808 F.2d 802 (11th Cir. 1987), 85-7619, Irvin v. Griffin Corp.

Docket Nº:85-7619.
Citation:808 F.2d 802
Party Name:Mary Sue Engle IRVIN, Plaintiff-Appellant, Cross-Appellee, v. GRIFFIN CORPORATION, A Kansas Corporation, a division or subsidiary of the defendant, Griffin Products; Griffin Products, Inc., a Canada Corporation; and Howard Brothers, a corporation, a division of the Wick Corporation, a Delaware Corporation, d/b/a Howard Brothers Discount Store, Defe
Case Date:January 26, 1987
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 802

808 F.2d 802 (11th Cir. 1987)

Mary Sue Engle IRVIN, Plaintiff-Appellant, Cross-Appellee,

v.

GRIFFIN CORPORATION, A Kansas Corporation, a division or

subsidiary of the defendant, Griffin Products; Griffin

Products, Inc., a Canada Corporation; and Howard Brothers,

a corporation, a division of the Wick Corporation, a

Delaware Corporation, d/b/a Howard Brothers Discount Store,

Defendants- Appellees,

Roper Corporation, a Delaware Corporation,

Defendant-Appellee, Cross-Appellant.

No. 85-7619.

United States Court of Appeals, Eleventh Circuit

January 26, 1987

Rehearing and Rehearing En Banc Denied March 6, 1987.

Stephen D. Heninger, Hare, Wynn, Newell & Newton, Birmingham, Ala., for irvin.

Alan T. Rogers, Balch & Bingham, Birmingham, Ala., for Griffin Corp.

Jack B. Porterfield, Jr., Birmingham, Ala., for Howard Bros.

Eugene P. Stutts, Sadler, Sullivan, Sharp & Stutts, Birmingham, Ala., for Roper Corp.

Appeals from the United States District Court for the Northern District of Alabama.

Before TJOFLAT and KRAVITCH, Circuit Judges, and TUTTLE, Senior Circuit Judges.

Page 803

Corrected January 28, 1987.

TUTTLE, Senior Circuit Judge:

The appellant, Mary Sue Engle Irvin, appeals from a summary judgment dismissal of her products liability lawsuit against the appellees, Griffin Corporation and Roper Corporation, for injuries she sustained in a motorcycle accident while wearing a motorcycle helmet allegedly manufactured and distributed by the defendants.

FACTS

On February 5, 1982, the plaintiff was seriously injured in a motorcycle automobile collision in Marshall County, Alabama, while riding as a passenger on a motorcycle being operated by her husband. The driver of the automobile, which collided with the appellant's motorcycle, Z.D. Burgett, and his insurance carrier, Alabama Farm Bureau Insurance Carrier, offered to settle with the appellant. The appellant accepted $10,000 from the insured which was the maximum amount of his $10,000 insurance policy. In so doing, the appellant executed a form which was unmistakably in the form of a general release of liability. The release provided in part:

[Mary Irvin] forever discharges Z.D. Burgett and Alabama Farm Bureau Insurance Cos., Inc. heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable, or who might be claimed to be liable, none of whom admit any liability to the undersigned but all expressly deny any liability from any and all claims, demands, damages, actions, causes of action or suits or any kind or nature whatsoever and particularly on account of all injuries known and unknown, both to person and property, which have resulted or may in the future develop from an accident which occurred on or about the fifth day of February, 1982 at or near Douglas, Alabama.

Undersigned hereby declares that the terms of the settlement have been completely read and are fully understood and voluntarily accepted for the purpose of making a full and final compromise, adjustment and settlement of any and all claims, disputed or otherwise, on account of the injuries and damages abovementioned, and for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident by the undersigned.

This release was witnessed by the appellant's lawyer.

After executing the release, the plaintiff then filed a products liability action against the various defendants alleging that the helmet she was wearing at the time of the collision was defective in both design and manufacture. Extensive discovery between the parties subsequently followed. The appellant, then without notice to the named defendants in the products liability action, sought a reformation of the general release by petitioning the circuit court for Marshall County. The petition alleged that the release signed by Mary Sue Engle Irvin was intended as a pro tanto release and not a general release as the form indicated. The Alabama court conducted a hearing on this petition for reformation and entered judgment reforming the release on May 11, 1984 as a pro tanto rather than a general release. The circuit court found that the parties had intended to effect a release only of Z.D. Burgett and his insurer from liability. Neither of the appellees was made a party to the reformation suit or personally appeared to contest the reformation of the release. However, in the products liability action in the district court below, the appellees moved for summary judgment, alleging that the original release executed by the appellant was a general release, which operated as a bar to any further proceedings against any tortfeasors, and secondly, that the reformation was improper because none of the defendants was made a party to or given notice of the reformation proceeding. The district court then refused to give judicial recognition to the Alabama circuit court's reformation of the release before it. It held that the release executed by the plaintiff was unambiguous and would be given effect according to the intentions of the parties to

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be judged from what appeared within the four corners of the instrument. The court held that the defendants herein were beneficiaries of the general release executed by the plaintiff and for the circuit court to conclude their rights by a judgment of reformation in a suit to which the defendants were not made parties and of which they had no notice was, according to the court, offensive to the notions of equity and good conscience and the reformed release was therefore inadmissible in derogation of the general release.

For reasons set forth below, we reverse the judgment of the district court and remand for further proceedings.

DISCUSSION

Under Alabama law, an injured party's execution of a general release arising from a tort claim operates as a bar to any other potential claim of the party arising from the same tort. The general release operates in favor of other alleged tortfeasors and releases them from liability. This is simply a reflection of the old common law rule, that one who accepts payments from one tortfeasor and executes a release, which, in express terms, releases "any and all persons" is held to have discharged both the payer party as well as other tortfeasors not party to the release agreement. Thompson v. N.C. St. L. Railway, 49 So. 340 (Ala.1909); Wright v. McCord, 88 So. 150 (Ala.1922). However, the common law rule has been modified by statute and a release executed in writing in a general form as was the case below, does not ipso facto, discharge all other potential parties from liability. By statute, the Legislature has provided for an "intention of the party's" test. Alabama has codified the general rule regarding release as follows:

All receipts, releases and discharges in writing, whether of debt or record, a contract under seal or otherwise, must have effect according to the intention of the parties.

Section 12-21-109, Code of Alabama (1975). The major substantive change in the common law rule was that of modifying the law regarding settlements or releases, and changing it according to the law of contracts, that is, that the release must be given effect according to the intentions of the parties. Thus, under Alabama law, the common law rule on the subject of general releases has been modified by the intention of the party standard of contract law. In so doing, courts have recognized the validity of both pro tanto releases and general releases. In the instant case, the appellant sought a reformation of the release executed between her and the insured, Z.D. Burgett, and his insurance company, to effect the true intention of the parties to execute a pro tanto release only, releasing the parties to the agreement from liability. The reformation of the release was sought pursuant to Sec. 8-1-2 of the Alabama Code of 1975, which provides that:

When through fraud, a mutual mistake of the parties or mistake of one party which the other at the time knew or suspected a written contract does not truly express the intention of the parties, it may be revised by the court on the application of the parties aggrieved so as to express that intention, so as it can be done without prejudice to the rights acquired by third persons in good faith and for value. (Emphasis added.)

The circuit court of Marshall County, in granting the appellant's petition, found that it was the intent of all the parties concerned to release only Z.D. Burgett and Alabama Farm Bureau Insurance Company and that no other entity was involved in the compromise and release; that the parties executed the release on a general form although not intending a general release of all parties. The circuit court held that they intended to execute only a pro tanto release. Clearly, Alabama law provides for a pro tanto release. In Steenhuis v. Holland, 217 Ala. 105, 115 So. 2 (1927), the court construed Alabama statute Sec. 12-21-109 as providing for the right of an injured party to accept satisfaction in part from one tortfeasor, release him, and then proceed against the other. Moreover, there

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need not be a reservation of a right to pursue other tortfeasors expressed in the pro tanto release. The court noted:

Such reservation is not essential, nor need the release take the form of a covenant not to sue. The true inquiry is, that the party's intend to limit release to the parties named, with no intent that the cause of action be satisfied in full.

It is clear that under Alabama Code Sec. 12-21-109, a release, which has as its intent the discharge from liability of only named parties to the release, need not discharge all potential parties then or later known.

In the...

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