### 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 HonorableWilliam J. Speare,Judge presiding. Counsel of Record: ForAppellants: 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

# 81982

r @ 

### ClerkMr. Justice Fred J. Weber delivered the Opinion of the Court.

Joanie Sweet (Sweet) sued Burlington Northern, Inc. (BN) and Colborn School Supply and M&LRealty Co. (Colborn) inYellowstone County DistrictCourt for personal injuries sufferedwhile crossing the BN track adjacent to the Colborn building located on BN property. BN settled by the payment of $60,000 to Sweet. BN cross claims against Colborn claiming indemnification under the BN-Colborn lease. The District Court granted summary judgment toColborn against BN on the

cross claim. BN appeals. Weaffirm the District Court. The issues are: (1) Does the BN-Colborn lease indemnify BN against damages suffered as a result 

### of the solenegligence of BN? (2) Is BN estopped from denying that Colborn atall timeswas infullcompliance with the BN-Colborn lease? Sweet claimed that she sustained injury in the course of her employment as a delivery van driver forUnited Parcel Service, while enroute toColborn's building inBillings, Montana, forpurposes of pick-up and delivery on April 12, 1976. Sweet claimed that as she was operating her delivery vehicle upon or across railroad tracks located behind the building occupied by Colborn, the steering wheel of her vehicle was caused to suddenly spin and strikeher hand, causing injury. She claimed that the steering wheel 

### was caused to spin as the result of ruts, depressions, and chuckholes inthe ground adjacent to the railsover which she was operating her vehicle. Colborn is located on the southwest corner of Montana Avenue and North 27th StreetinBillings. This four story building occupies railroad right-of-way owned by BN and 

### isserved by a railroad spur track adjacent to the loading dock atthe rear of the building. The land occupied by Colborn

was leased from the railroad by M&L Realty in 1957. The leasewas revised and renewed in 1975. M&LRealty subleased the property toColborn. Only the property physically occupied by the building and by the loading dock is leased from the railroad. The ground on which the spur track 

### is located is owned by BN and isnot covered by any lease agreement. Itwas customary for Colborn toreceive freight shipments atits loading dock by delivery truck aswell as by rail. Such delivery trucks necessarily passed over the railsof the spur track. Colborn and BN were aware of this. Itwas an undisputed factthat the stripof land where the accident occurred was under the exclusive control of BN and that BN was the only party with a duty tomaintain the

area. BN would not allow businesses such as Colborn to conduct or perform separatemaintenance procedures inthe

area where the accident occurred. Paragraph 5 of the BN-Colborn lease provides: "Lessee shall not nor shall Lessee foster, sanction orpermit others tooperate any equipment, motor driven or otherwise, for the purpose of serving Lessee, upon or across any railroad track located on or adjacent to the demised premises except atestablished crossings. "Lessee agrees to indemnify and save harm

### less Lessor from allloss, damage, penalties, costs or judgments thatmay be assessed against orrecovered from it on account of or inany manner arising or growing out of a violation of the provisions of thisparagraph 5." The issue iswhether the foregoing lease provisions are sufficient to indemnify BN against damages sustained because of the negligence of BN.On this issue BN maintains that the language of the lease agreement provides that Colborn 

### willindemnify BN for any losses assessed against BN as a result of Colborn violating the 

### terms of the lease. BN claims that therewas a violation of paragraph 5 of the leasewhen Colborn permitted the plaintiff tooperate a motor vehicle on tracks other than at

an established crossing. This Court recognizes thevalidity of a contract provision of indemnity. Lesofski v. Ravalli Co. Elect. Coop. (1968), 151Mont. 104, 439 P.2d 370; Western ConstructionEquipment Co. v. Mosby's Inc. (19651, 146Mont. 313, 406 P.2d 165. However, thisCourt held that a party cannot be indemnified against itsown negligence unless the contract provisions

are "clear and unequivocal." InLesofski a widow of a deceased employee of a highway contractor brought an action against an electricpower company for the death of the employee who was electrocuted. The company brought a third-party action against the contractor. The District Court entered a summary judgment for the contractor which the Company appealed. The third-party complaint was based upon an indemnity agreement ina contract between the Company and the StateHighway Commission. The contractor had no contract of any sortwith the Company, and therehad not been any bargaining by the Company for indemnity for 

### its own negligence. This Court stated that "tocontend that

### we should liberally construe the contract of respondent with the StateHighway omm mission to include the appellant's negligent actswould inour opinion annul the recognized rule that toindemnify a party against his own negligence 

### itmust be expressed in 'clear and unequivocal 

### terms.

## ' " Lesofski, 146Mont. at 108, 439 P.2d at372. TheDistrict Court could not find such clear and unequivocal language in the present case. BN argues that it had the right toprotect itself against an increased risk incurred by permitting Colborn to occupy premises adjacent to the BN tracks. BN alsoargues the validity of the indemnity clauseswhich they contend indemnify BN against 

### its own negligence. BN relies upon theMontana case of Ryan Mercantile Company v. Great Northern Railway Company (9thCir. 1961), 294 F.2d 629, which was an actionbrought by a railroad's tenant for a judgment declaring the rights of the parties under a lease. The wife of an employee of Ryan was injured while riding ina carwhen the

car

### was struck by a boxcar being pushed by a Great Northern switch engine. She alleged only negligence of the Great Northern. While finding that the Great Northern should be indemnified for its own negligence, the 9th Circuit Court stated: 

# ".

. .[Iln order touphold an indemnification agreement for damages caused by negligent acts of the indemnitee theremust be clear and unequivocal 

### terms. 

# .

# .An examination of the indemnity agreement discloses no ambiguity. The phrases used 

## -- 'any and allpersonal injuries,' 'of every name and nature which may in any manner arise,' 'whether due or not due tothe negligence of Great Northern' 

### -- demonstrate thatRyan's indemnity would cover any claim made against Great Northern, 

# . . . and shows that theparties had inmind that the negligence of Great Northern would be no bar to Ryan's indemnity obligation." Ryan, 294 F.2d at633. The Ryan Mercantile Company lease states that 

### it extends to personal injuries "whether due or not due to the negligence of GreatNorthern." There isno comparable provision inthe BN-Colborn lease. We agreewith the conclusion of the DistrictCourt that the language from paragraph 

### 5 of the BNColborn leasedoes not provide clear and unequivocal 

### termsnecessary for BN torecover under a theory of indemnification against 

### its own negligence. Because we recognize the close question in the interpretation of the 

### lease provision, we willconsider the next issuewhich is whether BN is estopped from denying that Colborn 

### was infullcompliance with the BN-Colborn lease. BN claims a violation of the lease agreement's paragraph 5 because Colborn allowed the plaintiff to cross the tracks atan area not "an established crossing." Itwas undisputed that BN was aware that the tracks were being crossed for deliveries toColborn. This had been occurring since the original lease in 1957. The undisputed evidence also shows that trucks have been making deliveries across this crossing tothe building now occupied by Colborn formore than 60 years on a continuingbasis. A new lease was drawn up in 1975partly because of the construction of a new loading dock. The record shows thatBN was aware that Colborn intended toand did use the loading dock, thatvehicles could not service the loading dock without crossing the tracks, and that BN maintains the tracks so that vehicles could cross them 

### to servicebusinesses. Colborn asserted the defense of estoppel, and the District Court held that BN was estopped, as a matter of law, from asserting that 

### a violation of the lease caused plaintiff's injuries. The District Court memorandum opinion stated: "BURLINGTON NORTHERN, by its conduct as apparent from the record, has acquiesced in the use of the areawhere the accident happened as an area for vehicular travel; BURLINGTON NORTHERN has sanctioned such travel and has atleast attempted tomaintain the area for the specificpurpose of vehicular travel to serve such businesses as COLBORN SCHOOL SUPPLY."In support of the finding of estoppel, the deposition of Blane Pound, BN executive, inpart states: "Q. Well, if you consider what they've been doing for 23 years a violation of the provisions of this lease, Burlington Northern hasn't done anything toprevent them from doing that, have they? "A. That is correct. "Q. As a matter of fact, you well know that Burlington Northern has, atleast atsome 

### time, built that area up there so thatvehicles could drive inand out of there. "A. Correct. "Q. I see. So what, I guess atthe very least Burlington Northern assisted intheviolation of the 

### terms of this lease, if that's a violation, huh? "A. Thatwould appear tobe correct. "Q. And it would alsoappear that thathas been with the approval and blessing of BurlingtonNorthern, wouldn't thatbe correct? "A. Yes. "Q. 

### It's either one of two things. 

### It's either thatBurlington Northern assisted Colborn School Supply inviolating the 

### terms of the lease

### -- and 

### I'mreferring to fullParagraph 3 under Paragraph 5

## -- they've either assisted and approved allthese years of thatviolation orBurlington Northern considers that area back there an established crossing. (Ob jection) "Q. Well, I want you to answer that. 

### It's either one of those two things, isn't it? "A. Yes, your statementwould be correct." Six essential elements have been held necessary to constitute an equitable estoppel: "(1)theremust be conduct, acts, language, or silence amounting to a representation or a concealment of material facts; (2) these facts must be known tothe party estopped atthe 

### time of his conduct, or atleast the circumstances must be such thatknowledge of them is necessarily imputed tohim; (3) the truth concerning these factsmust be unknown tothe other party claiming the benefit of the estoppel at the time 

### it was acted upon by him; 

### (4) theconduct must be done with the intention, or at leastwith the expectation, that 

### it willbe acted upon by the other party, or under the circumstances that 

### it 

### isboth natural and probable that 

### it willbe so acted upon; (5) the conduct must be relied upon by the other party, and, thus relying, he must be led to actupon 

### it, and (6) he must infactactupon 

### it in such a manner 

### as to change his position for theworse." Smith v. Krutar (1969), 153 Mont. 325, 332, 457 P.2d 459, 463; Hustad v. Reed (1958), 133Mont. 211, 223, 321 P.2d 1083, 1090; Mundt v. Mallon (1938), 106 Mont. 242, 249-50, 76 P.2d 326, 329. As to element (I),the actions of the BN inmaintaining thisparticular area as a crossing and allowing vehicles to continuously use the same as a crossing formore than 60 years amounts toa representation that it was a proper crossing foruse. As to element (2), the holding out that thiswas a proper crossing for usage was clearly known to BN as established by the testimony of the BN executive. As to element (3),the facts show that Colborn did not know thatBN claimed thiswas not a proper crossing. As to element (4), the facts show that BN's conductwith regard to the crossing was done with the expectation that Colborn would continue touse the crossing aswould 

### its invitees. As to element (5), the facts clearly show thatColborn relied upon such actions of BN and continued tohave deliveries made across such crossing toColborn. As to element (6), the actions of Colborn, of course, are sufficient to change itsposition for the worse so that BN could contend a potential breach of the lease. The record contains clearly sufficient uncontradicted evidence that the six elements of equitable estoppel were present so far as BN 

### is concerned. As a result, regardless of the contentions on the part of BN as to the technical indemnity provisions of its leasewith Colborn, BN is estopped from claiming any right toindemnification.The DistrictCourt properly granted summary judgment to Colborn against BN. Weaffirm.

WeConcur: