SWEET v COLBORN SCHOOL SUPPLY

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No. 81-298 IN THE SUPREME COURT OF THE STATE OF MONTANA JOANIE SWEET, Plaintiff and Respondent, COLBORN SCHOOL SUPPLY, BURLINGTON NORTHERN INC., & M & L REALTY COMPANY, Defendansand Appellants. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone Honorable William J. Speare, Judge presiding. Counsel of Record: For Appellants: K. Kent Koolen, Billings, Montana Anderson, Brown, Gerbase, Cebull Billings, Montana & Jones, For Respondent: Hennessey Law Office, Billings, Montana Submitted on briefs: November 5, 1981 Decided: January 28, 1982 Filed: JAN 2 8 1982 r @ Clerk J u s t i c e Fred J . Weber d e l i v e r e d t h e Opinion of t h e Court. Mr. J o a n i e Sweet (Sweet) sued B u r l i n g t o n N o r t h e r n , I n c . ( B N ) and Colborn School Supply and M&L R e a l t y Co. (Colborn) i n Yellowstone County D i s t r i c t C o u r t f o r p e r s o n a l i n j u r i e s s u f f e r e d w h i l e c r o s s i n g t h e BN t r a c k a d j a c e n t t o t h e Colborn b u i l d i n g l o c a t e d on BN p r o p e r t y . o f $60,000 t o Sweet. BN s e t t l e d by t h e payment BN c r o s s c l a i m s a g a i n s t Colborn c l a i m i n g i n d e m n i f i c a t i o n under t h e BN-Colborn l e a s e . The D i s t r i c t C o u r t g r a n t e d summary judgment t o Colborn a g a i n s t BN on t h e c r o s s claim. BN a p p e a l s . W e a f f i r m t h e D i s t r i c t Court. The i s s u e s a r e : (1) Does t h e BN-Colborn l e a s e indemnify BN a g a i n s t damages s u f f e r e d a s a r e s u l t of t h e s o l e n e g l i g e n c e of BN? (2) I s BN e s t o p p e d from denying t h a t Colborn a t a l l t i m e s was i n f u l l compliance w i t h t h e BN-Colborn l e a s e ? S w e e t claimed t h a t she s u s t a i n e d i n j u r y i n t h e course of h e r employment a s a d e l i v e r y van d r i v e r f o r U n i t e d P a r c e l Service, while enroute t o Colborn's building i n B i l l i n g s , Montana, f o r p u r p o s e s of pick-up and d e l i v e r y on A p r i l 1 2 , 1976. Sweet c l a i m e d t h a t a s s h e was o p e r a t i n g h e r d e l i v e r y v e h i c l e upon o r a c r o s s r a i l r o a d t r a c k s l o c a t e d b e h i n d t h e b u i l d i n g o c c u p i e d by C o l b o r n , t h e s t e e r i n g wheel of h e r v e h i c l e was caused t o suddenly s p i n and s t r i k e h e r hand, causing injury. She c l a i m e d t h a t t h e s t e e r i n g wheel w a s c a u s e d t o s p i n a s t h e r e s u l t of r u t s , d e p r e s s i o n s , and chuckholes i n t h e ground a d j a c e n t t o t h e r a i l s o v e r which s h e was o p e r a t i n g h e r v e h i c l e . Colborn i s l o c a t e d on t h e s o u t h w e s t c o r n e r of Montana Avenue and North 2 7 t h S t r e e t i n B i l l i n g s . b u i l d i n g o c c u p i e s r a i l r o a d right-of-way This f o u r s t o r y owned by BN and i s s e r v e d by a r a i l r o a d s p u r t r a c k a d j a c e n t t o t h e l o a d i n g dock a t t h e r e a r of t h e b u i l d i n g . The l a n d o c c u p i e d by Colborn was l e a s e d from t h e r a i l r o a d by M&L R e a l t y i n 1957. l e a s e was r e v i s e d and renewed i n 1975. l e a s e d t h e p r o p e r t y t o Colborn. The M&L R e a l t y sub- Only t h e p r o p e r t y p h y s i c a l l y o c c u p i e d by t h e b u i l d i n g and by t h e l o a d i n g dock i s l e a s e d from t h e r a i l r o a d . The ground on which t h e s p u r t r a c k i s l o c a t e d i s owned by BN and i s n o t c o v e r e d by any l e a s e agreement. I t was customary f o r Colborn t o r e c e i v e f r e i g h t s h i p m e n t s a t i t s l o a d i n g dock by d e l i v e r y t r u c k a s w e l l a s by r a i l . Such d e l i v e r y t r u c k s n e c e s s a r i l y p a s s e d o v e r t h e r a i l s of t h e spur track. Colborn and BN were aware of t h i s . I t was an u n d i s p u t e d f a c t t h a t t h e s t r i p of l a n d where t h e a c c i d e n t o c c u r r e d was under t h e e x c l u s i v e c o n t r o l of BN and t h a t BN was t h e o n l y p a r t y w i t h a d u t y t o m a i n t a i n t h e area. BN would n o t a l l o w b u s i n e s s e s s u c h a s Colborn t o c o n d u c t o r perform s e p a r a t e maintenance p r o c e d u r e s i n t h e a r e a where t h e a c c i d e n t o c c u r r e d . P a r a g r a p h 5 of t h e BN-Colborn l e a s e p r o v i d e s : " L e s s e e s h a l l n o t nor s h a l l L e s s e e f o s t e r , s a n c t i o n o r p e r m i t o t h e r s t o o p e r a t e any equipment, motor d r i v e n o r o t h e r w i s e , f o r t h e p u r p o s e of s e r v i n g L e s s e e , upon o r a c r o s s any r a i l r o a d t r a c k l o c a t e d on o r a d j a c e n t t o t h e demised p r e m i s e s e x c e p t a t e s t a b l i s h e d crossings. " L e s s e e a g r e e s t o indemnify and s a v e harm- less L e s s o r from a l l l o s s , damage, p e n a l t i e s , c o s t s o r judgments t h a t may be a s s e s s e d a g a i n s t o r r e c o v e r e d from i t on a c c o u n t of o r i n any manner a r i s i n g o r growing o u t of a v i o l a t i o n of t h e p r o v i s i o n s of t h i s p a r a g r a p h 5." The i s s u e i s whether t h e f o r e g o i n g l e a s e p r o v i s i o n s a r e s u f f i c i e n t t o indemnify BN a g a i n s t damages s u s t a i n e d b e c a u s e of t h e n e g l i g e n c e of BN. On t h i s i s s u e BN m a i n t a i n s t h a t t h e l a n g u a g e of t h e l e a s e agreement p r o v i d e s t h a t Colborn w i l l indemnify BN f o r any l o s s e s a s s e s s e d a g a i n s t BN a s a r e s u l t of Colborn v i o l a t i n g t h e t e r m s of t h e l e a s e . BN c l a i m s t h a t t h e r e was a v i o l a t i o n of p a r a g r a p h 5 o f t h e l e a s e when Colborn p e r m i t t e d t h e p l a i n t i f f t o o p e r a t e a motor v e h i c l e on t r a c k s o t h e r t h a n a t an established crossing. T h i s C o u r t r e c o g n i z e s t h e v a l i d i t y of a c o n t r a c t p r o v i s i o n of i n d e m n i t y . L e s o f s k i v . R a v a l l i Co. E l e c t . Coop. (1968), 1 5 1 Mont. 1 0 4 , 439 P.2d 370; Western C o n s t r u c t i o n Equipment Co. v . Mosby's I n c . (19651, 146 Mont. 313, 406 P.2d 165. However, t h i s C o u r t h e l d t h a t a p a r t y c a n n o t be i n d e m n i f i e d a g a i n s t i t s own n e g l i g e n c e u n l e s s t h e c o n t r a c t p r o v i s i o n s a r e " c l e a r and u n e q u i v o c a l . " I n L e s o f s k i a widow of a d e c e a s e d employee of a highway c o n t r a c t o r b r o u g h t an a c t i o n a g a i n s t an e l e c t r i c power company f o r t h e d e a t h of t h e employee who was e l e c t r o c u t e d . The company b r o u g h t a third-party action against the contractor. The D i s t r i c t C o u r t e n t e r e d a summary judgment f o r t h e c o n t r a c t o r which t h e Company a p p e a l e d . The t h i r d - p a r t y c o m p l a i n t was b a s e d upon a n indemnity agreement i n a c o n t r a c t between t h e Company and t h e S t a t e Highway Commission. The c o n t r a c t o r had no c o n t r a c t of any s o r t w i t h t h e Company, and t h e r e had n o t been any b a r g a i n i n g by t h e Company f o r indemnity f o r i t s own n e g l i g e n c e . This Court s t a t e d t h a t " t o contend t h a t w e should l i b e r a l l y c o n s t r u e t h e c o n t r a c t of r e s p o n d e n t w i t h t h e S t a t e Highway omm mission t o i n c l u d e t h e a p p e l l a n t ' s n e g l i g e n t a c t s would i n o u r o p i n i o n a n n u l t h e r e c o g n i z e d r u l e t h a t t o indemnify a p a r t y a g a i n s t h i s own n e g l i g e n c e i t must be e x p r e s s e d i n ' c l e a r and u n e q u i v o c a l terms. '" L e s o f s k i , 146 Mont. a t 108, 439 P.2d a t 372. The D i s t r i c t C o u r t c o u l d n o t f i n d such c l e a r and u n e q u i v o c a l language i n t h e p r e s e n t case. BN a r g u e s t h a t i t had t h e r i g h t t o p r o t e c t i t s e l f a g a i n s t a n i n c r e a s e d r i s k i n c u r r e d by p e r m i t t i n g Colborn t o occupy p r e m i s e s a d j a c e n t t o t h e BN t r a c k s . BN a l s o a r g u e s t h e v a l i d i t y o f t h e indemnity c l a u s e s which t h e y c o n t e n d indemnify BN a g a i n s t i t s own n e g l i g e n c e . BN r e l i e s upon t h e Montana c a s e of Ryan M e r c a n t i l e Company v . G r e a t N o r t h e r n Railway Company ( 9 t h C i r . 1 9 6 1 ) , 294 F.2d 629, which was a n a c t i o n b r o u g h t by a r a i l r o a d ' s t e n a n t f o r a judgment d e c l a r i n g t h e r i g h t s of t h e p a r t i e s under a l e a s e . The w i f e of a n employee of Ryan was i n j u r e d w h i l e r i d i n g i n a c a r when t h e c a r w a s s t r u c k by a boxcar b e i n g pushed by a G r e a t Northern switch engine. Northern. She a l l e g e d o n l y n e g l i g e n c e of t h e G r e a t While f i n d i n g t h a t t h e G r e a t N o r t h e r n s h o u l d be i n d e m n i f i e d f o r i t s own n e g l i g e n c e , t h e 9 t h C i r c u i t C o u r t stated: ". . . [ I l n o r d e r t o uphold a n i n d e m n i f i c a t i o n agreement f o r damages c a u s e d by n e g l i g e n t a c t s of t h e i n d e m n i t e e t h e r e must be c l e a r and unAn e x a m i n a t i o n of t h e i n equivocal t e r m s . demnity agreement d i s c l o s e s no a m b i g u i t y . The p h r a s e s used -- 'any and a l l p e r s o n a l i n j u r i e s , ' ' o f e v e r y name and n a t u r e which may i n any manner a r i s e , ' 'whether due o r n o t due t o t h e n e g l i g e n c e of G r e a t N o r t h e r n ' -- d e m o n s t r a t e t h a t Ryan's indemnity would c o v e r any c l a i m made a g a i n s t G r e a t N o r t h e r n , and shows t h a t t h e p a r t i e s had i n mind t h a t t h e n e g l i gence of G r e a t N o r t h e r n would be no b a r t o Ryan's i n d e m n i t y o b l i g a t i o n . " Ryan, 294 F.2d a t 633. .. ... The Ryan M e r c a n t i l e Company l e a s e s t a t e s t h a t i t e x t e n d s t o p e r s o n a l i n j u r i e s "whether due o r n o t due t o t h e n e g l i g e n c e of G r e a t N o r t h e r n . " BN-Colborn l e a s e . There i s no comparable p r o v i s i o n i n t h e W a g r e e w i t h t h e c o n c l u s i o n of t h e e D i s t r i c t C o u r t t h a t t h e language from p a r a g r a p h 5 of t h e BNColborn l e a s e d o e s n o t p r o v i d e c l e a r and u n e q u i v o c a l t e r m s n e c e s s a r y f o r BN t o r e c o v e r under a t h e o r y of i n d e m n i f i c a t i o n a g a i n s t i t s own n e g l i g e n c e . Because we r e c o g n i z e t h e c l o s e q u e s t i o n i n t h e i n t e r p r e t a t i o n of t h e lease p r o v i s i o n , we w i l l c o n s i d e r t h e n e x t i s s u e which i s whether BN i s e s t o p p e d from denying t h a t Colborn w a s i n f u l l compliance w i t h t h e BN-Colborn l e a s e . BN c l a i m s a v i o l a t i o n of t h e l e a s e a g r e e m e n t ' s p a r a g r a p h 5 b e c a u s e Colborn a l l o w e d t h e p l a i n t i f f t o c r o s s t h e t r a c k s a t an a r e a not "an e s t a b l i s h e d c r o s s i n g . " I t was u n d i s p u t e d t h a t BN was aware t h a t t h e t r a c k s were b e i n g c r o s s e d f o r d e l i v e r i e s t o Colborn. o r i g i n a l l e a s e i n 1957. T h i s had been o c c u r r i n g s i n c e t h e The u n d i s p u t e d e v i d e n c e a l s o shows t h a t t r u c k s have been making d e l i v e r i e s a c r o s s t h i s c r o s s i n g t o t h e b u i l d i n g now o c c u p i e d by Colborn f o r more t h a n 6 0 y e a r s on a c o n t i n u i n g b a s i s . A new l e a s e was drawn up i n 1975 p a r t l y b e c a u s e of t h e c o n s t r u c t i o n of a new l o a d i n g dock. The r e c o r d shows t h a t BN was aware t h a t Colborn i n t e n d e d t o and d i d u s e t h e l o a d i n g d o c k , t h a t v e h i c l e s c o u l d n o t s e r v i c e t h e l o a d i n g dock w i t h o u t c r o s s i n g t h e t r a c k s , and t h a t BN m a i n t a i n s t h e t r a c k s s o t h a t v e h i c l e s c o u l d c r o s s them t o s e r v i c e b u s i n e s s e s . Colborn a s s e r t e d t h e d e f e n s e of e s t o p p e l , and t h e D i s t r i c t C o u r t h e l d t h a t BN was e s t o p p e d , a s a m a t t e r of law, from a s s e r t i n g t h a t a v i o l a t i o n of t h e l e a s e caused plaintiff's injuries. The D i s t r i c t C o u r t memorandum o p i n i o n stated: "BURLINGTON NORTHERN, by i t s c o n d u c t as a p p a r e n t from t h e r e c o r d , h a s a c q u i e s c e d i n t h e u s e of t h e a r e a where t h e a c c i d e n t happened a s a n a r e a f o r v e h i c u l a r t r a v e l ; BURLINGTON NORTHERN h a s s a n c t i o n e d such t r a v e l and h a s a t l e a s t attempt e d t o m a i n t a i n t h e a r e a f o r t h e s p e c i f i c purp o s e of v e h i c u l a r t r a v e l t o s e r v e such b u s i n e s s e s a s COLBORN SCHOOL SUPPLY." I n s u p p o r t o f t h e f i n d i n g of e s t o p p e l , t h e d e p o s i t i o n of Blane Pound, BN e x e c u t i v e , i n p a r t s t a t e s : "Q. W e l l , i f you c o n s i d e r what t h e y ' v e been d o i n g f o r 23 y e a r s a v i o l a t i o n of t h e p r o v i s i o n s of t h i s l e a s e , B u r l i n g t o n N o r t h e r n h a s n ' t done a n y t h i n g t o p r e v e n t them from d o i n g t h a t , have they? "A. That i s c o r r e c t . "Q. A s a m a t t e r of f a c t , you w e l l know t h a t B u r l i n g t o n N o r t h e r n h a s , a t l e a s t a t some t i m e , b u i l t t h a t a r e a up t h e r e s o t h a t v e h i c l e s c o u l d d r i v e i n and o u t of t h e r e . "A. Correct. "Q. I see. So what, I g u e s s a t t h e v e r y l e a s t Burlington Northern a s s i s t e d i n t h e v i o l a t i o n of t h e t e r m s of t h i s l e a s e , i f t h a t ' s a v i o l a t i o n , huh? "A. T h a t would a p p e a r t o b e c o r r e c t . And i t would a l s o a p p e a r t h a t t h a t h a s been w i t h t h e a p p r o v a l and b l e s s i n g of B u r l i n g t o n N o r t h e r n , w o u l d n ' t t h a t be c o r r e c t ? "Q. "A. Yes. "Q. I t ' s e i t h e r one of two t h i n g s . I t ' s e i t h e r t h a t B u r l i n g t o n N o r t h e r n a s s i s t e d Colborn School Supply i n v i o l a t i n g t h e t e r m s of t h e l e a s e -- and I ' m r e f e r r i n g t o f u l l P a r a g r a p h 3 under P a r a g r a p h 5 -- t h e y ' v e e i t h e r a s s i s t e d and approved a l l t h e s e y e a r s of t h a t v i o l a t i o n o r B u r l i n g t o n N o r t h e r n c o n s i d e r s t h a t a r e a back t h e r e an e s t a b l i s h e d crossing. (Obj e c t i o n ) It's "Q. W e l l , I want you t o answer t h a t . isn't it? e i t h e r one of t h o s e two t h i n g s , "A. Y e s , your s t a t e m e n t would b e c o r r e c t . " S i x e s s e n t i a l e l e m e n t s have been h e l d n e c e s s a r y t o c o n s t i t u t e an e q u i t a b l e estoppel: " ( 1 ) t h e r e must be c o n d u c t , a c t s , l a n g u a g e , o r s i l e n c e amounting t o a r e p r e s e n t a t i o n o r a concealment of m a t e r i a l f a c t s ; ( 2 ) t h e s e f a c t s must be known t o t h e p a r t y e s t o p p e d a t t h e t i m e of h i s c o n d u c t , o r a t l e a s t t h e c i r c u m s t a n c e s must be s u c h t h a t knowledge of them i s necess a r i l y imputed t o him; ( 3 ) t h e t r u t h concerni n g t h e s e f a c t s must b e unknown t o t h e o t h e r p a r t y c l a i m i n g t h e b e n e f i t of t h e e s t o p p e l a t t h e t i m e i t was a c t e d upon by him; ( 4 ) t h e c o n d u c t must be done w i t h t h e i n t e n t i o n , o r a t l e a s t w i t h t h e e x p e c t a t i o n , t h a t i t w i l l be a c t e d upon by t h e o t h e r p a r t y , o r under t h e c i r c u m s t a n c e s t h a t i t i s b o t h n a t u r a l and p r o b a b l e t h a t i t w i l l be s o a c t e d upon; ( 5 ) t h e c o n d u c t must be r e l i e d upon by t h e o t h e r p a r t y , a n d , t h u s r e l y i n g , h e must be l e d t o a c t upon i t , and ( 6 ) he must i n f a c t a c t upon i t i n such a manner as t o change h i s p o s i t i o n f o r t h e worse." Smith v . K r u t a r ( 1 9 6 9 ) , 153 Mont. 325, 332, 457 P.2d 459, 463; Hustad v . Reed ( 1 9 5 8 ) , 133 Mont. 2 1 1 , 223, 321 P.2d 1083, 1090; Mundt v. Mallon ( 1 9 3 8 ) , 106 Mont. 2 4 2 , 249-50, 76 P.2d 326, 329. A s t o e l e m e n t ( I ) , t h e a c t i o n s of t h e BN i n m a i n t a i n i n g t h i s p a r t i c u l a r a r e a a s a c r o s s i n g and a l l o w i n g v e h i c l e s t o c o n t i n u o u s l y u s e t h e same a s a c r o s s i n g f o r more t h a n 60 y e a r s amounts t o a r e p r e s e n t a t i o n t h a t i t was a p r o p e r crossing f o r use. A s t o element ( 2 ) , t h e holding o u t t h a t t h i s was a p r o p e r c r o s s i n g f o r u s a g e was c l e a r l y known t o BN a s e s t a b l i s h e d by t h e t e s t i m o n y of t h e BN e x e c u t i v e . As t o e l e m e n t ( 3 ) , t h e f a c t s show t h a t Colborn d i d n o t know t h a t BN c l a i m e d t h i s was n o t a p r o p e r c r o s s i n g . element ( 4 ) , As to t h e f a c t s show t h a t B N ' s c o n d u c t w i t h r e g a r d t o t h e c r o s s i n g was done w i t h t h e e x p e c t a t i o n t h a t Colborn would c o n t i n u e t o u s e t h e c r o s s i n g a s would i t s i n v i t e e s . A s t o e l e m e n t ( 5 ) , t h e f a c t s c l e a r l y show t h a t Colborn r e l i e d upon such a c t i o n s of BN and c o n t i n u e d t o have d e l i v e r i e s made a c r o s s s u c h c r o s s i n g t o Colborn. A s t o element ( 6 ) , t h e a c t i o n s of Colborn, of c o u r s e , a r e s u f f i c i e n t t o change i t s p o s i t i o n f o r t h e worse s o t h a t BN c o u l d c o n t e n d a p o t e n t i a l b r e a c h of t h e l e a s e . The r e c o r d c o n t a i n s c l e a r l y s u f f i c i e n t u n c o n t r a d i c t e d e v i d e n c e t h a t t h e s i x e l e m e n t s of e q u i t a b l e e s t o p p e l were p r e s e n t s o f a r a s BN i s concerned. As a r e s u l t , r e g a r d l e s s o f t h e c o n t e n t i o n s on t h e p a r t of BN a s t o t h e t e c h n i c a l indemnity p r o v i s i o n s of i t s l e a s e w i t h Colborn, BN i s e s t o p p e d from c l a i m i n g any r i g h t t o i n d e m n i f i c a t i o n . The D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary judgment t o C o l b o r n a g a i n s t BN. W e Concur: W e affirm.

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