Summary of Hales v. Green Colonial, U. S. D. Ct [1975]

Contribution and Indemnity

Relevant Facts: PL, Hales contacted a plumbing and heating specialist about installing a heating unit in his retail store.  The plumber, Munroe, ordered two Peerless LP gas heating units from Green Colonial.  Green ordered the units from its distributor IPS.  IPS supplied one propane heater and one natural gas heater.  The heaters were designed and manufactured by Dover. They were installed by Munroe, but he modified one so that it could be used w/ LP gas by using conversion kit provided by Dover.  Afterward Pl noticed popping and exploding noises coming from the heater.  A mo later the unit caused a fire which completely destroyed pl’s store.

Legal Issue(s): Whether IPS and Green, who have been held strictly liable for selling a defective product, may seek indemnity from Dover the designer and manufacturer of the product?

Court’s Holding: Yes

Procedure: IPS and Green submit Summary on Cross Claim seeking Indemnity against Dover.  Granted.

Law or Rule(s): Indemnity shifts the entire liability from one tortfeasor who has been compelled to pay damages to another joint tortfeasor who should bear it.  The right of indemnity may arise by means of a contractual agreement or by operation of law.  Non-contractual indemnity is allowed in Missouri only if the joint tortfeasors are not in equal fault.

Court Rationale: Failure by the one secondarily liable to discover or correct a dangerous condition, indemnity is allowed against a manufacturer and in favor of an employer who negligently failed to discover a defect and became liable to an employee injured by the product. The right of a retailer and distributor to assert a cross claim for indemnity against the manufacturer of an allegedly defective product where all three were joined as dfs has been upheld in MO.  IPS and Green must have had actual knowledge of the defect prior to the sale to PL.  Mere negligence in failing to discover the defect will not prevent them from recovering under indemnity against Dover.

Evidence at trial failed to establish any actual knowledge of either defect on the part of IPS or Green. They may have had knowledge that the heater was not working properly, but they did not have knowledge of the defects alleged and found.

Plaintiff’s Argument: IPS and Green did not have actual knowledge of the defect and therefor did not have active fault in the injury.

Defendant’s Argument: (Dover) IPS and Green were actively at fault b/c they participated in making the danger effective as to the pl.  They furnished a natural gas heater rather than a LP heater, and they failed to advise against using the larger heater when it was apparent it was not working properly.