Opinion ID: 1927947
Heading Depth: 2
Heading Rank: 3

Heading: Indemnification of Fireman's

Text: Finally, Murphy argues that he should not be held liable to indemnify Fireman's for the damages against it caused by its being found liable for conversion. The Superior Court held in favor of Fireman's on its cross-claim, awarding it indemnification together with attorney's fees and costs, because it acted without an immediate present knowledge of the existence of the lien at the time the draft was sent to Murphy, and as soon as Fireman's realized its error, it contacted Murphy and in essence did all that it could to assure that the lien would be dealt with. Based on the evidence at trial the Superior Court was justified in concluding that Fireman's was less culpable than Murphy and that Fireman's should be entitled to indemnification. Fireman's offered in evidence correspondence between Murphy and Fireman's attorney, along with an affidavit by that attorney, tending to show that Fireman's was merely negligent. A January 9, 1979, letter from Fireman's attorney to Murphy transmitted the $6,500 check and a release form. The release stated: It is the understanding of the releasees that there are no liens legally chargeable against the payment described herein, and it is further expressly understood and agreed that the releasor [i.e., Crochere] expressly assumes complete and exclusive responsibility for the discharge of any claimed liens against the payment described therein. Murphy and Crochere signed and dated the release on January 12, 1979. When Fireman's was reminded of the Bank's lien, its attorney wrote to Murphy on January 24, 1979, and stated that the release was technically incorrect since there was in actuality an outstanding lien, but that Fireman's had made the offer of settlement with the understanding that Mrs. Crochere will see to the discharge of any liens. After a telephone conversation that same day, Fireman's attorney wrote Murphy, stating, You have indicated to me that you are holding sufficient money out of the settlement to satisfy the lien of Northeast Bank.... Based on this understanding, I am not going to take any action to rescind the settlement agreement. The Superior Court concluded, [H]ad Murphy done what he should have done [with the settlement proceeds], the actions of Fireman's Fund in disbursing the funds to him would have caused no harm to plaintiff Bank, and in fact this lawsuit would not have arisen and Fireman's Fund would therefore not have had to expend anything in attorneys' fees or costs connected with this lawsuit. The case at bar is an appropriate one for indemnity in order to do justice within the law so that one guilty of an active or affirmative act of negligence [or intentional act] will not escape liability, while another whose fault was only technical or passive assumes complete liability. 41 Am.Jur.2d Indemnity § 20, at 706 (1968). The present facts bring this case squarely within the black letter rule of section 97 of the Restatement of Restitution (1937), which declares: A person whose negligent conduct combined with the reckless or intentionally wrongful conduct of another has resulted in injury for which both have become liable in tort to a third person is entitled to indemnity from the other for expenditures properly made in the discharge of such liability, if the other knew of the peril and could have averted the harm at a time when the negligent tortfeasor could not have done so. Furthermore, Murphy disbursed the settlement proceeds in disregard of what the Superior Court found to be a contract between Murphy as Crochere's attorney and Fireman's, which entitled Fireman's to rely upon Murphy to see to it that the Bank's lien was taken care of. See, e.g., Gardner v. Murphy, 54 Cal.App.3d 164, 168, 126 Cal.Rptr. 302, 304 (1975) (indemnity is a total and complete transfer of liability that is equitably justified by the difference in character or kind of the wrongs of the two tortfeasors). We find no error in the Superior Court's award of indemnity, attorney's fees, and costs to Fireman's. The entry is: Judgments affirmed. All concurring.