## Facts

- Chrysler hired W.J.C. Kaufmann Construction Co. to fabricate and install metal plate covers over an underground oil reservoir under a 1969 purchase order incorporating general conditions, including an indemnity clause benefiting Chrysler for injuries related to Kaufmann’s work.
- Chrysler separately hired Markward & Karafilis, Inc. to build an addition to the same building; Kaufmann’s plates were treated as substructure and Markward’s work as superstructure.
- Chrysler sent Kaufmann a letter stating Kaufmann’s contract was being “assigned” to Markward for “overall administration and coordination,” while Chrysler would continue to pay Kaufmann directly; Kaufmann acknowledged the notice.
- In 1976, a Chrysler employee, Charles G. Kingston, was helping replace the metal plates when a plate slipped; he fell into the reservoir and died.
- The estate sued Kaufmann and Markward for negligence; the defendants asserted third-party claims against Chrysler, and Markward sought indemnity from Kaufmann based on the 1969 contract and the “assignment.”
- A jury awarded $3,000,000 against Kaufmann and Markward jointly and awarded Markward “total indemnity” against Kaufmann.
- Kaufmann sought JNOV on indemnity; Markward sought a directed verdict establishing indemnity as a matter of law; the trial court denied both motions, leading to consolidated appeals.

## Issues

1. Whether Chrysler’s “assignment” letter and related conduct transferred to Markward the right to enforce Kaufmann’s contractual indemnity obligation.
2. Whether any other theory (contractual or implied) created an indemnity obligation running from Kaufmann to Markward.
3. Whether the trial court erred by denying Kaufmann’s JNOV motion on indemnity and by refusing Markward a directed verdict on indemnity.

## Decision

- The court held Kaufmann owed no indemnity obligation to Markward.
- The court reversed the denial of Kaufmann’s motion for JNOV on the indemnity verdict in Markward’s favor.
- The court rejected Markward’s cross-appeal seeking a directed verdict on indemnity.

## Legal Principles

- Contractual rights may be assignable, but an indemnity obligation and its enforcement in favor of a new party requires clear contractual intent and a legally effective transfer; the word “assignment” in correspondence is not controlling.
- Indemnity provisions are strictly construed and will not be extended to benefit a party not clearly within the contract’s contemplation.
- Administrative coordination of a contractor’s performance, while the original owner remains the payor and contracting party, does not by itself substitute a new indemnitee or create a direct indemnity relationship.

## Conclusion

Because the 1969 indemnity clause was written to protect Chrysler and there was no clear, legally effective transfer making Markward an indemnitee, the jury’s award of total indemnity to Markward lacked a contractual basis; Kaufmann was entitled to JNOV on indemnity, and Markward was not entitled to a directed verdict.


Kingston v. Markward & Karafilis, Inc., 350 N.W.2d 842 (Mich. Ct. App. 1984)