Barlage v. The Place, Inc., 48178.

• Citation: 277 NW 2d 193
• Decision Date: 23 February 1979
• Docket Number: No. 48178.,48178.
• Court: Supreme Court of Minnesota (US)
• Parties: Ronald M. BARLAGE, Respondent, v. THE PLACE, INC., et al., Appellants. TENTH FRAME, INC., d. b. a. Prior Place, Defendant and Third Party Plaintiff, Appellant, v. Kenneth GRAPPER, Third Party Defendant, Respondent, Rocky Brinkman, et al., Third Party Defendants, B & D Bar (Gerald Hafermann, Licensee), Third Party Defendant, Respondent.

277 N.W.2d 193 (1979)

Ronald M. BARLAGE, Respondent, v. THE PLACE, INC., et al., Appellants.

TENTH FRAME, INC., d. b. a. Prior Place, Defendant and Third Party Plaintiff, Appellant, v. Kenneth GRAPPER, Third Party Defendant, Respondent, Rocky Brinkman, et al., Third Party Defendants, B & D Bar (Gerald Hafermann, Licensee), Third Party Defendant, Respondent.

No. 48178.

Supreme Court of Minnesota.

February 23, 1979.

Clarence Hagglund, O. C. Adamson II, Minneapolis, for appellants.

Clint J. Grose and David A. Stofferahn, Minneapolis, for Barlage.

Robert J. Hauer, Jr., Minneapolis, for Grapper.

Carroll, Cronan, Roth & Austin, Minneapolis, for B & D Bar.

Heard before TODD, YETKA, and SCOTT, JJ., and considered and decided by the court en banc.

TODD, Justice.

Ronald Barlage's left leg was traumatically amputated just above the knee when the motorcycle he was operating was struck by a motor vehicle driven by Kenneth Grapper. Barlage entered into a loan-receipt agreement with Grapper prior to trial. The jury awarded Barlage $700,000 in his dram shop action against The Place. The trial court did not inform the jury of the loan-receipt agreement, not did it deduct the payment made under the agreement from the verdict. We affirm.

The jury's determination that The Place was liable under the dram shop act is not questioned on appeal. The issues presented relate to the refusal of the trial court to advise the jury of the loan-receipt agreement, the alleged excessiveness of the verdict, and the refusal of the trial court to deduct the payment under the agreement from the verdict. We will recite only such facts as are pertinent to these issues.

The accident occurred on June 6, 1975. In November 1975, Grapper's insurance carrier loaned Barlage $59,850, which was the maximum amount available under its policy. At that time, a loan-receipt agreement and contract for release was executed by Barlage, Grapper, and Grapper's insurance carrier. In essence, the agreement provided that Barlage would forego any action he might have against the insurer and that he would release Grapper when the dram shop litigation was completed. In addition, all parties mutually agreed that Barlage did not waive his dram shop claim, that there was no admission of liability by Grapper, and that the insurer waived its claim for subrogation in Barlage's dram shop claim.

In March 1976, Barlage commenced a dram shop action against The Place. In June 1976, The Place commenced a third-party action against Grapper. In September 1976, The Place dismissed with prejudice its third-party action against Grapper, apparently as a tactical move to obtain certain statements of Grapper not available to it if Grapper remained a party to the action. Barlage then brought a cross complaint against Grapper, who asserted the loan-receipt agreement as an affirmative defense.

At trial, after Barlage rested without having called Grapper as a witness, Grapper moved for the dismissal of Barlage's cross complaint against him. This motion was granted over the objection of The Place, although it had previously dismissed its own third-party action against Grapper with prejudice.

The Place, fearing jury speculation about its liability because of the dismissal of Grapper, then moved the court to inform the jury that Grapper had settled with Barlage for $59,850. This motion, opposed by both Barlage and third-party defendant B & D Bar, was denied. The court ruled that it would deduct from any verdict the amount Barlage had received under the loan-receipt agreement in accordance with its terms, if they pertained. The court then simply advised the jury that Grapper's counsel was no longer present because Grapper had been dismissed.

1. In Pacific Indemnity Co. v. Thompson-Yeager, Inc., 260 N.W.2d 548 (Minn. 1977), we indicated our approval of the use of loan-receipt agreements upon the condition that there be full disclosure to all parties involved, including nonsettling defendants, and that the adversary system be maintained. In Frey v. Snelgrove, 269 N.W.2d 918, 923 (Minn.1978), in discussing a Pierringer type release, we established certain guidelines, which are equally applicable to a loan-receipt agreement. These guidelines again emphasize the requirements of full disclosure and preservation of the adversary system.

In the present case, there was complete disclosure to the parties. The Place argues, however, that there were limitations on the adversary system because the jury was not informed that Grapper had no economic interest in the outcome of the litigation, and because it was not able to impeach Grapper by disclosing the agreement. An examination of the record discloses no basis for The Place's fear that Grapper, or any other witness, had been biased by the loan-receipt agreement. Furthermore, if The Place had not chosen to dismiss its third-party action against Grapper, it would have had the opportunity to examine and impeach Grapper as an adversary. Considering the record as a whole, we are...