Opinion ID: 1969186
Heading Depth: 1
Heading Rank: 2

Heading: Issues and Scope of Review on Appeal.

Text: CNW cites two errors on appeal. First it claims the court erroneously interpreted the licensing agreement for the overhead conveyor. Second it asserts the court erred in its application of Iowa Code section 327D.186 to the facts of this case. Our review is for the correction of errors at law. Iowa R.App.P. 4. A. Applicability of indemnification provision. Iowa Limestone constructed its overhead conveyor pursuant to a licensing agreement with CNW. The agreement permitted Iowa Limestone to construct, maintain, and use car loading facilities ... upon the property and over and adjacent to tracks of CNW. The parties' controversy centers on the agreement's indemnity clause. Its pertinent parts read: It is understood by the Licensee that said facility is subject to and may increase the dangers and hazards of the operation of the railroad of the Railway Company, and that this license is subject to all risks thereof. Therefore, and as a material consideration to the Railway Company for entering into this license and without which the Railway Company will not enter into same, the Licensee agrees to assume and pay for all loss or damage to property whatsoever ... including costs and expenses incident thereto, however arising from or in connection with the existence, construction, maintenance, repair, renewal, reconstruction, operation, use or removal of said facility ... and the Licensee forever indemnifies the Railway Company against and agrees to save it harmless from any and all claims, demands, lawsuits or liability for any such loss, damage, injury and death, costs and expenses, even though the operation of the Railway Company's railroad may have caused or contributed thereto. At issue is the scope of the phrase arising from or in connection with the conveyor's existence and operation. The district court, reading the phrase narrowly, ruled as a matter of law that this contractual provision failed to insulate CNW from liability because the overhead conveyor was not the source of any damages. The collision, the court found, was related to construction of a large storage tank, not the conveyor. The conveyor's only connection to the mishap was its misfortune of being struck by the crane that was working on the tank. On appeal CNW contends the court should have construed the agreement more broadly. It was error, the railroad argues, for the court to infer from the agreement's terms anything less than an absolute promise to pay. We note preliminarily that contract interpretationthe process of determining the meaning of words usedpresents a question of law for the court unless the meaning turns on extrinsic evidence or a choice among reasonable inferences. Farm Bureau Mut. Ins. Co. v. Sandbulte, 302 N.W.2d 104, 107-08 (Iowa 1981). No extrinsic evidence bearing on the phrase in connection with was submitted to the court. Thus the court was correct in resolving the issue as a matter of law based upon its own examination of the use of the words in the licensing agreement. Id. at 108; Seymour v. Chicago & N.W. Ry., 255 Iowa 780, 782, 124 N.W.2d 157, 159 (1963). We are convinced, however, that the court's focus on causation led it to misinterpret the agreement's scope. Used in the context of this case, the phrase in connection with has ordinarily been interpreted broadly, not narrowly. Seymour, 255 Iowa at 786, 124 N.W.2d at 161. Such an interpretation is in keeping with the expressed purpose of the license: to shield the railroad from the increased risk associated with the construction and use of facilities in close proximity to the tracks. Without the protection such a hold-harmless clause provides, there would be little reason for the railroad to permit Iowa Limestone to use the right-of-way adjoining its property. See Chicago & N.W. Ry. v. Kramme, 244 Iowa 944, 951, 59 N.W.2d 204, 208 (1953) (railroad entitled to impose such conditions as it chose upon granting permission to use its property). Although the record supports the court's finding that the conveyor was not the source of the collision, we do not believe causation is the test for application of the clause. By its very existence in close proximity to the tracks, the overhead conveyor presented a hazard. The record reveals that its location restricted the movement of the crane. The crane was operating on Iowa Limestone equipment nearby. Forced to position itself on adjoining tracks to avoid touching the conveyor, the crane ultimately ended up in the path of the moving railroad cars. Had its placement not been restricted by the existence of the conveyor, its collision with the rail carsresulting ultimately in damage to the conveyorwould not have occurred. It is true that agreements relieving an indemnitee from its own negligence are looked on with some disfavor. Herter v. Ringland-Johnson-Crowley Co., 492 N.W.2d 672, 674 (Iowa 1992). They are enforceable, however, when the contractual language is clear and unambiguous. Id. The agreement before us meets that standard. Just as this court noted in Seymour, when interpreting the identical clause, it is inescapable that the injuries sustained here arose in connection with Iowa Limestone's occupation and use of the premises. See Seymour, 255 Iowa at 786, 124 N.W.2d at 161. The court erred in interpreting the licensing agreement otherwise and must be reversed.