No. 14827 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

INDUSTRIAL INDEMNITY COMPANY, 

a corporation, 

Plaintiff and Respondent, 

DAVID McINTOSH, 

Defendant and Appellant. 

Appeal from: District Court of the Thirteenth Judicial District, 

Honorable Robert H. Wilson, Judge presiding. 

Counsel of Record: 

For Appellant: 

Olsen, Christensen & Gannett, Billings, Montana 

Paul G. Olsen argued, Billings, Montana 

For Respondent : 

Anderson, Symmes, Brown, Gerbase, Cebull & Jones, 

Billings, Montana 

Steve Harman argued, Billings, Montana 

ir'i - 

;if,, 5 1' 

Filed: 

Submitted: December 13, 1979 

Decided : ;4[u - 2 1933 

Clerk 
Mr. Chief Justice Frank I. Haswell delivered the Opinion 

of the Court. 

Defendant David McIntosh appeals from a judgment 

entered against him in Yellowstone County District Court. 

The judgment grants plaintiff Industrial Indemnity Co. 

indemnification from McIntosh for the amount paid in 

settlement of a Workmen's Compensation claim. We affirm. 

The case was submitted to the District Court on agreed 

facts as follows: In a written contract dated April 30, 

1974, McIntosh, an interstate hauler, agreed to provide a 

truck and driver for Lewis Grover of Idaho Falls, Idaho. 

Grover is an interstate carrier, certified by the Interstate 

Commerce Commission (ICC). The contract contained two clauses 

which are of particular importance to the resolution of the 

case. They are: 

" (11) . . . Contractor [McIntosh] shall save 

carrier harmless from any liability arising 

from the relationship between the contractor 

and any of contractor's employees, agents and 

servants, whether under industrial accident 

laws, workmen's compensation laws, or any other 

state or federal law applicable to employees 

and employers. Contractor [McIntosh] shall 

maintain workmen's compensation coverage for 

all employees, agents or servants employed by 

the contractor in the performance of this 

contract . . . 

" (13) Subject to the requirements of the 

Interstate Commerce Commission and of any 

state or provincial regulatory authorities 

having jurisdiction (a) The contractor 

[McIntosh] shall direct, in all respects, 

the operation of the equipment used in the 

performance of this contract.. . ." 

Pursuant to the contract, McIntosh supplied Grover 

with a truck and driver. On May 23, 1974, Michael Weldon, 

the driver, was killed in an accident near Lolo, Montana. 

McIntosh had not obtained Workmen's Compensation coverage 

for Weldon as agreed in the contract. Weldon's widow filed 

a claim with the Workmen's Compensation Division against Grover 

and his insurer, Industrial Indemnity Co., the plaintiff 

herein. 
Industrial Indemnity settled the claim with Weldon's 

widow for $75,000 and now seeks to recover that amount from 

McIntosh. In ruling in favor of Industrial Indemnity, the 

District Court held that McIntosh had breached his contractual 

duty to provide Workmen's Compensation coverage and alternatively, 

that he breached his contractual duty to indemnify Grover 

and his insurer. The validity of the contract is the dispositive issue on appeal. 

McIntosh argues the contract is void because it is 

unlawful. Pursuant to 49 U.S.C. §304(e) (2), the ICC has the 

authority to promulgate regulations to insure that an interstate carrier using another's equipment shall "have full 

direction and control of such vehicles and will be fully 

responsible for the operation thereof. . ." The ICC's resulting 

regulation provides: 

". . . authorized carriers may perform authorized transportation in or with equipment which 

they do not own only under the following conditions. 

"(a) Contract requirements: The contract, lease, 

or other arrangement for the use of such equipment: 

"(4) . . . Shall provide for the exclusive possession, control, and use of the equipment, and 

for the complete assumption of responsibility in 

respect thereto, by the lessee for the duration 

of said contract, lease or other arrangement . . ." 

49 C.F.R. s1057.4. 

The contract obligates McIntosh to "direct, in all respects, 

the operation of the equipment used in the performance of 

the contract." According to McIntosh, this violates the ICC 

regulation. He concludes the contract is "contrary to public 

policy, unlawful . . . and should be declared void.' We 

disagree. 

The regulation imposing carrier control and responsibility 

is intended: 
"(1) to prevent I.C.C. carriers from avoiding 

safety standards imposed by the I.C.C. by 

the simply practice of leasing equipment from 

non-regulated carriers; (2) to promote highway safety by insuring that drivers furnished 

by exempt carriers as part of the lease 

agreement do not violate safety regulations 

in the operation of the leased equipment; and 

(3) to provide shippers and other members of 

the public with financially responsible carriers." 

Indiana Refrigerator Lines, Inc. v. Dalton 

(6th Cir. 19751, 516 F.2d 795, 796. 

The regulation "makes and keeps [the carrier] responsible to 

the public, the shipper, and the Commission." Transamerican 

Freight v. Brada Miller (19751, 423 U.S. 28, 39, 96 Sect. 

229, 46 L Ed 2d 169. It was not intended to shield the owner 

of equipment from the consequences of its breach of contract. 

Moreover, the provision of the contract that McIntosh 

claims is illegal is expressly "subject to the requirements 

of the Interstate Commerce Commission." We fail to understand 

how the contract violates ICC rules. 

Upon examination of the entire contract, it is apparent 

that Grover, the carrier, was expressly made responsible for 

any injuries or damages sustained by a member of the public; 

for any damages sustained by a shipper; and to the ICC for 

compliance with its rules and regulations. So that the carrier 

could comply with ICC regulations, McIntosh was to supply it 

with the logs of his driver, vehicle reports, scale tickets, 

toll receipts, delivery receipts and other documents on a 

daily basis. McIntoshls express contractual duties included 

supplying a driver who met ICC regulations, being responsible 

for the payroll and expenses of his employees, paying the 

operating and maintenance expenses of the equipment as well 

as all taxes and fees incurred in transporting the consigned 

goods. He was also to maintain the equipment, and subject 

to ICC regulations, "be solely responsible for the direction 

and control of [his] employees, agents, and servants . . . 
including selecting, hiring, supervising, directing, 

setting wages, hours and working conditions, paying and 

adjusting grievances.. . ." 

We cannot hold the contract illegal. The policy of 

the ICC regulation was met by making the carrier exclusively 

responsible to the public, the shippers and the ICC. 40 C.F.R. 

1057.4. The duties undertaken by McIntosh were essentially 

ministerial and do not contravene the regulation or the policy 

behind it. Transamerican Freight v. Brada Miller, supra; 

for similar contracts held not to violate 40 C.F.R. 1057.4: 

see Carolina Freight Carrier Corp. v. Pitt County Transp. 

Co. (4th Cir. 1974), 492 F.2d 243; Continental Ins. Co. v. 

Daily Express (1975), 68 Wis.2d 581, 229 N.W.2d 617. 

The clause of the contract wherein McIntosh agreed to 

indemnify the carrier for any Workmen's compensation liability 

it might incur as to McIntoshls employees is not contrary to 

the requirement of carrier control and responsibility. 40 

supra 

C.F.R. 1057.4; Transamerican Freight v. Brada ille el%. Indiana 

Refrigerator Lines, Inc. v. Dalton (6th Cir. 1975), 516 F.2d 795; 

Indiana Insurance Co. v. Parr Trucking Service, Inc. (6th 

Cir. 1975), 510 F.2d 490; Jones Truck Lines, Inc. v. ~yder 

Truck Lines, Inc. (6th Cir. 1974), 507 F.2d 100; Carolina 

Freight Carrier Corp. v. Pitt County Transp. Co., supra; 

Watkins Motor Lines Inc. v. Zero Refrigerated Lines (N.D.111. 

1974), 381 F.Supp. 363, aff'd (7th Cir. 1975), 525 F.2d 538; 

General Express, Inc. v. Schreiber Freight Lines, Inc. (N.D. 

Ill. 1974), 377 F.Supp. 1159; Continental Ins. Co. v. Daily 

i 

Express, supra; Cooper Jarretg Inc. v. J. Miller Corp. (19721, 

70 Misc.2d 88, 332 N.Y.S.2d 177; Newsome v. Surratt (1953), 

237 N.C. 297, 74 S.E.2d 732; accord Truck Ins. Exchange v. 

Transport ~ndemnity Co. (1979) , Mont . , 591 P.2d 
McIntosh, having accepted a benefit under a lawful 

contract may not now repudiate his obligations arising under 

the same contract. Section 28-2-503(2), MCA. 

Affirmed. 

Chief Justice \ 

We Concur: 

............................... Justices 
Mr. Justice John C. Sheehy specially concurring: 

I concur, but only because of the inescapable language 

of the United States Supreme Court in Transamerican Freight 

Lines Inc. v. Brada Miller Freight Systems (1975), 423 U.S. 

28, 96 S.Ct. 229, 46 L.Ed.2d 169. That case holds that leases 

of trucking equipment such as here which give the lessor 

(owner) of the truck "operational control and responsibility" 

are not in violation of the ICC regulations. When that court 

shoots holes of that size in the regulatory fabric, it will 

not hold against the wind for any decision we might render 

to enforce the regulations realistically. Otherwise we could 

apply the principle that when parties -- in pari delicto to 

an unlawful contract seek to enforce its terms, the law leaves 

them where it finds them. See for example, May v. Whitbeck 

(1941), 111 Mont. 568, 113 P.2d 332.