Cahill Bros. v. Clementina Co.

This is an appeal from a judgment for $17,609.73, plus interest and costs, on a jury verdict for plaintiff and respondent, Cahill Brothers, Inc., a corporation, hereinafter referred to as Cahill, against defendant and appellant, Clementina Company, a corporation, hereinafter referred to as Clementina.

The Facts

J. Peter Cahill, hereinafter referred to as Peter, owned certain buildings at Kearny and Sacramento Streets in San Francisco, California, which he desired to have demolished so that he could construct a new building on the site. He entered into a contract with Cahill, which was headed by his father, John R. Cahill, hereinafter referred to as John, for such demolition and construction work upon a cost plus 3 per cent fee basis.

Cahill had in its employ for over 40 years one Edwin A. Larkin, hereinafter referred to as Larkin. For many years prior to the accident which is the subject of this action, Larkin had acted as general superintendent for Cahill with whom he enjoyed a position of trust and confidence. Because of this relationship Cahill had from time to time permitted Larkin

In 1950 Clementina commenced doing demolition work for other contractors including Cahill. Its contracts with Cahill were always oral, on an informal basis and without the submission of bids. Clementina had only two permanent employees : Larkin, who was its managing officer, and an office girl. It was Clementina’s practice to hire such employees as it needed for a particular demolition job, and on numerous occasions it would “borrow” employees from Cahill. At first, whenever employees of Cahill were “borrowed” they were paid directly by Clementina, but in later years they were paid by Cahill under its payroll, because Cahill’s employees enjoyed a union contract with Cahill which contained welfare provisions, while Clementina had no such union contract. In these instances it was the practice of Cahill to charge such wages back to Clementina “ ‘in the final adjustment’ ” for the particular demolition job done for Cahill. The evidence discloses that in demolition jobs done for Cahill, Clementina did so usually on a cost plus 10 per cent basis, subject to final adjustment, with offsets to the credit of Cahill for wages to employees under the aforesaid arrangement and for the sums realized from salvaged materials. Clementina owned certain land on which it maintained its office and area for its materials and equipment. A portion of this area was rented to Cahill for a small separate office building.

On or about September 15, 1956, Cahill orally contracted with Clementina to do the demolition work on Peter’s property. Under this contract Clementina was to completely wreck the existing buildings, sell the salvage, and render an accounting as to the amount recovered for salvage. Cahill, on the other hand, was to pay the demolition cost “plus a fee to be determined.” The required demolition permits were taken out by Cahill in its name. The first work done on the job was by Cahill’s men and consisted of the removal of furniture and plumbing from the buildings about to be demolished. There

In the course of the subject demolition job and in his capacity as such superintendent for Cahill, Larkin ordered several of Cahill’s employees to engage in the demolition work which work was a “part of his job.” Among these employees were two carpenters, Robert J. Dobson and Kenneth Wellman. While performing demolition work each was acting in the capacity of a foreman. Both testified that in the demolition work they took orders from Larkin and that during such work they considered themselves employees of Clementina, although their payroll cheeks on this job were issued by Cahill. Bach testified that they had worked under such an arrangement previously, shifting from Cahill’s employment to that of Clementina, during the demolition work, upon the completion of which they went back to Cahill’s employ. They also testified that prior to the establishment of the aforesaid union welfare plan their checks were issued by Clementina, Wellman testifying that this was the first demolition job in which he received his payroll check from Cahill.

Larkin testified that Dobson and Wellman were ordered on' this demolition job by him in his capacity as their superior at Cahill; that Wellman was directed by him' “to keep the job well barricaded”; that barricades were erected by Dobson and Wellman, the lumber for the same being furnished by Cahill pursuant to his order as superintendent for Cahill; that the barricades were put up for purposes of protecting the public from falling into any openings or getting into any of the stores which were still occupied by some of the tenants in the buildings about to be demolished; that he instructed Wellman and Dobson “to keep the place protected,” and that in doing so they were protecting “Cahill’s interests”; and that the

Despite such barricade, on Sunday, October 7, 1956, while demolition work was in progress, one William Hull, a pedestrian, was injured when he fell into an excavation on said job site. Hull brought suit against both Cahill and Clementina alleging that his injuries were due to their negligence in failing to provide adequate safeguards for pedestrians. After a trial Hull was awarded a judgment for $30,000, plus costs against both Cahill and Clementina. Said judgment was satisfied by the payment of the sum of $15,576.66 by Cahill and a like sum by Clementina, said sum representing one-half of the judgment, costs and accrued interest. Cahill thereupon filed this present action against Clementina for indemnification, seeking recovery of said sum of $15,576.66, plus the sum of $2,033.07 expenses incurred in defending the Hull action, or a total of $17,609.73. The latter sum was awarded to Cahill by a jury in the instant action.

Before proceeding to the questions and contentions presented on this appeal, it should be noted that the evidence further disclosed that the total cost of the said demolition work amounted to $25,276.38, and that the labor charge for the carpenters “borrowed” by Clementina from Cahill amounted to $2,838.92. The aggregate of these sums, i.e., $28,115.30, less a credit of $558.07 for lumber salvage, or a net of $27,557.23, was billed to Peter by Cahill. Peter was also charged with the sum of $2,723.62 as Clementina’s fee. This sum of $2,723.62 represented the amount accounted to Cahill by Clementina as the amount received by the latter for salvage, and because the said sum approximated the 10 per cent fee which it was agreed Clementina should receive, the respective credits were allowed by agreement between Cahill and Clementina to offset each other without the necessity of exchanging payments.

Questions Presented

Two questions are presented on this appeal:

(1) Did the evidence in this case warrant the submission of the issue of indemnity to the jury?

(2) Did the trial court err prejudicially in its instruction to the jury to the effect that the defendant, Clementina, had the burden of proving that it was not an independent contractor but was instead engaged in a joint venture with Cahill?

The Bight to Indemnity

The gist of appellant's contention on appeal is that the uncontroverted evidence establishes as a matter of law that Cahill is not entitled to indemnity. Three arguments are advanced in support of the assertion, to wit: (1) That indemnity is improper when respondent’s own fault contributed to the injury; (2) that respondent had knowledge of, acquiesced to, and participated in the negligent acts; and (3) that the admissions in respondent’s verified complaint are binding on respondent and preclude indemnity as a matter of law. With respect to the last point, it is claimed that the verified admission in Cahill’s amended complaint in its cause of action against Larkin (dismissed with prejudice prior to trial), to the effect that Larkin was operating on behalf of both respondent and appellant is binding as a matter of law.

The right to implied indemnity, while relatively recent in the law of California, is now well established. (See Peters v. City & County of San Francisco, 41 Cal.2d 419 [ 260 P.2d 55 ] ; City & County of San Francisco v. Ho Sing, 51 Cal.2d 127 [ 330 P.2d 802 ]; San Francisco Unified Sch. Dist.

The San Francisco Unified Sch. Dist. case relied upon the reasoning of Ryan and Weyerhaeuser, holding that a prima facie case for indemnity had been made by the school district plaintiff against the defendant maintenance company for damages which the district was compelled to pay to an employee of the maintenance company who had been injured while washing the windows of a high school. There the company contracted and agreed to wash the windows from the inside from stepladders but failed to furnish such ladders to its employees. The court held that the contract was breached, and that the damages flowing to the district from such breach were subject to indemnification under a warranty or agreement to indemnify necessarily implied in the contract. The Alisal case involved the sufficiency of a complaint for indemnity. There, too, the gist of the complaint was the breach of the defendant’s contract with the plaintiff, the obligation allegedly breached being the performance of engineering work for the plaintiff in a skillful, expert and careful manner. In the De La Forest case the court relied on the San Francisco Unified Sch. Dist. case in holding that where the injury to a third party arises from a violation of a contractual duty owed by one tortfeasor to another, the latter may recover from the former. That case involved the sufficiency of a complaint wherein it was alleged in substance: that the plaintiff truck owner engaged the plaintiff repair shop owner to repair a worn trailer axle, the latter subletting the work to the defendants who held themselves as qualified, equipped, skilled and expert in their crafts; that the axle was reinstalled on the trailer and thereafter failed causing the trailer to strike an automobile and

Ho Sing was the first California case to consider noncontractual implied indemnity. The court there concluded “that where an adjoining property owner for the exclusive benefit of his own property places in a public street or sidewalk some artificial structure and a city is compelled to pay compensation in damages to a member of the public injured thereby the city has a right to recover the amount so paid from the property owner by way of indemnity.” (P. 138.) The court’s ruling was predicated upon the equitable considerations of primary and secondary liability arising out of the special relationship existing between the city and the landowner in the situation where the latter negligently maintains a structure in the public sidewalk which inures only to his private benefit.

The American Can Co. case was the first to come to grips with the question of primary and secondary liability in rejecting a claim for implied indemnity in a situation where a vehicle owned by the plaintiff, who was seeking indemnity, had struck the defendant’s improperly parked truck causing injuries to two of the latter’s employees, who were on said truck and who thereafter recovered damages from the plaintiff. The court there adopted the rule of primary and secondary liability announced in Builders Supply Co. v. McCabe, supra, 366 Pa. 322 , 325-326 [ 77 A.2d 368 ], and cited with approval by Alisal, as follows: “ ' “ The right of indemnity rests upon a difference between the primary and secondary liability of

An examination of the pleadings and the record in the instant case reveals that the case was tried upon the theory of contractual indemnity and that the trial court’s instructions were so predicated. We are therefore not concerned with the incidents of primary and secondary liability, but rather with the question as to whether Clementina breached a contractual duty to Cahill. The evidence here was reasonably susceptible of the inference that Clementina was an independent subcontractor despite the wearing by Larkin of “two hats”; one in his capacity as general superintendent for Cahill, and the other as the responsible and managing officer of Clementina. “An independent contractor is one who renders service in the course of an independent employment or occupation, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.” (Bates v. Industrial Acc. Com., 156 Cal.App.2d 713 , 717 [ 320 P.2d 167 ] ; Lab. Code, § 3353.) The most important factor, in determining whether one is an employee or an independent contractor, is the right to control the manner and means of accomplishing the result desired; and, in this regard, the right to discharge an employee at will, without cause, is strong evidence of the employer’s control. (City of Los Angeles v. Vaughn, 55 Cal.2d 198 , 201 [ 10 Cal.Rptr. 457 , 358 P.2d 913 ].) Instructions requested by the respondent so defining an independent contractor and stressing the factor of such control were given by the trial court. Appellant does not, moreover, challenge the right of the trial court, under the state of the evidence, to submit to the jury the question whether or not Clementina was an independent contractor. The existence of an oral contract between Cahill and Clementina for the demolition work, and whether such contract, if found to exist, was breached by Clementina were likewise questions of fact for the jury. The propriety and sufficiency of the instructions on these issues are not under attack here.

The serious question presented is whether as a matter of law Cahill’s own conduct was sufficient to preclude recovery. In this respect appellant contends that indemnity does not lie because Cahill’s own fault contributed to Hull’s injury. In the literature of the law “ ‘fault’ ” is synonymous with “ ‘negligence.’ ” (Marston v. Pickwick Stages, Inc., 78

The evidence in this case unerringly points to participation on the part of Cahill which went beyond nonaction and the mere failure to perform the duty to Hull which the law imposed on Cahill, i.e., the failure to act in fulfillment of the duty of care which devolved upon it as a general contractor. The actions and knowledge of Larkin in the course and scope of his employment for Cahill are imputed to the latter. The ubiquitous Larkin was present on this job as general superintendent for Cahill from its inception. He was not only physically connected, as such superintendent, with the barricade in question by virtue of his knowledge and acquiescence in the manner and method of its construction, but he was affirmatively active in its construction. As such superintendent he ordered Cahill’s employees, Dobson and Well-man, to the demolition job and the erection of the barricade. He directed that the barricade be constructed with Cahill’s lumber. In the erection of the barricade he was acutely conscious of his obligation to protect Cahill’s interests as well as those of Clementina, particularly the welfare of the tenants who were Cahill’s responsibility. Under the state of the facts we are impelled to find that as a matter of law Cahill partook consciously and actively in the wrong to Hull. This is the only reasonable hypothesis that can be drawn from the evidence and the uneontradieted facts and the only conclusion which reasonable men could draw. Accordingly, the question as to whether Cahill actively participated in the affirmative act

In reaching this conclusion we have not required the aid of appellant’s assertion that Cahill has admitted as a matter of law, in its dismissed cause of action for indemnity against Larkin, that the latter was acting as its employee in the erection of the barricade. The allegation was there made that Larkin as its general superintendent negligently supervised the construction of such barricade so as to make him liable to his employer under the doctrine of respondeat superior. The trial court permitted the reading of said dismissed cause of action to the jury by counsel for the appellant during his argument to the jury over respondent’s objection. In this state a superseded pleading is not an evidentiary admission which may be used as affirmative evidence, but it may be used as a prior inconsistent statement to impeach a party as a witness. (Meyer v. State Board of Equalization, 42 Cal.2d 376 , 385 [ 267 P.2d 257 ].) On the other hand, a pleading in a prior action or in others which are pending may be offered either as an evidentiary admission against the pleader in a subsequent proceeding or for the purpose of impeachment. (Meyer v. State Board of Equalization, supra, p. 385.) While a dismissed cause of action against another party in the same action is not a superseded pleading in the strict sense, it would appear by analogy that it should be so treated and hence permitted only for impeachment purposes. In Gajanich v. Gregory, 116 Cal.App. 622 [ 3 P.2d 389 ], a dismissed cause of action against the sole defendant in the case was admitted for such purpose only. While no case has been cited or found in the instance of a cause of action dismissed against a defendant who is no longer a party in the case by virtue of the dismissal, we are of the opinion that under the familiar liberal rule permitting the pleading of inconsistent causes such an abandoned pleading in the same ease should be treated in the same category as a superseded pleading. (See Williams v. Seiglitz, 186 Cal. 767 , 773 [ 200 P. 635 ] (abandoned answer), and Gajanich v. Gregory, supra, 116 Cal.App. 622 , cited by Meyer v. State Board of Equalization, supra, 42 Cal.2d 376 , 385, in support of the rule that a superseded pleading may be offered for the purpose

The Instructions as to Burden of Proof

In its complaint Cahill alleged in essence that Clementina was its subcontractor and as such solely responsible for the demolition worh. Clementina, in its answer, denied that it was a subcontractor and asserted that Cahill and Clementina were joint venturers in the performance of the demolition worh. These were the respective contentions as recognized by the pretrial order. The trial court gave a standard instruction to the jury that the respondent bore the burden of proving all the allegations in its complaint by a preponderance of the evidence. The propriety of this instruction is not questioned. The court further instructed the jury that the respondent bore the burden of proving that it entered into an oral contract with the appellant for the demolition of certain buildings and that the appellant entered into these contracts as an independent contractor and that the appellant breached the oral contract. The appellant does not challenge this instruction, but disputes a subsequent instruction which reads as follows: “You are further instructed that among the allegations contained in the answer of the defendant Clementina Company, that is, the answer to the plaintiff’s complaint, is that Clementina Company was not an independent contractor but instead entered into a joint agreement with Cahill Brothers to demolish the buildings in question and thus was engaged in a joint venture at the time of the accident in question to William Hull, and hence was not an independent contractor as alleged in plaintiff’s complaint. The burden of proving these allegations by a preponderance of evidence

The respondent, in its complaint, presented the affirmative of the issue that appellant was an independent contractor. Appellant’s answer that it was not an independent contractor was merely a denial of respondent’s allegation. The burden of proof on this issue therefore devolved upon the respondent and remained upon it throughout the trial. All that was required of the appellant was to produce evidence sufficient to offset the effect of respondent plaintiff’s showing; it was not required to offset it by a preponderance of the evidence. (Scarborough v. Urgo, 191 Cal. 341 [ 216 P. 584 ] ; Eley v. Curzon, 121 Cal.App.2d 280 [ 263 P.2d 86 ].)

The questioned instruction also told the jury that the appellant had the burden of proving by a preponderance of the evidence that it was a joint venturer. Unless this allegation constitutes new matter it amounts to no more than a denial of the allegation in the complaint that the appellant was an independent contractor. The mere fact that an answer contains an affirmative allegation does not mean per se that it is setting up “new matter.” An averment in the answer contrary to what is alleged in the complaint is equivalent to a denial. (Trozera v. McDonell, 131 Cal.App. 473 , 475 [ 21 P.2d 706 ].) The basic consideration is whether the matters of defense are responsive to the essential allegations of the complaint, i.e., whether they are contradicting elements of plaintiff’s cause of action or whether they tender a new issue, in which case the burden of proof is upon the defendant as to the allegation constituting such new matter. (Rancho Santa Margarita v. Vail, 11 Cal.2d 501 [ 81 P.2d 533 ].) The distinction is well stated by the leading case of Frisch v. Caler (1862) 21 Cal. 71 , as follows: “Whether matter is new or not, must be determined by the matter itself, and not by the form in which it is pleaded—the test being whether it operates as a traverse or by way of confession and avoidance. A plea tendering no new issue, but controverting the original cause of action, is a mere traverse, and as nothing new is involved in it, to call it new matter would be a misapplication of terms. It is not essential

In the early case of Goddard v. Fulton (1863) 21 Cal. 430 , the rule was stated thusly: “If the answer, either directly or by necessary implication, admits the truth of all the essential allegations of the complaint which show a cause of action, but sets forth facts from which it results that, notwithstanding the truth of the allegations of the complaint, no cause of action existed in the plaintiff at the time the action was brought, those facts are new matter. But if those facts only show that some essential allegation of the complaint is not true, then such facts are not new matter, but only a traverse. ’ ’ (P. 436.) (Quoted by 2 Within, Cal. Procedure, p. 1524.)

By its answer the appellant not only denied respondent’s affirmative allegation that it was an independent contractor, but it responded with an affirmative allegation of its own, i.e., that it was a joint venturer. If appellant showed that it is a joint venturer it showed that it was not an independent contractor, and therefore its affirmative allegation was but another traverse or denial of respondent’s affirmative allegation. The appellant’s answer contains no element of confession or avoidance, nor does it directly or by necessary implication admit the truth of respondent’s allegation that Clementina was an independent contractor.

The trial court at respondent’s request gave an instruction to the effect that if the jury found Clementina to be an independent contractor that then Clementina and Cahill could not at the same time be joint venturers. The court also instructed on the meaning and the elements of a joint venture.

• The relationship between the parties was the main feature of the ease. The evidence here might have supported the finding of a joint venture in view of Larkin’s close relationship with both Clementina and Cahill, his dual capacity, and the manner of their dealings. If the burden of proof were placed on the wrong party it could well have affected the outcome of the case.

Respondent seeks to soften the impact of any error in the questioned instruction by urging that the evidence discloses as a matter of law that there was not a joint venture

The respondent argues further that the existence of a joint venture would not, in any event, bar respondent’s recovery because one joint venturer may recover from another for a breach of his duties to the joint venture. Respondent cites Elsbach v. Mulligan, 58 Cal.App.2d 354 [ 136 P.2d 651 ] as authority for this proposition. The Elsbach case did not involve an indemnity situation, but concerned itself with the right of one adventurer to recover damages against his co-adventurer for a wrong inflicted by the latter in the carrying out of their joint undertaking. It did not involve a situation where the two adventurers wronged a third party. The respondent here predicated his entire ease upon the theory that the appellant was an independent contractor, which relationship the appellant sought to negate by attempting to show a joint venture. The jury was not instructed (nor did either side so request) upon the rule which would permit an adventurer to recover from his coadventurer where both were found liable for a wrong to a third party. It should be noted that all members of a joint venture are jointly liable for injuries resulting from the negligent conduct of one of the parties thereto because the negligence of one joint venturer or his employee acting in connection with the joint venture is imputed to the other joint venturers. (Buckley v. Chadwick, 45 Cal.2d 183 [ 288 P.2d 12 , 289 P.2d 242 ]; Leming v. Oilfields