In this action, The Union Pacific Railroad Company (Union
Pacific) appeals a summary judgment damage award of $10,912 in
favor of Tom Anderson for property damage and attorney fees
arising out of a March 27, 1988, fire.
In the court below, the parties stipulated to the following
facts. On March 27, 1988, a railroad engine and train owned by
Union Pacific negligently caused a fire which incinerated
property adjacent to the railroad tracks. On October 24, 1984,
Anderson had leased a 330- by 150-foot parcel of commercial
property adjacent to the railroad tracks from Union Pacific for
an annual rental of $644. He stored several automobiles on the
property. The fire destroyed twenty vehicles with a total value
Section 13 of the lease included the following provisions:
"It is understood by the parties hereto that the
Premises are in dangerous proximity to the tracks of
the Lessor, and that by reason thereof there will be
constant danger of injury and damage by fire, and the
Lessee accepts this lease subject to such danger.
"It is therefore agreed, as one of the material
considerations for this Lease and without which the
same would not be granted by the Lessor, that the
Lessee assume all risk of loss or destruction of or
damage to buildings or contents on the Premises, and
of or to other property thereon . . . where such
loss, damage, destruction, injury, or death of
persons is occasioned by fire caused by, or resulting
from, the operation of the railroad of the Lessor,
whether such fire be the result of defective engines,
or of negligence on the part of the Lessor or of
negligence or misconduct on the part of any officer,
servant, or employee of the Lessor, or otherwise, and
the Lessee hereby agrees to indemnify and hold
harmless and defend the Lessor . . . against and from
all liability . . . arising out of or by reason of
any such loss, damage, destruction, injury, or death
of persons. . . ."
Although Anderson questioned some of the terms of the lease in
the pre-lease negotiations, Union Pacific would not alter any of
After the fire, Anderson filed suit to recover for damage to
his personal property. Cross-motions for summary judgment were
filed. Union Pacific moved for summary judgment on the basis of
section 13 of the lease. Anderson defended that the provision was
unenforceable and moved for summary judgment on the stipulated
facts. The court granted Anderson's motion and denied Union
Pacific's motion, holding that the lease provision violated
K.S.A. 66-234 and was contrary to public policy and, thus, was
Union Pacific timely appeals the entry of summary judgment.
The trial court determined that section 13 of the lease
violated K.S.A. 66-234 and Kansas public policy. Our scope of
review is de novo, inasmuch as the sole issue is the legal effect
of the lease contract. Adams v. John Deere Co.,
13 Kan. App. 2d 489, 492, 774 P.2d 355 (1989).
Kansas follows the general principle that "competent parties
may make contracts on their own terms, provided they are neither
illegal nor contrary to public policy." 13 Kan. App. 2d at 492.
Anderson, of course, contends that section 13 of the lease is
both illegal and contrary to public policy.
Anderson first contends the waiver of liability provision of
section 13 of the lease violates the clear language of K.S.A.
K.S.A. 66-234 was enacted in 1870 and provides: "Railroads in
this state shall be liable for all damages done to person or
property, when done in consequence of any neglect on the part of
the railroad companies." Anderson argues this language,
especially the legislature's use of the word "shall," indicates
legislature intended railroads to be liable for their negligence
without exception. However, as early as 1873, the Kansas Supreme
Court indicated K.S.A. 66-234 was not a clear, unambiguous
statute but instead raised "many interesting questions"
concerning contributory negligence and assumption of risk. St.
Joseph & D.C.R. Co. v. Grover, 11 Kan. *302, *306 (1873).
In 1915 the Kansas Supreme Court was called upon to determine
the validity of a waiver of liability provision under the
statute. Grain Co. v. Railway Co., 94 Kan. 590, 146 P. 1134
(1915). In Grain Co., the court held that a hold harmless
provision in a railroad lease was not "void on the ground of
public policy." 94 Kan. at 593. See generally Annot., 14 A.L.R.3d
446. Anderson attempts to distinguish Grain Co. from the
instant case by arguing that in Grain Co. the railroad and
grain company had a business relationship, that the grain company
lease was on the ...