People ex rel. Department of Public Works v. Daly City Scavenger Co.

Opinion

This case presents two questions: First, whether an express contract of indemnity necessarily negates the assertion of a right to implied equitable indemnity; and second, if not, whether the indemnity claimant in the instant case is entitled to such indemnity as a matter of law.

The State of California (“State”) appeals from a judgment in declaratory relief denying its claim for recovery of indemnity from Daly City Scavenger Company (“Company”). Neither party disputes the findings of fact, which may be summarized as follows:

In 1957, State closed a portion of the Old Coast Highway, located in San Mateo County to general public travel by placing hinged fence gates at two points labeled Stations 255 + 08 (southerly) and 362 + 70 (northerly). State owned all real property on which the highway was located; Company

In order to provide Company with access to its property located within the barricaded highway, State and Company entered into a written agreement dated February 24, 1960. Said agreement provided for Company to receive keys to the gate locks, but for Company to indemnify State for injury to any person using the barricaded portion of the highway pursuant to the purposes of the agreement, but not to indemnify State for injury to any individual using the highway for his own purposes or not pursuant to the agreement or business of Company. The agreement further provided that “the restricted use contemplated by this agreement” extended only to the area between the two fence gates.

Subsquent to execution of this agreement, Company erected a chain barrier across the highway south of State’s southerly fence gate at a location labeled Station 235 + 28. State knew said chain barrier existed, and its agents entered through the barrier to accomplish State’s purposes. On July 11, 1963, two individuals were kijled when a motorcycle on which they were riding collided with the chain barrier. Both individuals were using the highway for their own purposes and not pursuant to Company permission or business.

Wrongful death actions thereafter filed against State and Company were settled by payments of $62,500 by State and $91,250 by Company. State sought to recover its payment (plus attorney’s fees) from Company by cross-complaint for declaratory relief. Judgment denying State’s claim forms the basis of the present appeal.

Is State precluded from seeking implied equitable indemnity?

The rule is established that where parties expressly contract with respect to indemnity, the extent of the indemnitor’s duty is “determined from the contract and not from the independent doctrine of equitable indemnity.” (Markley v. Beagle (1967) 66 Cal.2d 951 , 961 [ 59 Cal.Rptr. 809 , 429 P.2d 129 ], quoted with approval in Price v. Shell Oil Co. (1970) 2 Cal.3d 245 , 256 [ 85 Cal.Rptr. 178 , 466 P.2d 722 ]; Burlingame Motor Co., Inc. v. Peninsula Activities, Inc. (1971) 15 Cal.App.3d 656 , 662 [ 93 Cal.Rptr. 376 ].) The trial court relied upon this rule to hold that inclusion of all rights to indemnity in the parties’ express contract precluded State from seeking implied equitable indemnity from Company.

The application of this rule, however, necessarily depends upon whether the contract, construed as a whole, was intended to convey indemnification

Considering the first of the two requirements for equitable indemnity described, supra, State was subjected to payment of damages as a result of a legal obligation owed to injured parties. State acknowledges its liability for injuries caused by the dangerous condition of the highway. (Gov. Code, § 835.) The records on appeal establish that defense of the wrongful death actions was tendered to Company by State but refused by Company and that said actions were thereafter settled. A good faith settlement of an action after refusal of a tendered defense entitles a party to seek indemnity. (Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co. (1962) 202 Cal.App.2d 99 , 115, 117 [ 20 Cal.Rptr. 820 ].)

As to the second requirement for implied equitable indemnity, it appears as a matter of law that State affirmatively participated in the wrongdoing to an extent which precludes it from recovering from Company. State accepts without dispute a finding of fact by the trial court that subsequent to Company’s construction of the chain barrier and prior to the incident resulting in the deaths, State “had knowledge of the existence of the barrier . . . [and] used said barrier through State’s agents, in that State entered through, locked and unlocked said barrier in order to accomplish State’s own purposes.”

State relies upon cases in which the indemnity claimant failed to discover a dangerous condition (Markley v. Beagle, supra, 66 Cal.2d at p. 956; J. A. Payton v. Kuhn-Murphy, Inc., supra, 253 Cal.App.2d at p. 282), or the court expressly declined to consider acquiescence as affirmative conduct (County of Alameda v. Southern Pac. Co., supra, 55 Cal.2d at pp. 485-486), or the claimant apparently possessed mere constructive notice of a dangerous condition (City & County of S. F. v. Ho Sing (1958) 51 Cal.2d 127 , 130, 138 [ 330 P.2d 802 ]; Reinach v. City & County of San Francisco (1958) 164 Cal.App.2d 763 , 766-767, 769 [ 331 P.2d 1006 ]), or the claimant of contractual indemnity obtained a letter guaranteeing the absence of a dangerous condition (Safeway Stores, Inc. v. Massachusetts Bonding & Ins. Co., supra, 202 Cal.App.2d at pp. 107, 111), or the claimant was not alleged to have possessed knowledge of a dangerous condition. (Alisal Sanitary Dist. v. Kennedy (1960) 180 Cal.App.2d 69 [ 4 Cal.Rptr. 379 ].)

The conduct by the claimants in these cases is readily distinguishable from that of State in the present case. Not only did State possess actual

The judgment is affirmed.

Shoemaker, P. J., and Taylor, J., concurred.

A petition for a rehearing was denied September 15, 1971, and appellant’s petition for a hearing by the Supreme Court was denied October 6, 1971.