City of Bloomington v. Holt

• Decision Date: 19 April 1977
• Docket Number: No. 1--675A101,1--675A101
• Citation: 361 N.E.2d 1211,172 Ind.App. 650
• Parties: CITY OF BLOOMINGTON et al., Appellants (Defendants Below), v. Eris HOLT, Administrator of the Estate of Wilma M. Holt, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1211

361 N.E.2d 1211

172 Ind.App. 650

CITY OF BLOOMINGTON et al., Appellants (Defendants Below), v. Eris HOLT, Administrator of the Estate of Wilma M. Holt,

Appellee (Plaintiff Below).

No. 1--675A101.

Court of Appeals of Indiana, First District.

April 19, 1977.

Rehearing Denied May 23, 1977.

Theo. L. Sendak, Atty. Gen., Susan J. Davis, Deputy Atty. Gen., Indianapolis, for appellants.

Vernon J. Petri, Richard W. Lorenz and John J. Fuhs, Spencer, David S. McCrea, of McCrea & McCrea, Bloomington, for appellee.

LYBROOK, Judge.

Defendants-appellants, State of Indiana (State) and Indiana State Highway Commission (Commission), appeal from a judgment in favor of plaintiff-appellee, Eris Holt. Holt, administrator of his wife's estate, initiated this wrongful death action alleging that his wife's death was caused by defendants' conduct. Holt was awarded $100,000 after a jury trial, and from this judgment the State and the Commission appeal.

The following issues are presented for our review:

(1) Whether the court erred in refusing to prohibit defendants Voyles from actively participating in the trial.

(2) Whether the trial court erred in refusing to declare a loan receipt agreement between defendants Voyles and plaintiff void.

(3) Whether the court erred in refusing to allow testimony by the plaintiff Eris Holt as to the loan receipt agreement, the amount of the loan, and the relationship between the parties.

(4) Whether the court erred in refusing to change the order of closing arguments so that the Voyles would not be last.

(5) Whether the court erred in giving to the jury, over State's objections, Court's instruction number two (2).

(6) Whether the court erred in refusing certain testimony by witness, Thomas Calderwood.

(7) Whether the trial court erred in prohibiting testimony which would diminish plaintiff's damages for loss of services.

(8) Whether the court erred in prohibiting testimony as to the fact that any other lawsuit had been filed as a result of this accident.

(9) Whether the court erred in allowing, over the State's objection, testimony by expert witness Joe Haag as to the standards used in 1974 for laying water pipes beneath roadways.

The facts most relevant to these issues reveal that on January 11, 1972, Wilma Holt was instantly killed when her car hit a patch of ice on State Road 37 near Bloomington, causing it to spin out of control into the opposite lane where it was struck by a large truck. The ice was created from water escaping from a ruptured water pipe passing under State Road 37. This water pipe serviced the Voyles' residence.

Holt filed the original complaint on March 8, 1972, against the City of Bloomington (Bloomington) and Harold and Gretna Voyles (Voyles) claiming $120,000 in damages. The complaint alleged that the accident was caused by Bloomington's negligent and careless construction and maintenance of the water line and highway or by negligent observation of property conditions by the Voyles or by a combination of both.

On November 8, 1972, plaintiff filed a Petition for Leave to Add a Party Defendant. The court granted said petition and plaintiff filed an amended complaint adding the State and the Commission as defendants and increasing the claim for damages to $360,000. The amended complaint alleged that the State and the Commission were negligent by failing to supervise and maintain State Road 37 in a safe condition in front of the Voyles' residence.

Sometime near the commencement of the trial, defendant Voyles and plaintiff Holt entered into a 'loan receipt agreement'. The first several issues to be considered in this appeal involve this 'loan receipt agreement'. Judge Robertson in Burkett v. Crulo Trucking Co. (1976), Ind.App., 355 N.E.2d 253 described a loan receipt agreement as follows:

'A loan receipt agreement, in its simplest form, provides that one with potential liability to a claimant will advance funds in the form of a non-interest loan to the claimant in order that the claim may be prosecuted against another who is also potentially liable for the claim. In return for the funds advanced, the claimant agrees that he will not sue or will not seek to enforce a judgment against the lender and will repay the loan according to some formula based upon the claimant's recovery against the other party. Such an agreement, then, serves to limit the liability of one against whom a claim might be pressed and, at the same time, gives the claimant an immediate 'bird in hand' instead of forcing him to await but possible recovery following protracted litigation.'

As a general rule, loan receipt agreements have been expressly approved for use in Indiana. Burkett, supra; Northern Indiana Public Service Company v. Otis (1969), 145 Ind.App. 159, 250 N.E.2d 378; American Transport Co. v. Central Indiana Ry. Co. (1970), 255 Ind. 319, 264 N.E.2d 64. However, recently this settlement device has been the subject of both legal literature and criticism. ¹ We determine, however, that the loan receipt agreement should remain valid for use in Indiana. This is so, particularly in light of Burkett, supra, which acknowledges that a defendant who can show that he has been prejudiced by the loan receipt agreement, has alternative courses which he may pursue to relieve the prejudice. ²

I.

The first issue for our consideration is whether the court erred in refusing to prohibit defendant Voyles from actively participating in the trial. Apparently State argued that the presence of Voyles as defendants in this case prejudiced the remaining defendants and therefore there should have been separate trials. As grounds for this motion the State maintains that:

'In this case the loan receipt agreement was executed by plaintiff Holt and defendants Voyles prior to trial. It was not, however, filed with the court, and the other defendants, who were not given a copy of the agreement until several days into the trial itself, were precluded from making any pre-trial motions on the subject. The Voyles conducted no voir dire of the jurors. Mr. Rarick and Mr. Brown (prospective jurors in this trial) were briefly questioned in a routine fashion, and their responses revealed no bias. The Voyles however, struck from the panel those two jurors despite the absence of any indication that they were the type of jurors the defendants in this case would not have wanted. The defendants Voyles made no opening statement and conducted no cross-examination of the plaintiff's first two witnesses, Bonnie Lee Hacker and Arnold Flynn, who were both very familiar with the accident scene and had witnessed the icy condition in front of the Voyles' residence on January 11, 1972, the day of the accident. After the third witness, the Voyles began active participation, but appeared to behave like plaintiffs rather than defendants. Their questions on cross-examination were designed to point the finger at the other defendants and fill in any gaps left open by the plaintiff on direct. The Voyles had the additional advantage of being last to cross-examine, thus able to bring up items in their examination which the other defendants were unable to respond to or defend themselves against.'

We find that the trial court did not err by denying appellants' motion concerning this issue.

First we must determine if the fact that defendants could not make pre-trial motions in regard to the loan receipt agreement resulted in prejudice to them. In the case of Scott v. Krueger (1972), 151 Ind.App. 479, 280 N.E.2d 336, it was held that a settlement agreement (in that case a covenant not to execute) reached between plaintiff and one of the defendants while the jury was deliberating was not improper. The court went on to say that, 'covenants not to sue, covenants not to execute and loan receipt agreements are legal and are to be encouraged in the settlement of litigation.' In Krueger the settlement agreement was entered into much later in the litigation than the settlement agreement in the case at bar. There the parties certainly had no opportunity to make pre-trial motions concerning said agreement. It would appear that the State would have us hold that settlement agreements must be entered into prior to the beginning of trial so as to allow parties the opportunity to make pre-trial motions regarding such agreements. The courts have not required this in the past and we do not require this now.

Next, the State would have us believe that the failure of the Voyles to participate in voir dire by actually interrogating prospective jurors and then to strike two jurors from the panel 'despite the absence of any indication that they were the type of jurors the defendants in this case would not have wanted' was prejudicial. The State cites no authority for this argument and we find that it has no merit. Our search of the record reveals that no cause was given by Voyles when the two jurors were struck. It therefore seems that the jurors were struck by 'peremptory challenges'. This type of challenge may be exercised without cause and may be exercised arbitrarily and capriciously. ³ The right of a party to use of peremptory challenge is absolute and there is no area of discretion by which the trial court can deny this right. Schroer v. Edward J. Funk & Sons, Inc. (1968), 250 Ind. 480, 237 N.E.2d 247. We fail to find any prejudicial effect caused by the trial court allowing the Voyles to exercise their peremptory challenges.

Finally, appellants maintain that the mere presence of the Voyles as defendants in this case and the manner in which the Voyles conducted their defense was a deception to the jury and therefore prejudicial. Appellants maintain taht the Voyles failed to make an opening statement, failed to cross-examine the first two witnesses, acted like a plaintiff when they did begin to take part in the trial, and had an unfair advantage by being allowed to have the final closing argument. This conduct is alleged to be prejudicial.

We do not...