explaining the proper application of “indemnify and hold harmless” clauses
How later courts described this case
- explaining the proper application of “indemnify and hold harmless” clauses
Written by the judges who cited it.
The opinion
O’CONNELL, C. J.,
dissenting.
The majority opinion sees the liability to pay the cost of defense as resting entirely upon the proven liability of Chrysler for a loss resulting exclusively from its conduct.
I look upon the problem differently. I think that the liability to indemnity for expenditures made in defending an action is distinct from the liability to indemnity for a loss suffered as a result of a judgment against the alleged indemnitee based upon the alleged indemnitor’s conduct. Where the question of the liability to indemnity arises out of a transaction involving the sale of goods, as in the present case, I *374 would explain my position as follows. If the action-brought by the consumer against the dealer alleges not only a defect in the manufacture of the goods but also a loss resulting from misconduct of the dealer for which the dealer would not be entitled to indemnity, the dealer is threatened with imposition of a loss which could be his alone, without right of reimbursement from the manufacturer. Under these circumstances he should be made to bear his own cost of defense.
On the other hand, if the action against the dealer alleges as the cause of the loss only a defect in the manufacture of the goods, the allegations if proven will visit the loss on the manufacturer and, as between him and the dealer, that loss will be the manufacturer’s exclusively unless he can prove that dealer is barred from indemnity by his own misconduct.
An action so brought can be looked upon not as the dealer’s lawsuit but primarily as the manufacturer’s lawsuit for the reasons already stated. Thera is, of course, always the possibility, looming in the future at the time the dealer is sued, that the'manufacturer will assert a defense to the dealer’s claim to indemnity, but unless statistics would show , that .the successful assertion of such a defense is common I would still insist that the lawsuit is the manufacturer’s primary concern and he should defend it or pay the cost of doing so. ①
The right of indemnity is based'upon the equitable principle that one who makes a non-voluntary *375 expenditure for the benefit of another should be entitled to reimbursement for it. I believe that this principle is applicable in the situation which I have described. In the case before us it is shown that the complaint in the action brought against Westway alleged facts which would have entitled Westway to indemnity against Chrysler had there been a judgment in favor of Jeanette Berger and her husband, assuming of course that Chrysler did not have a defense against Westway’s claim to indemnity. Under these circumstances I would hold that Chrysler did not have a defense against Westway’s claim to indemnity. Under these circumstances I would hold that Chrysler must pay the cost of defense.
I join in the dissenting opinion filed by Mr. Justice Denecke.
The same reasoning .would apply where the action brought against the dealer alleges not only a manufacturer’s defect, but also the.dealer’s failure to inspect. Since the dealer has a right to indemnity against the manufacturer even where the loss to'the consumer is deemed to have been ■ suffered as a-result of , the dealer’s failure to inspect, the action brought against the dealér can be regarded as primarily the manufacturer’s lawsuit. " ■ - ■