Court Opinion

ID: 8882022
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:49:54.365255+00
Date Added: 2024-06-11T17:06:42.439061
License: Public Domain

STAHL, Circuit Judge
(dissenting).
This troublesome case presents the difficult question of whether a contractual provision, otherwise controlling between the parties, is unenforceable, because it is contrary to public policy. The district court so held and I believe we should affirm. Accordingly, I respectfully dissent.
By the Act of May 18, 1937, P.L. 654, as amended, 43 P.S. 25-1 et seq., the Pennsylvania legislature required that all places or “establishments” within the state where persons work must meet certain minimum standards of safety. The intention of the act clearly was to protect workingmen by requiring safe working conditions.
The legislature granted the State Department of Labor and Industry the power to promulgate and enforce regulations pertaining to equipment used at places of work. The Department adopted mandatory safety regulations pertaining to ladders. It is undisputed that Ellwood’s negligent failure to comply with these regulations was a proximate cause of the death in this case.
Normally Ellwood did not have occasion to make use of ladders in its operation although it had constructed a ladder on the outside of its water tower. When Ellwood contracted with Bease-Johnson to have the tower painted, it required the contractor to agree to indemnify it for losses arising in the course *791of the job, even if occasioned by Ell-wood’s own negligence, and further required the contractor to procure insurance to cover any losses.
Though Pennsylvania has enforced agreements for the indemnification of the negligence of the indemnitee, there does not appear to be any case dealing with such an agreement where there is involved a statutory public policy for the protection of the public safety. In the Westinghouse case on which the majority relies, the indemnitor raised only the question of whether the agreement there could properly be construed to reach a situation where the loss was caused by the negligence of the indemnitee.
As the majority acknowledges, under Pennsylvania law an agreement exculpating a party from financial responsibility for a loss caused to the other party to a contract is unenforceable where it conflicts with a statutory public policy. The majority concludes, however, that this principle does not apply to the indemnity agreement here despite the “substantial kinship” between these types of provisions expressly recognized by the Pennsylvania Supreme Court in Dilks v. Flohr Chevrolet, Inc., 411 Pa. 425, 192 A.2d 682, 687 n. 11 (1963):
While an exculpatory clause — which deprives one contracting party of a right to recover for damages suffered through the negligence of the other contracting party — differs somewhat from an indemnity clause — which effects a change in the person who ultimately has to pay the damages — yet there is such a substantial kinship between both types of contracts as to render decisions dealing with indemnity clauses applicable to decisions dealing with exculpatory clauses, and vice versa.
The majority’s reasoning is that unlike an exculpatory clause the indemnity provision here does not affect the victim’s right to recover. Thus they hold that enforcement of the agreement works “no waiver of the protection of the Department of Labor regulation.”
I disagree with this conclusion. The purpose of the legislative scheme to protect the public safety was not merely to make it easier for workmen to recover damages. The purpose was to compel compliance with the safety requirements in the first instance. The different effects of exculpatory and indemnification provisions upon the right of an injured party to recover do not go to the key issue which concerns us here: Does the indemnity agreement conflict with public policy?
The leading case expounding the Pennsylvania law in this area is Boyd v. Smith, 327 Pa. 306, 94 A.2d 44 (1953). In that case a tenant sued for injuries suffered as a result of his landlord’s failure to comply with the state statute requiring that apartment houses be equipped with adequate fire escapes. As in this case, the landlord’s failure to comply with the requirement constituted negligence per se. A provision of the lease exculpating the landlord from responsibility for injuries caused by his negligence was raised as a defense.
The state court held that although such clauses are ordinarily valid, they are not enforceable when in contravention of a strong public policy. The court found such a policy in Boyd because the landlord’s failure to fulfill his duty to provide proper fire escapes was “a matter of interest to the public.” The statutory requirement had been imposed “for the protection of human life.” The landlord’s duty to observe such a statute, the court said, “cannot be waived by an individual or denied effect by courts, since the integrity of the rule expressed by the Legislature is necessary for the common welfare.” 94 A.2d at 46.1
*792The import of Boyd was that to permit the landlord to avoid responsibility for non-compliance would be to defeat the statutory purpose of protecting the public against the possibility of injury. If the landlord could contract away his responsibility, the likelihood that he would provide the required fire escapes was lessened.
I believe that a careful reading of Boyd makes clear that it was not solely the fact that the tenant’s injury would remain uncompensated that led the court to outlaw the exculpatory clause.. The crux of the public interest was the requirement of safe fire escapes, and public policy was directly contravened because the agreement tended to deprive the tenant, as well as the public, of the protection sought to be assured by the state.
Similarly, to look only to the availability of recovery in the present case seems to me inappropriate. The statute regulating working conditions for establishments was not designed to guarantee the availability of damages for injured workmen and their families after the fact. Like the legislation in Boyd, it was intended to prevent the occurrence of accidents and to protect human life. If the indemnity agreement here tends to weaken the statutory protection, it is in contravention of public policy, like Boyd, and should not be enforced.
From the facts here, I am convinced that enforcement of the indemnity agreement would weaken the protection of the state’s safety requirements. Ellwood does not use the ladder on its water tank in the ordinary course of business. There is therefore no incentive to install the required safety devices for those occasions on which work is to be done on the tank if the owner can contract away its responsibility for failing to comply with the state standards. On the other hand, a contractor in the position of Bease-Johnson, while accepting financial responsibility for a violation, would be unlikely to furnish the mandated safety equipment since the cost would be high and insurance is available. Consequently, the required equipment may not be supplied, and workers will be compelled to risk unsafe conditions.
In my view the only way to make certain the fulfillment of the legislative mandate of public safety is to refuse to allow Ellwood to contract away the responsibility placed on owners of “establishments” by the state legislature. The availability of insurance to Ellwood to cover its own liability would not change the result. This would in fact engender pressure from the insurer to comply with the state requirements.
As indicated above, the Pennsylvania Supreme Court in Dilks, swpra, has pointed the way to similar treatment of exculpatory clauses and indemnity agreements. The majority chooses to disregard this authority because the state court “did not go so far as to say that the public policy considerations determinative of the legality of exculpatory clauses are necessarily determinative of the legality of indemnity clauses.” This is, of course, literally correct. On close examination, however, the policy considerations underlying Boyd are equally relevant here,2 and I think it is appropriate to give the Dilks statement the more expansive significance to which its words lead. I therefore agree with Judge Sorg below that the indemnity agreement “is contrary to public policy and of no avail for the purpose of insulating Ellwood Water from the consequences of its failure to comply with an express statutory enactment designed for the protection of human life.”

. The court also said: Where the legislature has, by definite and unequivocal language, determined the pub-lie policy of this Commonwealth with re-eard to a particular subject, that pronouncement cannot be set aside and ren*792dered unenforceable by a contract between individuals. * * * The clause in the lease here invoked * * * is violative of that policy and is therefore legally inoperative and void. 94 A.2d at 46.

. See Gilpin v. Abraham, 218 F.Supp. 414 (E.D.Pa.1963), where the Bond doctrine was followed in a situation where a landlord sought indemnification from his tenant for a loss occasioned by an injury to a guest.