Sweet claimed t h a t a s she was operating her d e l i v e r y v e h i c l e upon o r a c r o s s r a i l r o a d t r a c k s located behind t h e building occupied by Colborn, t h e s t e e r i n g wheel of her v e h i c l e was caused t o suddenly s p i n and s t r i k e her hand, causing i n j u r y . She claimed t h a t t h e s t e e r i n g wheel w a s caused t o s p i n a s t h e r e s u l t of r u t s , depressions, and chuckholes i n t h e ground adjacent t o t h e r a i l s over which she was operating her vehicle. Colborn i s located on t h e southwest corner of Montana Avenue and North 27th S t r e e t i n B i l l i n g s . This four s t o r y building occupies r a i l r o a d right-of-way owned by BN and i s served by a r a i l r o a d spur t r a c k adjacent t o the loading dock a t t h e r e a r of t h e building. The land occupied by Colborn was leased from t h e r a i l r o a d by M&L Realty i n 1957. The l e a s e was revised and renewed i n 1975. M&L Realty sub- leased t h e property t o Colborn. Only t h e property physically occupied by t h e building and by t h e loading dock is leased from t h e r a i l r o a d . The ground on which t h e spur t r a c k i s located is owned by BN and i s not covered by any l e a s e agreement. I t was customary f o r Colborn t o r e c e i v e f r e i g h t shipments a t its loading dock by d e l i v e r y truck a s w e l l a s by r a i l . Such d e l i v e r y t r u c k s n e c e s s a r i l y passed over t h e r a i l s of t h e spur t r a c k . Colborn and BN were aware of t h i s . I t was an undisputed f a c t t h a t t h e s t r i p of land where t h e accident occurred was under t h e exclusive c o n t r o l of BN and t h a t BN was t h e only p a r t y with a duty t o maintain t h e area. BN would not allow businesses such a s Colborn t o conduct o r perform s e p a r a t e maintenance procedures i n t h e a r e a where t h e accident occurred. Paragraph 5 of t h e BN-Colborn l e a s e provides: "Lessee s h a l l not nor s h a l l Lessee f o s t e r , sanction o r permit o t h e r s t o operate any equipment, motor driven o r otherwise, f o r t h e purpose of serving Lessee, upon o r a c r o s s any r a i l r o a d t r a c k located on o r adjacent t o t h e demised premises except a t e s t a b l i s h e d crossings. "Lessee agrees t o indemnify and save harm- less Lessor from a l l l o s s , damage, p e n a l t i e s , c o s t s o r judgments t h a t may be assessed a g a i n s t o r recovered from it on account of o r i n any manner a r i s i n g o r growing o u t of a v i o l a t i o n of t h e provisions of t h i s paragraph 5." The i s s u e i s whether t h e foregoing l e a s e provisions a r e s u f f i c i e n t t o indemnify BN a g a i n s t damages sustained because of t h e negligence of BN. On t h i s i s s u e BN maintains t h a t t h e language of t h e l e a s e agreement provides t h a t Colborn w i l l indemnify BN f o r any l o s s e s assessed a g a i n s t BN a s a r e s u l t of Colborn v i o l a t i n g t h e t e r m s of t h e l e a s e . BN claims t h a t t h e r e was a v i o l a t i o n of paragraph 5 of t h e l e a s e when Colborn permitted t h e p l a i n t i f f t o operate a motor v e h i c l e on t r a c k s o t h e r than a t an e s t a b l i s h e d crossing. This Court recognizes t h e v a l i d i t y of a c o n t r a c t provision of indemnity. Lesofski v . Ravalli Co. Elect. Coop. (1968), 151 Mont. 1 0 4 , 439 P.2d 370; Western Construction Equipment Co. v. Mosby's Inc. (19651, 146 Mont. 313, 406 P.2d 165. However, t h i s Court held t h a t a p a r t y cannot be indemnified a g a i n s t i t s own negligence unless t h e c o n t r a c t provisions a r e " c l e a r and unequivocal." I n Lesofski a widow of a deceased employee of a highway c o n t r a c t o r brought an a c t i o n a g a i n s t an e l e c t r i c power company f o r t h e death of t h e employee who was electrocuted. The company brought a third-party a c t i o n a g a i n s t t h e c o n t r a c t o r . The D i s t r i c t Court entered a summary judgment f o r t h e c o n t r a c t o r which t h e Company appealed. The third-party complaint was based upon an indemnity agreement i n a c o n t r a c t between t h e Company and t h e S t a t e Highway Commission. The c o n t r a c t o r had no c o n t r a c t of any s o r t with t h e Company, and t h e r e had n o t been any bargaining by t h e Company f o r indemnity f o r its own negligence. This Court s t a t e d t h a t " t o contend t h a t w e should l i b e r a l l y construe t h e c o n t r a c t of respondent with t h e S t a t e Highway omm mission t o include t h e a p p e l l a n t ' s negligent a c t s would i n our opinion annul t h e recognized r u l e t h a t t o indemnify a p a r t y a g a i n s t h i s own negligence it must be expressed i n ' c l e a r and unequivocal t e r m s . ' " Lesofski, 146 Mont. a t 108, 439 P.2d a t 372. The D i s t r i c t Court could not f i n d such c l e a r and unequivocal language i n t h e p r e s e n t case. BN argues t h a t it had t h e r i g h t t o p r o t e c t i t s e l f a g a i n s t an increased r i s k incurred by permitting Colborn t o occupy premises adjacent t o t h e BN t r a c k s . BN a l s o argues t h e v a l i d i t y of t h e indemnity c l a u s e s which they contend indemnify BN a g a i n s t its own negligence. BN r e l i e s upon t h e Montana case of Ryan Mercantile Company v. Great Northern Railway Company ( 9 t h C i r . 1961), 294 F.2d 629, which was an a c t i o n brought by a r a i l r o a d ' s t e n a n t f o r a judgment d e c l a r i n g t h e r i g h t s of t h e p a r t i e s under a l e a s e . The wife of an employee of Ryan was i n j u r e d while r i d i n g i n a c a r when t h e c a r w a s s t r u c k by a boxcar being pushed by a Great Northern switch engine. She a l l e g e d only negligence of t h e Great Northern. While finding t h a t t h e Great Northern should be indemnified f o r its own negligence, t h e 9th C i r c u i t Court s t a t e d : ". . . [ I l n order t o uphold an indemnification agreement f o r damages caused by negligent a c t s of t h e indemnitee t h e r e must be c l e a r and un- equivocal t e r m s . . . A n examination of t h e in- demnity agreement d i s c l o s e s no ambiguity. The phrases used -- 'any and a l l personal i n j u r i e s , ' 'of every name and nature which may i n any manner a r i s e , ' 'whether due o r n o t due t o t h e negligence of Great Northern' -- demonstrate t h a t Ryan's indemnity would cover any claim made a g a i n s t Great Northern, . . . and shows t h a t t h e p a r t i e s had i n mind t h a t t h e negli- gence of Great Northern would be no bar t o Ryan's indemnity obligation." Ryan, 294 F.2d a t 633. The Ryan Mercantile Company l e a s e s t a t e s t h a t it extends t o personal i n j u r i e s "whether due o r not due t o t h e negligence of Great Northern." There i s no comparable provision i n t h e BN-Colborn lease. W e agree with t h e conclusion of t h e D i s t r i c t Court t h a t t h e language from paragraph 5 of t h e BN- Colborn l e a s e does n o t provide c l e a r and unequivocal t e r m s necessary f o r BN t o recover under a theory of indemnification a g a i n s t its own negligence. Because we recognize t h e c l o s e question i n t h e i n t e r p r e - t a t i o n of t h e lease provision, we w i l l consider t h e next i s s u e which is whether BN i s estopped from denying t h a t Colborn w a s i n f u l l compliance with t h e BN-Colborn l e a s e . BN claims a v i o l a t i o n of t h e l e a s e agreement's paragraph 5 because Colborn allowed t h e p l a i n t i f f t o c r o s s t h e t r a c k s a t an a r e a not "an e s t a b l i s h e d crossing." I t was undisputed t h a t BN was aware t h a t t h e t r a c k s were being crossed f o r d e l i v e r i e s t o Colborn. This had been occurring s i n c e t h e o r i g i n a l l e a s e i n 1957. The undisputed evidence a l s o shows t h a t t r u c k s have been making d e l i v e r i e s across t h i s crossing t o t h e building now occupied by Colborn f o r more than 60 years on a continuing b a s i s . A new l e a s e was drawn up i n 1975 p a r t l y because of t h e construction of a new loading dock. The record shows t h a t BN was aware t h a t Colborn intended t o and d i d use t h e loading dock, t h a t v e h i c l e s could not s e r v i c e t h e loading dock without crossing t h e t r a c k s , and t h a t BN maintains t h e t r a c k s s o t h a t v e h i c l e s could c r o s s them t o s e r v i c e businesses. Colborn a s s e r t e d t h e defense of e s t o p p e l , and t h e D i s t r i c t Court held t h a t BN was estopped, a s a matter of law, from a s s e r t i n g t h a t a v i o l a t i o n of t h e l e a s e caused p l a i n t i f f ' s i n j u r i e s . The D i s t r i c t Court memorandum opinion s t a t e d : "BURLINGTON NORTHERN, by i t s conduct as apparent from t h e record, has acquiesced i n t h e use of t h e a r e a where t h e accident happened a s an a r e a f o r vehicular t r a v e l ; BURLINGTON NORTHERN has sanctioned such t r a v e l and has a t l e a s t attemp- t e d t o maintain t h e a r e a f o r t h e s p e c i f i c pur- pose of vehicular t r a v e l t o s e r v e such busines- s e s a s COLBORN S C H O O L SUPPLY." I n support of t h e finding of estoppel, t h e deposition of Blane Pound, BN executive, i n p a r t s t a t e s : "Q. W e l l , i f you consider what they've been doing f o r 23 years a v i o l a t i o n of t h e provisions of t h i s l e a s e , Burlington Northern h a s n ' t done anything t o prevent them from doing t h a t , have they? "A. That i s c o r r e c t . "Q. A s a matter of f a c t , you w e l l know t h a t Burlington Northern has, a t l e a s t a t some t i m e , b u i l t t h a t a r e a up t h e r e s o t h a t v e h i c l e s could d r i v e i n and o u t of there. "A. Correct. "Q. I see. So what, I guess a t t h e very l e a s t Burlington Northern a s s i s t e d i n t h e v i o l a t i o n of t h e t e r m s of t h i s l e a s e , i f t h a t ' s a viola- t i o n , huh? "A. That would appear t o be c o r r e c t . "Q. And it would a l s o appear t h a t t h a t has been with t h e approval and b l e s s i n g of Burling- t o n Northern, wouldn't t h a t be c o r r e c t ? "A. Y e s . "Q. I t ' s e i t h e r one of two things. I t ' s e i t h e r t h a t Burlington Northern a s s i s t e d Colborn School Supply i n v i o l a t i n g t h e t e r m s of t h e l e a s e -- and I ' m r e f e r r i n g t o f u l l Paragraph 3 under Paragraph 5 -- they've e i t h e r a s s i s t e d and approved a l l t h e s e years of t h a t v i o l a t i o n o r Burlington Northern considers t h a t a r e a back t h e r e an e s t a b l i s h e d crossing. (Ob j e c t i o n ) "Q. W e l l , I want you t o answer t h a t . I t ' s e i t h e r one of those two t h i n g s , i s n ' t i t ? "A. Y e s , your statement would be c o r r e c t . " S i x e s s e n t i a l elements have been held necessary t o c o n s t i t u t e an e q u i t a b l e estoppel: " ( 1 ) t h e r e must be conduct, a c t s , language, o r s i l e n c e amounting t o a r e p r e s e n t a t i o n o r a concealment of m a t e r i a l f a c t s ; ( 2 ) t h e s e f a c t s must be known t o t h e p a r t y estopped a t t h e t i m e of h i s conduct, o r a t l e a s t t h e circumstances must be such t h a t knowledge of them i s neces- s a r i l y imputed t o him; ( 3 ) t h e t r u t h concern- ing t h e s e f a c t s must be unknown t o t h e o t h e r p a r t y claiming t h e b e n e f i t of t h e estoppel a t t h e time it was acted upon by him; ( 4 ) t h e conduct must be done with t h e i n t e n t i o n , o r a t l e a s t with t h e expectation, t h a t it w i l l be acted upon by t h e o t h e r p a r t y , o r under t h e circumstances t h a t it is both n a t u r a l and probable t h a t it w i l l be s o acted upon; (5) t h e conduct must be r e l i e d upon by t h e o t h e r p a r t y , and, thus r e l y i n g , he must be l e d t o a c t upon it, and (6) he must i n f a c t a c t upon it i n such a manner as t o change h i s p o s i t i o n f o r t h e worse." Smith v. Krutar (1969), 153 Mont. 325, 332, 457 P.2d 459, 463; Hustad v. Reed (1958), 133 Mont. 2 1 1 , 223, 321 P.2d 1083, 1090; Mundt v. Mallon (1938), 106 Mont. 2 4 2 , 249-50, 76 P.2d 326, 329. A s t o element ( I ) , t h e a c t i o n s of t h e BN i n maintaining t h i s p a r t i c u l a r a r e a a s a crossing and allowing v e h i c l e s t o continuously use t h e same a s a crossing f o r more than 60 years amounts t o a r e p r e s e n t a t i o n t h a t it was a proper crossing f o r use. A s t o element ( 2 ) , t h e holding o u t t h a t t h i s was a proper crossing f o r usage was c l e a r l y known t o BN a s e s t a b l i s h e d by t h e testimony of t h e BN executive. A s t o element ( 3 ) , t h e f a c t s show t h a t Colborn d i d n o t know t h a t BN claimed t h i s was not a proper crossing. A s t o element ( 4 ) , t h e f a c t s show t h a t B N ' s conduct with regard t o t h e crossing was done with t h e expectation t h a t Colborn would continue t o use t h e crossing a s would i t s i n v i t e e s . A s t o element ( 5 ) , t h e f a c t s c l e a r l y show t h a t Colborn r e l i e d upon such a c t i o n s of BN and continued t o have d e l i v e r i e s made a c r o s s such crossing t o Colborn. A s t o element ( 6 ) , t h e a c t i o n s of Colborn, of course, a r e s u f f i c i e n t t o change i t s p o s i t i o n f o r t h e worse s o t h a t BN could contend a p o t e n t i a l breach of t h e lease. The record contains c l e a r l y s u f f i c i e n t uncontradicted evidence t h a t t h e s i x elements of e q u i t a b l e estoppel were p r e s e n t s o f a r a s BN is concerned. A s a r e s u l t , r e g a r d l e s s of t h e contentions on t h e p a r t of BN a s t o t h e t e c h n i c a l indemnity provisions of its l e a s e with Colborn, BN is estopped from claiming any r i g h t t o indemnification. The D i s t r i c t Court properly granted summary judgment t o Colborn a g a i n s t BN. W e a f f i r m . W e Concur: