Petition for Writ of Certiorari — Mack Trucks, Inc. v. Bendix-Westinghouse Automotive Air Brake Co.

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INTHE .:—

: Supreme Court of the United States |

“) _ October Term, 1967 ;

No. 1.26 0):

_ MACK TRUCKS, INC.,

| Petitioner,

Vv.

BENDIX. WESTINGHOUSE AUTOMOTIVE AIR

| BRAKE COMPANY, -

7 | Depa

ee :

_ LATROBE DIE CASTING COMPANY,

; sistas Defendant.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CiXCUIT

JOSEPH B. BAGLEY,

-BAGLEY & SYDOR,

\ Attorneys for Petitioner.

“a

716 Frick Bldg.,

Pittsburgh, Pa. 15219.

BATAVIA TIMES, APPELLATE COURT PRINTERS, / age.

EOWARD W. SHANNON, REPRESENTATIVE,

5022 CARLYN DRIVE, PITTSBURGH, PA., 15236

412-681-7463

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Opinions Below............. SLi ea be eae Cea es - 1

Jurisdiction .............. Ps PAP ge aOR SAE Ls 1

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Statutes Involved eres Sey Piapericentens “2

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‘CrraTions.

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Erie R. R. Co. v. Tompkins. 304 U. s. 64 (1938) ~ 2

—— Griffith v. United Airlines, Inec., 416 Pa. 1, 203. Ae

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Guaranty Trust Co. v. York, 326 U. S. 99. 1945) 2

Kuchinie v.. McCrory, 422 Pa. 620, 222 At. 2a 897

MsSwatn v. VieSwain, ‘490 Pa. 86, 215 “At. 2d 677

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. IN THE .

"Supreme Court of as sted States

es * ° : ‘ is

| seein ty October am, 1967:

{ne : No. sobbed

MACK'TRUCKS, INC,

BENDIX. WESTIN GHOUSE AUTOMOTIVE AIR .

_ BRAKE COMPANY, -

; Defendant,

LATROBE 2 DIE CASTING COMPAN , ihe

ron aad Defendant.

PETITION FOR A WRIT OF CERTIORARI ne THE

___ UNITED STATES COURT OF APPEALS

ee _ FOR THE THIRD CIRCUIT

Mack Trucks, Inc., by its Attorney,-J oseph B. Bagley,

prays that a Writ of Certiorari issue to review the decision

. of the Third —— Court. of Appeals.

Opinions Below _ |

The opinion of the Federal - District: Court dee: ‘the

_ Western District of Pennsylvania was entered May 5, 1965,

and is unreported. The opinion of the Court of Appeals :

for the Third Circuit was entered December 15, 1966, and

is reported at 372 Fed. 2d 18 (1966).

- Jurisdiction

The jurisdiction of the Court: ‘was invoked under 28 U. S.

Code 1254 ( 1). ret

oF Petitioner,

Sites Presented

Whether the Federal District Court for the Western

District.'of Pennsylvania and the Third Circuit Court of

Appeals hearing this case solely upon the basis of diversity

of citizenship applied as the law,. principles which the.

proper. state courts would not have applied, thus not fol-

lowing the ‘Erie’? dodtrine

304 U: S. 64 (1938), and Guaranty Trust Co. v. ‘York, 326

U. S. 99 (1945).

Statute Involved

The statutory provision involved is 12 Pa. Stat. Ann.

§ 39.

Oo.

| Statement

Petitioner i is @ -seaieiered N ew. York corporation whose

_ principal place of business in 1958, through October, 1965,

was New Jersey and since October, 1965, has been Pennsyl-

_vania. From its Allentown, Pennsylvania Plant, Petitioner

purchased a brake pedal assembly from Defendant, Bendix-

Westinghouse Automotive Air Brake Company, an Ohio

corporation, sometime prior to J anuary 24, 1955. Peti-

-tioner installed the brake pedal assembly in Pennsylvania’

in one of its trucks. The brake pedal assembly was manu-

factured in- Pennsylvania: by ‘Latrobe Die Casting Com-

pany, Third-Party Defendant. The entire brake pedal

‘ assembly was installed in Pennsylvania by the Petitioner |

On May 22, 1958, while the-

in one of Petitioner’s trucks.

truck was being operated in in Miami, Flordia, the. brake pedal

assembly broke off causing an accident. An examination:

_ of the brake pedal assembly revealed a latent defect, not

known to the Petitioner, caused by the manufacture of the

: said brake pedal assembly. Suit was filed ee Peti- _

Erie R. R. Co. v. Tompkins,

-«

’ 3

tioner and a - verdict / was ibeaiasaae obtained against :

oe Mack Truck, Inc., and thé owner of the truck on the basis :

- that the defestive brake pedal assembly was the ‘elon

_ cause of the: accident.

Due notice was given Bendix- Westinghouse Automotive

_ Air Brake Company, by a series of registered letters from

‘the Petitioner which informed the Defendant at all stages a

of -the proceedings that. the suit and subsequent verdict

against Mack: Trucks, Inc., was the result of a defect in

the brake pedal assembly purchased from.the Defendant. ©

Due to Florida’s Rules of Procedure, the ‘Petitioner was

not permitted to join-Bendix-Westinghouse as an Addition-

al Defendant in-the suit resulting from the accidént. “How-

a ever, said company was at all times fully informed of the’

: Petitioner’ 's intention to hold jit- liable for all costs and

_ judgments arising from the defect in the brake pedal as- -

sembly, sand of Pétitioner’s desire to have .Bendix-West-

inghouse enter and defend said suit. :

As its share of the verdict i in the Florida accident case,

_ Petitioner was forced to pay $13,028.95. The formal ‘‘Sat-

- isfactionof Judgment’2 duly executed by counsel was filed

and entered in the records of the divas: Court on J une 30,

On October 10, 1963, Petitioner sioaih suit against Rie.

dix-Westinghouse on the common law theory of indemnity .

_ in the Federal District Court for. the Western District of

‘Pennsylvania. The jurisdiction of the Court was based

upon Diversity of Citizenship, 28 U.S. Code 4 1382. Ben-

dix- Westinghouse joined Latrobe Die Casting Company,

the manufacturer, as a Third-Party Defendant charging -

that the Third-Party Defendant manufactured the brake _

pedal assembly in question and would be liable over to.

- Bendix-Westinghouse for any monies due Petitioner. —

' The Defendants moved for Summary Judgment on the

"basis that the claim of Mack Trucks, Ine., was barred by the .

statute of limitations. The case was argued before the

United States District Judge, John L. Miller, and on May )

* 5, 1965, a judgment was entered in favor of Defendant

i and Third-Party Defendant. The judgment was based

upon the applicable statute of limitations. ,

The Petitioner then appealed to the United States Court

' of Appeals for the Third Circuit. On December 15, 1966,

_ ~the decision below was affirmed with Freedman, J., dissent-

. ing. The Court of Appeals decision was based on the fol-

lowing Pennsylvania statute, commonly known as the Penn- |

sylvania ‘‘borrowing”’ statute:

‘‘When a cause of action has been fully taped by

-the. laws of the state or country in which it arose,

- such bar shall’ be a complete’ defense to an action

thereon brought in any courts of this Commonwealth. ”

12 Pa. Stat. Ann. § 38, o

‘The Court of Appeals interpreted this etl as calling

for the application of a statute oe limitations of the State —

of Florida. ys :

_ Petitioner’s Petition for Re-Hearing | in ‘the Court of

cna denied on J veasa 18, 1967. ;

Reasons for Granting the V Writ |

Pe I

‘The decision of the Third Circuit Court of Appeals is ~

not in fie with the Pennsylvania law, as sigan in recent

Pennsylvania Supreme Court decisions.

~The Third Circuit Court of Appeals, i in interpreting the

Pennsylvania ‘‘borrowing’’ statute (12 Pa. Stat: Ann. $39), -

> . held that. the cause of action arose when the a was

8 ; ’

entered and later satisfied by the Petitioner in Florida.

. It then held that under the ‘‘borrowing’’ statute, the three-

‘year Florida statute of limitations is applicable. |.

In Griffith v. United Airlines, Inc. (416 Pa. 1 1964), the :

'. Pennsylvania Supreme Court in adopting the ‘‘Significant.

Contacts’? rule, abandoned the lex loci delecti rule ‘‘‘in

favor of a more flexible rule which permits analysis of the

. policies and interests underlined in particular issue before

the Court.’’' (416 Pa. at 21). This flexible rule is more

preferable, it is believed, than the ‘‘wooden application of

a few overly simple rulés, based on the outmoded ‘vested

riglits’ theory. * * *’? (416 Pa. at 13). Subsequent to the;

Griffith case, in McSwain v. McSwam, 420 Pa. 86 (1966),

the Pennsylvania Supreme Court stated: ©

‘‘Whether the policies of one state rather than sanliver

should be furthered in-the event of conflict can only

be determined within the matrix of specific litigation.

What should be sought is an-analysis of the. extent.

to which *one state rather than another has demon- ©

strated, by reason of its policies and their connection

_ and refevance to the matter in dispute, a priority of

interests in-the “application of its rule of law.’ (420

Pa. at-94). ~

Both Griffith’ and McSwain ote show Ciiiatiieniiied S

view on problems. i in the area of conflict of laws. The pri-

mary inquiry should always be into just: which state has

the superior, interests, in the form of contacts.” Pennsyl-

vania has even gone so far as to apply this view to a case

which had been tried prior to the Griffith case, but whose

-appeal came after Griffith had been handed down. This was

done in Kuchinic v. McCrory, 422 Pa. 620 (1966). On the

basis of such cases as the above mentioned, it seems obvious

that Pennsylvania now -efuses to apply the law of jurisdic-

tions which have no interest in the outcome of the litigation.

In the case at hand, both the Federal District Court and

the Third Circuit Court of Appeals, on the basis of the

Pennsylvania ‘‘borrowing”’ statute, have applied the sta-

tute of limitations of the State of Florida. Petitioner

_eontends that the Pennsylyania Courts would not have

reached the same conclusion. While Florida had an interest

in the tort case, because of the injuréd party’s residence

there, and also because of the accident occurring there; in’

. the indemnity suit, Florida could not possibly have a legiti-

OIE ae RD EY

maite interest. None of the present litigants are Florida

residents. The brake pedal assembly was not manufactured

or installed there. The purchase of the brake pedal as-

‘sembly did not occur there. Yet, all of these factors being

present, the Courts below ‘still determined that Pennsyl-

vania law calls for them to apply the Florida statute of

limitations, regardless of the Pennsylvania ‘‘eontacts.”’

In the present. case, the cause of action is ‘said to have

arisen in Florida because it is there that Petitioner satis-

fied the judgment and thus started the time to run which ©

marked when the cause of action arose. ‘Such an interpreta-

tion of the ‘‘borrowing’’ statute relegates the. Pennsyl-

vania law to a ‘‘place of payment’’ rule. Under future

application of such a rule, the court would only be looking

to where the payment was made, and then apply the law

of-that place: Such a rule is directly contrary to the stated

law and policy of the Griffith, McSwain and Kuichinic cases,

ed:

in their abhorrence of ‘‘wooden applications’’ of mechanic

rules. In the dissenting opinien_below, Freedman, J., stat-

‘‘T, therefore, believe that the Pennsylvania Courts

would interpret the borrowing statute by the appli-

cation of general choice of law principals rather than ©

promulgate a general rule whose effect in many cases -

would be to rest one greed with the power to chose the

controlling statute of limitations by manipulations of

the place payment’’ (372 Fed. 2d:at 23). , }

The Petitioner believes this to be the true approach which — |

‘would be taken by a Pennsylvania Court. Petitioner’s right

to ‘ndemnity arose out of a business transaction: whose es-

sential contacts all were in Pennsylvania. The manufac-

_ ture, purchase, delivery and installation of the brake pedal

assembly togk place in Pennsylvania where Petitioner

’ is engaged in business. Thus, Pennsylvania has the sub-’

stantial interest in determining for itself which when such

a party’s cause of action should be barred. ps

The ‘‘borrowing”’ statute must be interpreted by the

Pennsylvania Court, as is the case with all statute law.

Such judicial interpretation should necessarily coincide with

the ‘current judicial views and policies. Therefore, the .

. Pennsylvania Court would, in interpreting the statutory

terms ‘‘cause of action’’ and when and where it “‘arose’’,

apply the ‘current choice of law policies. In so doing, it ©

would hold that the cause of action arose in Pennsylvania

where the contractual relationship out of which the suit

arose originated. Such an interpretation is obviously

- more reasonable than interpreting the statutory terms in

such a manner as to make applicable the law of a com-

pletely disinterested mason

‘ome jon

To protect the integrity of le. ‘‘Erie’’ doctrine, and to .

prevent the formation of a/¥ederal common law in Divers-

ity of Citizenship cases, to bring the Federal Courts

' into line with the current ennsylvania policies and laws in

Assuming that the Pennsylvania Supreme Court would ;

agree with the Courts below in their determination that the

Pennsylvania ‘‘borrowing’’ statute calls for the application

-. of Florida law, Petitioner contends that the Courts below

applied the wrong Florida statute of limitations. | ,

_ No Florida case law was discussed in the briefs of either

party below, whieh actuaily applied § 95.11. (5) (e) of the

Florida statutes to a lawsuit based upon the common. law

action of idemnity. This subsection provides that a three--

‘year statute of limitations is applicable to actions upon

contracts, obligations or liabilities not founded upon an in-

_ strument in writing. Yet, the Courts below held this sec-

tion applicable.

Petitioner insists that the common law action for indem-

nity in this case arose out of the within contract of sale

and thus comes within the purview of 95.11 (3) calling for

a five year statute of limitations for action upon-a contract,

obligation or liability founded upon a written instrument.

Or, in the alternative, Petitioner contends that 95.11 (4) is

applicable. / The latter section applies a four year statute.

of limitations ‘to actions not specifically covered by the —-——.

’ other section of the statute. Seat.

Pan

Conclusion

If the cnet below are permitted to apply a as the appro-

priate statute of limitations a section which the Florida

courts would not apply, then there, exists as law principles

which are not the law of Florida. If such a condition is

tolerated, then’ ‘the “Brie” doctrine is destroyed.

3 Respectfully submitted,

JOSEPH B. BAGLEY,

BAGLEY & SYDAR,

Attorneys for Petitioner.

Peco eee ree peg me Obey areas zsapencoe mpeg tiene SA

, :

| " Agpendix “A”

UN ITED STATES COURT OF APPEALS

_ For-tHe Turep Crrcurr

- No. 15539

MACK TRUCKS, INC.,

' A ppellant,

Vv.

BENDIX -WESTIN GHOUSE AUTOMOTIVE

AIR BRAKE COMPANY,

LATROBE DIE CASTIN G COMPANY,

‘ Sieh Pory Defendant,

—<

—"

«fF ; a emma aa

~ APPEAL Feom THE Visees States District Court FOR THE

WESTERN. District oF PENNSYLVANIA

Argued April 14, 1966

Before: McLavenuin, _— and Sabi Circuit

- Judges.

OPINION OF THE COURT

(Filed December 15, 1966,

By Hast, Circutt Judge.

‘This is- an’ action for indemnity. It is of federal cog-

nizance solely under diversity jurisdiction. The District

‘

Court for the Western District of Pennsylvania dismissed |

-'the aé¢tion as barred by the statute of limitations. This

--appeal followed.

The claim for indemnity arose in ‘this way. Bendix-

Westinghouse Automotive Air Braké Co. sold brake pedal

assemblies, manufactured for it by Latrobe Die Casting.

Co., to Mack Truvks, Inc., for incorporation in vehicles —

manufactured by Mack. - A truck, incorporating such a

brake assembly, was sold to a. resident of Florida. While

the vehicle was being operated in Florida; the brake assem-

bly broke, causing an accident. A person injured in the.

accident sued Mack and the operator of the truck ina

Florida court. and recovered a judgment for $13, 028. 95,

_ which Mack paid. A formal ‘‘Satisfaction of Judgment”’,

duly executed by counsel, was filed and entered. in the

~ records of the Florida court on June 30, 1960. ee

See

Mack gave Bendix timely notice of the Florida suit,

although Florida procedural rules prevented the joining

of Bendix as an additional defendant. However, it was

not until October 10, 1963, more than three years after the:

satisfaction of the Florida judgmént, that Mack brought

this suit for indemnity against Bendix in the Western |

District of Pennsylvania. Bendix joined Latrobe as a.

third-partydefendant. sabe

One defense was the statute of limitations. Since this

was.a.diversity case, the district court, no different from a

Pennsylvania ‘state court, was obligated to apply Penn-

sylvania choice of law rules to determine what statute of

- limitations was applicable. Guaranty Trust Co. v. York,

_ 1945, 326 U. S. 99. In most situations, Pennsylvania courts

apply the statute of limitations of the forum. Freeman v.

Lawton, 1946, 353 Pa. 613, 46 A. 2d 205; Rosenzweig v.

Heller, 1931, 302. Pa. 279, 153 Atl: 346. However, there is a

eargme wera Lene ye YAO IT EE ERE DI) ere BI OnE tes os aenet

statutory exception to this rule. Pengsylvanja courts must

respect and apply the following Pennsylvania “borrowing”

statute :

“When a a cause. of action has been fully barred by

the laws of the state or country in which it arose, such

bar shall be a complete defense to an action thereo

brought in any of the courts of this. commonwealth.”

12 P.S. § 39. coe ate

beg if this “cause of action * * * arose” i in Florida, refer-

must-be made to the appropriate Florida statute of

Timi tions. Mangene v. Diamond, 3d. Cir. 1956, 229 F. 2d

-§54. » The district court concluded that the cause of action. :

arose in Flordia. We agree.

“ The concept of ‘‘the arising of a cause of. action’” is

/ used frequently to systematize dnd facilitate the application

of statutes of limitations. Usually, the problem.is to deter- -

mine when the statute begins to run.:; In this context, the

familiar rule is that -the statute begins to run when the

cause of action arises, as determined by the occurrence of

the final significant event necessary to. make the claim

suable. Foley v. Pittsburgh-Des Moines Co., 1949, 363 Pa.

1, 68 A. 2d 517; Bell v. Brady, 1943, 346 Pa. 666, 31 A. 2d

547; Shaffer’s Estate, 1910, 228 Pa. 36, 76 Atl. 716. With

reference to claims for indemnification for loss, this means

that the cause arises when the plaintiff sustains the loss

for which he can claim indemnification. Chicago, R. I. and

Pacific Ry. v. United States, 7th Cir. 1955, 220 F. 2d 939;

Northwestern Airlines, Inc. v. Glenn L. Martin Co., D. Ma.

1958, 161 F’. Supp. 452; Hidick v. Orion Shipping & Trading

Co.,S. D. N. Y. 1957, 157 F. Supp. 477 ; Globe Indemnity Co.

v. Larkin, 1944, 62, Cal. App. 2d 891, 145 P. 2d 633. Inthe

present case, the cause of action for indemnity arose when

Mack satisfied the judgment, an event evidenced by formal

entry of record in the Florida court on June 30, 1960.

The Pennsylvania borrowing statute utilizes this ‘von-

cept of the arising of a-cause of action in relation to place

rather than time in order to specify the circumstances in

which a Pennsylvania court shall apply another state’s

statute of. limitations and to identify the appropriate state.

“We think the concept of when a cause arises and the con-

cept of where a cause arises, both used to aid in the applica-

‘ tion of statutes of limitations, are im pari materia: In —

other words, the cause arises where. as well as when the

final significant event that is essential to a suable claim

occurs. Bank of Nova Scotia v. San Miguel, 1st Cir. 1952,

- 196 F.2d 950; Orschel v. Rothschild, 1925, 238 Il. App. 353;

Runkle v. Pullin, 1912, 49 Ind. App. 619, 97 N. E. 956.. In

this case the cause of action argse when a judgment was

entered against and later satisfied by Mack-in Florida. By

the same token, Florida is the state where the cause of. ‘

action for indemnity arose.

In an effort to avoid this conclusion, the appellant

cites Griffith v. United Air Lines, 1964, 416.Pa. 1, 203 A. 2d

796. There it was held that the measure of damages in a

- tort case should be determined in accordance with the law

of the place having the most significant contacts with the

relevant transactions and with the parties rather than by

the law of the place of the wrong: In‘ so holding, the court

announced a common law conflict of laws rule for the choice

of law to be applied in deciding the merits of certain issues.

No statute was controlling, and there was. no question of

when or where the ¢ause of action arose, ‘though ee

it arose at the place of wrong.

Here we have a very different situation. Under the

’ Pennsylvania borrowing statute a court i is required to apply

the statute of limitations of the state where the cause of —

action arose without regard to any contacts of any other

13 .

state with the parties and their prior dealings. And cer-

tainly neither the Griffith case nor any other of which we

know suggests that the residence of the parties or the place

of their earlier dealings before the claim became suable ..

' have any relevance to determining when or where the.

cause arose. Indeed, in Foley v. Pittsburgh-Des. Moines

Co., supra, Chief Justice Stern explicity stated that the

accrual of .a cause of action occurs when suable harm is

done the’ plaintiff, ‘‘not when the causes are set in motion

which ultimately produce injury as a consequence”. 363

Pa. at 38, 68 A. 2d at 535. :

Perhaps it would be arguable, on the merits of the -

_ present controversy, that in determining the ‘existence or

extent of an obligation to indemnify, the forum should be

guided, as was the court in the Griffith case, by the substan-

tive law of Pennsylvania because of cumulatively significant

_ Pennsylvania ‘‘contaets’’. But-we do not have that prob- |

lem here.’ We have to-answer only the narrow question of

the meaning of; the phrase ‘‘where the cause of action

arose’’, as used in the Pennsylvania borrowing statute and.

applied to a situation in which thé cause of action came into

existence upon the happening of certain events in Florida.

It remains’ to determine what period of limitations ©

Florida law specifies for such an action as this. Section

95.11(5)(e) of Florida Statutes Annotated stipulates that

‘‘an action upon a contract, obligation or liability not

founded upon an instrument in writing’ must be brought

within three years after the action shall have accrued.

While the relationship between Mack and Bendix-Westing-

house in this case resulted from a transaction of sale evi- |

denced by a writing, no express promise to indemnify

appears or is claimed. Rather, the plaintiff is suing on an

impos | obligation which the seller must bear, even in the

absence of such a promise. Thus, this is ‘‘an ‘action upon

‘a** * liability not founded upon an instrument in writing.

*\* "2 Cf. Webb v. Powell, Sth Cir. -1937,.87 F. 2d 983;

Edgerly v. Schuyler, Fla. 1959, 113 So. 2d 737; Ball v.

Roney, 1933, 112 Fla. 186, 150 So. 240. As one Florida

court has expressed the. controlling concept, an action or

a liability is ‘‘founded upon a written instrument”’ for

_ purposes of statute of limitations only if that instrument

contains an undertaking ‘‘to. do the thing for the non-

performance of which the action is brought’. Gulf Life.

Ins. Co. v. Hillsborough County, 1937, 129 Fla. 98, 104; 176

~ So. 72,75. °° | wit 7 oe Se

We conclude, as did the trial court,-that- the three year

Florida statute of limitations is applicable to the claim in

suit. There is no contention or evidence that the statute was

tolled for any period. Accordingly, since this cause accrued -

not later than June 30, 1960, the date upon which Mack’s

satisfaction of the Florida judgment was entered in the say

records ofthe Florida court, the present action was barred

at the time of its filing on October 10, 1963.

The judgment will be affirmed. —

FREEDMAN, Circuit Judge, dissenting.

The determination under the Pennsylvania Borrowing |

Statute (Act of June 26, 1895, P. L. 375, § 1') of where the -:

present ‘‘cause of action’’ for indemnity ‘‘arose’’ involves.

two difficulties. ‘There is first the generally elusive concept

of a ‘‘cause of action’’. To this is added the nature of the

present action for indemnity, originating in an implied .

112 Purdon’s ‘Pa, Stat: Annot. § 39, ”

> ———__

warranty and founded on @ quasi contractual right of resti-

tution which matured after a recovery in tort.? -

The majority has wisely rejected a decision based on

- the predominance of the tort or contract elemenig which -

would lead to Florida as‘the lex loct delictus if the tort ele- .

ment prevailed and to Pennsylvania as the lex loci con-

tractus if the contract element ‘governed. I disagree, how-.

"ever, with the majority’s conclusion that the place where the

cause of action arose should be fixed where the event occurs

which starts the running of the time for the statute of

limitations.*- This, it seems to me, has the attraction of

simplicity but is just as ‘inappropriate a. test as are the |

labels of contract or tort in executing the policy of: the -

Pennsylvania Borrowing Statute. It is not required by

any Pennsylvania precedents old or new and is inconsistent

with the modern trend of Pennsylvania law. —

It is true that Mack’s right to indemnity was against :

loss and not against liability and therefore arose ‘only on

Mack’s payment to the injured party in satisfaction of the’

judgment. The use of this event as the time when the

cause of action for indemnity arises is appropriate as the

point of origin of the indemnitee’s claim against the in-

demnitor. Even this rule, however, is often expressed

‘without distinction between the time of paynient and the -

2 See Builders Supply Co. v. McCabe, 366 Pa. 322 (1951). . See-also Craw.”

ford v. Pope & Talbot, Ine., 206 F. 2d 784, 792-93 (3 Cir. 1953). .

angene v. Di

(3 Cir. 1956) ; Hornsey v. Jacono, 12 D&C 2d 291 (C. P. Del. Co. Pa. 1957).

The Florida statute (Fla. Stat.” Annot,, § 95.07) provides in relevant ‘4

when shal ai i of he

time of satiataction of the judgment.t, But at least for

ordinary purposes, where the short a es between the

payment and satisfaction of the judgment has no isignif-

icanee for the period of limitations involved, the rule is

, Simple, easily applicable, and meets no countervailing

' elements. coe 3

A holding, however, that the ra where a cause of

_action arose is to be conclusively equated with the location

of the vagrant,event which sets the time running, leads to

os Serious ‘problems.. The place of the apparently simple ele-.

ment of payment is subject to fortuitous variations and |

may even be contrived. A-corporation with a nationwide

i business may make or receive payment in any one of the -

‘states. If the place of payment is to be decisive, such a

party can determine what statute of limitations shall bind

it by a conscious choice of the office from which payment

‘will be made, or conversely of the office to which payment

‘ultimately will be made. When the payment is made in

satisfaction of a judgment it. may seem that the place of

| judgrhent should be the determinative factor. But there

are many cases where indemnity arises on a payment which

is made in settlement of a claim without the entry of a

judgment. Even after a judgment, the possibility of appeal

or the difficulty in obtaining satisfaction by execution may

lead to a negotiated settlement effected i in a place outside

' "the state where the judgment was entered. It would be

contrary to the law’s deep-seated preference for settlement

i “father than litigation to make it an advantage for a party

"td have his liability nn by a s judgment rather’ than

_ by.a settlement.

In the present case. the cause of action is said.to have

arisen in Plofida becausé it is there. that Mack i sates the.

4 E.g Northwest Airlines, Inc. v. Thie Glenn. L. Martin Co., 161- F. ‘Supp.

452, 458 (D. Md. 1958). : he

_ _ judgment and thus started the time to run whieh marked

when thé cause of action arose. But suppose the judgment

had not been satisfied, but a simple payment or even a -

Settlement under the judgment had. been made in Penn-

sylvania? Or suppose that a judgment had later been

entered in Pennsylvania in a suit on the Florida judgment

and the Pennsylvania judgment alone had been marked

satisfied of record after a payment made in Pennsylvania? ,

‘Would any of these circumstances alter the determination

of where the cause of. action arose? ,

It seems to me that the place where payment is made

in settlement of a claim-or in satisfaction of a.recorded

judgment does not contain the ‘same undeviating element. -

as does the time of payment, which is the inherent point

of origin of the cause.of action for indemnity. I therefore

believe that the Pennsylvania courts would interpret the

Borrowing Statute by the application of general choice of

law principles rather than promulgate a general rule whose -

effect in many cases would be to vest. one party with the

“power to choose the controlling statute of limitations ‘by

- Manipulation of the place of payment.

Pennsylvania is in the forefront of jurisdictions which

have recently adopted a pragmatic standard of choice of

law which eschews mechanical formulas. This standard

reduces the possibility of manipulation to ‘insignificance.

It stresses the interests of the jurisdictions involved and

emphasizes a principle of realism in preference to an. auto-

matic test applied by a rule of thumb. The Supreme Court

of Pennsylvania adopted this modern standard in Griffith

v. United Air Lines, Inc., 416 Pa.1 (1964).' There the

court refused to apply the Colorado limitation on damages —

against the estate of a Pennsylvania decedent even though

he was killed in Colorado in the crash of an airplane. The

a |

court applied the law of: Pennsylvania because the decedent

and the transaction itself, in which decedent had-purchased

_ his ticket from defendant in Philadelphia for a flight from

that city to Arizona, had such contacts with Pennsylvania

that Pennsylvania’s interest.in the outcome was more sig-

nificant. than that of Colorado. This interest principle,

which has moved rapidly into the foreground of acceptance

in American states,° has been applied by the Supreme Court

‘of Pennsylvania in an increasing number of recent cases

and is now firmly established in Pennsylvania decisional

law.® A similar statutory rule for contract actions now

prevails in Pennsylvania under the Uniform Commercial

Code.’ I think Pennsylvania would take a similar approach

in construing the Borrowing Statute. - j

Pennsylvania’s interest in the period of limitations to

be ‘applied in this action far outweighs. the interest ‘of

Florida.* Florida’s real interest was in the negligence

action for the accident which occurred. in Florida. That

action, in which Florida’s interest dominated, terminated

in a judgment; which was satisfied by payment, The present

action for indemnity, on the: other hand, is dominated by

_ . Pennsylvania’s -interest. Mack’s right of indemnity is

based upon a business transaetion whose essential contacts

all were in’ Pennsylvania. The brake pedal assembly was

manufactured, purchased, delivered and installed in thé

5E.g., Baboock v. Jackson, 12.N. Y. 2d’ 473, 191 N.. E. 2d 279 (1963) ; Auten

v.Auten,-308-N-Y. 155,124 N. E. 2d 99 ( 1954) ; see Bernkrant v. Fowler. 55

Cal. 2d 588, 360 P. 2d 906 €1961) ; Schmidt v. Driscoll Hetel, Inc.,.249 Minn.

376, 82 N. W. 2d 365. (1957). Many leading articles are ‘cited in Griffith v.

United Air Lines, Inc., 416 Pa. 1 ( 1964). ‘i

6 See McSwain v. McSwain, 420 Pa, 86 (1966): Elston v. Industrial Lift

Truck .Co., 420 Pa. 97 (1966); Hunter Adoption Case, 421 Pa. 287 (1966);

Kuchinic v. McCrory, 422 Pa. 620 (1966). - .

7 Act of April 6, 1953, P. L. 3, § 1-105, as amended, 12A Purdon's Pa. Stat.

Annot. § 1-105.

8 There may, of course, be cases where two or more states have significant

interests in having their period of limitations applied. Cf. George v. Douglas

Aircraft Co.; Inc., 332 F. 2d 73, 79 n. 6 (2 Cir. 1964).

truck in Pennsylvania where Mack was engaged in business.

Pennsylvania therefore has a substantial interest in deter-

- mining for itself when such. a-party’s cause of action for

indemnity should be barred. Otherwise the question would

—beleft to the aceident of the particular location where ‘the

events Which effectuate the right to indemnity may have

_ chanced to occur, and which the original parties would have

had no means of foreseeing when they transacted their.

business. The rapid movement. of motor vehicles -across

state lines should: not result in a wayward choice of the

place where a cause of action for indemnity, arises, even

though.it is appropriate and ‘just that a party injured by —

the negligence of the driver should be able to obtain redress

‘ for his injuries at the place where the accident occurred,

if necessary by the use of a longarm statute.

_ Nor do I see any reason to restrict the: modern Penn-

sylvania conflicts rule to so-called substantive law questions

such as the existence or extent of the obligation to indem- ~

_hify as distinguished from the present problem of the stat-

ute of limitations. Indeed, while limitations of action may

fall under the heading of procedure, to the litigant a deter-

‘mination that. his suit is completely barred by the statute

of limitations is substantively far more drastic and impor-

tant than a ruling on the extent of his right to indemnity.

But I believe there is a deeper problem involved. Statutes.

of limitation seem simple on their face because the time

period they fix can be measured by the clock. Experience

has shown, however, tliat even here unexpected: problems —

arise which present significant alternatives that can only be

determined by a choice of policy. In some cases this policy

has been settled by statute and where the courts have fol.

lowed the letter of the statute they have made an unspoken

choice not to alleviate its hardship. In Pennsylvania an

20 °

early Colonial statute _provided for the tolling of the.

period of limitations in favor of persons under: the disabili-

ties of minority, coverture, mental incompeteney, imprison-

ment, or absence beyond the sea. Much of this statute was

later,held to have been impliedly repealed by a subsequent -

statute.” .Among the statutory tolling provisions still in

effect is one which exists where a defendant makes service

_of process impossible by becoming a nonresident after the

cause of action arose.” | |

In. those cases where the legislature has not provided

relief the courts have had the choice of watching the. clock

or inquiring into the purpose of the statute. In recogniz-

ing the underlying purpose of the statute courts have early —

held that it would not be applied to bar a suit if the plaintiff

- was diverted from bringing it by the affirmative fraud of

his adversary.” In Ayres v. Morgan, 397 Pa. 282. (1959),

the Supreme Court of Pennsylvania held that the statute of

limitations was suspended in malpractice cases ‘where -the

injury was unknown_and undiscoverable by the plaintiff.

In doing soit departed from the traditional rule, which the.

New York Court of Appeals followed a few years later

that the principle of repose requires the barring of suit in

such cases in the absence of. specific legislative relief. Simi-

lar problems arise wheré the cause of action results from

the accumulation of injuries over a long period of time, as

® Act of March 27, 1713. 1 Smith's Laws 76,'§5, 12 Purdon’s Pa. Stat.

Annot. § 35.

10 Act of June 24, 1895; P. L. 236, §2, 12 Purdon’s Pa. Stat. Annot. § 34.

Walker v. Mummert, 394 Pa, 146 (1958); Peterson v. Delaware River Ferry

e bi pe i053). (1899). See also Conrad v. Stitzel, 225 F. Supp. 244, 247

_ 11 Act of May 22, 1895, P. L. 112, $1, 12 Purdon’s Pa. Stat. Annot. $40;

Hunter v. Bremer, 256 Pa. 257 (1917).

12 Smith v. Blachley, 198 Pa. 173 (1901). Cf. Bailey v. Glover, 88 U. S.

(21 Wall.) 342 (1874).

. | 18 Schwartz v. ‘Heyden ater sail Chemical Corp., 12 N. Y. 2d 212, 18

- N. E. 2d 142- (1963).

in silicosis,"* and where negligent?industrial operations re-

sult in the poisoning of the atmosphere and cause injuries ~

‘which take long to mature as recognizable illness.* These

statutes and decisions are a far cry from the view that the

statute of limitations i is caipable of application. as a —

chronological measure.

o Borrowing statutes, like “the statutes of’ limitations

themselves, reflect an underlying policy. They have existed

in various forms in many states, and usually were intended

to prevent a nonresident defendant from being subjected to

an indefinite liability because the forum’s period of limita-

ant’s absence from the jurisdiction.’ Since in Pennsyl-

vania the tolling provisions were inapplicable t6 defendants _

who were nonresidents at the time the cause of action arose

and who had not entered the jurisdiction within the statu--

tory period,’*® the-Pennsylvania borrowing legislation must

have had the broader purpose of assuring that the decision

as to when the claim should be barred would be governed

by the policy of the jurisdiction with the most significant

interest in the claim,—the jurisdiction i in which the ‘‘cause

of action’’ ‘‘arose’’.’® The Pennsylvania Borrowing Stat- .

ute therefore early gave recognition to what is now the .

~ modern principle of the importance of the interest of the

ae Plazak v. Allegheny Steel Co., 324 Pa. 422 (1936).. See sles Urie v.

Thompson, 337 U. S S. 163 (1949),

15 Daniels v. The Beryllium Corp., 227 F. Supp. 591 (E. D. Pa. 1964), and

211 F. Supp. 452 (E. D. Pa. 1962).

16 Ester, Borrowing Statutes of Limitation and Conflict of Laws, 15 Fla.

L. R. 33, 79-84 ( 1962), .collecting and classifying the statutes of various

states and territories, and. listing 38 states as having borrowing tatutes of

general application.

17 George v. ‘Douglas Aircraft Co.; Ine., 332 F. 2d 73, 77 e Cir. 1964) =

Dedasmais in the Law—Statutés of Limitations, 63 Harv. L. R. 1177, 1262-

63 (1950); Ester, supra, at p. 42.

18 Act of May 22, 1895, P. L. 112, §1, 12 Pendens Pa. Stat. Annot. § 40.

19 See George v. Douglas Aircraft Co., Iric., 332 F. 2d 73, 77 (2 Cir. 1964)

discussing an analogous New 7 statute of 1902, -

. an

respective jurisdictions in the underlying: transaction.. This.

> principle is recognized, at least impliedly, in'two of the .

cases cited by the majority. In Orschel v. Rothschild, 238 —

Ill. App. 353 (1925), not only had the plaintiff made the

payment giving rise to the right of indemnity in Illinois

whose statute of limitations the court applied, but the court

-also pointed out that the Illinois Borrowing Statute was

inapplicable because the plaintiff was a resident of the

forum.: This in turn resulted from the restricted nature of.

_ the tolling statute which was inapplicable if ‘neither party .. |

was a resident of the state when the cause of action acérued.

In Runkle v. Pullin, 49 Ind: App. 619, 97 N. E. 956 (1912),

. while the court adopted the view that the time when a cause

‘of action arises determines also the place where it arises,.

‘both parties to the transaction had resided in Indiana, but..

the defendant had become a nonresident when plaintiff paid

the balance due on the note and remained a nonresident

although he was within the jurisdiction at the tinie he was

served. In the circumstances, therefore, Indiana had every .

possible contact with the transaction and almost every pos- |

' sible contact with the parties. Go .

The Pennsylvania Borrowing Statute in speaking of a

- «¢eause of action’’ and where it ‘‘arose’’ has not undertaken

to define these terms, but has left them to be given content

by judicial-refinement and clarification. This includes judi-’ -

cial developments in the future as well as those which have

taken place in the past. While we may not alter the legisla-

tive command that the statutory period fixed by the forum

state..shall prevail in the designated cases, nevertheless, —

what is a ‘‘cause of action’? and when and where it

‘arose’? are matters for judicial inte¥pretation and should

_ reflect current views of the relative significance of state

| interest as a ‘determinant of decision.

tence umes

+ 23 . : ,

I would hold, therefore, that. the present. cause of action

a |: indétinity arose in Pennsylvania where there originated

the contractual relationship. between the parties out of

which thé right of indemnity arose, rather than in Florida

where the accident occurred and satisfaction of the judg-

ment was made which ripened the claim for indemnity and

started the time of the running of the statute of limitations.

Since it is agreed that the action was within the time fixed —

as the period of limitations in. Pennsylvania” I dissent

from the conclusion that the action was barred.

A True Copy:

Teste: nae a

Clerk of the United States Court of |

Appeals for the Third Circuit.

20 The action was brought within the four-year period prescribed, by the

Uniform Commercial Code (Act of April 6, 1953, P. L. 3, § 2-725, as amended,

12A Purdon’s Pa. Stat. Annot. § 2-725) and, of course, within’ the. six-year

period prescribed for contract actions generally. Act of April 25, 1850, P.-L.

567, §7, 12 Purdon’s Pa. Stat. Annot. § 31.

Appendix “B”

UNITED STATES COURT OF APPEALS

eae For THe Tub Circurr ” |

No. 15,539

MACK TRUCKS, INC.,

Appellant, |

” vs.

_ BENDIX. WESTINGHOUSE AUTOMOTIVE

.\AIR BRAKE eo

vs.

LATROBE DIE CASTING COMPANY, 3

(D.C. Civil Action No. 63-874.) —

On APPEAL FROM THE UNITED States Distiicr Court

FOR THE WESTERN DiIsTRICT OF: PENNSYLVANIA.

| Present : McLaughlin, Hastie and Freedman,

: — Circuit —

. °

Bincanonee

This cause came on to be heard on the record from the -

; United States District Court for the Western District of |

Pennsylvania and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged id this inte that ee judgment of the said Dis- - °

trict Court, filed May 5, 1965, be, and the same is sed

affirmed, with costs. ;

ATTEST:

«... IDA 0. CRESKOFF,

| = Clerk. ;

December 15, 1966: |

Appendix “C”

UNITED rite to OF APPEALS —

| For tHe Turep Circuit

No. 15,539

MACK TRUCKS, INC,

oe Appellant,

Vv. ia |

BENDIX-WESTINGHOUSE AUTOMOTIVE

AIR BRAKE COMPANY,

Vv.

LATROBE DIE CASTING COMPANY,

Third-Party Defendant.

SUR PETITION FOR REHEARING.

Present : Staley, Chief Judge; and McLaughlin, Siadnk,

Hastie, Smith, Freedman and Seitz,

Circuit Judges.

- not having voted for reheari

. The petition for rehearing led ‘if Mack Trucks, Inc., |

Appellant in the above entitled case having been submitted

to the judges who partici ted in the decision of this court

and to all the other available circuit judges of the circuit in

regular active service, and no judge who concurred in the °

decision having ‘asked for ms and a majority of —

the circuit judges of the circuit in regular active service

by the court in banc, the

petition for rehearing is. denied. |

: By THE Court,

/s/ WILLIAM H. HASTIE,

re , _. Cireutt Judge.

Dated: J anuary 18, 1967.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.