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Brewster v. Catalytic Construction Co.

Decided: December 13, 1954.


On certified appeal from the Law Division to the Appellate Division of the Superior Court.

For affirmance -- Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- Chief Justice Vanderbilt. The opinion of the court was delivered by Heher, J. Vanderbilt, C.J. (dissenting).


George M. Brewster & Son, Inc., a New Jersey corporation, sues to the use of The Travelers Insurance Company, a Connecticut corporation authorized to pursue its business in New Jersey, for indemnification for "actual losses and damages suffered" by Brewster within the understanding and meaning of a contract between it and the defendant Catalytic Construction Company, a Delaware corporation, made March 12, 1948. Brewster's "losses" were satisfied by Travelers pursuant to a policy of liability insurance issued by it to Brewster before the making of the contract of indemnity in suit; and Travelers now invokes the right of subrogation reserved by its policy and to that end the action is brought for its benefit as the use plaintiff. The defense is that the stipulated indemnity covers only "actual loss," and Brewster "admittedly suffered no actual loss" since the "loss" in question was within the coverage of Travelers' indemnity policy and thus Brewster was saved harmless, but, even on the contrary hypothesis, Brewster's loss is of a nature not within the ambit of the contractual indemnity.

There was judgment of involuntary dismissal in the Law Division of the Superior Court. The case is here by certification, on our own motion, of plaintiff's pending appeal to the Appellate Division.

By the contract of March 12, 1948, in form a letter addressed by Brewster to Catalytic, accepted by Catalytic in writing at the foot of the letter, the former "rented" to the latter, "on a month to month basis, for a minimum period [17 NJ Page 24] of three months, subject to cancellation after the three-month period by either party," on 30 days' advance notice in writing, "a 40 Ton Manitowoc Speed crane, Model 3000 Special, Full revolving gasoline crawler crane, * * * mounted on all-steel chain driven crawlers, * * * equipped with a Wisconsin Gasoline engine, a special open throat heavy duty crane boom 100' long, complete for regular hook and crane service," at a "monthly rental rate" for the "bare machine" of $1,868, "f.o.b. trailer our yard, Bogota, N.J., based on 240 hours per month plus 50% of this rate for all hours over 240 per month." It was stipulated, inter alia, that the "rental period shall start on the date the equipment leaves" Brewster's yard at Bogota, New Jersey, "for delivery to" Catalytic's "job at Tidewater Associates Oil Company, foot of East 22nd Street, Bayonne, N.J., and shall continue uninterruptedly until the date the equipment is returned" to Brewster's yard at Bogota, "or equivalent distance." Catalytic undertook to pay all transportation charges "on this shipment from" Brewster's yard at Bogota to its "job at Bayonne," and "in returning" the equipment "on the expiration of the rental" to Brewster's yard at Bogota, "or equivalent distance." Catalytic promised to "furnish all fuel, lubricants, etc.," to "employ" Brewster's "operators and pay them their regular New Jersey rate of wages," "to maintain the equipment in first-class condition at all times during the rental period," and to return it to Brewster at the close of the rental period "in the same condition as when received, less ordinary wear and tear," or, in the event of "total loss," to "reimburse" Brewster for its "present value of $30,000." Catalytic also agreed to "assume full responsibility" for the equipment "during the rental period," and Brewster disclaimed "all liability for loss of time or damage on account of accidents, delays due to defective material, or to motor or engine troubles, or excessive consumption of fuel or lubricant or delays in the delivery or removal of equipment," and "for loss of time due to weather or surface conditions or temporary suspension of work."

And then comes the indemnity clause:

"It is understood and agreed that you (Catalytic) indemnify us against all loss, damage, expense and penalty arising from any action on account of personal injury or damage to property occasioned by the operation and handling of this equipment during the rental period, or any extension thereof.

It is understood and agreed that we (Brewster) shall be saved harmless from all court actions and all claims for injuries to persons or property, occasioned through the equipment while in your possession."

The equipment was not to be "moved to any other project" without Brewster's consent; and in the event of damage "in excess of ordinary wear and tear," Brewster could "take possession * * * upon 24 hours notice."

It was stipulated, in the pretrial order and in the course of the trial of this action, that on March 22, 1948 Joseph Roberts, Joseph Demyanovich and Arthur Hansen "were employees" of the defendant Catalytic, and on that date "these three employees were injured as the result of being struck by a falling boom of a crane * * * owned by" the plaintiff Brewster, and "At the time of the accident * * * the defendant was engaged in doing work at the Tidewater Associates Oil Co., foot of East 22nd St., Bayonne, N.J. where the three employees of defendant * * * were engaged in working for defendant, and at said time the crane heretofore mentioned was on the site of said job, having been taken there pursuant to" the stated agreement of March 12, 1948; that these three "employees of defendant brought suit against Brewster for personal injuries" which eventuated in judgments of $25,000 for Roberts, $5,000 for Demyanovich, and $10,000 for Hansen; that Brewster gave Catalytic due notice of the commencement of the actions, and demanded that it defend, but the demand was refused, and thereupon Travelers, on Brewster's behalf, undertook the defense of the actions under its policy issued to Brewster; that after recovery of the judgments, and their affirmance on appeal, Roberts v. Geo. M. Brewster & Son, Inc., 13 N.J. Super. 462 (App. Div. 1951), certification denied 7 N.J. 582

(1951), payment was demanded of Catalytic and refused, and full satisfaction was then made by Travelers conformably to the indemnity policy, in coverage more than sufficient to liquidate the recoveries and all the expenses incurred in the defense of the actions.

The complaint herein was amended to assert a right of subrogation in Travelers in virtue of the express terms of the policy. It is agreed that the policy was issued to Brewster for a term of three years commencing June 12, 1947; that the premium was paid by Brewster, and the indemnity thereby provided covered the liabilities thus reduced to judgment.

By answers to interrogatories, Catalytic acknowledged that in accordance with its directions the crane was "delivered" by Brewster to Catalytic on "March 19, 1948, to the job site at the Tidewater Associates Oil Co., foot of East 22nd Street," in Bayonne, and it "was in the process of being placed into position for operation at the time the boom fell"; that "immediately before the accident, the crane had been standing still at the scene of the accident for about ten minutes" and "the boom fell just as the crane started up or was about to start up again in motion"; that the crane was "rented or used" by Catalytic from March 19, 1948 to August 9, 1948, and rent was paid by it for that period; and that Catalytic "paid the wages of the person operating the crane and boom on March 22, 1948, at the time the boom fell," and deducted or made payment "of unemployment compensation, social security and withholding taxes from the wages of the operator of the crane and boom at the time it fell."

The operator of the crane, then concededly in Catalytic's immediate service and pay, although he was "sent" to the "job at the Tidewater plant" by Brewster, testified that the boom, "at a near horizontal position," fell while the caterpillar crane "was walked along," "crawling with the mechanism" to "bring it in to where" they "were working," in keeping with Catalytic's directions. The witness said that this was his first connection with the crane on this operation, ...

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