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CHICAGO CENT. v. UNION PACIFIC2/19/1997
n of a contracting "party"), the term could be understood to describe only strangers to the contract.
In reading the contract as a whole, we hold the indemnity clause covers only damages to persons not a party to the contract. This means that under the indemnity clause Chicago could recover for damages it paid to third parties injured, such as payments made for damaged and destroyed rail cars owned by other lines and damages to a farmer's derailment-related injury to his field, but not for damages suffered by the parties to the contract, Chicago, Union and Commonwealth.
The coal contract therefore does not modify the duty of Chicago under AAR rule 95 to pay Union for damage and destruction of Union-owned rail cars. Thus Chicago cannot recover for amounts it paid to Union under those rules. This conclusion requires reduction of the trial court judgment by $60,731.12, which represents damages for Chicago's payments to Union pursuant to the AAR rules.
IV. Turning to the cross-appeal, we have already resolved Chicago 's first contention (that it should recover the full amount it paid to Union for damages and destruction of Union-owned rail cars) by holding that Chicago is not entitled to any recovery of these payments.
Chicago 's second claim is that it should be able to recover from Union for the coal lost and damaged in the derailment. The trial court held that the coal contract placed the risk of loss for damaged and lost coal on the party in possession of the coal at the time of the loss, in this case Chicago. The coal contract provides in relevant part:
Railroads shall be liable for any Coal loss or damage (including contamination or degradation) while Coal is in their possession, except that Railroads shall not be liable for loss of Coal caused by negligence of Shipper or its agent.
"Shipper" is defined in the coal contract as Commonwealth.
We think the trial court correctly interpreted this clause as an assignment of the risk of coal loss or damage to the railroad in possession of the coal. Here Chicago was in possession at the time of the derailment and thus assumed all risk for lost or damaged coal. We thus reject Chicago's contentions on the cross-appeal.
V. What we have said renders various contentions moot. Union claims the trial court erred in refusing to order arbitration under the AAR rules. However, assuming Union had a right to arbitration, the arbitration would have concerned only the amount of damage sustained by Union-owned rail cars. Because we hold that Chicago cannot [558 NW2d Page 719]
recover for these damages, this claim is moot.
Challenged evidentiary rulings either were within the trial court's discretion or rendered moot by reason of our disposition.
The case must be remanded for an order reducing Chicago 's judgment by $60,731.12.
AFFIRMED IN PART AND REVERSED IN PART ON APPEAL; AFFIRMED ON CROSS-APPEAL.
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