Opinion ID: 1326759
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Heading: The Indemnity Theory

Text: There are two basic types of indemnity: express indemnity, based on a written agreement, and implied indemnity, arising out of the relationship between the parties. One of the fundamental distinctions between express indemnity and implied indemnity is that an express indemnity agreement can provide the person having the benefit of the agreement, the indemnitee, indemnification even though the indemnitee is at fault. Such result is allowed because express indemnity agreements are based on contract principles. Courts have traditionally enforced indemnity contract rights so long as they are not unlawful. Sellers v. Owens-Illinois Glass Company, 156 W.Va. 87, 191 S.E.2d 166 (1972). See also Eastern Gas and Fuel Associates v. Midwest-Raleigh, Inc., 374 F.2d 451 (4th Cir. 1967), cert. denied, 389 U.S. 951, 88 S.Ct. 333, 19 L.Ed.2d 360; Eley v. Brunner-Lay Southern Corporation, Inc., 289 Ala. 120, 266 So.2d 276 (1972); City of Borough of Juneau v. Alaska Electric Light & Power Company, 622 P.2d 954 (Alaska 1981); Christy v. Menasha Corporation, 297 Minn. 334, 211 N.W.2d 773 (1973); Waggoner v. Oregon Automobile Insurance Co., 270 Or. 93, 526 P.2d 578 (1974); Di Lonardo v. Gilbane Building Company, 114 R.I. 469, 334 A.2d 422 (1975); Herchelroth v. Mahar, 36 Wis.2d 140, 153 N.W.2d 6 (1967). No claim of an express indemnity agreement is made in this case. On the other hand, the concept of implied indemnity is based on equitable principles arising from the special nature of the relationship between the parties. In Syllabus Point 2 of Hill v. Joseph T. Ryerson & Son, Inc., W.Va., 268 S.E.2d 296 (1980), we stated in regard to implied indemnity: The general principle of implied indemnity arises from equitable considerations. At the heart of the doctrine is the premise that the person seeking to assert implied indemnitythe indemniteehas been required to pay damages caused by a third partythe indemnitor. In the typical case, the indemnitee is made liable to the injured party because of some positive duty created by statute or the common law, but the actual cause of the injury was the act of the indemnitor. We also explained in Hill that the person claiming implied indemnity in order to recover had to be without fault in regard to the incident that created the plaintiff's injuries. This is because a cause of action for implied indemnity rests on principles of restitution which permit a recovery against the indemnitor for all damages that the indemnitee has been required to pay to the injured party. We summarized this point in Hill as follows: The remedy of implied indemnity is an independent cause of action based primarily on principles of restitution: `A person who, without personal fault, has become subject to tort liability for the unauthorized and wrongful conduct of another, is entitled to indemnity from the other for expenditures properly made in discharge of such liability.' Restatement of Restitution § 96 (1937). W.Va., 268 S.E.2d at 301. (Footnotes omitted) Other courts have also concluded that a claim of implied indemnity is based upon principles of equity and restitution and, therefore, hold that one must be without fault to obtain implied indemnity. Stroh Brewery Company v. Grand Truck Western Railroad Company, 513 F.Supp. 827 (E.D. Mich.S.D.1981); Holden v. Placid Oil Company, 512 F.Supp. 644 (E.D.La.1981); Nelson v. Quimby Island Reclamation District Facilities Corporation, 491 F.Supp. 1364 (N.D.Cal.1980); Chirco Construction Company, Inc. v. Stewart Title & Trust of Tucson, 129 Ariz. 187, 629 P.2d 1023 (1981); Houdaille Industries, Inc. v. Edwards, 374 So.2d 490 (Fla.1979); Przybylski v. Perkins, 95 Ill.App.3d 620, 51 Ill.Dec. 110, 420 N.E.2d 524 (1981); Peeples v. City of Detroit, 99 Mich.App. 285, 297 N.W.2d 839 (1980); Cartel Capital Corporation v. Fireco of New Jersey, 81 N.J. 548, 410 A.2d 674 (1980). [3] When analyzed from the perspective of implied indemnity principles, it is clear that a manufacturer can only recover if he is without fault. In a products liability case such as the one involved here, where the third party is the manufacturer, he is not accorded a right of implied indemnity against the employer because, having made a defective product, he is not fault free. Under Hill, this is the predicate for a claim of implied indemnity. For purposes of the certified question, we are asked to assume that both Niagara and Unipunch have manufactured a defective producta punch press. In view of these assumed facts and under the foregoing law of implied indemnity, we conclude that Niagara and Unipunch have no claim for implied indemnity against the employer Terrell. [4]