Opposition Brief — Delaware, Lackawanna & Western Railroad v. Mostyn

iL& Corr Le

SEP 9 1947

= aa OLERD

Supreme Court

of the United States

OCTOBER TERM, 1947.

No. 249

DELAWARE, LACKAWANNA & WESTERN

RAILROAD COMPANY, .

Petitioner,

PS =

EDWARD MOSTYN,

Plaintiff-Respondent,

—vs.—

S. H. GOLDEN COMPANY, INC.,

3rd Party Defendant-Respondent.

On Petition for a Writ of Certiorari to the United States

Circuit Court of Appeals for the Second Circuit.

BRIEF FOR THE 3RD-PARTY DEFENDANT-

RESPONDENT, S. H. GOLDEN COMPANY,

INC., IN OPPOSITION.

/ TRACY H. FERGUSON,

BOND, SCHOENECK & KING,

Attorney for 3rd Party Defendant-Respondent,

S. H. Golden Company, Inc.,

1400 State Tower Building,

Syracuse, N. Y.

F. N. SPAULDING LAW PRINTING CO., SYRACUSE, N, Y.

INDEX.

Subject Index PAGE

Opinions Below heh dinkhceol chia at eee aad bb Gulela tae 2

i ee be kaceC Ch aAR hah cs 6s0 0040 5h0R4008 2

ee ee ak aks RAW be CAAA SOAS AM 3

Question Presented ....... 6... cece eee ee eee eee ees 5

Semmary Of Argument ...... ccc ci cece ccc cecenens 5

Te ee eee Teeter Tere eee ee eee Tere 6

EE SAAS ee ere ee ee ee Tee TT ee TE ee eee ee 6

a ee en ee OF or eee ee SS 15

NOG I Rae 2 ee ey eee 16

Statutes:

Federal Emplovers’ Liability Act, 45 USCA 51-60. .2, 4, 15

Judicial Code, Section 240(a) 2... .. ccc cee cen cnees 2

Table of Cases:

Amitrano vs. Board of Education, Sup. Ct. Kings Co.

Ce, GS CP EE Sk dcdksceh beans vaccaskeeeaeus 10

DeHaen vs. Rockwood Sprinkler Co., 258 N. Y. 350... 11

Dudar vs. Milef Realty Corp., 258 N. Y. 415.......... 11

Employers’ Liability Assurance Corp., Ltd., vs. Post

and McCord Ine. (1941), 286 N. Y. 254............. 10

Long Island Railroad Co. vs. American Bridge Co.,

175 App. Div. 170, 172-174, affd. 225 N. Y. 692...... 12

Manhattan Railwey vs. Cornell (1891), 54 Hun, 292,

ee By Es GON e tes ceesvadees dechanbabwades es 10

Petkinie vs. Mare Eidlitz & Son Ine. (1934), 266 N. Y.

PS REE WERE VGA KA LOMA EWE TL ECE RE ORAS Chae 10, 12

Post & McCord Ine. vs. N. Y. Municipal R. Corp., 187

App. Div. 467, 173-175, affd. 230 N. Y. 540.......... 11

Schwartz vs. Merola Bros. Construction Co. (1943),

SE hs MO a G5 iv ehatc these linker ees deers 9,11

Semanchuck vs. Fifth Ave. & 37th St. Corp (1943), 290

De: WEE <u uk ensue ccuyskokunebswe sk keke shane 9, 11

Thompson Starrett Co. vs. American Mutual Liability

Insurance (1937), 276 N. Y. 266 .................. 10

Thompson Starrett Co. vs. Otis Elevator Co. (1936),

Se ade Wis Olen Kak KacdueGech wean oe taenecses 10

Turner Construction Company vs. Rockwood Sprinkler

Company of Mass., et al., 275 N. Y. 635, 249 A. D.509 11

Walters vs. Rao Electrical Equipment Co. (1942), 289

Ee rere rer eer errr 9

Westinghouse, Church, Kerr & Co. vs. L. I. R. R. Co.,

160 App. Div. 200, affd. 216 N. Y. 697.............. 12

Wischnie vs. Dorsch, 296 N. Y. 257 (Adv. Sh. No. 419)

Supreme Court

of the United States

OCTOBER TERM, 1947.

NO. 249

DELAWARE, LACKAWANNA & WESTERN

RAILROAD COMPANY,

Petitioner,

—vs.—

EDWARD MOSTYN,

Plaintiff-Respondent,

a

S. H. GOLDEN COMPANY, INC.,

3rd Party Defendant-Respondent:.

On Petition for a Writ of Certiorari to the United States

Circuit Court of Appeals for the Second Circuit.

BRIEF FOR THE 3RD-PARTY DEFENDANT-

RESPONDENT, S. H. GOLDEN COMPANY,

INC., IN OPPOSITION.

2

Opinions Below.

There were two opinions by Judge Stephen W. Brennan

in the United States District Court for the Northern Dis-

trict of New Yor':. Neither has been officially reported.

They appear at R. 31-36 and at R. 382-388.

The prevailing opinion of the Circuit Court of Appeals

for the Second. Circuit, which was written by Judge

Learned Hand with whom Judge Clark concurred, is not

yet reported. It appears at R. 399-405. The opinion of

Judge Swan, who dissented in part, appears at R. 405-406.

Jurisdiction.

The judgment of the court below was entered May 9; 1947

(R. 407). The petition for certiorari was filed August 8,

1947; This: court’s jurisdiction is invoked under Section

240 (a) of the Judicial Code, Act of February 13, 1925, ¢.

229, Sec. 1, 48 Stat. 938.

The jurisdiction of the lower court was invoked by the

plaintiff-respondent, whose action was against the peti-

tioner, under the Federal Employers’ Liability Act, 45

USCA 51-60, April 22, 1908, ¢. 149, Sections 1-10, 35 Stat.

65-66 as amended and added by Apr. 5, 1910, ¢. 148, See-

tions 1-2, 36 Stat. 291; Mar. 3, 1911, ¢. 231, Section 291, 36

Stat. 1167 and Aug. 11, 1939, ce. 685, Sections 1-3, 53 Stat.

1404. The third-party defendant-respondent became a

party through the commencement by the petitioner of a

third-party action upon an indemnity agreement.

3

Statement of the Casa.

The accident out of which this action arose occurred on

August 12, 1944 (R. 48) at about one o’clock in the morning

(R. 110). The plaintiff-respondent, hereinafter called

Mostyn, was a trackman employed by the petitioner in the

maintenance of its tracks (R. 62). While so employed,

Mostyn lived in camp cars owned by the petitioner and

located upon a temporary siding at Sherburne, New York

(R. 64-65). The petitioner contracted! with the third party

defendant-responcdent, hereinafter called Golden, for the

operation of these cars as living quarters (R. 285); and

pursuant to the contract, Golden operated a kitchen and

commissary, furnished bedding, and cleaned the cars. The

petitioner deducted a fixed amount for board and lodging

from the wages of employees who lived in the cars and paid

these amounts to Golden (R. 86).

On the night of the accident, Mostyn did not sleep in his

bunk at the camp but lay down, instead, in an area about

five feet wide between a building and the nearer rail of a

ewitch track (R. 109). This place was about opposite the

ear in which Mostvn had his bunk (R. 103) and about twenty

feet from it (R. 224, Ex. B). He fell asleep and did not

awaken (R. 81) until an engine, owned by the petitioner

(R. 58) and backing down the switch track (R. 166) to pick

up and remove certain refrigerator cars (R.-238), had so

injured his right leg as to require amputation of his right

foot (R. 92).

It was the claim of Mostyn that he was unable to sleep

in his bunk car because it was infested with vermin and

1 Infra, P. 6.

4

that upon complaint to the foreman of his work gang, an

employee of.the petitioner, he had been given permission

to sleep outside upon the ground (R. 78). He claimed, too,

that he had been assured by the foreman that the switch

track was dead and that there would be no operation upon

it at night (R. 74}. He thus accounted for his sleeping at

the ill-fated spot.

Mostyn began an action against the petitioner under the

Federal Employers Liability Act, supra, to recover for his

injury. His action was hased solely upon the negligence of

the petitioner in its operation of the engine which caused

the injury (R. 15). The petitioner, by a third-party action,

claimed indemnity from Golden upon the contract for the

operation of the bunk cars. The contention was that, if

vermin were in fact in the car and Mostyn recovered,

Golden was liabie over to the petitioner upon the indemnity

provisions of the contract (R. 20-24).

The trial was by judge and jury. <A $10,000 verdict in

favor of Mostyn against the petitioner (R. 370), and a like

verdict in favor of the petitioner against Golden upon the

indemnity agreement (R. 375), were returned. Judgment

was entered upon them (R. 389-390). Golden appealed to

the Court below from the judgment and from the denials of

motions it had made (R. 394-396). Insofar as it was ad-

versely affected, the petitioner did likewise (R. 391-393).

The Court below, Judge Swan dissenting, affirmed the

judgment against the petitioner (R. 399-407). It reversed,

unanimously, the judgment against Golden and dismissed

the third-party complaint (R. 399-407).

5

Question Presented.

The petitioner’s action against Golden presents but a

single question: Under the law of New York, do the indem-

nity provisions ? of the contract between the petitioner and

Golden provide for the indemnity of petitioner against the

latter’s liability to Mostyn, such liability having been occa-

sioned by the petitioner’s own active negligence?

Summary of Argument.

Golden submits that the petition, insofar as it seeks re-

view of the reversal of the judgment against Golden by the

court below, should be denied for the following reasons:

1

1. The question of the interpretation of the indemnity

agreement is controlled by the law of New York. That law

is that a contract of indemnity will not be construed to

indemnify a person against losses arising out of his own

active negligence unless such an intention is expressed in

unequivocal terms. The loss for which the petitioner is

seeking indemnity was occasioned by its own active negli-

gence. The agreement does not provide in unequivocal

terms for indemnity against such a loss. The decision of

the Court below, therefore, is not in conflict with the ap-

plicable New York decisions.

2. Mostyn’s action against petitioner and that of peti-

tioner against Golden are separate, distinct and independ-

ent, as are the questions to which each has given rise. That

part of petitioner’s application which relates to the former

action may be granted without granting that part which

relates to the latter. Each part must be considered sepa-

2 Infra, P. 7.

6

rately, therefore, and whatever merit there may be in the

application so far as it relates to the Mostyn judgment adds

nothing to the petitioner’s application in the action against

Golden.

ARGUMENT.

POINT I.

The decision of the Court below is not in conflict

with the applicable New York decisions.

The provisions of the contract between Golden and the

petitioner for the maintenance and operation of the camp

cars were stipulated by counsel as follows (R. 285) :

‘“‘Tt is stipulated between the D. L. & W. RR. Co.

and the S. H. Golden Company, Inc. that on Jann-

ary 1, 1943. the Railroad and S. H. Golden Company,

Ine., entered into a contract for an adequate con-

sideration which was in force and effect during the

vear 1944, including the months of June, July and

August of that year, and that pursuant to the terms

of said contract during those months the S. H. Gol-

den Company, Inec., maintained the labor camp re-

ferred to in the testimony in this case just south and

west of the station at Sherburne, N. Y., and

It is further stipulated that pursuant to said con-

tract the S. H. Golden Company, Inc., agreed to far-

nish bedding, food, lodging and laundry service to

the men who lived at the camp; and further to keep

the said camp in a clean, neat, sightly, and sanitary

7

condition, and to allow no nuisance to be created

upon or in the vicinity of said camp.

It is stipulated further that the Railroad Com-

pany furnish for said camp the track, the cars, the

permanent fixtures, including tables, chairs, and

benches in the cars, together with light, water and

fuel.’’

The indemnity agreement contained in the contract is

this (R. 285-286) :

‘*To be fully and wholly responsible for any and

all loss of life or property or injury or damage to

person or property of any person or corporation,

including the parties hereto and their respective offi-

cers, agents and employees, which loss, injury or

damage may be due to, or arise out of, or result

from or be in any way connected with the services

to be performed by the contractor hereunder, or the

performance or lack of performance thereof, or any

act or omission of the contractor, its agents or em-

ployees in any way related thereto, and to indemnify

and save harmless the Railroad Company from and

against any and all claims, demands, actions, judg-

ments, awards of any kind, damages, losses, costs,

expenses and liability of every name and nature

(including all reasonable expenses which may be in-

curred by the Railroad Company in defending any

such action, claim or demand) which may arise or

result, directly or indirectly, from or by reason of

any such loss, damage, or injury, or from or by rea-

son of the failure of the contractor fully to keep,

perform and fulfill each and every agreement and

condition in this contract contained on its part to

8

he kept; performed and fulfilled. The contractor

further agrees to be fully and wholly responsible for

injury to or death of its agents, employees, invitees,

and licensees occurring on the premises of the rail-

road company in the vicinity of said camps, and to

indemnify and save harmless the railroad company

from and against any and all claims, demands, ac-

tions, judgments, awards of any kind, damages,

losses, costs, expenses and liabilities of every name

and nature (including all reasonable expenses that

may be incurred by the railroad company in defend-

ing any such action, claim, or demand) which may

arise or result, directly or indirectly, from or by

reason of such injury or death.”’

The controversy between. petitioner and Golden involves

interpretation of the indemnity agreement. The petitioner

contends that the agreement provides indemnity to it for

the judgment obtained by Mostyn. Golden disagrees. Its

contention is that the petitioner’s liability to Mostyn arose

out of the petitioner’s own active negligence and that the

parties did not intend by the agreement to safeguard the

petitioner from the results of such negligence. The Court

helow agreed with Golden.

No argument has been made by the petitioner, as indeed

none could, that there was not a finding of active negligence

implicit in the verdict of the jury for Mostyn. The propri-

ety of that verdict is not a matter of contest between the

petitioner and Golden. When the court below affirmed the

judgment for Mostyn, therefore, the issue for review in the

third-party action was single and clear-cut: Did the agree-

ment provide for the indemnification of the petitioner

against losses occasioned by its own active negligence?

9

Resolving this issue, the court below determined and ap-

plied the. New York law relating to the construction of

indemnity contracts. In the words of its opinion, the court

determined that law to be (R. 404):

‘«* * * that if the indemnitee means to throw the

loss upon the indemnitor for a fault in which he him-

self individually shares, he must express that pur-

pose beyond any peradventure of a doubt.”’

Having thus stated the rule, the court reversed the judg-

ment against Golden. By so doing, it. found that the agree-

ment lacked an unequivocal expression of the purpose the

petitioner contended was evidenced in it.

The petitioner now urges that this decision of the court

below is probably in conflict with the applicable decisions

of the New York courts. It is not clear from the petition

whether petitioner feels the court erred in determining or

in applying the New York law. In either event, as is below

demonstrated, the opinion of the petitioner is mistaken.

The New York law applicable to indemnity agreements

is that such a cont™act will not be construed to indemnify a

person against his own active negligence unless that inten-

tion is expressed in unequivocal terms. That this is the

established rule in New York is beyond doubt.

Semanchuck vs. Fifth Ave. & 37th St. Corp.

(1943), 290 N. Y. 412.

Schwartz vs. Merola Bros. Construction Co.

(1943), 290 N. Y. 145.

Walters vs. Rao Electrical Equipment Co.

(1942), 289 N. Y. 57.

10

Employers’ Liability Assurance Corp., Ltd., vs.

Post and McCord Inc. (1941), 286 N. Y. 254.

Thompson Starrett Co. vs. American Mutual

Liability Insurance (1937), 276 N. Y. 266.

Thompson Starrett Co. vs. Otis Elevator Co,

(1936), 271 N. Y. 36.

Petkinic vs. Marc Eidlitz & Son Inc. (1934), 266

N. Y. 487. ;

Manhattan Railway vs. Cornell (1891), 54 Hun.

292, aff. 130 N. Y. 637.

Amitrano vs. Board of Education, Sup. Ct.

Kings Co. (1945), 55 S. (2) 535.

In the Schwartz case, the Court stated: (Italics sup-

plied)

‘*While the parties are free to contract as between

themselves for the ultimate burden of liability due

to negligence, yet in the absence of explicit language

to the contrary, courts will not interpret an indem-

nity agreement as a promise by the indemnitor to

save harmless the indemnitee on account of the ac-

tive negligence of the latter. * * * Clearly the word-

ing of the indemnity agreement in the case at har is

not sufficiently broad to require indemnification if

the injury to the plaintiff can be charged to active

negligence on the part of the Bank.’’

Not one of the New York cases cited by the petitioner

questions this rule. Each of them was concerned with its

application. Each falls into one of two groups according

to the question it presented. In the first group are those

ll

cases in which the active or passive nature of the indem-

nitee’s negligence, if any, formed the issue; in the second,

those cases in which the problem was whether or not the

indemnity sought was promised in unequivocal terms.

The following of the cases* cited by the petitioner fall

into the first group: Schwartz v. Merola Bros. Construc-

tion Corp., 290 N. Y. 145, 153-156, 157-159; Turner Con-

struction Company v. Rockwood Sprinkler Company of

Mass., et al., 275 N. Y. 635 (See De Haen v. Rockwood

Sprinkler Co., 258 N. Y. 350) * and Post & McCord, Inc. v.

N. ¥. Municipal R. Corp., 187 App. Div. 167, 173-175, affd.

930 N. Y. 540. Indemnity was allowed in each of them only

after a finding that the indemnitee had been guilty either

of no negligence or of passive negligence.

Semanchuck v. Fifth Avenue & 37th St. Corp. (1943), 290

N. Y. 412.5 to which the petitioner also refers, is in this

group too. It illustrates a situation in which indemnity

was denied because of the affirmative negligence of the in-

demnitee. The concern of the court with the New York

Labor Law in that case was to determine if Section 241

thereof created a positive duty whose violation would con-

stitute active negligence. This determination was neces-

sary in order to apply the rule above set forth to the facts

of the case. Nothing in the decision limits the application

of the rule to eases in which Labor Law violations are pres-

ent. Its inquiry was directed solely to whether common

law standards of active or passive negligence could be ap-

plied to violations of Section 241.

3 P. 17, 18, Petition.

"4 See opinion in Appellate Division, 249 A. D. 509, and Dudar v. Milef Realty

Corp., 258 N. Y. 415.

5 P, 18, Petition.

12

The following of the cases* cited by the petitioner fall

into the second group: Long Island Railroad Co. v. Ameri-

can Bridge Co., 175 App. Div. 170, 172-174, affd. 225 N. Y.

692 and Westinghouse, Church, Kerr & Co. v. L. I. R. R.

Co., 160 App. Div. 200, affd. 216 N. Y. 697. Recovery by the

indemnitee was permitted in each of them only after a de-

termination that the indemnitor had unequivocally prom-

ised to indemnify for the consequences of the specific ac-

tivity out of which the indemnitee’s liability arose.

Wischnie v. Dorsch, 296 N. Y. 257 (Adv. Sh. No. 419) is

also cited by the petitioner to demonstrate the error of the

court below.’ Such a demonstration is not made by this

ease. The court was testing upon a motion the sufficiency

of a cross-claim for indemnity based upon common law prin-

ciples. It held the cross-claim sufficient because the wrong-

doing of the indemnitee, as set forth in the pleadings, did

not constitute active negligence. The inquiry by the court

into the nature of the indemnitee’s negligence reaffirmed

rather than questioned the rule applied by the court below.

The decisions of this Court and of the lower Federal

Courts cited by petitioner * do not apply New York law and

are not controlling in the instant case. <A discussion of

them is, therefore, unnecessary.

It is thus clear that the Court below did not err in deter-

mining the New York law applicable to petitioner’s claim

against Golden. And that it did not err in the application

of such law is demonstrated by the Petkinic case, supra.

6 P, 17, 18, Petition.

7 P. 19, Petition.

8 P. 18, Petition.

13

The official report of the Petkinic case is somewhat

sketchy. The facts are revealed in the record on appeal.

Kidlitz was the general contractor and MeGratty was a sub-

contractor. The general contractor erected a temporary

partition of plaster board and lumber but instead of fasten-

ing it correctly, ‘merely leaned it against timbers or up-

rights where it might fall if pushed. The plaintiff was

changing his clothes near the partition when employees of

the sub-contractor negligently dislodged the partition, and

it fell on the plaintiff. Plaintiff sued both contractor and

sub-contractor and recovered a verdict against both. The

general contractor moved for judgment over on bis cross

complaint, relying on the following indemnity agreement

(fols. 574-576 of the record on appeal. Italics supplied) :

‘““The sub-contractor hereby assumes entire re-

sponsibility and liability for any and all injuries to

any and all persons, including the sub-contractor’s

employees, and for any and all damage to property

caused by or resulting or arising out of any act or

omission on the part of the sub-contractor under or

in connection with the contract and/or the prosecu-

tion of the work thereunder, and shall indemnify

and save harinless the owner and general contractor

from and against any and all loss and/or expense

which they or either of them may suffer or pay as

a result of claims or suits due to, because of or aris-

ing out of any and all such injury and/or damage,

whether real or alleged, and the sub-contractor, if

requested, shall assume and defend at his own ex-

pense any such suits.”’

14

The Trial Court said (fols. 857-858 of the record on ap-

peal. Italics supplied) :

**Motion denied. Here the jury has found both of

the defendants at fault and jointly responsible for

this accident. If it were the purpose of that part of

the agreement between Mare Eidlitz & Sons, Inc., as

contractor, and McGratty and Sons, as sub-con-

tractors, set forth in paragraph fourth of the an-

swer, to hold the sub-contractor liable fer the par-

ticipating negligent acts of the employees of the

general contractor, certainly such a drastic exten-

sion of liability should not have been left to conjec-

ture when without any difficulty it could have been

expressed in clear and understandable English so

that he who runs may read,”’

The general contractor appealed but the Appellate Divi-

sion and Court of Appeals both affirmed the judgment with-

out opinion. (241 A. D. 720, 266 N. Y. 437.)

) OW NSQENET TO On tea oe “ wn euiiee — - “a —- — a =e ——

15°

POENT. TL.c

A review.of the judgment:of thescourt:.below. in

favor of Golden is not required even if it be»deters::

mined that a review of the judgment for Mostyn

should be had.: -

Mostyn’s action against the petitioner is based upon neg-

ligence and the Federal Employers’ Liability Act, supra.

The petitioner’s action against Golden is upon contract and

is governed by New York law. The‘ questions in each are

distinct and independent. The two actions might have been

brought separately; it was only for convenience that they

were tried together.

Golden expresses no opinion of the merits of the petition

so far as it relates to Mostyn. It does urge, however, that

whatever those merits may be, they add nothing to that

part of the application which relates to Golden. And no

sufficient reason for this Court’s action appears in that part

of the petition.

a — aoe ae eE LTE = she PO OO Spee

es . a

16

CONCLUSION.

The petition, so far as it relates to Golden, should

be denied.

TRACY H. FERGUSON,

BOND, SCHOENECK & KING,

Attorney for 3rd Party Defendant-

Respondent S. H. Golden Com-

pany, Inc.,

Office and P. 0. Address,

1400 State Tower Building,

Syracuse, New York.