69 Cal. 2d 33, 69 Cal. Rptr. 561, 564, 566, 567-68, 442 P.2d 641, 644, 645-46 (1968)
In 1960, defendant G.W. Thomas Drayage & Rigging Co. entered into a contract with plaintiff Pacific Gas & Electric Co. to furnish the labor and equipment necessary to remove and replace the upper metal cover of plaintiff's steam turbine.1
Under the contract defendant agreed to perform the work at its own risk and expense and to indemnify plaintiff against all loss, damage, expense and liability resulting from injury to property arising out of or connected with performance of the contract.2 Defendant also agreed to procure at least $50,000 in insurance covering liability for injury to property, with plaintiff named as an additional insured under a policy containing a cross-liability clause.3
During performance of the work the cover fell and injured the exposed rotor of the turbine.4 Plaintiff spent $25,144.51 on repairs and brought suit to recover that amount under the indemnity clause.5 At trial plaintiff dismissed its negligence count and obtained judgment on the theory that the indemnity provision covered injury to plaintiff's own property.6
Defendant offered to prove through admissions of plaintiff's agents, defendant's conduct under similar contracts with plaintiff, and other evidence that the parties intended the indemnity clause to cover only injury to third-party property.7 The trial court refused to admit any extrinsic evidence, held that the plain language of the agreement required indemnification for injury to plaintiff's property, and entered judgment for plaintiff.8
To prove the amount of damages sustained, plaintiff presented invoices received from Ingersoll-Rand, the manufacturer and repairer of the turbine, the drafts by which plaintiff had remitted payment, and testimony that payment had been made.9 Plaintiff called a mechanical engineer who qualified as an expert witness on the repair of turbines.10
Whether the trial court erred in refusing to admit extrinsic evidence offered to prove the parties' intended meaning of the indemnity clause?11
The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and ambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.12 Rational interpretation requires at least a preliminary consideration of all credible evidence offered to prove the intention of the parties.13
Yes. The trial court refused to consider extrinsic evidence offered to show that the indemnity clause in the contract was not intended to cover injuries to plaintiff’s property.14 Defendant offered to prove by admissions of plaintiff’s agents, by defendant’s conduct under similar contracts entered into with plaintiff, and by other proof that in the indemnity clause the parties meant to cover injury to property of third parties only. Although the trial court observed that the language used was the classic language for a third party indemnity provision, it nevertheless held that the plain language of the agreement also required defendant to indemnify plaintiff for injuries to plaintiff’s property.15
Since the clause was reasonably susceptible of the meaning contended for by defendant, the offered evidence was admissible to prove that the clause had that meaning and did not cover injuries to plaintiff’s property.16
The trial court erred in excluding the extrinsic evidence, requiring reversal of the judgment.17
Whether the jury instruction correctly required all four specified conditions to exist before relieving the indemnitor of liability?18
No. On the theory that the indemnity clause covered plaintiff’s property, the trial court instructed the jury that plaintiff was entitled to recover unless all of the following conditions were found to exist: that Pacific Gas and Electric Company continued to maintain independent operation on the premises, that the damage was unrelated to defendant’s performance, that the plaintiff was guilty of active affirmative negligence, and that such active negligence related to a matter over which the plaintiff exercised exclusive control.21 Those cases do not hold that all four conditions specified in the instruction must exist for the indemnitor to be relieved of liability.22 It is sufficient if the indemnitee’s own active negligence is a cause of the harm.
The jury instruction was erroneous because it required all four conditions rather than merely causation by the indemnitee’s active negligence.23
Whether invoices from a third-party repairer are admissible to prove that the specific repairs listed were actually performed?24
Since invoices, bills, and receipts for repairs are hearsay, they are inadmissible independently to prove that the specific repairs were made.25 An invoice submitted by a third party is not admissible evidence on this issue unless it can be admitted under some recognized exception to the hearsay rule.26
No. To prove the amount of damages sustained, plaintiff presented invoices received from Ingersoll-Rand, the manufacturer and repairer of the turbine.27 The individual items on the invoices were read not to corroborate payment or the reasonableness of the charges but to prove that these specific repairs had actually been made.28 No qualified witness was called to testify that the invoices accurately recorded the work done by Ingersoll-Rand, and there was no other evidence as to what repairs were made.29 This use of the invoices was error.30
The invoices were inadmissible to prove that the specific repairs listed were actually performed.31
Whether expert testimony on the reasonableness of repair charges may rely on hearsay evidence that the repairs were made?32
An expert must base his opinion either on facts personally observed or on hypotheses that find support in the evidence.33
No. Plaintiff called a mechanical engineer who qualified as an expert witness on the repair of turbines.34 On the basis of photographs of the damage after the accident, the expert testified that the amounts charged for the repairs listed in the invoices were reasonable.35 Since the invoices were inadmissible to prove that the repairs had been made, the expert’s testimony as to the reasonableness of the charges was based on hearsay evidence inadmissible to prove that the repairs had been made.36 Defendant’s objections to it should have been sustained.37
The expert testimony on the reasonableness of the charges was improperly admitted because it relied on inadmissible hearsay.38