Before KALODNER, HASTIE and GANEY, Circuit Judges.
This litigation began as a wrongful death action under the Federal Employers' Liability Act by the administratrix of the estate of Edward Day against the Pennsylvania Railroad. While working for the defendant railroad as a brakeman, Day had been crushed to death between a moving train and a wall on the premises of Erie Avenue Warehouse Co., where the railroad serviced a siding. A third-party claim, filed by the railroad, a citizen of Pennsylvania, against Erie, also a citizen of Pennsylvania, under Rule 14, Federal Rules of Civil Procedure, 28 U.S.C.A., broadened the suit to include the additional claim that, should the railroad be found legally responsible for Day's death, the amount of any recovery should be recouped, in whole or in part, from Erie under a contract of indemnity. The railroad paid what all parties now recognize as a reasonable sum in settlement of the Day claim and that action was then dismissed. The subsequent trial of the third-party claim resulted in the railroad's recovery from Erie of the full amount of the Day settlement.
The original claim was within federal jurisdiction because it arose under a federal statute, the Federal Employers' Liability Act. But the third-party claim neither arose under a federal statute nor was asserted between citizens of different states. Independently considered, it was not within federal jurisdiction. However the court below ruled that the third-party claim was so "ancillary" to the original proceeding that no jurisdictional basis was required to support it, beyond the federal question jurisdiction that existed with reference to the principal claim. The correctness of that ruling is the first question on this appeal.
Analytically, an "ancillary" claim of the type we now are considering arises solely because of a principal claim and asserts some right pertaining to the judgment sought on the principal claim. More particularly, both principal and "ancillary" claims arise out of the same injury and the "ancillary" claim seeks either to make the judgment effective or to reallocate the liability. In effect, the supplmmental proceeding serves to accomplish full justice with reference to any award made on the principal claim. In the present case, the third-party claim serves to settle a question of liability over as between a principal defendant and a third party without subjecting either to prejudice that might result if the matter should be left to subsequent litigation in a separate action.*fn1
The Supreme Court has long held that the constitutional bounds of federal jurisdiction are not exceeded by broadening an action, that is properly in a federal court, to include various related nonfederal claims that are no more intimately connected with the principal claim than is the obviously dependent and supplementary third-party claim here. Moore v. New York Cotton Exchange, 1926, 270 U.S. 593, 46 S. Ct. 367, 70 L. Ed. 750; Dewey v. West Fairmount Gas Coal Co., 1887, 123 U.S. 329, 8 S. Ct. 148, 31 L. Ed. 179; Stewart v. Dunham, 1885, 115 U.S. 61, 5 S. Ct. 1163, 29 L. Ed. 329. It follows that the entertaining of the present ancillary claim was a permissible exercise of federal jurisdiction.
However, there is the additional question whether the joinder of non-federal claims over against third parties under Rule 14 violates the requirement of Rule 82, Federal Rules of Civil Procedure, that no Rule shall be construed to extend or limit the statutory jurisdiction of the federal courts. We ruled against such a contention in Sheppard v. Atlantic States Gas Co., 3 Cir. 1948, 167 F.2d 841. Such square holdings as there are in other circuits decide that the addition of claims like the present one does not enlarge federal jurisdiction. Dery v. Wyer, 2d Cir. 1959, 265 F.2d 804; United States v. Acord, 10th Cir. 1954, 209 F.2d 709; Waylander-Peterson Co. v. Great Northern Ry., 8th Cir. 1953, 201 F.2d 408, 37 A.L.R.2d 1399. This conclusion may be justified by demonstrating that analogous or no more closely related non-federal claims were litigated as controversies incidental to federal suits without independent jurisdictional bases before th adoption of the present Rules.
It has long been familiar federal practice to entertain an "ancillary" claim without independent jurisdictional basis, if that claim seeks either to make a principal judgment effective or to make some lawfully required reallocation of the burden imposed by the principal recovery. Such a supplemental proceeding may serve to effectuate a principal judgment by restraining a third person from interfering with its operation. Supreme Tribe of Ben-Hur v. Cauble, 1921, 255 U.S. 356, 41 S. Ct. 338, 65 L. Ed. 673. It may achieve full justice by bringing into a suit a third party who should be required to pay the judgment on a claim because of a transfer of property to him in fraud of creditors. Dewey v. West Fairmount Gas Coal Co., supra.
Again, it was familiar practice before the adoption of the present Rules to permit a person whose interest might be affected by the outcome of a diversity case to intervene, regardless of the intervenor's citizenship. Phelps v. Oaks, 1886, 117 U.S. 236, 6 S. Ct. 714, 29 L. Ed. 888 (landlord intervening in suit against tenant); Stewart v. Dunham, supra (additional creditors intervening to share benefits of a creditors' bill). Such intervenors are no more seriously affected by outcome of the principal litigation than is a prospective indemnitor of the defendant. In principle, therefore, an indemnitor's voluntary intervention would be no enlargement of the jurisdiction exercised in the above cited cases. To permit the principal defendant now under Rule 14 to compel his indemnitor to become a party is merely to adopt a new procedure that gives the litigation no broader scope than it could formerly have been given through intervention. We are satisfied no violation of Rule 82 is involved in this case.
The question remains whether the settlement of the principal claim and its consequent formal dismissal with prejudice terminated the power of the court to decide the "ancillary" third-party claim. The Supreme Court has from time to time considered the effect of the termination of principal claims upon judicial power to adjudicate pending ancillary claims. When the dismissal of the principal claim has been because the court lacked power from the outset to entertain it, dismissal of the ancillary claim has also been required. Kelleam v. Maryland Casualty Co., 1941, 312 U.S. 377, 61 S. Ct. 595, 85 L. Ed. 899; A. Leschen & Sons Rope Co. v. Broderick & Bascom Rope Co., 1906, 201 U.S. 166, 26 S. Ct. 425, 50 L. Ed. 710; cf. St. Louis I.M. & So. Ry. v. McKnight, 1917, 244 U.S. 368, 37 S. Ct. 611, 61 L. Ed. 1200. But when the principal claim has been defeated on its merits, power to adjudicate pending ancillary matters has been held to survive. Hurn v. Oursler, 1933, 289 U.S. 238, 53 S. Ct. 586, 77 L. Ed. 1148; Moore v. New York Cotton Exchange, 1926, 270 U.S. 593, 46 S. Ct. 367, 70 L. Ed. 750; cf. Hardenbergh v. Ray, 1894, 151 U.S. 112, 14 S. Ct. 305, 38 L. Ed. 93; Mollan v. Torrance, 1824, 9 Wheat. 537, 22 U.S. 537, 6 L. Ed. 154. It is logical and eminently fair that the present case, where settlement of the principal claim is not substantially different from recovery upon it in creating a need to adjudicate forthwith the ancillary issue of recovery over, be treated like a disposition on the merits. Dery v. Wyer, supra.
This is not to decide that a trial judge would lack discretionary power to dismiss an ancillary claim for policy considerations growing out of the disposition made of the principal claim. But no such adverse policy consideration is urged in this case. Moreover, in refusing to dismiss the ancillary claim the court below pointed out that interrogatories had been filed and answered and other pre-trial steps had been taken in connection with the third-party claim before its dismissal was moved. In all the circumstances, it was reasonable and proper to retain jurisdiction of the third-party claim.
We next state the facts essential to the disposition of this appeal on its merits. The accident in controversy occurred during the execution of a switching operation by the railroad over an industrial siding located on property leased and occupied by Erie. The decedent, Day, was working as a railroad brakeman when his head became wedged and was crushed between the side of a moving boxcar and a concrete retaining wall, a permanent structure close to the sidetrack. The accident occurred in an area where a funnel-like narrowing of the space between the sidetrack and the adjacent retaining wall rather abruptly reduced the lateral clearance of a moving boxcar from 31 inches to a mere 7 inches in approximately 15 feet. This means that the lateral clearance between the track itself and the wall was reduced to less than 3 feet at this point. The trial court found, with ample justification in the evidence, that Day's death resulted from an inadequate and unsafe clearance along side the track. The industrial siding was an old one, and the close clearance in question had existed in 1955, when the railroad contracted to provide Erie with service, and remained unchanged until the fatal accident occurred in 1957.
The trial court ruled and it is not disputed now, that under the Federal Employers' Liability Act the railroad breached its duty to provide its employee Day with a safe place to perform his duties as a brakeman. Accordingly, the railroad properly paid reasonable damages for Day's death in settlement of the principal claim. The matter in dispute is Erie's liability over. This depends upon the legal interpretation and effect of certain indemnity provisions of the agreement between Erie and the railroad under which the siding was used. The trial court, sitting without a jury, awarded the railroad full indemnity, and Erie has appealed.
The agreement in question was drafted by the railroad and signed by both parties on July 28, 1955. The text of paragraphs 7, 8 and 9 of the agreement is set out in the margin.*fn2 It will be observed that paragraph 7 explicitly requires Erie to "maintain on its property a clear and safe space above and on each side of the side track sufficient to insure the safety of employees and equipment of the Railroad Company * * * [and to] indemnify and save harmless the Railroad Company from loss, damage and expense for failure so to do." A similar but more general provision in paragraph 9 requires that the Industry shall "indemnify and hold harmless the Railroad Company for loss, damage and injury of any ...