Commercial Union Insurance Co. of N. Y. v. Pryor, 7759
| Decision Date | 11 December 1967 |
| Docket Number | No. 7759,7759 |
| Parties | COMMERCIAL UNION INSURANCE CO. OF NEW YORK, Appellant, v. Karen Sue PRYOR et al., Appellees. . Amarillo |
| Court | Texas Court of Appeals |
Underwood, Wilson, Sutton, Heare & Berry, Amarillo, Hardie, Grambling, Sims & Galatzan, El Paso, for appellant .
Gibson, Ochsner, Harlan, Kinney & Morris, Amarillo, Lovell, Lyle & Cobb, Dumas, for appellees.
This present action was brought by Commercial Union Insurance Co. of New York under the Uniform Declaratory Judgment Act, Art. 2524-1, Vernon's Ann.Tex.Civ.St. On April 27, 1965, in a collision between motor vehicles which they were driving, Charles A. Pryor was killed and Billy Pat McGuire was severely injured. Karen Sue Pryor, the wife of Charles A. Pryor, individually and as next friend of James Austin Pryor, a minor, and Curg P. Pryor and Hattie Copeland Pryor, as plaintiffs, brought suit in Cause No. 42009 against Billy Pat McGuire and Leonard C. Traylor. James Austin Pryor was the minor son of Charles A. Pryor, and Curg P. Pryor and Hattie Copeland Pryor were the surviving parents of Charles A. Pryor . The plaintiff alleged certain negligent acts of Billy Pat McGuire causing the death of Charles A. Pryor; then alleged that at all times pertinent thereto and on the occasion in question Billy Pat McGuire was an agent, servant and employee of Leonard C. Traylor, and that the acts of Billy Pat McGuire were in law and in fact the acts of Leonard C. Traylor, employer of Billy Pat McGuire. On July 8, 1965, in Cause No. 1000 in the County Court of Moore County, Texas, in the Estate of Charles A. Pryor, deceased, it was ordered that Karen Sue Pryor be and was thereby authorized as community administrator to control, manage and dispose of the community property as said survivor of Charles A. Pryor, deceased, in accordance with the Texas Probate Code.
The original suit filed by Karen Sue Pryor in Cause No. 42009 against Billy Pat McGuire and Trylor was filed by Lovell & Lyle as attorneys of Mrs. Pryor. The Phoenix of Hartford Insurance Company was the insurer as to damages caused by the defendants, McGuire and Traylor, and was willing to pay in behalf of McGuire and Traylor the sum of $10,000.00. Phoenix of Hartford employed their own attorneys to represent it in Cause No. 42009. Those same attorneys, as attorneys for the McGuires, on December 28, 1965, answered contending the collision in question and any damages resulting therefrom was proximately caused by the negligence of Charles A. Pryor and filed a counterclaim in Cause No. 42009 seeking to recover damages against Karen Sue Pryor as community survivor of the marital partnership and community estate of Karen Sue Pryor and Charles A. Pryor.
On December 28, 1965, a Compromise Settlement Agreement was made and entered into. This agreement was made and entered into by and between Karen Sue Pryor, individually, and as community survivor of the marital partnership and community estate of Karen Sue Pryor and Charles A. Pryor, deceased, and as next friend for James Austin Pryor, a minor, and their attorneys as one party; and Phoenix of Hartford, Billy Pat McGuire and wife, Linda McGuire, and their attorneys, as other parties, since they all took part in the settlement and had it approved by the trial court. In part, that Compromise Settlement Agreement is as follows:
'WHEREAS, bona fide disputes and controversies exist between the parties, both as to liability and the amount thereof, if any, and by reason of such disputes and controversies the plaintiffs desire to compromise and settle all claims and causes of action of any kind whatsoever which they have or might have arising out of said accident; and
WHEREAS, The Phoenix of Hartford Insurance Company is willing to pay, in behalf of the defendants, the sum of TEN THOUSAND AND 00/100 DOLLARS ($10,000.00) in compromise and settlement of such claims, with said sum to be apportioned and divided between the plaintiffs in accordance with the final judgment of the Court in this cause;
NOW, THEREFORE, for the sole consideration of TEN THOUSAND AND 00/100 DOLLARS ($10,000.00) paid to plaintiffs by The Phoenix Insurance Company of Hartford, in behalf of defendants, in accordance with the provisions of said final judgment entered by the Court in this cause, the payment of which is hereby acknowledged, we, KAREN SUE PRYOR, individually, as community survivor of the marital partnership and community estate of KAREN SUE PRYOR and CHARLES A. PRYOR, deceased, and as next friend for and in behalf of JAMES AUSTIN PRYOR, a minor, CURG P. PRYOR AND HATTIE COPELAND PRYOR, have this day released and by these presents do release, acquit and forever discharge BILLY PAT MCGUIRE, LEONARD C. TRAYLOR, The Phoenix of Hartford Insurance Company, their agents, servants and employees, and all persons, natural or corporate, in privity with them or any of them, from any and all claims of any kind whatsoever, at common law, statutory or otherwise, which we have or might have, known or unknown, now existing or that might arise hereafter, directly or indirectly attributable to the aforesaid accident and death; it being intended to release all claims of any kind which we might have, whether asserted in this suit or not.
For the same consideration we agree to indemnify and save harmless the parties released hereby from any and all claims of any kind whatsoever which may or might be asserted by any other person by reason of the injuries to and death of CHARLES A. PRYOR.
It is expressly agreed and understood that the terms hereon are contractual and not merely recital, that the payment of the aforesaid sum is in compromise and settlement of disputed claims and does not constitute an admission of liability, all liability being expressly denied.
It is further understood that BILLY PAT McGUIRE and wife, LINDA McGUIRE, have asserted counter-claims for damages by reason of the injuries sustained by BILLY PAT McGUIRE in said collision; that said counter-claim has been severed by order of the Court in this cause and shall remain pending as a separate cause on the docket of the Court; that this compromise and settlement and the judgment entered in pursuance hereof shall in no way affect or prejudice such counter-claim or any other cause of action which may be asserted by any person by reason of the injuries sustained by BILLY PAT McGUIRE in said collision, all such claims and causes of action being expressly protected and reserved.
It is further understood and agreed that this compromise settlement agreement, the fact of settlement and the judgment entered in pursuance hereof shall never be used or admissible in evidence against any of the parties released hereby.'
On the same day the Settlement Agreement was entered into and the counterclaim of the McGuires was filed and citation issued and served, the attorneys for the McGuires filed a motion to sever their counterclaim and the same was ordered severed by order of the court, and such order was approved by all attorneys representing all the parties. All of the instruments, including the judgment of the court approving the Settlement Agreement, were executed on December 28, 1965.
On December 28, 1965, in Cause No. 42009, the McGuires had citation for service upon Mrs. Pryor issued and delivered to the sheriff for service at 2:15 P.M. and service was had five minutes later there in the courthouse. Mrs. Pryor thereafter delivered that citation to Commercial Union Insurance Co. of New York as the insurer of Charles A. Pryor and Commercial Union delivered it to its attorneys. Under this record, that was the first time that Commercial Union was in any way connected with this matter. When the citation was delivered to the attorney for Commercial Union, he wrote to Mrs. Pryor as follows:
'The citation which was served upon you in the above suit has reached us for attention, and we propose to file an answer on your behalf. We find it necessary to do so under a reservation of rights, that is to say, we must reserve the right to deny any responsibility at all either to defend you or to pay any judgment which might be rendered against you if ultimately we are driven to the conclusion that our client has no responsibility. Since you were represented by counsel of your own choice in the prosecution of your suit, I am sending them also copies of this letter, so that they likewise may be fully advised of the problem.
In making settlement of your own suit founded on Mr. Pryor's death, you executed a compromise settlement agreement which included this paragraph:
'It is further understood and agreed that this compromise settlement agreement, the fact of settlement and the judgment entered in pursuance hereof shall never be used or admissible in evidence against any of the parties released hereby.'
Our problem is with respect to whether this operates to cut us off from a defense which otherwise we would have against Mr. McGuire. If it does, my judgment would be that it also operates to cut you off from protection under your insurance policy.
The questions with respect to which we must reach some conclusions are:
(a) Whether Mr. McGuire's suit against you was a compulsory counterclaim to your suit against him;
(b) Whether, except for the above quoted language, the settlement made with you would have operated as a defense to McGuire's suit against you; and
(c) Whether the instrument you have executed cuts us off from that defense.
These questions we will pursue as quickly as we reasonably can; and, when we have reached a final conclusion, we will report it to you and your attorneys. For the present, we merely reserve the right to withdraw from the case and to deny liability if in truth the effect of what has happened appears to be to cut you off from insurance protection.
Note also, please, that the cross action filed against you claims damages in the amount of $515,000.00....
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McGuire v. Commercial Union Ins. Co. of N. Y., B-728
...Union she released said company of any claims she might have had under the policy issued to Charles A. Pryor.' Commercial Union Ins. Co. of New York v. Pryor, 423 S.W.2d 364. The questions before this Court concern the effect of a compromise settlement agreement and agreed judgment which di......