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28 Ins. Counsel J. 617 (1961)
Shifting Risks through Insurance and Hold-Harmless Agreements

handle is hein.journals/defcon28 and id is 619 raw text is: INSURANCE COUNSEL JOURNAL Shifting Risks Through Insurance And Hold-Harmless Agreements CHARLES F. BACHMANN Boston, Massachusetts T HE unrelenting search for lower costs of doing business sometimes causes the alert proprietor to seek to shift some of his costs to others by the use of various types of hold-harmless clauses in the contracts he uses in carrying on his business. The purpose of this discussion is to consider some of the problems associated with the use of these clauses other than those found in sidetrack,' equipment rent- al2 and lease agreements.3 Judicial opinions as to the principles to be applied in the interpretation of these agreements run the gamut from strict to liberal with variations in between, depend- ing upon the language used and the factual posture in which it is attempted to be ap- plied. However, a great many courts pay lip service, at least, to the classic phrase that . . . contracts will not be construed to indemnify a person against his own negli- gence unless such intention is expressed in unequivocal terms.4 Others say that such construction . must be required by clear and explicit lan- guage of the contract.' A federal court 'Southern Pacific Co. v. Layman, 173 Or. 275, 145 P.2d 295 (1944); Booth Kelly Lumber Co. v. Southern Pacific Co., 183 F.2d 902 (9) Cir. 1950); Chicago Rock Island & Pacific Railroad Co. v. Dob- ry Flour Mills, Inc., 211 F. 2d 785 (10 Cir. 1954); Ryan Mercantile Co. v. Great Northern Railroad Co., 186 F. Supp. 660 (D. Mont. 1960); New York Central Railroad Co. v. General Motors Corp., 182 F. Supp. 273 (N. D. Ohio 1960). 2Martin v. American Optical Co., 184 F.2d 528 (5 Cir. 1950) ; Wade v. Park View, Inc., 25 N.J. Super. 433, 96 A.2d 450 (1953) ; Crowell v. Eastern Airlines, 240 N.C. 20, 81 S.E.2d 178 (1954); Dedol v. The Hallack & Howard Lumber Co., et al, 226 F.2d 526 (9 Cir. 1955); Simmons v. Columbus Venetian Ste- vens Buildings, Inc., 20 Il. App.2d, 155 N.E.2d 372 (1958) ; Burns v. N. & L. Realty Corp., 160 F. Supp. 203 (W.D. Pa. 1958). 3George M. Brewster & Son v. Catalytic Construc- tion Co., 17 N.J. 20, 109 A.2d 805 (1954); James Stewart & Co., Inc. v. H. B. Mobley, 282 S.W.2d 290, Tex. (1955); Bernardo v. Fordham Hoisting Equip- ment Co., et al, 6 A.D.2d 619, 180 N.Y.S.2d 525 (1958). 4Thompson-Starrett Co., Inc. v. Otis Elevator Co., 271 N.Y. 36, 2 N.E.2d 35, 37 (1936). 5County of Alameda v. Southern Pacific Co., et al, 4 Cal. Rptr. 807, 813 (1960); Cozzi v. Owens Corn- ing Fiber Glass Corp., et al, 59 N.J. Super. 570, 158 A.2d 231, 234 (1960). CHARLES F. BACHMANN is Assistant General Attor- ney of Liberty Mutual In- surance Company. He re- ceived his A.B. and LL.B. degrees from Fordham University and is admitted -to practice in the New York, Massachusetts and Federal Courts. Mr. Bach- mann is a member of the Boston Bar Association and the American Bar As- sociation and is a member of the Section of Insur- ance, Negligence and Compensation Law of the lat- ter association. has held that Under New York law, a per- son is not entitled to be indemnified against the liability to which his own active negli- gence contributed unless the contract ex- presses that intention beyond all doubt. The text writers usually say that the rule of strict construction will generally be ap- plied.7 Despite this, there are jurisdictions that have determined that a compensated in- demnitor . . . should not be able to assert the strict construction of the rule against the indemnitee.' Following the same line, the Massachusetts court says that such agree- ments . . . are to be fairly and reasonably construed in order to ascertain the inten- tions of the parties and to effectuate the purpose sought to be accomplished.0 A federal court in Michigan has stated that ... It is not necessary to use the word 'neg- ligence' in order to express the intention.1o On the other hand, one judicial school of thought holds that recoupment for loss 6Miller v. The Pensylvania Railroad Co., 236 F.2d 295, 298 (2 Cir. 1956). 7Annotation 175 A.L.R. 12, at page 144, Section 68. SEmery v. Metzner, et al, 191 Pa. Super. 440, 156 A.2d 627, 631 (1959). 9New York, New Haven & Hartford Railroad Co. v. Walworth Co., 59 AS 1421 (Mass), 162 N.E.2d 789, 791 (1959). l0General Accident Fire & Life Assurance Corp., Ltd. v. Smith and Oby Co., 272 F.2d 581 (6 Cir. 1959). October, 1961 Page 617

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