Gramm v. Armour & Co.

Decision Date15 June 1971
Docket NumberNo. 70--173,70--173
Citation132 Ill.App.2d 1011,271 N.E.2d 52
PartiesJulia GRAMM, Plaintiff, v. ARMOUR AND COMPANY, a corporation, Defendant and Third-Party Plaintiff-Appellant, v. Charles VARNES, Third-Party Defendant-Appellee.
CourtUnited States Appellate Court of Illinois

John E. Cassidy, Jr., Peoria, for appellant.

Davis, Morgan & Witherell, John C. Mulgrew, Jr., Peoria, for appellee.

STOUDER, Justice.

This action arose out of an automobile collision occurring in December, 1962, in which Julia Gramm was injured by a vehicle operated by Charles Varnes. Gramm brought this action in the Circuit Court of Peoria County, the complaint as amended seeking damages from Varnes for his negligence and from Armour & Company, the employer of Varnes. Armour and Varnes filed answers to the complaint.

On December 30, 1964, Gramm for a consideration of $8,000, entered into a 'Covenant Not To Sue' with Varnes and as a consequence the counts of Gramm's complaint against Varnes were dismissed. It is the effect and consequence of the 'Covenant Not To Sue' which is the basis of this controversy.

In February, 1965, Armour moved to dismiss the remaining counts of the complaint against it claiming that the 'Covenant Not To Sue' executed in favor of Varnes, its employee, extinguished any right or cause of action which Gramm may have had against Armour as Varnes' employer. Armour's motion was denied and it then filed a third party complaint against Varnes seeking indemnity with respect to any liability to Gramm. In his response to the third party complaint Varnes denied that Armour was entitled to indemnity. At this stage of the proceedings Varnes also filed a counterclaim against Gramm based on the latter's violation of the 'Covenant Not To Sue'. Next Varnes moved for summary judgment against Armour on its third party complaint basing his motion on the same reasons that Armour had previously used in its motion to dismiss Gramm's complaint namely that the liability of Armour was extinguished by the 'Covenant Not To Sue'. This motion was denied in June, 1965.

Thereafter Armour negotiated a settlement with Gramm and on September 5, 1965, Armour withdrew its jury demand and a consent judgment was entered against it. The consent judgment found that Varnes was an employee of Armour on the date of the collision, acting within the scope of his employment. According to the judgment Gramm sustained total injuries of $16,000 and after deducting the $8,000 received for the 'Covenant Not To Sue' judgment was entered for $8,000 against Armour. Additionally there was a finding that Armour was not guilty of any tortious conduct. No appeal was taken from this judgment and apparently it was satisfied. At the time of the entry of the consent judgment no action was taken regarding Armour's third party complaint.

In May, 1966, the Supreme Court filed its opinion in Holcomb v. Flavin, 34 Ill.2d 558, 216 N.E.2d 811, holding that a 'Covenant Not To Sue' executed in favor of an employee extinguished the plaintiff's cause of action against the employer. Based on the Holcomb decision Varnes renewed his motion for judgment against Armour on its third party complaint and in May, 1967, the motion dismissing Armour's third party complaint was granted. Armour moved to vacate the May judgment but did not call its motion for hearing until April, 1970, at which time its motion was denied and this appeal follows.

Armour, as third party plaintiff, is the only appellant on this appeal and Varnes, the third party defendant, is the only appellee. The facts are undisputed and the only question presented on this appeal is the propriety of the court's decision holding that Armour was not entitled to indemnity at the time the court finally ruled on the third party complaint.

As a preliminary observation this controversy has evolved from two related rules. The first is that there can be no liability on the part of a principal on the theory of respondeat superior unless the agent also be liable. Meece v. Holland Furnace Co., 269 Ill.App. 164. The second rule is that where liability against a principal is established by the doctrine of respondeat superior the principal is entitled to indemnity from the negligent agent. Purple Swan Safety Coach Lines v. Egyptian Transp. Co., 256 Ill.App. 442.

In Holcomb v. Flavin, supra, the Court concluded that the liability of a principal under the application of the respondeat superior doctrine was derivative and consequently whatever extinguished a cause of action against the agent including a 'Covenant Not To Sue' also exonerated the principal from liability.

As one of its arguments Armour initially urges that the Holcomb case is not applicable to this controversy. According to Armour the 'Covenant Not To Sue' in the case at bar is different from the covenant considered in the Holcomb case and therefore the result should be different. The differences pointed to in the covenants is that the one involved in the case at bar included a provision that it would...

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6 cases
  • Naramore v. Colquitt
    • United States
    • United States Appellate Court of Illinois
    • November 21, 1973 rendered and not when the suit is brought. Goldblatt v. City of Chicago, 30 Ill.App.2d 211, 174 N.E.2d 222; Gramm v. Armour & Company, 132 Ill.App.2d 1011, 271 N.E.2d 52. As is stated in Gramm on page 1014, 271 N.E.2d on page "As a general rule, the overruling of a decision operates retr......
  • Agee v. First Nat. Bank of Maywood
    • United States
    • United States Appellate Court of Illinois
    • February 14, 1979
  • GTE Automatic Elec., Inc. v. Allphin
    • United States
    • United States Appellate Court of Illinois
    • May 14, 1976
    ...Generally, a case is governed by the law as it exists when judgment is rendered and not when the suit is brought. (Gramm v. Armour & Co., 132 Ill.App.2d 1011, 271 N.E.2d 52.) Even if we consider the application of Supreme Court decision to a pending case not yet reduced to judgment to be of......
  • Texas Eastern Transmission Corp. v. Seymour Nat. Bank
    • United States
    • Indiana Appellate Court
    • July 25, 1983
    ... ... State ex rel. Board of School Commissioners of the City of Indianapolis (1898), 150 Ind. 168, 174-174, 49 N.E. 961, 963; Gramm v. Armour and Company (1971), 132 Ill.App.2d 1011, 1014, 271 N.E.2d 52, 55; cf. Gross v ... Board of Commissioners of Whitley County (1902), 158 Ind ... ...
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