Source: https://law.justia.com/cases/california/supreme-court/2d/69/33.html
Timestamp: 2019-04-18 20:16:49+00:00

Document:
Justia › US Law › Case Law › California Case Law › Cal. 2d › Volume 69 › Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co.
PACIFIC GAS AND ELECTRIC COMPANY, Plaintiff and Respondent, v. G. W. THOMAS DRAYAGE & RIGGING COMPANY, INC., Defendant and Appellant.
Miller, Van Dorn, Hughes & O'Connor, Richard H. McConnell and Daniel C. Miller for Defendant and Appellant.
Richard H. Peterson, Gilbert L. Harrick and Donald Mitchell for Plaintiff and Respondent.
 In the present case the court erroneously refused to consider extrinsic evidence offered to show that the indemnity clause in the contract was not intended to cover injuries to plaintiff's property. Although that evidence was not necessary to show that the indemnity clause was reasonably susceptible of the meaning contended for by defendant, it was nevertheless relevant and admissible on that issue. Moreover, since that clause was reasonably susceptible of that meaning, [69 Cal. 2d 41] the offered evidence was also admissible to prove that the clause had that meaning and did not cover injuries to plaintiff's property. fn. 9 Accordingly, the judgment must be reversed.
The instruction was based on certain guidelines discussed in Goldman v. Ecco-Phoenix Elec. Corp. (1964) 62 Cal. 2d 40, 45-46 [41 Cal. Rptr. 73, 396 P.2d 377]; Harvey Machine Co. v. Hatzel & Buehler, Inc. (1960) 54 Cal. 2d 445, 448 [6 Cal. Rptr. 284, 353 P.2d 924]; and Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co. (1962) 202 Cal. App. 2d 99, 112-113 [20 Cal. Rptr. 820]. Those cases do not hold, however, that all four conditions specified in the instruction must exist for the indemnitor to be relieved of liability. It is sufficient if the indemnitee's own active negligence is a cause of the harm. As stated in Markley v. Beagle (1967) 66 Cal. 2d 951, 952 [59 Cal. Rptr. 809, 429 P.2d 129], "An indemnity clause phrased in general terms will not be interpreted ... to provide indemnity for consequences resulting from the indemnitee's own actively negligent acts."
 Since invoices, bills, and receipts for repairs are hearsay, they are inadmissible independently to prove that liability for the repairs was incurred, that payment was made, or [69 Cal. 2d 43] that the charges were reasonable. (Plonley v. Reser (1960) 178 Cal. App. 2d Supp. 935, 937-939 [3 Cal. Rptr. 551, 80 A.L.R.2d 911]; Menefee v. Raisch Improvement Co. (1926) 78 Cal. App. 785, 789 [248 P. 1031].) If, however, a party testifies that he incurred or discharged a liability for repairs, any of these documents may be admitted for the limited purpose of corroborating his testimony (Bushnell v. Bushnell (1925) 103 Conn. 583 [131 A. 432, 436, 44 A.L.R. 788]; Cain v. Mead (1896) 66 Minn. 195 [68 N.W. 840, 841]), and if the charges were paid, the testimony and documents are evidence that the charges were reasonable. (Dewhirst v. Leopold (1924) 194 Cal. 424, 433 [229 P. 30]; Smith v. Hill (1965) 237 Cal. App. 2d 374, 388 [47 Cal. Rptr. 49]; Meier v. Paul X. Smith Corp. (1962) 205 Cal. App. 2d 207, 222 [22 Cal. Rptr. 758]; Malinson v. Black (1948) 83 Cal. App. 2d 375, 379 [188 P.2d 788]; Laubscher v. Blake (1935) 7 Cal. App. 2d 376, 383 [46 P.2d 836]. See also Gimbel v. Laramie (1960) 181 Cal. App. 2d 77, 81 [5 Cal. Rptr. 88].) Since there was testimony in the present case that the invoices had been paid, the trial court did not err in admitting them.
Peters, J., Mosk, J., Burke, J., Sullivan, J., and Peek, J., fn. * concurred.
FN 3. " 'Rerum enim vocabula immutabilia sunt, homines mutabilia,' " (Words are unchangeable, men changeable) from Dig. XXXIII, 10, 7, § 2, de sup. leg. as quoted in 9 Wigmore on Evidence, op. cit. supra, § 2461, p. 187.
FN 8. Extrinsic evidence has often been admitted in such cases on the stated ground that the contract was ambiguous (e.g., Universal Sales Corp. v. California Press Mfg. Co., supra, 20 Cal. 2d 751, 761). This statement of the rule is harmless if it is kept in mind that the ambiguity may be exposed by extrinsic evidence that reveals more than one possible meaning.
The provision that defendant perform the work "at his own risk and expense" and the provisions relating to insurance are equally inconclusive. By agreeing to work at its own risk defendant may have released plaintiff from liability for any injuries to defendant's property arising out of the contract's performance, but this provision did not necessarily make defendant an insurer against injuries to plaintiff's property. Defendant's agreement to procure liability insurance to cover damages to plaintiff's property does not indicate whether the insurance was to cover all injuries or only injuries caused by defendant's negligence.
If the language of the contract is ambiguous and may reasonably support multiple interpretations, a court should consider extrinsic evidence rather than merely relying on the plain language of the document.
Pacific Gas & Electric Co. arranged with G.W. Thomas Drayage and Rigging Co. to replace the upper metal cover on one of its steam turbines. Thomas agreed that it would perform the work at its own risk and expense and that it would indemnify Pacific against any resulting losses, damage, expenses, and liability caused by harm to property connected with its work. It agreed to cover these concerns with at least $50,000 in insurance, using a policy that contained a cross-liability clause extending the coverage of Pacific's property.
The metal cover fell during the work on the replacement, causing damage to the exposed rotor that was worth about $25,000. During the ensuing dispute, Thomas argued that the indemnity clause in the contract covered only harm to the property of third parties, not Pacific's property. In support of that claim, it tried to introduce similar contracts entered into by Pacific, but the trial court felt that the plain meaning of this contract was evident on its face and refused to consider the other contracts.
The trial court implicitly revealed its view that the clause was ambiguous by stating that it used the standard language for a third-party indemnity provision. As a result, a rational interpretation of the clause requires some investigation of all credible evidence relevant to the contract in determining the intent of the parties.
California courts use the more generous Corbin version of the parol evidence rule, which permits examination of extrinsic evidence to interpret terms even if the document appears to be a full integration.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 2
 § 2461
 v.