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Mack Trucks Inc. v. Bendix-Westinghouse Automotive Air Brake Co.

decided: December 15, 1966.

MACK TRUCKS, INC., APPELLANT,
v.
BENDIX-WESTINGHOUSE AUTOMOTIVE AIR BRAKE COMPANY, V. LATROBE DIE CASTING COMPANY, THIRD-PARTY DEFENDANT



McLaughlin, Hastie and Freedman, Circuit Judges. Freedman, Circuit Judge (dissenting).

Author: Hastie

Opinion OF THE COURT

HASTIE, Circuit Judge.

This is an action for indemnity. It is of federal cognizance solely under diversity jurisdiction. The District Court for the Western District of Pennsylvania dismissed the action as barred by the statute of limitations. This appeal followed.

The claim for indemnity arose in this way. Bendix-Westinghouse Automotive Air Brake Co. sold brake pedal assemblies, manufactured for it by Latrobe Die Casting Co., to Mack Trucks, Inc., for incorporation in vehicles manufactured by Mack. A truck, incorporating such a brake assembly, was sold to a resident of Florida. While the vehicle was being operated in Florida, the brake assembly broke, causing an accident. A person injured in the accident sued Mack and the operator of the truck in a Florida court and recovered a judgment for $13,028.95, which Mack paid. A formal "Satisfaction of Judgment", duly executed by counsel, was filed and entered in the records of the Florida court on June 30, 1960.

Mack gave Bendix timely notice of the Florida suit, although Florida procedural rules prevented the joining of Bendix as an additional defendant. However, it was not until October 10, 1963, more than three years after the satisfaction of the Florida judgment, that Mack brought this suit for indemnity against Bendix in the Western District of Pennsylvania. Bendix joined Latrobe as a third-party defendant.

One defense was the statute of limitations. Since this was a diversity case, the district court, no different from a Pennsylvania state court, was obligated to apply Pennsylvania choice of law rules to determine what statute of limitations was applicable. Guaranty Trust Co. of New York v. York, 1945, 326 U.S. 99, 65 S. Ct. 1464, 89 L. Ed. 2079. In most situations, Pennsylvania courts apply the statute of limitations of the forum. Freeman v. Lawton, 1946, 353 Pa. 613, 46 A.2d 205; Rosenzweig v. Heller, 1931, 302 Pa. 279, 153 A. 346. However, there is a statutory exception to this rule. Pennsylvania courts must respect and apply the following Pennsylvania "borrowing" statute:

"When a cause of action has been fully barred by the laws of the state or country in which it arose, such bar shall be a complete defense to an action thereon brought in any of the courts of this commonwealth." 12 P.S. ยง 39.

Thus, if this "cause of action * * * arose" in Florida, reference must be made to the appropriate Florida statute of limitations. Mangene v. Diamond, 3d Cir. 1956, 229 F.2d 554. The district court concluded that the cause of action arose in Florida. We agree.

The concept of "the arising of a cause of action" is used frequently to systematize and facilitate the application of statutes of limitations. Usually, the problem is to determine when the statute begins to run. In this context, the familiar rule is that the statute begins to run when the cause of action arises, as determined by the occurrence of the final significant event necessary to make the claim suable. Foley v. Pittsburgh-Des Moines Co., 1949, 363 Pa. 1, 68 A.2d 517; Bell v. Brady, 1943, 346 Pa. 666, 31 A.2d 547; Shaffer's Estate, 1910, 228 Pa. 36, 76 A. 716. With reference to claims for indemnification for loss, this means that the cause arises when the plaintiff sustains the loss for which he can claim indemnification. Chicago, R.I. and Pacfic Ry. v. United States, 7th Cir. 1955, 220 F.2d 939; Northwest Airlines, Inc. v. Glenn L. Martin Co., D.Md. 1958, 161 F. Supp. 452; Hidick v. Orion Shipping & Trading Co., S.D.N.Y.1957, 157 F. Supp. 477; Globe Indemnity Co. v. Larkin, 1944, 62 Cal.App.2d 891, 145 P.2d 633. In the present case, the cause of action for indemnity arose when Mack satisfied the judgment, an event evidenced by formal entry of record in the Florida court on June 30, 1960.

The Pennsylvania borrowing statute utilizes this concept of the arising of a cause of action in relation to place rather than time in order to specify the circumstances in which a Pennsylvania court shall apply another state's statute of limitations and to identify the appropriate state. We think the concept of when a cause arises and the concept of where a cause arises, both used to aid in the application of statutes of limitations, are in pari materia. In other words, the cause arises where as well as when the final significant event that is essential to a suable claim occurs. Bank of Nova Scotia v. San Miguel, 1st Cir. 1952, 196 F.2d 950; Orschel v. Rothschild, 1925, 238 Ill.App. 353; Runkle v. Pullin, 1912, 49 Ind.App. 619, 97 N.E. 956. In this case the cause of action arose when a judgment was entered against and later satisfied by Mack in Florida. By the same token, Florida is the state where the cause of action for indemnity arose.

In an effort to avoid this conclusion, the appellant cites Griffith v. United Air Lines, 1964, 416 Pa. 1, 203 A.2d 796. There it was held that the measure of damages in a tort case should be determined in accordance with the law of the place having the most significant contacts with the relevant transactions and with the parties rather than by the law of the place of the wrong. In so holding, the court announced a common law conflict of laws rule for the choice of law to be applied in deciding the merits of certain issues. No statute was controlling, and there was no question of when or where the cause of action arose, though apparently it arose at the place of wrong.

Here we have a very different situation. Under the Pennsylvania borrowing statute a court is required to apply the statute of limitations of the state where the cause of action arose without regard to any contacts of any other state with the parties and their prior dealings. And certainly neither the Griffith case nor any other of which we know suggests that the residence of the parties or the place of their earlier dealings before the claim became suable have any relevance to determining when or where the cause arose. Indeed, in Foley v. Pittsburgh-Des Moines Co., supra, Chief Justice Stern explicitly stated that the accrual of a cause of action occurs when suable harm is done the plaintiff, "not when the causes are set in motion which ultimately produce injury as a consequence". 363 Pa. at 38, 68 A.2d at 535.

Perhaps it would be arguable, on the merits of the present controversy, that in determining the existence or extent of an obligation to indemnify, the forum should be guided, as was the court in the Griffith case, by the substantive law of Pennsylvania because of cumulatively significant Pennsylvania "contacts". But we do not have that problem here. We have to answer only the narrow question of the meaning of the phrase "where the cause of action arose", as used in the Pennsylvania borrowing ...


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