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Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.
Supreme Court of California
69 Cal.2d 33, 442 P.2d 641 (1968)
In 1960, G.W. Thomas Drayage & Rigging Co. (Thomas) (defendant) entered into a contract with Pacific Gas & Electric Co. (PG&E) to provide labor and equipment necessary to remove and replace the upper cover for PG&E’s steam turbine. Thomas agreed to perform the work at its own risk and expense and to indemnify PG&E for any “loss, damage, expense and liability resulting from injury to property” or any other act associated with performance of the contract. During performance, the cover fell and damaged part of the exposed rotor of PG&E’s turbine. PG&E brought suit to recover $25,144.51 in damages. The trial court awarded judgment for PG&E on the ground that Thomas’ indemnity provision protected PG&E from damage to its own property. The trial court concluded that the “plain meaning” of the indemnity provision in Thomas’ contract was to permit indemnification of damage to PG&E’s property in addition to the property of third parties. The trial court admitted no extrinsic evidence on this issue. Thomas appealed, arguing that the extrinsic evidence should be admissible to show that the “plain meaning” of the indemnity clause was that it should only apply to damage of the property of third parties, not PG&E.
Rule of Law
Holding and Reasoning (Traynor, C.J.)
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