HOERNER WALDORF CORP v BUMSTEAD-W

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I N THE SUPREME C U T O THE STATE O MONTANA OR F F HOERNER W L O F CORPORATION O M N A A AD R F OTN, a Corporation, and THE TRAVELERS INSUEUNCE, COMPANY, a Corporation, P l a i n t i f f s and Respondents, BUMSTEAD-WOOLFORD COMPANY, a Corpora t i o n , Defendant and Appellant. Appeal from: , D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable J a c k L. Green, Judge p r e s i d i n g . Counsel of Record: For Appellant : Boone, Karlberg and Haddon, Missoula , Montana. Karl R. Karlberg argued, Missoula , Montana. P a t r i c k F. Hooks argued, Townsend, Montana. For Respondents: G a r l i n g t o n , Lohn and Robinson, Missoula, Montana. Sherman V. Lohn argued, M i s s o u l a , Montana. Submitted : Decided : December 3 , 1971 I ,m M r . Chief J u s t i c e James T. Harrison d e l i v e r e d t h e Opinion o f t h e Court, T h i s i s an a p p e a l by d e f e n d a n t from a judgment e n t e r e d i n t h e d i s t r i c t c o u r t of Missoula County i n f a v o r of p l a i n t i f f s . From t h e r e c o r d i t a p p e a r s t h a t t h e p l a i n t i f f Hoerner Waldorf C o r p o r a t i o n was a d e f e n d a n t i n an a c t i o n brought by one C l a r e n c e Dutton f o r i n j u r i e s s u s t a i n e d by him w h i l e h e was employed by Bumstead-Woolford Company i n t h e c o n s t r u c t i o n of a b l e a c h p l a n t a t the Hoerner Waldorf p u l p m i l l i n Missoula, Montana. T h i s a c t i o n was s e t t l e d by t h e i n s u r a n c e c a r r i e r s f o r Hoerner Waldorf and t h e r e a f t e r t h e y and T r a v e l e r s I n s u r a n c e Company, h e r e a f t e r r e f e r r e d t o a s T r a v e l e r s , brought t h i s a c t i o n a g a i n s t Bumstead-Woolford f o r indemnity o f expenses and c o s t s i n c u r r e d by them on t h e ground t h a t Bumstead-Woolford was o b l i g a t e d t o indemnify Hoerner Waldorf and T r a v e l e r s under an i n demnity agreement drawn by Hoerner Waldorf on t h e r e v e r s e s i d e of a purchase o r d e r . The a c t i o n was t r i e d on s t i p u l a t e d f a c t s b e f o r e t h e court, s i t t i n g without a jury. plaintiffs. The judge found i n f a v o r of t h e A motion f o r amendment o f f i n d i n g s , c o n c l u s i o n s and judgment and e x c e p t i o n s t o t h e f i n d i n g s were f i l e d by t h e d e f e n d a n t b u t were o v e r r u l e d . judgment The d e f e n d a n t a p p e a l s from t h e . Summarizing t h e s t i p u l a t e d f a c t s it a p p e a r s t h a t Hoerner Waldorf i n 1960 was i n t h e p r o c e s s of expanding i t s b l e a c h p l a n t a t i t s p u l p m i l l i n Missoula County, Montana. on v a r i o u s work t o be performed. It requested bids P u r s u a n t t o such r e q u e s t , de- f e n d a n t Bumstead-Woolford submitted i t s q u o t a t i o n and on t h e same &' d a t e , by l e t t e r , Bumstead-Woolford set f o r t h t h e terms f o r any a d d i t i o n a l work. The q u o t a t i o n and l e t t e r which were d a t e d J u l y 1 2 , 1960, d o n o t recite t h e assumption by Bumstead-Woolford of any o b l i g a t i o n t o i n s u r e or indemnify Hoerner Waldorf from any claims made a g a i n s t Hoerner Waldorf as a r e s u l t of n e g l i g e n c e o f Hoerner Waldorf n o r t o indemnify Hoerner Waldorf f o r any o t h e r l o s s e x c e p t Bumstead-Woolford's i n d u s t r i a l a c c i d e n t coverage. On o r a b o u t J u l y 1 5 , 1 9 6 0 , t h e p l a i n t i f f , Hoerner Waldorf, i s s u e d i t s purchase o r d e r c o n f i r m i n g a c c e p t a n c e of t h e $109,255 p r i c e quoted by d e f e n d a n t Bumstead-Woolford, and r e f e r r e d t o t h e q u o t a t i o n as t h e basis f o r t h e p u r c h a s e o r d e r . T h i s p u r c h a s e o r d e r , on t h e r e v e r s e s i d e under p a r a g r a p h 11, p r o v i d e d f o r i n s u r a n c e and i n d e m n i f i c a t i o n as f o l l o w s : "INSURANCE AND INDEMNIFICATION. " A l l material as d e s c r i b e d i n I t e m 5 and a l l d e s i g n , tools, p a t t e r n s , equipment, drawings and o t h e r i n f o r m a t i o n d e s c r i b e d i n I t e m 4 , f u r n i s h e d by Buyer, s h a l l be p r o t e c t e d a g a i n s t l o s s o r damage by i n s u r a n c e on p a r t o f S e l l e r which i s a c c e p t a b l e t o Buyer. The S e l l e r i s l i a b l e f o r any damage t o p r o p e r t y o f t h e Buyer caused by n e g l i g e n c e of t h e S e l l e r o r C o n t r a c t o r or any of t h e i r Agents, S e r v a n t s o r Employees, from any c a u s e whatsoever. S e l l e r agrees t o indemnify Buyer a g a i n s t a l l l i a b i l i t i e s , claims, o r demands f o r i n j u r i e s o r damages t o p e r s o n o r p r o p e r t y , or f o r wages, unemployment i n s u r a n c e , s o c i a l s e c u r i t y t a x e s , o r o t h e r w i s e growing o u t o f d e f e c t i v e m a t e r i a l o r workmanship i n t h e a r t i c l e s o r m a t e r i a l s , s u p p l i e d h e r e i n or o u t o f t h e performance o f t h e c o n t r a c t r e s u l t i n g from a c c e p t a n c e of t h i s p u r c h a s e o r d e r . " I f t h i s order r e q u i r e s t h e performance of any l a b o r f o r Buyer, S e l l e r f u r t h e r agrees t o c a r r y and t o f u r n i s h upon r e q u e s t a c e r t i f i c a t e from i t s i n s u r a n c e carriers showing t h a t it carries a d e q u a t e Workmen's Compensation, P u b l i c L i a b i l i t y and P r o p e r t y Damage i n s u r a n c e cover- a g e . Such c e r t i f i c a t e must show t h e amount o f each k i n d of c o v e r a g e , name o f e a c h i n s u r a n c e company and p o l i c y number and e x p i r a t i o n date o f e a c h p o l i c y . I f S e l l e r is s e l f - i n s u r e r , S e l l e r must have a c e r t i f i c a t e t h e r e o f f u r n i s h e d directl y t o Buyer by t h e c o g n i z a n t Department o f t h e Government o f e a c h S t a t e i n which any such labor i s t o be performed. " Bumstead-Woolford commenced work under i t s c o n t r a c t w i t h Hoerner Waldorf as d e s c r i b e d by t h e q u o t a t i o n . C l a r e n c e Dutton was employed by Bumstead-Woolford as a p i p e f i t t e r i n t h e c o n s t r u c t i o n of t h e bleach p l a n t . While Dutton w a s engaged i n h i s em- ployment f o r Bumstead-Woolford, who w a s engaged i n t h e performa n c e o f i t s c o n t r a c t w i t h Hoerner Waldorf, h e was s t r u c k i n t h e head by a 2 " x 6 " p l a n k which f e l l from a c a t w a l k c o n s t r u c t e d by Hightower & L u b r e c h t , a n independent c o n t r a c t o r o f Hoerner Waldorf. The p a r t i e s a g r e e d t h a t n e i t h e r C l a r e n c e Dutton n o r BumsteadWoolford was n e g l i g e n t w i t h r e s p e c t t o t h e i n j u r y t o C l a r e n c e Dutton. A t t h e t i m e o f t h e a c c i d e n t t h e metal tread o f t h e cat- walk which was t o b e s u p p l i e d by Hoerner Waldorf had n o t been i n s t a l l e d because i t had n o t been r e c e i v e d a t t h e p l a n t , a l t h o u g h it w a s on o r d e r . tower & Temporary p l a n k i n g had been i n s t a l l e d by High- L u b r e c h t a t t h e r e q u e s t o f Hoerner Waldorf. A s a r e s u l t o f h i s b e i n g s t r u c k on t h e head by t h e f a l l - i n g plank,Dutton was i n j u r e d . H e r e q u e s t e d and r e c e i v e d b e n e f i t s of Workmen's Compensation provided by h i s employer, BumsteadWoolford, and an o r d e r approving t h e f u l l and f i n a l compromise s e t t l e m e n t w a s e n t e r e d i n t o on A p r i l 2 4 , 1961. Dutton, dn November 1 0 , 1961, i n s t i t u t e d a n a c t i o n i n United S t a t e s District C o u r t f o r t h e District of Montana, Missoula Division, against Hightower & Lubrecht and Hoerner Waldorf. On April 24, 1963, the trial of that case resulted in a verdict for both defendants. Thereafter, various post-trial motions were filed and on September 5, 1963, an order was entered granting plaintiff a new trial. A second trial was started on May 5, 1964, but was terminated by a mistrial. A third trial of the action was set for October 19, 1965, but before trial settlement negotiations were instituted which ultimately resulted in a settlement of $135,000, of which Travelers paid $25,000 on behalf of Hoerner Waldorf, Lloyds of London paid $55,000 on behalf of Hoerner Waldorf and $55,000 was paid by Hightower & Lubrecht. Travelers incurred attorney's fees and defense costs of $10,825 and Hoerner Waldorf incurred expenses in the sum of $750 for loss of time of its employees during preparation for and attendance at the various trials in the Dutton suit. Subsequently suit was filed in the district court of the fourth judicial district, Missoula County, Montana, wherein Hoerner Waldorf and Travelers claimed damages for settling the claim of Dutton and claimed reimbursement for court costs, attorneys' fees and expenses in the defense of the Dutton case. The theory of the action by Hoerner Waldorf is that the indemnity agreement on the reverse side of the purchase order required BumsteadWoolford to indemnify Hoerner Waldorf from expense incurred in the action brought by Dutton against Hoerner Waldorf, and to defend any action brought by Dutton against Hoerner Waldorf. The theory of Travelers was that it was subrogated to t h e r i g h t o f Hoerner Waldorf under t h e indemnity c l a u s e , even though T r a v e l e r s was n o t a p a r t y t o t h e purchase o r d e r and even though Dutton and Bumstead-Woolford were n o t n e g l i g e n t w i t h r e s p e c t t o D u t t o n ' s a c c i d e n t and had no common-law l i a b i l i t y f o r t h e i n j u r y t o Dutton. The a c t i o n w a s s u b m i t t e d t o t h e d i s t r i c t judge on t h e a g r e e d s t a t e m e n t o f facts and memorandums from t h e p a r t i e s . The judge made f i n d i n g s o f f a c t and c o n c l u s i o n s o f law on November 24, 1970. Defendant f i l e d e x c e p t i o n s t o t h e f i n d i n g s and f i l e d a motion t o amend t h e f i n d i n g s o f f a c t and c o n c l u s i o n s o f law. were argued b e f o r e t h e d i s t r i c t c o u r t on December 1 4 , 1970. These The c o u r t f a i l e d t o a c t w i t h i n f i f t e e n d a y s a f t e r t h e argument and p u r s u a n t t o Rule 59, M.R.Civ.P., R.C.M. s u p e r s e d i n g s e c t i o n 93-5606, 1947, t h e e x c e p t i o n s were deemed o v e r r u l e d and t h e motion t o amend d e n i e d . T h i s a p p e a l followed. Defendant raises 15 i s s u e s on a p p e a l . P l a i n t i 3 f s argue t h a t t h e d e t e r m i n a t i v e i s s u e s are t h r e e i n number. t h e r e c o r d discloses b u t one: Our r e v i e w of t h a t being, d i d defendant c o n t r a c t t o indemnify t h e p l a i n t i f f , Hoerner Waldorf, from any and a l l l o s s o r damages s u s t a i n e d by such p l a i n t i f f w h i l e t h e d e f e n d a n t was engaged i n performing work and f u r n i s h i n g m a t e r i a l on t h e job i n question. A r e v i e w o f t h e e x h i b i t s i n t h i s case r e v e a l s t h a t t h e q u o t a t i o n f u r n i s h e d by d e f e n d a n t r e s u l t e d from n e g o t i a t i o n s between t h e d e f e n d a n t ' s employee, a M r . Lysne and Hoerner Waldorf's employee, a M r . Sandberg, and c o n s i s t e d o f a f o u r page q u o t a t i o n accompanied by a two page l e t t e r . The q u o t a t i o n documents are quite comprehensive in setting forth the materials to be furnished, their quality and specifications as well as the scope of work to be performed by the defendant and that work which the defendant would anticipate would be performed by others. A completion date, billing arrangements, as well as terms for furnishing extra work, and the letter accompanying the quotation, set forth in exact detail the cost at which the additional materials would furnished , including a provision for passing on discounts received from defendant's suppliers for prompt payment. Provisions were also made for the payment for rental equip- ment, expense, traveling and living expenses as well as a percentage ratio to be applied for the payment of taxes, industrial accident insurance, unemployment insurance, casualty insurance, as well as an accounting expense, and goes on to state: "Our normal insurance coverage which is subject to your approval provides for property damage at $250,000.00 and public liability at $250,000/$500,000." This quotation was issued on July 12, 1960. On July 15, 1960, the plaintiff issued its purchase order accepting the quotation offered. A printed purchase order form was utilized for this purpose by the plaintiff. The face of the order reads in type- written words: "Perform work and supply materials per quotation A-4378-A and attached letter. "Price, $109,255.00 "CONFIRMING 0RI)ER" The attached letter reads in pertinent part: "P.O. t o Bumstead-Woolford Co. 1 4 1 1 F o u r t h Ave. S e a t t l e , Washington "Perform work and s u p p l y m a t e r i a l s t o i n s t a l l p i p i n g , instrument a t i o n , and machinery as o u t l i n e d i n your q u o t a t i o n A-4378-A and r e f e r r e d t o as c o n t r a c t 326 w i t h t h e f o l l o w i n g m o d i f i c a t i o n s and changes : " I t i s understood t h a t when your work i s completed t h e b l e a c h p l a n t w i l l be r e a d y t o p r o c e s s p u l p e x c e p t f o r t h e e l e c t r i c a l i n s t a l l a t i o n . T h i s means a l l p i p i n g and machinery w i l l b e comp l e t e , t e s t e d and r e a d y f o r o p e r a t i o n . performance bond w i l l b e f u r n i s h e d . be an a d d i t i o n t o t h e c o n t r a c t p r i c e . "A The cost o f t h e bond t o "Evidence of i n s u r a n c e coverage i n t h e f o l l o w i n g amounts w i l l be submitted : - " P r o p e r t y damage $250,000 " P u b l i c l i a b i l i t y - $250,000/500,000" (Emphasis o u r s . ) The rest o f t h e l e t t e r relates t o t h e s p e c i f i e d work t o be performed. tiff" Nowhere i n t h e t y p e w r i t t e n p o r t i o n o f t h e p l a i n - p u r c h a s e o r d e r n o r i n t h e a t t a c h e d l e t t e r was any mention o f i n d e m n i f i c a t i o n made. i s s u e d by t h e p l a i n t i f f To t h e c o n t r a r y t h e p u r c h a s e o r d e r a c c e p t e d t h e terms and c o n d i t i o n s o f t h e d e f e n d a n t ' s o f f e r and t h e l e t t e r accompanying t h e p u r c h a s e o r d e r c a l l e d t h e d e f e n d a n t ' s a t t e n t i o n t o s p e c i f i c r e q u e s t e d modificat i o n s which we have emphasized i n s e t t i n g f o r t h t h e language o f t h e correspondence. I t i s p l a i n t i f f ' s c o n t e n t i o n however, t h a t t h e f o l l o w i n g c l a u s e , a p p e a r i n g on t h e r e v e r s e s i d e o f i t s purc h a s e o r d e r , had t h e e f f e c t o f i n c o r p o r a t i n g t h e indemnity c l a u s e s e t f o r t h p r e v i o u s l y i n t h i s o p i n i o n as paragraph 11. numbered paragraph 1, r e a d s : "1. ACCEPTANCE. T h i s o r d e r c o n s t i t r l + e s an o f f e r by t h e Waldorf-Hoerner Paper P r o d u c t s Company ( h e r e i n a f t e r r e f e r r e d t o as 'Buyer' ) upon t h e terms and c o n d i t i o n s and s u b j e c t t o This clause i n s t r u c t i o n s a p p e a r i n g on t h e f a c e and r e v e r s e hereof. To c o n s t i t u t e a binding c o n t r a c t t h i s o f f e r must b e a c c e p t e d by t h e S e l l e r by execut i o n o f t h e acknowledgment form a t t a c h e d h e r e t o . T h i s acknowledgment form must b e r e t u r n e d t o u s by r e t u r n mail confirming r e q u e s t e d d e l i v e r y d a t e s o r s t a t i n g best p o s s i b l e d e l i v e r y f o r Buyer's a c c e p t a n c e . No o t h e r form o f a c c e p t a n c e , v e r b a l o r w r i t t e n , w i l l b e v a l i d o r b i n d i n g upon t h e Buyer. No d e v i a t i o n from t h i s o r any o f t h e terms h e r e o f s h a l l be b i n d i n g upon t h e Buyer w i t h o u t p r i o r w r i t t e n a p p r o v a l o f t h e Buyer. The Buyer w i l l n o t b e r e s p o n s i b l e f o r goods d e l i v e r e d o r s e r v i c e s r e n d e r e d e x c e p t on a properly authorized o r signed purchase o r d e r form." T h i s c o n t e n t i o n must f a i l . I t i s fundamental c o n t r a c t l a w t h a t t h e w r i t t e n o r t y p e w r i t t e n p r o v i s i o n s of a c o n t r a c t w i l l t a k e precedence o v e r t h e p r i n t e d p r o v i s i o n s o f a c o n t r a c t . 17A C.J.S C o n t r a c t s S 310. More s p e c i f i c a l l y , s e c t i o n 13-717, R.C.M. 1947 p r o v i d e s : "Where a c o n t r a c t i s p a r t l y w r i t t e n and p a r t l y p r i n t e d , or where p a r t o f it i s w r i t t e n o r p r i n t e d under t h e s p e c i a l d i r e c t i o n s o f t h e p a r t i e s , and w i t h a s p e c i a l view t o t h e i r i n t e n t i o n , and t h e remainder i s c o p i e d from a form o r i g i n a l l y p r e p a r e d w i t h o u t s p e c i a l r e f e r e n c e t o t h e p a r t i c u l a r p a r t i e s and t h e p a r t i c u l a r contract i n question, the written p a r t s c o n t r o l t h e p r i n t e d p a r t s , and t h e p a r t s which are p u r e l y o r i g i n a l c o n t r o l t h o s e which are c o p i e d from a form. And i f t h e t w o are a b s o l u t e l y r e p u g n a n t , t h e l a t t e r must b e s o f a r d i s r e g a r d e d . " Applying t h e s t a t u t e t o t h e f a c t s i n t h e r e c o r d w e can o n l y conclude t h a t t h e t y p e d p r o v i s i o n s o f p l a i n t i f f ' s confirmi n g p u r c h a s e order c o n t r o l t h e i n t e r p r e t a t i o n o f t h e agreement between t h e p a r t i e s . The t y p e w r i t t e n p o r t i o n o f t h e p u r c h a s e o r d e r s p e c i f i c a l l y i n c o r p o r a t e s two o t h e r documents by r e f e r e n c e . First the d e f e n d a n t ' s q u o t a t i o n and second t h e p l a i n t i f f ' s own l e t t e r which conditioned specifically the acceptance of the defendant's quotation. Neither of these two documents incorporate the terms on the face or reverse side of the purchase order. A contract will not be held to incorporate stipulations embodied in another contract save insofar as the same are specifically set forth or identified by reference. State Bank of Darby v. Pew, 59 Mont. 144, 195 P. 852. Thus we see that the controlling language of the plaintiff's purchase order does not effect an incorporation of the printed terms and conditions of the purchase order form itself but had only the effect of accepting the defendant's quotation as expressly modified by the terms of the plaintiff's letter. Consideration of the format of the printed form in question buttresses this conclusion. The printed form is not par- ticularly adapted for the type of contract contemplated between the parties. The space wherein the typewritten language appears is the space provided for the quantity, description, unit price, and the extention of the unit price of materials ordered. Thus in viewing the contract document as a whole it is clear the intended effect of the plaintiff's purchase order form, with respect to the terms and conditions contained therein, is at best indefinite. This conclusion is fatal to plaintiff's assertion that in accepting the purchase order defendant was bound by the indemnity clause contained therein; for the law requires that the intention to indemnify must be stated in clear and definite language. 42 C.J.S. Indemnity 5 5 ; L e s o f s k i v. R a v a l l i Co. E l e c . Coop., 1 5 1 Mont, 1 0 4 , 439 P.2d 370. P l a i n t i f f ' s contention t h a t paragraph 1 of t h e purchase o r d e r e n t i t l e d 'Acceptance" f u l f i l l s t h i s r e q u i r e m e n t i s w i t h o u t m e r i t as t h i s "Acceptance" c l a u s e i t s e l f a p p e a r s on t h e r e v e r s e s i d e o f t h e u n i n c o r p o r a t e d form i n q u e s t i o n . P l a i n t i f f f i n a l l y contends t h a t s e c t i o n 13-707, R.C.M. 1947, which p r o v i d e s : "The whole o f a c o n t r a c t i s t o be t a k e n t o g e t h e r , so as t o g i v e e f f e c t t o e v e r y p a r t , i f r e a s o n a b l y p r a c t i c a b l e , each c l a u s e h e l p i n g t o i n t e r p r e t t h e o t h e r . I' r e q u i r e s t h a t t h e terms o f t h e p u r c h a s e o r d e r be r e a d i n t o t h e contract. Where s e v e r a l i n s t r u m e n t s are e x e c u t e d a t t h e same t i m e by t h e same p a r t i e s , f o r t h e same p u r p o s e , and i n t h e c o u r s e o f t h e same t r a n s a c t i o n t h e y c o n s t i t u t e i n t h e e y e of t h e law b u t one i n s t r u m e n t and w i l l be r e a d and c o n s t r u e d t o g e t h e r as if t h e y were as much one i n form as t h e y are i n s u b s t a n c e i n t h e absence o f a n y t h i n g t o i n d i c a t e t h e c o n t r a r y i n t e n t i o n . The weakness i n p l a i n t i f f & ' argument i s t h a t t h e language chosen by Hoerner Waldorf t o e x p r e s s i t s i n t e n t i o n n e g a t e s s u c h c o n s i d e r a t i o n o f t h e terms o f i t s own p u r c h a s e o r d e r . tracts Cir.; § 298. 17A C.J.S. Con- See a l s o Lambert v. Lambert, 182 F.2d 858. E i g h t h Four-Three-0-Six Duncan Corp, v . S e c u r i t y T r u s t CO., The d i s t r i c t c o u r t ' s f i n d i n g - of f a c t , t h a t t h e indem- n i f i c a t i o n clause w a s operative, w a s thus erroneous. Its conclusion of law, that it applied to the loss asserted, is likewise incorrect and in view of this holding all other issues raised by the defendant on appeal become moot. The judgment is reversed and the district court is directed to enter judgment in favor of defendant,dismissing the action. We concur: n ~ssociatv Justices

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