Cooper v. Robert Hall Clothes, Inc., 2-476A168

• Decision Date: 22 May 1978
• Docket Number: No. 2-476A168,2-476A168
• Citation: 375 N.E.2d 1142
• Parties: Clara COOPER, Appellant, v. ROBERT HALL CLOTHES, INC., Appellee.
• Court: Indiana Appellate Court

Page 1142

375 N.E.2d 1142

Clara COOPER, Appellant, v. ROBERT HALL CLOTHES, INC., Appellee.

No. 2-476A168.

Court of Appeals of Indiana,Second District.

May 22, 1978.

Wade R. Bosley, Marion, for appellant.

Merton Stanley, Winslow, Stanley & Winslow, Kokomo, for appellee.

WHITE, Judge.

Clara Cooper (Cooper) sued Robert Hall Clothes, Inc. (Hall), Superior Maintenance Supply, Inc. (Superior), and Texize, a division of Norton-Norwich Products, Inc. (Texize) for $75,000.00 in damages for bodily injuries allegedly sustained in a fall in Hall's store. Shortly before trial Cooper accepted $1,990.00 from Texize and $10.00 from Superior and executed two documents each entitled "Release of All Claims". One writing purported to release Cooper's claim against Texize and the other her claim against Superior while reserving, in both, her right to proceed against Hall. She thereupon dismissed Superior and Texize from the suit. Hall's motion for summary judgment was granted on the ground that, as a matter of law, Cooper's release of Texize and Superior also released Hall. Holding that the reservation clauses in the release are valid and effective, we reverse.

The documents executed by Cooper for Hall and Texize contain all the language ordinarily associated with a release:

"I . . . hereby fully and forever release, acquit and discharge . . . from any and all actions, claims and demands of whatsoever kind or nature . . . it being understood and agreed that the acceptance of said sum is in full accord and satisfaction of a disputed claim . . . .

"I hereby declare . . . that the amount stated herein is the sole consideration for this release, and that I voluntarily accept said sum for the purpose of making a full and final compromise, adjustment and settlement of all claims for injuries, losses and damages resulting from or to result from said accident."

However, each document also contains a specific reservation:

"This release is expressly intended to release only . . . and is not intended to release ROBERT HALL CLOTHES, INC. from any liability to me on account of any and all known and unknown injuries, losses and/or damages of whatever nature including consequential damages sustained by me . . . ."

The basis for Hall's Motion to Dismiss Cooper's complaint, and for the court's granting of that Motion, is the ancient rule that the release of one joint tortfeasor is the release of all joint tortfeasors. Bedwell v. DeBolt (1943), 221 Ind. 600, 609, 50 N.E.2d 875, 878.

The sole question, then, is whether the reservation clauses in the releases are legally effective.

In the early part of this century Indiana answered that question in the negative. Cleveland, etc. R. Co. v. Hilligoss (1908), 171 Ind. 417, 86 N.E. 485, said:

" 'Therefore, if he (the injured party) accepts the satisfaction (voluntarily) made by one, that is a bar to all. And so a release of one releases all, although the release expressly stipulates that the other defendants shall not be released. And this rule is held to apply, even though the one released was not in fact liable.' 1 Cooley, Torts (3d ed.), * 161."

In the succeeding years a number of devices have been successfully employed to circumvent that rule. The most common is a covenant-not-to-sue whereby the injured party, for an agreed consideration, contracts with one joint tortfeasor not to pursue his claim against that tortfeasor. Lows v. Warfield (1971), 149 Ind.App. 569, 274 N.E.2d 553. A variation of the covenant-not-to-sue is the loan-receipt-agreement whereby one or more putative tortfeasors lend a sum of money to a personal injury claimant who promises not to pursue his claim against the lenders and to repay the loan only in some stipulated proportion to his recovery, if any, from the other putative tortfeasors. See the discussion of loan agreements in N. I. P. S. Co. v. Otis (1969), 145 Ind.App. 159, 167-182, 250 N.E.2d 378, cited with approval in Amer. Transport v. Cent. Ind. R.R. Co. (1970), 255 Ind. 319, 322, 264 N.E.2d 64. See, also, Geyer v. City of Logansport (1976), Ind.App., 346 N.E.2d 634, 640. (Reversed on other grounds 370 N.E.2d 333.) A loan agreement with one joint tortfeasor not to execute against him upon a judgment against all joint tortfeasors has also been approved. American Transport Co. v. Central Indiana Railway Co. (1970), 255 Ind. 319, 264 N.E.2d 64.

During the period of these developments the Indiana courts have looked with ever increasing disfavor upon the rule that the release of one is a release of all joint or concurrent tortfeasors. See Wecker v. Kilmer (1973), 260 Ind. 198, 294 N.E.2d 132. Even as early as sixty years ago, in Gates v. Fauvre (1918), 74 Ind.App. 382, 397, 119 N.E. 155, 160, in regard to an attempted release of only one of several joint obligors, ¹ the court said:

"A release being a contract, the primary rule of construction is that the intention of the parties must govern. The intention is to be gathered from the instrument when the release is in writing, and from the facts, circumstances, and relations of the parties when the release relied upon arises by operation of law. To enable the court to properly construe a release, where it is ambiguous, extrinsic evidence is admissible to explain the circumstances under which it was executed or the facts and transactions relied upon to show the release, when it is not evidenced by a written instrument. 34 Cyc 1075; 24 Am. and Eng. Ency. Law 290; Rowe v. Rand (1887), 111 Ind. 206, 211, 12 N.E. 377; Walls v. Baird, supra (91 Ind. 429-434).

"To avoid hardships and inequitable results not intended by the parties, courts in some instances have construed ambiguous releases as agreements not to sue the party released, and refused to give to such instruments or arrangements the effect of releasing other joint obligors. In some instances agreements not to sue one of several joint obligors at any time have been given the effect of an absolute release of such obligor, with the results attendant upon such release. Such phases of the doctrine of release or agreements not to sue have not been passed upon by the courts of Indiana, but the decisions of this state are in accord with the generally prevailing doctrine which emphasizes the importance of ascertaining and following the intention of the parties when it can be done without violence to the language employed where the alleged agreement is in writing, or without disregarding the plain intention of the parties, at the time of the transactions involved, as evidenced by their conduct in relation thereto. Aylesworth v. Brown, supra (31 Ind. 270, 276); Walls v. Baird, supra ; 34 Cyc 1084; 24 Am. and Eng. Ency. Law 292, 293; 1 Parsons, Notes and Bills 250; Line & Nelson v. Nelson & Smalley (1876), 38 N.J.L. 358, 360; Parmelee v. Lawrence (1867), 44 Ill. 405, 413.

Somehow that rationale was never applied in Indiana to the release of one joint tortfeasor. Perhaps it was because most plaintiffs' attorneys felt more comfortable with other devices and thus never before has the issue arisen.

In Landers v. McComb Window and Door Co. (1969), 145 Ind.App. 38, 248 N.E.2d 358, a personal injury tort action, however, the court had before it a quite similar question, whether the dismissal by plaintiff, during trial and for a monetary consideration of one defendant constituted a release of a co-defendant. The agreement between the plaintiff and the dismissed defendant was not in writing. The jury's verdict for plaintiff against the remaining defendant was held to be a finding that a release was not intended and was upheld by the appellate court as sustained by the evidence relevant to intent.

In Wecker v. Kilmer (1973), 260 Ind. 198, 203, 294 N.E.2d 132, the Indiana Supreme Court instructed the United States Court of Appeals for the Seventh Circuit as to the Indiana law concerning the question of whether the release of a first tortfeasor operated to release a subsequent tortfeasor, a physician whose treatment allegedly aggravated the injury. After criticizing the "prevailing view" that the second tortfeasor was released and after comparing the position of the subsequent tortfeasor to that of a third party beneficiary, the court, quoting from Loper v. Standard Oil Company (1965), 138 Ind.App. 84, 90, 211 N.E.2d 797, 801, held that:

" 'The intent of the parties is the controlling factor in resolving the question of the rights of a third party beneficiary: such determination must be established from the manifestations of the parties as exhibited by the terms of the written (instrument) and testimony related thereto.' " (Wecker's emphasis.)

Wecker further held: "The controlling factors are whether the plaintiff in fact received full satisfaction for his injuries and whether the parties to the release intended it to be in full satisfaction, both of which require a factual determination beyond the face of the instrument." (260 Ind. at 203, 294 N.E.2d at 135.)

A "factual determination beyond the face of the (release)" was necessary in Wecker because the written instrument in that case contained no expression of the intent of the parties with respect to the injured party's claim against the second tortfeasor. And for that same reason Wecker did not address itself to the question of the legal effect of a...