Title: HOERNER WALDORF CORP v BUMSTEAD-W

State: montana

Issuer: Montana Supreme Court

Document:

I N THE S U P R E M E C O U R T O F THE STATE O F MONTANA HOERNER W A L D O R F CORPORATION O F M O N T A N A , a Corporation, and THE TRAVELERS INSUEUNCE, C O M P A N Y , a Corporation, P l a i n t i f f s and Respondents, B U M S T E A D - W O O L F O R D C O M P A N Y , a Corpora tion, Defendant and Appellant. Appeal from: D i s t r i c t Court of the Fourth J u d i c i a l D i s t r i c t , , Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellant : Boone, Karlberg and Haddon, Missoula , Montana. Karl R. Karlberg argued, Missoula , Montana. Patrick F. Hooks argued, Townsend, Montana. For Respondents: Garlington, Lohn and Robinson, Missoula, Montana. Sherman V. Lohn argued, M i s soula, Montana. Submitted : December 3, 1971 Decided : I , m M r . Chief J u s t i c e James T. Harrison delivered the Opinion of the Court, This is an appeal by defendant from a judgment entered i n the d i s t r i c t court of Missoula County i n favor of p l a i n t i f f s . From the record it appears t h a t t h e p l a i n t i f f Hoerner Waldorf Corporation was a defendant i n an action brought by one Clarence Dutton f o r i n j u r i e s sustained by him while he was em- ployed by Bumstead-Woolford Company i n the construction of a bleach plant a t the Hoerner Waldorf pulp m i l l i n Missoula, Mon- tana. This action was s e t t l e d by t h e insurance c a r r i e r s f o r Hoerner Waldorf and t h e r e a f t e r they and Travelers Insurance Com- & ' pany, hereafter referred t o a s Travelers, brought t h i s action against Bumstead-Woolford f o r indemnity of expenses and c o s t s incurred by them on t h e ground t h a t Bumstead-Woolford was obli- gated t o indemnify Hoerner Waldorf and Travelers under an in- demnity agreement drawn by Hoerner Waldorf on the reverse s i d e of a purchase order. The action was t r i e d on stipulated f a c t s before the court, s i t t i n g without a jury. The judge found i n favor of the p l a i n t i f f s . A motion f o r amendment of findings, conclusions and judgment and exceptions t o the findings were f i l e d by the defendant but were overruled. The defendant appeals from t h e judgment . Summarizing the stipulated f a c t s it appears t h a t Hoerner Waldorf i n 1960 was i n the process of expanding its bleach plant a t its pulp m i l l i n Missoula County, Montana. It requested bids on various work t o be performed. Pursuant t o such request, de- fendant Bumstead-Woolford submitted its quotation and on the same d a t e , by letter, Bumstead-Woolford set f o r t h t h e terms f o r any a d d i t i o n a l work. The quotation and letter which were dated J u l y 12, 1960, do not recite t h e assumption by Bumstead-Woolford of any o b l i g a t i o n t o i n s u r e or indemnify Hoerner Waldorf from any claims made a g a i n s t Hoerner Waldorf as a r e s u l t of negligence of Hoerner Waldorf nor to indemnify Hoerner Waldorf f o r any other l o s s except Bumstead-Woolford's i n d u s t r i a l accident coverage. O n o r about J u l y 15, 1960, t h e p l a i n t i f f , Hoerner Waldorf, issued its purchase order confirming acceptance of t h e $109,255 p r i c e quoted by defendant Bumstead-Woolford, and r e f e r r e d t o t h e quotation as t h e basis f o r t h e purchase order. This purchase order, on t h e reverse s i d e under paragraph 11, provided f o r insurance and indemnification as follows: "INSURANCE AND INDEMNIFICATION. " A l l material as described i n I t e m 5 and a l l design, tools, p a t t e r n s , equipment, drawings and o t h e r information described i n I t e m 4 , furnished by Buyer, s h a l l be protected a g a i n s t l o s s o r damage by insurance on p a r t of S e l l e r which is acceptable t o Buyer. The S e l l e r is l i a b l e f o r any damage t o property of t h e Buyer caused by negligence of t h e S e l l e r or Contractor or any of t h e i r Agents, Servants o r Employees, from any cause whatsoever. S e l l e r agrees t o indemnify Buyer a g a i n s t a l l l i a b i l i t i e s , claims, o r demands f o r i n j u r i e s o r damages t o person o r property, or f o r wages, unemployment insurance, s o c i a l s e c u r i t y t a x e s , or otherwise growing o u t of d e f e c t i v e m a t e r i a l o r workmanship i n t h e articles o r m a t e r i a l s , supplied herein or o u t of t h e performance of t h e c o n t r a c t r e s u l t i n g from acceptance of t h i s purchase order. "If t h i s order requires t h e performance of any labor f o r Buyer, S e l l e r f u r t h e r agrees t o c a r r y and t o f u r n i s h upon request a c e r t i f i c a t e from its insurance carriers showing t h a t it carries adequate Workmen's Compensation, Public L i a b i l i t y and Property Damage insurance cover- age. Such certificate must show t h e amount of each kind of coverage, name of each insurance company and policy number and e x p i r a t i o n date of each policy. I f S e l l e r is s e l f - i n s u r e r , S e l l e r must have a c e r t i f i c a t e thereof furnished direct- l y t o Buyer by t h e cognizant Department of t h e Government of each S t a t e i n which any such labor is t o be performed. " Bumstead-Woolford commenced work under its c o n t r a c t with Hoerner Waldorf as described by t h e quotation. Clarence Dutton was employed by Bumstead-Woolford as a p i p e f i t t e r i n t h e construc- t i o n of t h e bleach plant. While Dutton w a s engaged i n h i s em- ployment f o r Bumstead-Woolford, who w a s engaged i n t h e perform- ance of its c o n t r a c t with Hoerner Waldorf, he was s t r u c k i n t h e head by a 2" x 6" plank which fell from a catwalk constructed by Hightower & Lubrecht, an independent c o n t r a c t o r of Hoerner Waldorf. The p a r t i e s agreed t h a t n e i t h e r Clarence Dutton nor Bumstead- Woolford was negligent with respect to t h e i n j u r y to Clarence Dutton. A t t h e t i m e of t h e accident t h e metal tread of t h e cat- walk which was to be supplied by Hoerner Waldorf had not been i n s t a l l e d because it had n o t been received a t t h e p l a n t , although it w a s on order. Temporary planking had been i n s t a l l e d by High- tower & Lubrecht a t t h e request of Hoerner Waldorf. A s a r e s u l t of h i s being s t r u c k on t h e head by t h e f a l l - ing plank,Dutton was injured. H e requested and received b e n e f i t s of Workmen's Compensation provided by h i s employer, Bumstead- Woolford, and an order approving t h e f u l l and f i n a l compromise settlement w a s entered i n t o on A p r i l 2 4 , 1961. Dutton, dn November 10, 1961, i n s t i t u t e d an a c t i o n i n United S t a t e s District Court f o r t h e District of Montana, Missoula Division, against Hightower & Lubrecht and Hoerner Waldorf. On April 24, 1963, the trial of that case resulted in a verdict for both defendants. Thereafter, various post-trial motions were filed and on September 5, 1963, an order was entered granting plaintiff a new trial. A second trial was started on May 5, 1964, but was terminated by a mistrial. A third trial of the action was set for October 19, 1965, but before trial settlement negotiations were instituted which ultimately resulted in a settlement of $135,000, of which Travelers paid $25,000 on behalf of Hoerner Waldorf, Lloyds of London paid $55,000 on behalf of Hoerner Waldorf and $55,000 was paid by Hightower & Lubrecht. Travelers incurred attorney's fees and defense costs of $10,825 and Hoerner Waldorf incurred expenses in the sum of $750 for loss of time of its employees during preparation for and attendance at the various trials in the Dutton suit. Subsequently suit was filed in the district court of the fourth judicial district, Missoula County, Montana, wherein Hoer- ner Waldorf and Travelers claimed damages for settling the claim of Dutton and claimed reimbursement for court costs, attorneys' fees and expenses in the defense of the Dutton case. The theory of the action by Hoerner Waldorf is that the indemnity agreement on the reverse side of the purchase order required Bumstead- Woolford to indemnify Hoerner Waldorf from expense incurred in the action brought by Dutton against Hoerner Waldorf, and to de- fend any action brought by Dutton against Hoerner Waldorf. The theory of Travelers was that it was subrogated to t h e r i g h t of Hoerner Waldorf under t h e indemnity clause, even though Travelers was n o t a party to t h e purchase order and even though Dutton and Bumstead-Woolford were not negligent w i t h respect t o Dutton's accident and had no common-law l i a b i l i t y for t h e i n j u r y to Dutton. The a c t i o n w a s submitted t o t h e district judge on t h e agreed statement of facts and memorandums from t h e p a r t i e s . The judge made findings of fact and conclusions of law on November 24, 1970. Defendant f i l e d exceptions t o t h e findings and f i l e d a motion t o amend t h e findings of fact and conclusions of law. These were argued before t h e d i s t r i c t c o u r t on December 1 4 , 1970. The c o u r t f a i l e d t o a c t within f i f t e e n days a f t e r t h e argument and pursuant t o Rule 59, M.R.Civ.P., superseding s e c t i o n 93-5606, R.C.M. 1947, t h e exceptions were deemed overruled and t h e motion t o amend denied. This appeal followed. Defendant raises 15 i s s u e s on appeal. P l a i n t i 3 f s argue t h a t t h e determinative i s s u e s are t h r e e i n number. Our review of t h e record discloses b u t one: t h a t being, d i d defendant c o n t r a c t to indemnify t h e p l a i n t i f f , Hoerner Waldorf, from any and a l l l o s s o r damages sustained by such p l a i n t i f f while t h e defendant was engaged i n performing work and furnishing m a t e r i a l on t h e job i n question. A review of t h e e x h i b i t s i n t h i s case r e v e a l s t h a t t h e quotation furnished by defendant r e s u l t e d from negotiations between t h e defendant's employee, a M r . Lysne and Hoerner Waldorf's employee, a M r . Sandberg, and consisted of a four page quotation accompanied by a two page letter. The quotation documents are quite comprehensive in setting forth the materials to be fur- nished, their quality and specifications as well as the scope of work to be performed by the defendant and that work which the defendant would anticipate would be performed by others. A completion date, billing arrangements, as well as terms for furnishing extra work, and the letter accompanying the quotation, set forth in exact detail the cost at which the additional ma- terials would furnished , including a provision for passing on discounts received from defendant's suppliers for prompt pay- ment. Provisions were also made for the payment for rental equip- ment, expense, traveling and living expenses as well as a per- centage ratio to be applied for the payment of taxes, industrial accident insurance, unemployment insurance, casualty insurance, as well as an accounting expense, and goes on to state: "Our normal insurance coverage which is sub- ject to your approval provides for property damage at $250,000.00 and public liability at $250,000/$500,000." This quotation was issued on July 12, 1960. On July 15, 1960, the plaintiff issued its purchase order accepting the quotation offered. A printed purchase order form was utilized for this purpose by the plaintiff. The face of the order reads in type- written words: "Perform work and supply materials per quotation A-4378-A and attached letter. "Price, $109,255.00 "CONFIRMING 0RI)ER" The attached letter reads in pertinent part: "P.O. t o Bumstead-Woolford Co. 1 4 1 1 Fourth Ave. S e a t t l e , Washington "Perform work and supply materials t o i n s t a l l piping, instrumen- t a t i o n , and machinery as outlined i n your quotation A-4378-A and r e f e r r e d t o as c o n t r a c t 326 with t h e following modifications and changes : "It is understood t h a t when your work is completed t h e bleach p l a n t w i l l be ready to process pulp except f o r t h e e l e c t r i c a l i n s t a l l a t i o n . This means a l l piping and machinery w i l l be com- p l e t e , t e s t e d and ready f o r operation. "A performance bond w i l l be furnished. The cost of t h e bond t o be an addition t o t h e c o n t r a c t price. "Evidence of insurance coverage i n t h e following amounts w i l l be submitted : "Property damage - $250,000 "Public l i a b i l i t y - $250,000/500,000" (Emphasis ours.) The rest of t h e letter relates t o t h e s p e c i f i e d work t o be performed. Nowhere i n t h e typewritten portion of t h e plain- t i f f " purchase o r d e r nor i n the attached letter was any mention of indemnification made. To the contrary t h e purchase order issued by t h e p l a i n t i f f accepted t h e terms and conditions of t h e defendant's o f f e r and t h e letter accompanying the purchase order c a l l e d t h e defendant's a t t e n t i o n t o s p e c i f i c requested modifica- t i o n s which we have emphasized i n s e t t i n g f o r t h t h e language of t h e correspondence. It i s p l a i n t i f f ' s contention however, t h a t t h e following clause, appearing on t h e reverse s i d e of its pur- chase o r d e r , had t h e e f f e c t of incorporating the indemnity clause set f o r t h previously i n t h i s opinion as paragraph 11. This clause numbered paragraph 1, reads : "1. ACCEPTANCE. This o r d e r constitrl+es an o f f e r by t h e Waldorf-Hoerner Paper Products Company ( h e r e i n a f t e r r e f e r r e d to as 'Buyer' ) upon the terms and conditions and s u b j e c t t o i n s t r u c t i o n s appearing on t h e f a c e and reverse hereof. To c o n s t i t u t e a binding c o n t r a c t t h i s o f f e r must be accepted by t h e S e l l e r by execu- t i o n of t h e acknowledgment form attached hereto. This acknowledgment form must be returned t o us by r e t u r n mail confirming requested d e l i v e r y d a t e s o r s t a t i n g best possible d e l i v e r y f o r Buyer's acceptance. N o o t h e r form of acceptance, verbal o r w r i t t e n , w i l l be v a l i d o r binding up- on t h e Buyer. N o deviation from t h i s o r any of t h e terms hereof s h a l l be binding upon t h e Buyer without p r i o r w r i t t e n approval of t h e Buyer. The Buyer w i l l n o t be responsible f o r goods delivered o r s e r v i c e s rendered except on a properly authorized o r signed purchase o r d e r form." This contention must f a i l . It is fundamental c o n t r a c t l a w t h a t t h e w r i t t e n o r typewritten provisions of a c o n t r a c t w i l l take precedence over t h e printed provisions of a contract. 17A C.J.S Contracts S 310. More s p e c i f i c a l l y , s e c t i o n 13-717, R.C.M. 1947 provides: "Where a c o n t r a c t is p a r t l y w r i t t e n and p a r t l y printed, or where p a r t of it is w r i t t e n o r printed under t h e s p e c i a l d i r e c t i o n s of t h e p a r t i e s , and with a s p e c i a l view t o t h e i r in- t e n t i o n , and t h e remainder is copied from a form o r i g i n a l l y prepared without s p e c i a l r e f - erence t o t h e p a r t i c u l a r p a r t i e s and t h e par- t i c u l a r c o n t r a c t i n question, t h e w r i t t e n p a r t s c o n t r o l t h e p r i n t e d p a r t s , and t h e p a r t s which are purely o r i g i n a l c o n t r o l those which are copied from a form. And i f t h e t w o are absolute- l y repugnant, t h e latter must be s o far disregarded." Applying t h e s t a t u t e t o t h e f a c t s i n t h e record w e can only conclude t h a t t h e typed provisions of p l a i n t i f f ' s confirm- i n g purchase order c o n t r o l t h e i n t e r p r e t a t i o n of t h e agreement between t h e p a r t i e s . The typewritten portion of t h e purchase order s p e c i f i - c a l l y incorporates two o t h e r documents by reference. F i r s t t h e defendant's quotation and second t h e p l a i n t i f f ' s own letter which conditioned specifically the acceptance of the defendant's quotation. Neither of these two documents incorporate the terms on the face or reverse side of the purchase order. A contract will not be held to incorporate stipulations embodied in another contract save insofar as the same are spec- ifically set forth or identified by reference. State Bank of Darby v. Pew, 59 Mont. 144, 195 P. 852. Thus we see that the controlling language of the plain- tiff's purchase order does not effect an incorporation of the printed terms and conditions of the purchase order form itself but had only the effect of accepting the defendant's quotation as expressly modified by the terms of the plaintiff's letter. Consideration of the format of the printed form in ques- tion buttresses this conclusion. The printed form is not par- ticularly adapted for the type of contract contemplated between the parties. The space wherein the typewritten language appears is the space provided for the quantity, description, unit price, and the extention of the unit price of materials ordered. Thus in viewing the contract document as a whole it is clear the intended effect of the plaintiff's purchase order form, with respect to the terms and conditions contained therein, is at best indefinite. This conclusion is fatal to plaintiff's assertion that in accepting the purchase order defendant was bound by the indem- nity clause contained therein; for the law requires that the in- tention to indemnify must be stated in clear and definite language. 42 C.J.S. Indemnity 5 5; Lesofski v. Ravalli Co. E l e c . Coop., 151 Mont, 104, 439 P.2d 370. P l a i n t i f f ' s contention t h a t paragraph 1 of t h e purchase order e n t i t l e d 'Acceptance" f u l f i l l s t h i s requirement is without m e r i t as t h i s "Acceptance" clause i t s e l f appears on t h e reverse s i d e of t h e unincorporated form i n question. P l a i n t i f f f i n a l l y contends t h a t s e c t i o n 13-707, R.C.M. 1947, which provides: "The whole of a c o n t r a c t i s t o be taken together, so as t o give e f f e c t t o every p a r t , i f reasonably p r a c t i c a b l e , each clause helping t o i n t e r p r e t t h e o t h e r . I' requires t h a t t h e terms of t h e purchase o r d e r be read i n t o t h e contract. Where s e v e r a l instruments are executed a t t h e same t i m e by t h e same p a r t i e s , for t h e same purpose, and i n t h e course of t h e same transaction they c o n s t i t u t e i n t h e eye of t h e law b u t one instrument and w i l l be read and construed together as if they were as much one i n form as they are i n substance i n t h e absence of anything t o i n d i c a t e t h e contrary intention. The weakness i n p l a i n t i f f & ' argument is t h a t t h e language chosen by Hoerner Waldorf to express its i n t e n t i o n negates such consider- a t i o n of t h e terms of its own purchase order. 17A C.J.S. Con- tracts § 298. See also Lambert v. Lambert, 182 F.2d 858. Eighth C i r . ; Four-Three-0-Six Duncan Corp, v. Security T r u s t CO., The d i s t r i c t c o u r t ' s finding- of fact, t h a t t h e indem- n i f i c a t i o n clause w a s operative, w a s thus erroneous. Its conclusion of law, that it applied to the loss asserted, is likewise in- correct and in view of this holding all other issues raised by the defendant on appeal become moot. The judgment is reversed and the district court is directed to enter judgment in favor of defendant,dismissing the action. We concur: n ~ssociatv Justices