Gulf, Colorado & Santa Fe Railway Company v. G. C. McBride et al., 159 Tex. 442

Mr. Justice Griffin delivered the opinion of the Court. This is a suit in which a

summary judgment in favor of respondents was given by the trial court. The suit involves liability under an indemnity contract and kindred issues. The petitioner, hereinafter called Santa Fe, on October 28, 1952 owned a certain tract of land near Brownwood, Texas. On a part of this tract Santa Fe owned and operated a rock crusher plant which made crushed rock, screenings, rip-rap and other similar material. Santa Fe also owned certain spur tracks which were used in the rock crushing business and the transportation of the finished product from the plant to its place of use. G. C. McBride, d/b/a as G. C.

McBride Co., hereinafter called McBride, was experienced in the business of rock crushing. On October 28, 1952 Santa Fe and McBride entered into a lease agreement whereby the land owned by Santa Fe, together with the rock crusher and its equipment, was leased to McBride for a term of years upon the terms and conditions set out in the agreement. The contract had attached thereto a plat showing the land leased to McBride together with an inventory listing all machinery, equipment and supplies leased.

The first paragraph of the lease defined the “plant” as the land shown by the plat and the machinery listed in the inventory. The spur track was shown on the plat as part of the property leased. Located on this spur track and on the land shown on the plat was a loading ramp some ten or twelve feet above the level of the spur track. In conducting switching operations in, on and around the “plant” there were times when the operating employees of Santa Fe had to climb upon the loading ramp in order to transmit signals to the train crew.

This practice was well known to McBride, and no objection or protest was made to such procedure. On April 10, 1954, C. F.England, Jr., who was employed as an engine foreman by Santa Fe — while climbing this ramp for the purpose of transmitting signals to a switching crew — fell and sustained serious injuries to his back. As a result of the injuries received it was necessary to perform a serious operation on his back. England was unable to work for approximately 18 months, and he was making from $400.00 to $450.00 per month at the time of his injury.

He lost in wages alone some $7,500 as a result of his inability to work. England made a claim against Santa Fe under the Federal Employees’ Liability Act, 45 U. S. C. A., Sec. 51, et seq. On April 25, 1956, Santa Fe sent a letter to McBride notifying him of the nature and extent of England’s injury and asked McBride to take over the handling of England’s claim for damages, or to authorize Santa Fe to handle the same for the account of McBride. On July 31, 1956, McBride notified Santa Fe that he would not take over the claim and denied any liability under the indemnity agreement.

Santa Fe on this same date settled England’s claim for the sum of $8,495.00. Santa Fe thereafter filed this suit against McBride and respondent, Central Surety and Insurance Corporation, who had signed a performance bond with McBride that he would carry out the lease contract. McBride denied any liability under the indemnity provision of the contract upon various grounds. Surety Corporation filed a general denial and adopted the answer of McBride. Santa Fe and McBride each filed unverified motions for

summary judgment upon the pleadings, depositions of England, depositions of E. A. McBride and a stipulation of facts entered into between the parties. The trial judge overruled Santa Fe’s motion for

summary judgment and sustained McBride’s motion. As a result judgment was entered that Santa Fe take nothing against McBride, and it naturally followed judgment was rendered in favor of the Surety Corporation. This was reversed and the cause remanded by the Court of Civil Appeals. 309 S.W. 2d 846. One of McBride’s defenses — and a ground urged in his motion for

summary judgment — was that the injury to England did not arise from, grow out of and was not in any manner incident to the use, operation and maintenance or state of repair of the plant, and was not, therefore, within the terms of the indemnity agreement. McBride, in his reply to the application for writ of error, says “the Court of Civil Appeals held that the injury suffered by England came within the terms of the indemnity agreement upon which plaintiff based its cause of action.” Santa Fe also states this was the holding of the Court of Civil Appeals on this point.

Both parties so construe the opinion of the Court of Civil Appeals, and we agree. Respondents have not appealed from this holding. The indemnity agreement, in so far as it is pertinent to our cause, reads as follows: McBride agreed “to release and discharge railway company from all liability because of * * * injury to or death of persons whomsoever * * * and to promptly repay any sum or sums which railway company may pay or be compelled to pay, and discharge any judgment or judgments which may be rendered against it because thereof.” (Emphasis added).

McBride claims he is not liable because Santa Fe made a voluntary payment to England without any judicial ascertainment of Santa Fe’s liability to England and McBride seeks to uphold that part of the Court of Civil Appeals’ opinion holding that in this suit for indemnity, Santa Fe must establish its liability to England before it can recover from McBride. In this holding the Court of Civil Appeals was in error. In our recent case of Mitchell’s, Inc. v. Friedman, 157 Texas 424, 303 S.W. 2d 775 (1957), we held that where an indemnitor denies any obligation under the indemnity agreement and obtains a

summary judgment, the indemnitor waives any right to insist upon a judicial determination of the liability of the indemnitee to the injured party. As to the status of the indemnitee in a case wherein a settlement was made with the injured party, after denial of liability on the part of the indemnitor, we said: “* * * Having settled the claim without obtaining a judicial determination of its liability, petitioner assumed the risk of being able to prove the facts which might have rendered it liable to the plaintiff as well as the reasonableness of the amount which it paid.

It will be necessary, therefore, for petitioner to establish that from its standpoint the settlement was made in good faith and was reasonable and prudent under the circumstances. See Luton Mining Co. v. Louisville & N. R. Co., 276 Ky. 321, 123 S.W. 2d 1055; Thermopolis Northwest Electric Co. v. Ireland, 10 Cir., 119 Fed. 2d 409; St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U.S. 173, 26 Sup. Ct. 400, 50 L. Ed. 712.” (Emphasis added). In the case of Luton Mining Co. v. Louisville & N. R.

Co., 276 Ky. 321, 123 S.W. 2d 1055, cited by us in the above case, the Court, in speaking of a voluntary settlement made by the railway company which was seeking indemnity from the mining company, said, “* * * As appellant [mining company] denied liability under this contract, the railroad company was justified in making reasonable and prudent settlement of the claim. The only thing remaining to determine is whether or not the railroad company acted in good faith in making the settlement.” See also the following cases which sustan this rule: New York Cent. & H. R. R. Co. v. T.

Stuart & Son Co. 260 Mass 242, 157 N.E. 540, 543 (5, 6); Chicago, R. I. & P. R. Co. v. Dobry Flour Mills, Inc., 10 Cir., 211 Fed. 2d 785, 787 (1, 2) ; The Chicago, Rock Island & Pacific Railway Company v. The United States of America, 7 Cir., 220 Fed. 2d 939; Thermopolis Northwest Electric Co. v. Ireland, 10 Cir., 119 Fed. 2d 409, 412 (5, 6). These authorities also adversely dispose of McBride’s contention that, under the terms of the indemnity provision of the contract, Santa Fe had no right, without the consent of McBride, to make the settlement with England and therefore Santa Fe cannot recover.

Santa Fe claims that its motion for

summary judgment should be sustained by this court and judgment rendered in its favor against McBride. McBride counters with the proposition that the action of the trial court in refusing Santa Fe’s motion for

summary judgment was interlocutory and therefore not appealable. McBride relies upon the cases of Wright v. Wright, 154 Texas 138, 274 S.W. 2d 670 and Rogers v. Royalty Pooling Company, 157 Texas 304, 302 S.W. 2d 938 as authority for his position. These cases do sustain that position, but in the later case of Tobin v. Garcia, 159 Texas 58, 316 S.W. 2d 396, decided May 7, 1958, and motion for rehearing overruled on October 1, 1958, this Court took another look at the Rogers case, supra, and after a thorough study overruled that case. The Rogers case cited the Wright case as authority.

When we overruled the Rogers case, of necessity, we overruled that part of the Wright case relied upon as authority in the Rogers case. We held that where there was a final judgment rendered in a cause, which was appealable (and was appealed), the appellate court could act upon a denied motion for

summary judgment if the point has been properly preserved. We will therefore examine this record to determine whether or not Santa Fe’s motion for

summary judgment should be sustained. We hold it should be sustained. Santa Fe claims that under the wording of Paragraph 5 of its contract with McBride, it had an absolute right to compromise England’s claim against it; that it would be entitled to recover the amount paid in settlement even without proving a reasonable and prudent settlement in the absence of allegations and proof of bad faith, collusion or fraud. It cites as authority for such contention U. S. Fidelity & Guaranty Company v. Jones (5th Cir.), 87 F. 2d 346 and Central Surety & Insurance Corporation v. Martin, Texas Civ.

App., 1949, 224 S.W. 2d 773, wr. ref. We have read the cases and the contract in each of them, by express language, gave the indemnitor the right to settle and compromise claims against it. Our contract does not give such right by express language.

It binds the indemnitor “to promptly repay any sum or sums which railway may pay, or be compelled to pay, and discharge any judgment or judgments which may be rendered against it * * *.” Had the parties intended to give Santa Fe the absolute and unconditional right to settle or compromise claims and bind the indemnitor to reimburse it for such sums paid out, it would have been a very easy matter to have inserted such language in the contract. We therefore overrule this contention of Santa Fe. McBride’s motion for

summary judgment relies upon the claim that the indemnity provision did not cover injuries sustained by Santa Fe’s employees; that it did not apply to this type of liability; that the agreement covers only the plant itself and not the use and operation of the track on which the injury occurred; that Santa Fe was a mere “volunteer” in making the settlement because no suit had been filed by England against Santa Fe, nor had any judgment been rendered against Santa Fe at the time of the settlement and that the settlement was made without his consent and he has not ratified the same.

As to the first three of the above, the Court of Civil Appeals has held adversely to McBride, and he has not appealed from such holding. Under Mitchell’s Inc. v. Friedman, supra, Santa Fe had a right, in good faith, to make a reasonable settlement with England because it had notified 'McBride of the claim against it and had called upon him to take over the satisfaction of same. McBride refused to do this and denied any liability whatsoever on the claim.

Having gone ahead and made settlement, Santa Fe then assumed the responsibility of showing that it made the settlement with England in good faith, and that it was a reasonable and prudent settlement. In order for Santa Fe to have its

summary judgment herein, it must show that the last above stated two facts are established by this record before us as a matter of law. Are these last two facts established as a matter of law? We hold they are. The evidence in this record shows that the loading ramp where England was injured had been a part of the plant for more than five years prior to England’s injury. The piece of timber, partially buried on this ramp, had been there for some time and the Santa Fe employees were aware of its location for a long period of time.

It had been necessary for many months to cross over this timber in order to reach the top of the ramp to signal the train operatives. The exact period of time is not clearly shown, but it is shown by the depositions to have been there long enough that the Santa Fe employees were well aware of its existence. Nothing had been done to remove this timber. The ramp was a large pile of rock, chat and dirt about 12 feet high with its bottom some 3 to 3% feet from the switch track.

The ramp was wide enough for a truck to drive up on it and to back upon a platform extending out from the ramp a sufficient distance and height so that the end of the platform would be above a railroad car and beyond the side of the car nearest the ramp a sufficient distance for the rock and chat from the loaded truck to be dumped into the car below. This ramp was used by McBride to load chat and rock into the railroad cars for shipment to the Santa Fe and other purchasers. It was a convenience to McBride.

The spur track was used by the Santa Fe to store empty cars for McBride’s use, and to remove such cars when one or more was filled by McBride and ready for moving to its place of delivery. The switch track curved after it passed the ramp to such an extent that it was necessary for a trainman to get on top of the ramp to pass signals from the ground switchman to the other members of the train crew in order to properly “spot” or place the cars being handled by the particular train. At the time of his injury, England was engine foreman of this particular switching train of 18 cars and in charge of that train.

The train was engaged in pushing the 18 empty gondola and coal cars onto this switch track to be used by McBride as needed for shipment of the material made by the rock crusher and as sold to his customers. The train crew reached the top of the dump by crawling, or walking or scrambling up the side of the dump. These sides were loosely piled with chat, rock and dirt. At the time of the injury, England needed to reach the top of the dump to give the necessary signals to the train crew so as to properly control the switching of the cars.

There was a large bridge -timber 6 x 8 or 10 x 12 inches on the side of the dump partly covered by the chat, stone and dirt, but with some six or eight feet uncovered and lying on the surface of the side. In order to reach the top of the dump it was necessary to cross over the exposed part of the timber. In getting across this timber, England’s right foot slipped in the loose chat, dirt or stone, and he partly fell down. In trying to keep from falling completely down and also to get across the exposed part of the timber, his body was in a strain and he “wrenched” or “strained” his back.

It was only a few minutes until quitting time and he finished his shift and went home. His back continued to hurt but he came back to work on his next shift, but was unable to continue and he was relieved and sent home. This occurred about April 14, 1954. He was sent to the hospital and was treated. He was unable to do any work for about six months. Then in October, 1954 he again tried to work, but after about four or five days he had to be taken off the job and sent to the hospital. As a result of his injury, he suffered much pain.

He had a laminectomy and and spinal fusion operation on November 4, 1954 and was unable to return to work until October 26, 1955. At the time of his injury he was being paid from $400 to $450 per month, and was a strong, able bodied man 35 years of age. He lost approximately 18 months wages from the date of his injury until his return to his job. On July 31, 1956 Santa Fe settled England’s claim for the sum of $8,495.00, after notifying McBride as above set out. We think the following quotation from the case of The Chicago, Rock Island & Pacific Railway Company v.

The United States, 7 Cir. 220 Fed. 2d. 939 at p. 941 is particularly applicable to this cause. In speaking of the railway company’s settlement of a Federal Employers’ Liability Act case, the Court said: “* * * Plaintiff at the time it made settlement with the employee did not have the benefit of such a finding. [Negating negligence of plaintiff, railway company]. It was required at that time to use its foresight rather than its hindsight in evaluating the situation relative to its probable liability.

Taking into consideration that which we all know, that is, the almost insurmountable diffieuties attending the defense by a railroad in an action for damages under the Federal Employers’ Liability Act, it cannot be said that plaintiff made other than a fair and reasonable settlement of its potential liability. To have resisted settlement to the point of a jury verdict would have been sheer folly under the circumstances.” The Supreme Court of the United States, in construing this Act, has held that a railroad is liable to an injured employee if the railroad’s negligence played a

part in producing the employee’s injury. Rogers v. Missouri Pacific Railroad Co. 352 U.S. 500, 524, 559; 1 L. Ed. 2d 493, 515; 77 Sup. Ct. 443, 459, 478; Deen v. Gulf, Colorado & Santa Fe Ry. Co., 353 U.S. 925, 1 L. Ed. 2d 721, 77 Sup. Ct. 715, reversing a Court of Civil Appeals judgment in favor of the railroad 275 S.W. 2d 529, wr. ref., n.r.e.; Gibson v. Thompson, Trustee, 2 L. Ed. 2d 1, 355 U.S. 18, 78 Sup. Ct. 2, reversing an opinion of this court absolving the railroad from liability and reported 156 Texas 593, 298 S.W. 2d 97; Arnold v. Panhandle & Santa Fe Railway Co., 353 U.S. 360, 1 L. Ed. 2d 889, 77 Sup.

Ct. 840, reversing a Court of Civil Appeals opinion absolving the railroad from liability, 283 S.W. 2d 303. Many other United States Supreme Court cases are cited in the Gibson case, supra, Under the facts of this case and under the law controlling liability of a railroad to its employees who suffer injury in the operation and use of the facilities furnished by the railroad, we hold, as a matter of law, that Santa Fe was reasonably justified in making a settlement, and that the settlement was made in good faith. Judgments of both courts below are reversed and judgment here rendered for Santa Fe against G. C.

McBride, d/b/a G. C. McBride Co. and the Central Surety and Insurance Corporation for the sum of $8,495.00 with 6% interest from and after July 31, 1956, together with all costs of suit. Central Surety and Insurance Corporation is hereby given a judgment against G. C. McBride d/b/a G. C. McBride Company for such amounts as it may be forced to pay to satisfy the above judgment. Opinion delivered October 22, 1958. ON MOTION FOR REHEARING Mr. Justice Griffin delivered the opinion of the Court. Respondent, McBride, has filed a vigorous motion for rehearing in which he insists that we were in error in rendering

summary judgment for the Santa Fe because of his pleadings of laches and estoppel as a defense to Santa Fe’s cause of action. He further asserts that the defense of laches raised a fact issue and therefore it was error to render a

summary judgment. After the petition and answer had been filed and the cause was awaiting trial, McBride filed his unverified motion for

summary judgment. This motion was based upon the ground that the indemnity provision of the contract did not cover the happening in question; therefore, as a matter of law, a proper construction of the contract would not permit Santa Fe to recover.

McBride alleged that Santa Fe did not notify him of England’s injury until two years and 15 days had elapsed, which fact engendered an unsurmountable degree of prejudice to defendant in investigating the said accident, and, in fact, made it impossible for defendant to know the nature of the accident or the extent of the alleged injury suffered by plaintiff’s employee, and sought to bar plaintiff’s action by virtue of laches. McBride then pleads facts he alleged constituted an equitable estoppel against the Santa Fe. These allegations are the only ones in McBride’s answer touching on either laches or estoppel.

After McBride’s motion for

summary judgment was filed, depositions of the injured party, England; of E. A. McBride, brother of G. C. McBride, and the general manager of the rock crushing plant at the time of England’s injury, and previously thereto, and at the time the depositions were taken, were filed in this cause. Stipulations as to the facts of the case were filed by the parties. About 30 days after McBride had filed his motion for

summary judgment, an unverified motion for

summary judgment was filed by Santa Fe. In this motion it was alleged that the pleadings, depositions and stipulations on file showed there is no genuine issue as to any material fact, and asked for judgment as a matter of law. In this state of the record, the trial court had a hearing on the motions for

summary judgment on June 12, 1957, and at the close of the hearing the trial judge granted McBride’s motion for

summary judgment and denied Santa Fe’s motion. In this case the stipulation sets forth that Santa Fe did notify McBride of England’s claim for damages and it did call upon McBride to take charge of the claim and proceed with it; that McBride notified Santa Fe that he would not take over England’s claim and denied any liability under the indemnity agreement contained in the contract. There was no denial of liability because of any delay on the part of Santa Fe in notifying McBride’s of England’s injury. Santa Fe settled with England after receiving McBride’s denial of any liability.

The stipulation further sets out the date of England’s injury; the date of Santa Fe’s letter notifying McBride of the injury and calling upon him to defend against England’s claim. The deposition of E. A. McBride shows that he first learned of England’s injury and Santa Fe’s demand on G. C. McBride shortly after the demand was made. Nowhere in the deposition was there anything said about any inconvenience, prejudice or injury suffered by McBride on account of not being notified earlier.

Neither was there anything contained in England’s deposition that showed anything regarding the dealings between McBride and Santa Fe. Laches has been defined as follows: “In Ross’ Estate v. Abrams, Texas Civ. App., 239 S.W. 705, 709, Chief Justice Fly quoted with approval from Pomeroy on Equity, Vol. 5, Sec. 1442, as follows: ‘Laches, in legal significance, is not mere delay but delay that works a disadvantage to another.

So long as parties are in the same condition, it matters little whether one presses a right promptly or slowly, within the limits allowed by law; but when knowing his rights, he takes no steps to enforce them until the condition of the other party has, in good faith, become so changed that he cannot be restored to his former state, if the right be then enforced, delay becomes inequitable, and operates as estoppel against the assertion of the right.’ ” Culver v. Pickens, 142 Texas 87, 176 S.W. 2d 167. Laches is an affirmative defense which must be pleaded by the party relying on it.

It is not incumbent upon a plainitff to incorporate in his petition allegations which negative the defense of laches. See Culver v. Pickens, 142 Texas 87, 176 S.W. 2d 167. At the hearing on the motions for

summary judgment the burden was upon Santa Fe to show there was no genuine issue of fact as to the cause of action asserted by it. Gulbenkian v. Penn, 151 Texas 412, 252 S.W. 2d 929; Tigner v. First Nat. Bank of Angleton, 153 Texas 69, 264 S.W. 2d 85. The evidence heard on Santa Fe’s motion for

summary judgment showed its legal right to same, therefore, the motion could only be denied by the court if McBride raised his affirmative defenses of laches and estoppel by some means other than mere pleadings. The record shows no inconvenience, prejudice or injury suffered by McBride by failure of Santa Fe to sooner notify him of England’s injury. This being true no fact issue as to laches or estoppel was shown. Mere lapse of time raises no presumption of laches. It must be an unreasonable delay which has worked injury to another person. Turner v.

Hunt, 131 Texas 492, 116 S.W. 2d 688, 117 A.L.R. 1066; Ross’ Estate v. Abrams, Texas Civ. App., 239 S.W. 705, affirmed Abrams v. Ross’ Estate, Com. App., 250 S.W. 1019; 30 C.J.S. 522, 531, Sec. 116; Culver v. Pickens, supra, 176 S.W. 2d 170 (3). When a motion for

summary judgment is supported by affidavits, depositions, stipulations or other extrinsic evidence sufficient on its face to establish facts, which, if proven at the trial, would entitle the movant to an instructed verdict, the opponent must show opposing evidentiary data which will raise an issue as to a material fact, or must justify his inability to do so and seek appropriate relief under subdivision (

f) of Rule 166A. Stafford v. Wilkinson, 157 Texas 483, 304 S.W. 2d 364 (4-5), 1957; Schepps v. American District Telegraph Co. of Texas, Texas Civ. App., 1956, 286 S.W. 2d 684, 690 (7-9), no writ history; Palm v. La Mantia Bros. Arrigo Company, Texas Civ. App., 1956, 287 S.W. 2d 208 (3), n.r.e.; McDonald,

Summary Judgments, 30 Texas Law Rev. 297 (c); McDonald, Texas Civil Practice, Vol. 4, Cumulative Supplement, pp. 26-39, Secs. 17.26.0 to 17.26.3. Where the plaintiff moves for

summary judgment in an action in which the defendant has pleaded an affirmative defense, he is entitled to have his

summary judgment if he demonstrates by evidence that there is no material factual issue upon the elements of his claim, unless his opponent comes forward with a showing that there is such a disputed fact issue upon the affirmative defense. LeMond & Kreager, The Scope of Pleading as Proof in

Summary Judgment Procedure, 30 Texas Law Rev., pp. 613-622. There seems to be some confusion among our courts as to just what is the correct rule of law to be applied in the above situation. As an example, we find the following statement of the rule in City of San Antonio v. Castillo, Texas Civ. App., 1956, 293 S.W. 2d 691 (7) : “If there is a disputed issue of fact here as to whether or not the appellees were guilty of laches resulting in injury to the City, the

summary judgments should be set aside, and the burden was on appellees to show that there was no such genuine issue. * * *” (Emphasis added). We do not approve the underlined quotation as a correct statement of the law. It is contrary to our holding herein. In the present case Santa Fe’s evidence in the hearing on the motion showed no fact issue as to laches or estoppel. McBride did not come forward with any evidence to show any extraordinary circumstances, prejudice or change in position, damaging him in the conduct of his defense.

The record shows that he refused to defend England’s claim on the ground that the contract imposed no liability upon him. We find nothing in the record to cause us to change the judgment heretofore entered. The motion for rehearing is overruled. Opinion delivered March 25, 1959.