Michels, Morgan and Milmed. The opinion of the court was delivered by Michels, J.A.D.
Defendant K.L.O. Welding Erectors, Inc. appeals from a summary judgment in favor of plaintiff Bethlehem Steel Corporation determining that it is liable for reasonable attorneys' fees and costs incurred by plaintiff in successfully defending a wrongful death action instituted by the administratrix ad prosequendum of the estate of Stephen Gallas, one of defendant's employees.
W.R. Grace & Company (Grace) entered into a contract with plaintiff for the construction by plaintiff of a steel water storage tank at Grace's chemical plant in Fords, New Jersey. Plaintiff subcontracted the construction of the tank to defendant. During the course of the tank's construction it was necessary for defendant to use its crane in order to lift steel plates into position. Gallas was fatally injured while assisting a co-worker in replacing the crane's boom cable when the boom accidentally came in contact with overhead wires carrying highly dangerous current.
The administratrix sued Public Service Electric and Gas Company, Grace and plaintiff to recover for the pecuniary loss suffered by her and her four children as a result of the death of her husband. Plaintiff immediately tendered the defense of the suit to defendant's insurance carrier, Aetna Casualty and Surety Company, which refused to defend the
suit in plaintiff's behalf. The defense of the suit was then tendered directly to defendant. Upon defendant's refusal to defend the action, plaintiff retained counsel and successfully defended the suit both at trial and on appeal. See Gallas v. Public Service Electric and Gas Co., 106 N.J. Super. 527 (App. Div. 1969), aff'd in part and rev'd in part 56 N.J. 101 (1970).
Plaintiff then instituted this action against defendant to recover the attorneys' fees and costs incurred in defending the wrongful death action under the indemnity provision of its contract with defendant, which in pertinent part provided:
On cross-motions for summary judgment the trial judge held that a realistic assessment of the language "any and all loss or liability" must be read to include counsel fees and costs incurred by plaintiff in successfully defending the prior wrongful death action and entered summary judgment in plaintiff's favor.
Defendant appeals, contending that it was not under any contractual obligation to indemnify plaintiff for counsel fees and costs incurred in successfully defending the wrongful death action instituted against it. Defendant contends that the indemnity agreement should be strictly construed and the language thereof does not provide indemnity for such
legal expenses. Defendant suggests that since it only agreed to indemnify plaintiff against loss or liability, its obligation does not come into existence until plaintiff's liability has been established by judgment and the amount of the loss by actual payment.
A contract of indemnity is to be interpreted in accordance with the rules governing the construction of contracts generally. The fundamental rule in construing contracts calls for the ascertainment of the intention of the parties in the light not only of the language used, but also of the surrounding circumstances and the objects sought to be attained by them under their agreement. See Cozzi v. Owens Corning Fiber Glass Corp., 63 N.J. Super. 117, 121 (App. Div. 1960); Stern v. Larocca, 49 N.J. Super. 496, 501 (App. Div. 1958); Longi v. Raymond-Commerce Corp., 34 N.J. Super. 593, 603 (App. Div. 1955). As stated in George M. Brewster & Son v. Catalytic Const. Co., 17 N.J. 20 (1954), in the case of an integrated contract.
[the judicial quest] is for the reasonably certain meaning of the language used, taken as an entirety, considering the situation of the parties, the attendant circumstances, the operative usages and practices, and the objects the parties were striving to achieve. * * * [T]he chosen words and phrases are to be realistically assessed, in relation to the context and the obvious general purpose of the compact, for the meaning that is reasonably clear, such as is within the reasonable understanding ...