further complicated by the existence of the insurance agreement between Northern and Carolina.
Generally, under an express contract of indemnification for damages, an indemnitee is not entitled to recover under the agreement until he has made actual payment or otherwise suffered actual loss or damage. Borowsky v. Margulis, 310 Pa. 420, 165 A. 491 (1933). Where, however, the indemnitee's liability is clear, with no apparent defense available, he may discharge a claim against him without waiting for an adjudication of fault. In doing so, however, he assumes the risk in an action against the indemnitor of proving not only that he was liable to the third party, but also that the amount of settlement was reasonable. Martinique Shoes, Inc. v. New York Progressive Wood Heel Co., 207 Pa.Super. 404, 217 A.2d 781 (1966).
When dealing with an implied contract of indemnity, the requirements are similar but not exactly the same. If the amount paid is reasonable and just, the payment is made in good faith, and notice is given to the indemnitor that settlement is being made, then the indemnitee may settle; but he still assumes the risk of proving liability and reasonableness of settlement in any subsequent litigation. Neville Chemical Co. v. Union Carbide Corp., 294 F. Supp. 649 (D.C.1968), affirmed in part, vacated in part, 422 F.2d 1205, (3rd Cir.), cert. denied, 400 U.S. 826, 91 S. Ct. 51, 27 L. Ed. 2d 55 (1970); Martinique Shoes, Inc. v. New York Progressive Wood Heel Co., supra. See also, 42 C.J.S. Indemnity § 25 (1944).
The following are undisputed facts. The accident occurred on November 7, 1978. On November 28, 1978, Daily sent Northern a letter stating: (1) the letter was "formal notice of our intent to pursue (the indemnification clause) of the trip lease agreement," (2) Northern, or its insurer could "assume handling of these claims," (3) if Daily were not contacted, it would "proceed to secure the most economical settlement possible and look to (Northern) for indemnity . . . ." Settlement of the claims was made by Daily after notice to Northern. Further, Northern and Daily have stipulated that the settlement of eleven thousand two hundred dollars ($ 11,200.00) was paid by Daily, and that such settlement was fair and reasonable.
Daily is justified in seeking payment of the settlement amount from Northern. It is entitled to the indemnity on the basis of the trip lease. But, even absent the lease, Daily would have prevailed on common law principles of indemnity as Northern contests neither the reasonableness of the settlement, nor its ultimate liability. Between Daily and Northern there are no material facts in dispute. Summary judgment will be granted for Daily against Northern.
II. IS NORTHERN'S LIABILITY TO DAILY A LIABILITY ASSUMED BY CONTRACT OR AGREEMENT?
Carolina, who admittedly is the insurer of Northern, alleges that a judgment in favor of Daily and against Northern would result from a liability Northern assumed by contract. This, Carolina states, is a risk it did not assume under the terms of its insurance policy with Northern.
The determinative issue is whether Northern's liability to Daily stems from the "contract or agreement."
A compilation of the applicable case law in this area is set forth in 63 ALR 2d 1123 (1959), which states:
From a perusal of all the cases in point the general principle may be deduced that a provision in a liability policy specifically excluding from coverage liability assumed by the insured under a contract not defined in the policy is operative in the sense that it relieves the insurer of liability otherwise existing under the policy only in situations where the insured would not be liable to a third party except for the fact that he assumed liability under an express agreement with such party, but does not relieve the insurer from liability under the policy where the liability of the insured assumed by the insured under an express contract with the third party is coextensive with the insured's liability imposed upon him by law. In other words, where the express contract actually adds nothing to the insured's liability, the contractual liability exclusion clause is not applicable, but where the insured's liability would not exist except for the express contract, the contractual liability clause relieves the insurer of liability. . . .