Schick v. Rodenburg
| Decision Date | 08 January 1987 |
| Docket Number | No. 15256,15256 |
| Citation | 397 N.W.2d 464 |
| Parties | Gustave SCHICK, Individually and as Executor of the Estate of Bernice M. Schick, Plaintiff and Appellee, v. Violet RODENBURG, Executrix of the Estate of Willis Henry Rodenburg, Defendant and Appellee, and Chrysler Corporation and Ford Motor Company, Intervenors, Defendants and Appellants. |
| Court | South Dakota Supreme Court |
Randolph J. Seiler, Krause, Seiler & Cain, Mobridge, for plaintiff and appellee.
Chester A. Groseclose, Jr., Richardson, Groseclose, Kornmann & Wyly, Aberdeen, for defendant and appellee.
Kennith L. Gosch, Bantz, Gosch, Cremer, Peterson & Oliver, Aberdeen, for Chrysler Corp.
Rory King, Siegel, Barnett & Schutz, Aberdeen, for Ford Motor Co.
Appellants Chrysler Corporation and Ford Motor Company (Chrysler and Ford/Intervenors) appeal the trial court's approval of a loan receipt and release agreement. We reverse and remand with instructions to modify.
Gustave Schick (Schick), commenced suit against Violet Rodenburg (Rodenburg) as executrix, on December 12, 1984. Schick sought damages for his own personal injuries and the wrongful death of his wife, Bernice Schick, as a result of the alleged negligent operation of an automobile driven by Rodenburg's decedent, Willis Rodenburg. Rodenburg's automobile crossed the centerline and struck Schick's automobile, killing Rodenburg, Schick's wife and injuring Schick. The collision occurred on November 3, 1983, in Walworth County, South Dakota. Rodenburg's answer of January 9, 1985, denied liability, alleged contributory negligence and claimed that the Rodenburg vehicle contained latent defects manufactured by Chrysler.
Schick, Rodenburg, and Rodenburg's insurer, State Farm Insurance Company (State Farm), attempted to settle their dispute by entering into a Loan Receipt and Release Agreement (release). Among its provisions, (discussed more fully infra ), the release provided: that the accident resulted from the negligent and defective construction by Chrysler ("or any other firm, person or corporation who is responsible for the defective condition") of the automobile owned and operated by Rodenburg's decedent; that the amount of the settlement with the settling defendant (Estate of Willis Rodenburg) will be credited against any ultimate judgment against Chrysler and Ford only if Willis Rodenburg is determined to be a joint tort-feasor with Chrysler and Ford; and that the release should be interpreted in accordance with the law of the State of Illinois. 1
On August 30, 1985, Schick and Rodenburg petitioned the trial court for approval of a compromise settlement which incorporated the terms of the release. Neither Chrysler nor Ford were parties to this action, nor had any involvement in the case until they received notice of hearing on the petition for compromise. Over their objections, the trial court granted the petition by order dated December 23, 1985.
By stipulation and order dated February 10, 1986, Chrysler and Ford intervened in the Schick v. Rodenburg action for the purpose of having the court decide how the release would affect their rights. Chrysler and Ford are potential defendants in an action to be brought by Schick. They received a Notice of Breach of Warranty on March 22, 1985, alleging that Willis Rodenburg's 1983 Chrysler Newport automobile was not fit or suitable for the purpose for which it was intended and used and was not of merchantable quality, resulting in the injuries set forth in Schick's complaint.
The trial court entered Findings of Fact, Conclusions of Law, and a Judgment on February 20, 1986, which stated in part:
* * *
* * *
4. The release agreement provides that in the event plaintiff recovers a judgment ... against the intervenors, the intervenors shall not be entitled to a credit against that judgment ... for the amounts mentioned in paragraphs 1 and 3 of the agreement, or for the contingent payments mentioned in paragraphs 6 and 7, unless Willis Henry Rodenburg is determined to be a joint tort-feasor with the judgment debtor. These provisions of the release agreement are valid, binding and enforceable as to all of the parties hereto, including the intervenors, and are not in violation of the public policy of the state of South Dakota.
* * *
* * *
7. The release agreement is valid, binding and enforceable in all respects against all of the parties hereto, including the intervenors, applying either South Dakota or Illinois law.
Chrysler and Ford appeal from this judgment.
The only issues to be determined in this case relate to the rights of the intervenors, Chrysler and Ford. We are not concerned here with questions between plaintiff Schick, defendant Rodenburg, and Rodenburg's insurer, State Farm.
Chrysler and Ford contend that the trial court erred in concluding: that the release is valid under either South Dakota or Illinois law; that it does not violate the public policy of the State of South Dakota; and, that it does not require Chrysler or Ford to receive credit for any portion of the monies paid under the settlement agreement unless Rodenburg and the Intervenors are adjudicated joint tort-feasors.
The "place of the wrong" rule governs the substantive rights of parties to a multi-state tort action. Heidemann v. Rohl, 86 S.D. 250, 256, 194 N.W.2d 164, 167 (1972). In this case, despite the fact that a release was executed in South Dakota, we applied the law of Nebraska because the effect of a release is governed by the substantive law of the place where the alleged tort occurred. Id. 86 S.D. at 261, 194 N.W.2d at 170. Therefore, State Farm's proposed release is governed by the law of the State of South Dakota because the automobile accident occurred in Walworth County, South Dakota. Accordingly, we hold that the effect of the release upon the rights of the intervenors is controlled by South Dakota substantive law; notwithstanding paragraphs 10e. and 12 of the release which provide otherwise.
Rodenburg was insured by State Farm for the injuries complained of to the extent of $100,000 per claim, for a total of $200,000 per accident. The release given by Schick to State Farm provides $85,000 in immediate payments to Schick, with a guarantee of an additional $115,000 in payments to Schick if he will sue Chrysler and Ford. As such, State Farm has guaranteed Schick a total recovery of at least $200,000, 2 the full extent of its insurance limits.
The release in question is a type of guaranteed verdict agreement. Guaranteed verdict agreements generally fall into three categories: (1) Mary Carter 3 agreements (2) Gallagher 4 agreements; and (3) loan receipt agreements. The latter type has been devised as a form of guaranteed verdict agreement in cases involving joint tort-feasors. They are distinguishable from both Mary Carter and Gallagher agreements because the settling defendant in a loan receipt agreement promises to loan the plaintiff an amount of money before trial to be repaid out of any ultimate recovery the plaintiff makes against the nonsettling defendant.
The first nine paragraphs of this release provide: (1) Upon execution of the agreement, Schick will be paid $85,000 as a loan which is to be repaid to State Farm if Schick effects a recovery in excess of $200,000 in the anticipated lawsuit against Chrysler and Ford. (2) If there is no recovery against Chrysler or Ford, or if the recovery is less than $200,000, the loan payment need not be repaid. (3) If there is no recovery against Chrysler or Ford, State Farm will pay Schick an additional sum of $115,000. (4) If there is a recovery against Chrysler or Ford but it is in a gross amount of less than $200,000, State Farm will make an additional payment to Schick bringing his gross recovery up to $200,000.
Paragraph 10 of the release provides that if Willis Rodenburg and Chrysler or Ford are determined to be joint tort-feasors, then the first nine paragraphs do not apply. Paragraph 10c. provides that the nonsettling parties, (Chrysler and/or Ford), are entitled to a reduction of Schick's claim in the greater of the amount of the consideration State Farm paid for the release, i.e., $200,000, or the settling party's (Willis Rodenburg's) pro rata share of the total liability to Schick, whichever is greater. Paragraph 10e. provides for the application of a "Pierringer" 5 agreement. Under the Pierringer agreement, Schick would have no repayment obligation, State Farm would pay the future contingent payments, and Rodenburg would be released in accordance with the guidelines set forth in Frey v. Snelgrove, 269 N.W.2d 918 (Minn.1978), and paragraph 10 of the agreement. Finally, paragraph 12 provides that Illinois law governs the interpretation of the release agreement.
South Dakota has adopted the provisions of the Uniform Contribution Among Joint Tort-Feasors Act (UCAJTA), in SDCL Secs. 15-8-11 to 15-8-22, inclusive. SDCL 15-8-17 provides:
A release by the injured person of one joint tort-feasor, whether before or after judgment, does not discharge the other tort-feasors unless the release so provides; but reduces the claim against the other tort-feasors in the amount of the consideration paid for the release, or in any amount or proportion by which the release provides that the total claim shall be reduced, if greater than the consideration paid.
In Degen v. Bayman, 90 S.D. 400, 408-409, 241 N.W.2d 703, 707-708 (1976), ("Degen II"), we held that the amount received in settlement from a party should be deducted from the judgment even though the settling party has never been judicially determined to be a joint tort-feasor. In Degen II, we adopted the view stated by the Supreme Court of...
To continue reading
Request your trial
-
Long v. State
...from the July 2010 flooding. Because Landowners settled with the City, the State and City are joint condemners. Cf. Schick v. Rodenburg, 397 N.W.2d 464, 468 (S.D. 1986) ("[I]f a plaintiff sues defendants as joint tort-feasors and settles with them, they are joint tort-feasors.").24 The Stat......
-
Owen v. Owen, 16481
...Nat'l Bank of Minneapolis v. Kehn Ranch, 394 N.W.2d 709 (S.D.1986); and of special interest, Justice Sabers' opinion in Schick v. Rodenburg, 397 N.W.2d 464 (S.D.1986). Vicki urges this court to overrule these cases and adopt a "modern" or "most significant relationship" rule. In support of ......
-
Fix v. First State Bank of Roscoe
...that any settlement amount from one joint tortfeasor reduced the total judgment against other joint tortfeasors. See Schick v. Rodenburg, 397 N.W.2d 464, 467–68 (S.D.1986); Duncan v. Pennington Cnty. Hous. Auth., 283 N.W.2d 546, 550 (S.D.1979) (citing Degen v. Bayman, 90 S.D. 400, 241 N.W.2......
-
City of Spearfish, Dakota Mun. Corp. v. Duininck, Inc.
...is potentially liable because Wyss and ATS executed settlement agreements and releases with Elkhorn. DBI relies upon Schick v. Rodenburg, 397 N.W.2d 464, 465 (S.D. 1986). In Schick, the Supreme Court of South Dakota reviewed whether settlements from alleged tortfeasors should be credited ag......