decided: March 9, 1970.
SECKINGER, TRADING AS M. O. SECKINGER CO.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.
Burger, Black, Douglas, Harlan, Brennan, Stewart, White, Marshall
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MR. JUSTICE BRENNAN delivered the opinion of the Court.
This case concerns the construction of a provision common to fixed-price government construction contracts that states that the private contractor "shall be responsible for all damages to persons or property that occur as a result of his fault or negligence . . . ." The Court of Appeals for the Fifth Circuit held that the provision could not be construed to allow the Government to recover from the contractor damages suffered by the Government on account of its own negligence. 408 F.2d 146 (1969). We granted certiorari because of the large amount of litigation that this contract clause has produced*fn1 and because of the divergent results that the lower courts have reached in construing the same or similar provisions.*fn2 396 U.S. 815 (1969). We reverse.
The United States had entered into a contract with the Seckinger Company for the performance of certain plumbing work at a United States Marine base in South Carolina. While working on this project, one of Seckinger's employees was directed by his foreman to assist a fellow employee on a particular section of pipe that had been partially constructed above a street. About four or five feet above the place where the employee was working, there was an electric wire that carried 2,400 volts of electricity. The employee accidentally
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came into contact with the wire, was thrown to the ground 18 feet below, and was seriously injured.
The injured employee recovered benefits under South Carolina's workmen's compensation law, S. C. Code Ann. §§ 72-1 to 72-504 (1962), and then commenced a suit in the Eastern District of South Carolina against the United States under the Federal Tort Claims Act, 28 U. S. C. §§ 2671-2680, on the theory that his injuries had been sustained as the proximate result of the Government's negligence. The United States, relying on the contract clause, moved to implead Seckinger as a third-party defendant. This motion was denied on the ground that the addition of Seckinger would "unnecessarily and improperly complicate the issues."*fn3
On the merits, the South Carolina District Court found that the United States had customarily de-energized its electric wires whenever Seckinger employees were required to work dangerously near them. The court therefore held that the United States had been grossly negligent in failing to de-energize the wire in this particular case. Alternatively, the Government was held to have been negligent in failing to advise Seckinger's employees that the electric wire had not been de-energized. Concluding also that the employee had in no way contributed to his injury, the District Judge ordered that he recover a judgment against the United States in the amount of $45,000 plus costs. No appeal was taken from this judgment of the District Court.*fn4
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Thereafter, the United States proceeded to the District Court for the Southern District of Georgia and commenced the instant suit against Seckinger. The complaint alleged that Seckinger's negligence was solely responsible for its employee's injuries*fn5 and that therefore the United States should be fully indemnified for the judgment which it had satisfied. In a second count, the Government alleged that Seckinger, having undertaken to perform its contract with the United States, was obligated "to perform the work properly and safely and to provide workmanlike service in the performance of said work."
The District Court granted Seckinger's motion to dismiss the complaint on the alternative grounds, first, that the suit was barred by the prior litigation in South Carolina and, second, that the contractual language was not sufficiently broad to permit the Government to recover indemnification for its own negligence. The Court of Appeals rejected the first ground of decision,*fn6 but sustained
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the holding that any recovery on the contract was foreclosed to the United States because its negligence had contributed substantially to the injury. The Court of Appeals held that, under the "majority rule," an indemnitee cannot recover for his own negligence in the absence of a contractual provision which unmistakably authorizes this result. Since the contract here did not unequivocally command that the Government be indemnified for its own negligence, and because the injuries in question were thought to have been caused by the "active direct negligence" of the Government with no more than a "slight dereliction" on the part of Seckinger, no recovery whatsoever on the contract would be permitted to the United States.*fn7
In the Government's view, this construction of the clause renders it a nullity, for the United States can never be held liable in tort under the Tort Claims Act or otherwise in the absence of negligence on the part of its agents. Thus, so the argument goes, the contractual provision in question can have meaning only in a context in which both the United States and the contractor are jointly negligent.*fn8 In that circumstance, the contractor would be obligated to sustain the full burden of ultimate liability for the injuries produced. Alternatively, the Government suggests that it is entitled
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to indemnity on a comparative basis to the extent that the negligence of Seckinger contributed to its employee's injuries.
In the posture in which this case reaches us, the historical background of the clause*fn9 and evidence concerning the actual intention of these particular parties with respect to that provision are sparsely presented. We do know that the clause was required in government fixed-price construction contracts as early as 1938.*fn10 This fact merely precipitates confusion, however, because it was not until the passage of the Tort Claims Act in 1946, §§ 401-424, 60 Stat. 842, as amended, 28 U. S. C. §§ 2671-2680, that the United States permitted recovery in tort against itself for the negligent acts of its agents. Viewed in the pre-Tort Claims Act context, the purpose of the clause is totally unclear except, perhaps, as an exercise in caution on the part of the government draftsmen, or, conceivably, as an attempt to insulate government agents from liability in their private capacities if their negligence arguably combined with that of the contractor to produce a given injury.
In American Stevedores, Inc. v. Porello, 330 U.S. 446 (1947), we had before us a contractual provision that was similar to that involved here. There we noted that
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the clause was susceptible of several different constructions, 330 U.S., at 457-458, and remanded the case to the District Court to ascertain the intention of the parties with respect to the clause. It does not appear that a similar course of action would be fruitful in the instant case. In Porello there were clear indications from the parties that further evidentiary proceedings in the District Court would shed light on the actual intention of the parties.*fn11 Here, by contrast, there is not only no representation that further proceedings would aid in clarifying the intentions of the parties, but there is at least tacit agreement that the background of the clause has been explored as thoroughly as possible. In these circumstances, we have no alternative but to proceed directly to the contractual construction problem.
Preliminarily, we agree with the Court of Appeals that federal law controls the interpretation of the contract. See United States v. County of Allegheny, 322 U.S. 174, 183 (1944);*fn12 Clearfield Trust Co. v. United States, 318 U.S. 363 (1943). This conclusion results from the fact that the contract was entered into pursuant to authority
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conferred by federal statute and, ultimately, by the Constitution.*fn13
In fashioning a federal rule we are, of course, guided by the general principles that have evolved concerning the interpretation of contractual provisions such as that involved here. Among these principles is the general maxim that a contract should be construed most strongly against the drafter, which in this case was the United States.*fn14 The Government seeks to circumvent this principle by arguing that it is inapplicable unless there is ambiguity in the contractual provisions in dispute and there exists an alternative interpretation that is, "under all the circumstances, a reasonable and practical one." Gelco Builders & Burjay Const. Co. v. United States, 177 Ct. Cl. 1025, 1035, 369 F.2d 992, 999-1000 (1966). The Government itself, however, has proffered two mutually inconsistent interpretations of the contract clause. To be sure, one of them is pressed with considerably more enthusiasm than the other. The Government, nevertheless, must be taken implicitly to have
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conceded (a) that the clause is not without ambiguity and (b) that there is an alternative construction of the clause that is both "reasonable and practical." Even in the Government's view of the matter, therefore, there is necessarily room for the construction-against-drafter principle to operate.
More specifically, we agree with the Court of Appeals that a contractual provision should not be construed to permit an indemnitee to recover for his own negligence unless the court is firmly convinced that such an interpretation reflects the intention of the parties. This principle, though variously articulated, is accepted with virtual unanimity among American jurisdictions.*fn15 The
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traditional reluctance of courts to cast the burden of negligent actions upon those who were not actually at fault*fn16 is particularly applicable to a situation in which there is a vast disparity in bargaining power and economic resources between the parties, such as exists between the United States and particular government contractors. See United States v. Haskin, 395 F.2d 503, 508 (C. A. 10th Cir. 1968).
In short, if the United States expects to shift the ultimate responsibility for its negligence to its various contractors, the mutual intention of the parties to this effect should appear with clarity from the face of the contract. We can hardly say that this intention is manifested by the formulation incorporated into the present contract.*fn17 By its terms Seckinger is clearly liable for its negligence, but the contractual language cannot readily
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be stretched to encompass the Government's negligence as well.*fn18
On the other hand, we must not fail to accord appropriate consideration to Seckinger's clear liability under the contract for " all damages" that resulted from its "fault or negligence." (Emphasis added.) The view adopted by the Court of Appeals, and now urged by Seckinger, would drain this clause of any significant meaning or protection for the Government, and, indeed, would tend to insulate Seckinger from potential liability
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in any circumstance in which any negligence is also attributable to the United States. Whatever may have been the actual intention of the parties with respect to the meaning of the clause, it is extremely difficult to believe that they sought to utilize this contractual provision to reduce Seckinger's potential liability under common law or statutory rules of contribution or indemnity.*fn19 Yet, that is arguably the result if the clause is
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interpreted to mean that Seckinger's liability is limited to situations in which it, as opposed to the United States, is the sole negligent party.
Furthermore, in this latter situation, it is perfectly clear that, both before and after the passage of the Tort Claims Act, the United States could not, in any event, be charged with liability in the absence of negligence on its part. In short, the construction of the clause adopted by the Court of Appeals tends to narrow Seckinger's potential liability and, also, limits its application to circumstances in which no doubt concerning Seckinger's sole liability existed. In the process, considerable violence is done to the plain language of the contract that Seckinger be responsible for all damages resulting from its negligence.
A synthesis of all of the foregoing considerations leads to the conclusion that the most reasonable construction of the clause is the alternative suggestion of the Government, that is, that liability be premised on the basis of comparative negligence.*fn20 In the first place, this interpretation is consistent with the plain language of the clause, for Seckinger will be required to indemnify the United States to the full extent that its negligence, if any, contributed to the injuries to the employee.
Secondly, the principle that indemnification for the indemnitee's own negligence must be clearly and unequivocally indicated as the intention of the parties is
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preserved intact. In no event will Seckinger be required to indemnify the United States to the extent that the injuries were attributable to the negligence, if any, of the United States. In short, Seckinger will be responsible for the damages caused by its negligence; similarly, responsibility will fall upon the United States to the extent that it was negligent.
Finally, our interpretation adheres to the principle that, as between two reasonable and practical constructions of an ambiguous contractual provision, such as the two proffered by the Government, the provision should be construed less favorably to that party which selected the contractual language. This principle is appropriately accorded considerable emphasis in this case because of the Government's vast economic resources and stronger bargaining position in contract negotiations.*fn21
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For these reasons, we reverse the judgment of the Court of Appeals and remand this case to the District Court for further proceedings consistent with this opinion.*fn22
Reversed and remanded.
MR. JUSTICE MARSHALL took no part in the consideration or decision of this case.
408 F.2d 146, reversed and remanded.
MR. JUSTICE STEWART, with whom THE CHIEF JUSTICE and MR. JUSTICE DOUGLAS join, dissenting.
The standard form that the Government uses for its fixed-price construction contracts has long contained a single sentence saying that the contractor "shall be responsible
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for all damages to persons or property that occur as a result of his fault or negligence in connection with the prosecution of the work."*fn1 For more than 30 years it has evidently been understood that these words mean what they rather clearly say -- that the contractor cannot hold the Government for losses he incurs resulting from his own negligence.*fn2 The provision, in short, is what the Court of Appeals called "a simple responsibility clause." 408 F.2d 146, 148.*fn3 But today this innocuous boilerplate language is turned inside out. For the Court says that the provision really is a promise by the contractor to reimburse the Government for losses it incurs resulting from its negligence.
To be sure, the Court does not go quite so far as to hold that this obscure clause operates as a complete liability insurance policy. But the Court does hold that the clause requires the contractor to indemnify the Government "to the full extent that its negligence, if any, contributed to the injuries to the employee." The magnitude of the burden the Court imposes is well illustrated
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by the circumstances of this case. Here an employee of the contractor was injured in the scope of his employment on plumbing work that the contractor was performing at the Paris Island Marine Depot in South Carolina. The employee recovered from the contractor the benefits to which he was entitled under the state workmen's compensation law. The employee then sued the Government under the Federal Tort Claims Act, claiming that his injuries had actually been caused by the Government's negligence. The Federal District Court agreed, finding that the negligence of the United States was the "sole cause" of the employee's injuries and awarding him $45,000 in damages. The Court today says that the United States can now recover an indeterminate portion of this $45,000 from the contractor, because the contractor has agreed to "indemnify the United States . . . ."
Despite intimations in the Court's opinion to the contrary, we do not deal here with "common law or statutory rules of contribution or indemnity."*fn4 The only question the Court decides is the meaning of the words of a clause in a government contract.*fn5 I think the
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meaning attributed to that clause today is as unconscionable as it is inaccurate.
The clause first appeared in government contracts at least eight years before the enactment of the Federal Tort Claims Act in 1946. Before the passage of that Act the United States could not be sued in tort for personal injuries. Thus there was absolutely no reason for the Government to secure for itself a right to recovery over against an alleged joint tortfeasor. Yet we are asked to believe that the drafter of this clause was so prescient as to foresee the day of government tort liability nearly a decade in the future, and so ingenious as to smuggle a provision into a standard contract form that would, when that day arrived, allow the Government to shift its liability onto the backs of its contractors. This theory is nothing short of incredible.
In drafting its construction contracts the United States certainly has both the power and the resources to write contracts providing expressly that it will pass off onto its contractors, either in whole or in part, liability it incurs for damages caused by its own judicially determined negligence. The Government could require its contractors to hold it harmless without regard to fault on their part, or it could establish a proration of liability arising from the joint negligence of the parties. But the contractual provision before us does neither. It no more says that the contractor shall reimburse the Government for his share of joint negligence than that he shall be a liability insurer for the Government's sole negligence.
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The Court nonetheless manages to discover that the clause amounts to a contribution agreement, relying for its conclusion upon cases involving, not the simple responsibility clause before us, but express indemnification agreements with "hold harmless" clauses.*fn6 This result is said to be desirable because it ensures a fair distribution of loss between those jointly responsible for the damage. But when Seckinger entered into this contract, it had every reason to expect that its liability for injuries to its employees would be limited to what is imposed by the South Carolina compensation law. That law relieved it of responsibility in tort in exchange for its guarantee that its employees would recover without regard to fault. Presumably its bid on the government project reflected its reasonable expectation that this would be the extent of its liability on account of employee accidents. Now the Court heaps an unforeseen federal contractual burden atop the requirement the State has already imposed.*fn7
If the Government wants to impose additional liabilities upon those with whom it contracts to do its work, I would require it to do so openly, so that every bidder may clearly know the extent of his potential liability. Even in the domain of private contract law, the author of a standard-form agreement is required to state its terms with clarity and candor.*fn8 Surely no less is required
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of the United States of America when it does business with its citizens.*fn9
Mr. Justice Holmes once said that "men must turn square corners when they deal with the Government."*fn10 I had always supposed this was a two-way street. The Government knows how to write an indemnification or contribution clause when that is what it wants. It has not written one here.
I would affirm the judgment.