Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc.

PETITIONER: Transamerican Freight Lines, Inc.
RESPONDENT: Brada Miller Freight Systems, Inc.
LOCATION: Approximate site of car accident

DOCKET NO.: 74-54
DECIDED BY:
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 423 US 28 (1975)
ARGUED: Oct 08, 1975
DECIDED: Nov 12, 1975

ADVOCATES:
Alphonso H. Voorhees - for petitioner
Joseph L. Leritz - for respondents

Facts of the case

In 1968, Brada Miller Freight Systems, Inc. (Brada Miller) agreed to lease a tractor and trailer operated by its employee-driver, H. L. Hardrick, to fellow licensed motor carrier Transamerican Freight Lines, Inc. (Transamerican) for a shipment from Detroit, Michigan, to Kansas City, Missouri. The agreement stated that Transamerican assumed control and responsibility for the operation of the equipment during the lease and that Brada Miller agreed to indemnify Transamerican from any and all claims related to any negligence on the part of Brada Miller or its employees. On the way to Kansas City, the truck collided with another car in Illinois. The injured driver sued both Brada Miller and Transamerican in federal district court and alleged that the accident was caused by Hardrick’s negligence.

Transamerican settled with the driver for $80,000 and then sued Brada Miller seeking indemnification for the settlement amount and costs of litigation. The district court held that the indemnity clause was unenforceable because it was contrary to public policy and granted summary judgment in favor of Brada Miller. On appeal, the U.S. Court of Appeals for the Seventh Circuit affirmed and held that the indemnification clause was an attempt to circumvent regulations promulgated by the Interstate Commerce Commission (ICC) that required carriers to exert actual control and responsibility over leased equipment and borrowed drivers.

Question

Do the “control-and-responsibility” provisions of the Interstate Commerce Commission’s regulations on equipment leasing prohibit an agreement between carriers in which the lessor indemnifies the lessee for a loss caused by the negligence of the lessor?

Media for Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc.

Audio Transcription for Oral Argument - October 08, 1975 in Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc.

Audio Transcription for Opinion Announcement - November 12, 1975 in Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc.

Warren E. Burger:

Mr. Justice Blackmun has an opinion for the Court to announce.

Harry A. Blackmun:

This is No. 74-54, Transamerican Freight Lines against Brada Miller Freight Systems.

The case comes to us from the United States Court of Appeals for the Seventh Circuit in Chicago.

We granted certiorari because of the parent conflict in holdings and in the underlying legal theory among the federal courts and some state supreme courts.

The Interstate Commerce Commission in connection with its regulation of motor carriers, who are operating in interstate commerce, has issued regulations applicable to the leasing of equipment between authorized carriers.

On of these regulations states that the lessor carrier and the lessee carrier must agree in writing that control and responsibility for the operation of the equipment shall be that of the lessee.

The lease between the lessor, Brada Miller, and the lessee, Transamerican, for a tractor trailer for a single trip between Detroit and Kansas City did in fact recite the Transamerican was to have control and responsibility for the operation of the equipment in respect to the public.

The lease also provided, however, that Brada Miller, the lessor, agreed to indemnify Transamerican for claims arising out of Brada Miller’s negligence.

An accident occurred on the trip allegedly due to the negligence of the lessor and a person was seriously injured.

She sued both carriers, and in the litigation, Transamerican offered the defense to Brada Miller.

It was refused and thereafter Transamerican settled the lawsuit with the plaintiff, and then it sought to enforce the indemnification agreement against Brada Miller.

This was resisted on the ground that it was contrary to the control and responsibility provision of the regulation and hence was against public policy.

The District Court and the Court of Appeals granted Brada Miller’s motion for summary judgment on the ground that the indemnification clause contravened the regulation.

We reverse.

We hold that the indemnification agreement does not contravene the Interstate Commerce Commission’s control and responsibility requirement.

And on the facts before us, the lessee had the required control and responsibility for the leased vehicle, and this was so, despite the indemnification clause, relating to the lessor’s negligence.

We also hold that the indemnification provision does not conflict with the Commission’s safety regulations.

Indeed it may promote rather than deter safety.

Consequently, the judgment of the Court of Appeals is reversed and the case is remanded for further proceedings.

I am authorized to say that Mr. Justice Douglas concurs in the judgment.

Warren E. Burger:

Thank you, Mr. Justice Blackmun.