Johnson v. Heintz, 747

• Decision Date: 30 June 1976
• Docket Number: No. 747,747
• Parties: Emaline JOHNSON and Donald A. Johnson, Respondents, v. Gladys Lorraine HEINTZ and American Family Mutual Insurance Company, Defendants and Third-Party Plaintiffs-Appellants, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Third-Party Respondents. (1974).
• Court: Wisconsin Supreme Court

Page 815

243 N.W.2d 815

73 Wis.2d 286

Emaline JOHNSON and Donald A. Johnson, Respondents, v. Gladys Lorraine HEINTZ and American Family Mutual Insurance

Company, Defendants and Third-Party Plaintiffs-Appellants,

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Third-Party

Respondents.

No. 747 (1974).

Supreme Court of Wisconsin.

Submitted May 5, 1976.

Decided June 30, 1976.

Wickhem, Consigny, Andrews, Hemming & Barton, S.C., Janesville, for appellants.

Grimm & Elliott, Janesville, and Richard E. Rosenberg, Janesville, of counsel, for respondents.

HANLEY, Justice.

The following issues are presented on this appeal:

1. May the trial court order concerning the undertaking be reviewed on this appeal?

2. Was it error for the trial court to allow a settlement between plaintiffs and third party defendants when the direct right of action between them was extinguished by the statute of limitations?

3. If the release was proper, should the defendants be allowed to inform the jury as to the settlement for its possible effect on the testimony of the plaintiff?

4. Did the trial court erroneously deny a directed verdict against the plaintiffs for a failure of their alleged burden of proof of separating the injuries and thus the damages attributable to the two collisions?

5. Did the jury return a verdict fatally defective by incompleteness?

6. Did the jury return a verdict fatally defective by inconsistency?

Post-Appeal Order Review

Appellants moved to dismiss the review of the post-appeal order concerning the undertaking and the obligation of interest, obviously because of the lack of a motion for cross-review within thirty days of the notice of appeal. Sec. 274.12(4), Stats. Respondents complain that this time period expired only two days after the particular order was entered. Quite conceivably, the order could have been made after the statutory period for notice of review. This unreasonable application of the review and cross-appeal procedure is cited as evidence that the statute was not meant to apply to post-appeal orders and that review of them is preserved merely by notice to the parties and inclusion of the necessary documents in the appellant record.

This court granted the motion to dismiss and noted that an explanation would be given in the decision on the appeal. It is clear that sec. 274.12, Stats., does not apply to the order concerning the use of a deposit in lieu of an undertaking for appeal. The portion of the order which aggrieves the Johnsons is the part limiting the insurer's responsibility for interest on the unpaid judgment. An order entered after judgment concerning other proceedings requires its own separate and noticed appeal. We think the failure to properly appeal that order precludes review.

State Farm Release

State Farm was brought into this action by a third party complaint for contribution. The Johnsons never directly claimed against State Farm or its insured, with the personal injury statute of limitations having run shortly after they commenced suit against Mrs. Heintz. Apparently State Farm and the appellants could not reach an agreement for settlement of the third party action. State Farm then obtained from the plaintiffs a purported Pierringer-type release in exchange for $5,000. Over the objection of the appellants, the trial court dismissed State Farm from the action. No reference to that insurer was made to the jury although State Farm's insured was included in the special verdict questions concerning the second impact.

Appellants complain about what they consider an unjustified extension of the power of a joint tortfeasor to satisfy the portion of a claim attributable to his own negligence without recourse to a trial and without compromising the claimant's rights against other parties. The viability of this power in the comparative negligence field was reaffirmed in Pierringer v. Hoger (1963), 21 Wis.2d 182, 124 N.W.2d 106. Unlike the situation here, settlement has usually been made between the injured party and one or more of the alleged joint tort-feasors who are defendants in the claimant's action. See, e.g., Payne v. Bilco Co. (1972), 54 Wis.2d 424, 195 N.W.2d 641. Heintz and American Family cite error in allowing the settlement and the resulting dismissal of State Farm from the action without their consent as the only parties who had a claim against State Farm.

Although a cause of action for contribution reflects the legal theory of the injured claimant, under our common law it is a separate and independent cause of action. State Farm Mutual Automobile Insurance Co. v. Schara (1972), 56 Wis.2d 262, 264--65, 201 N.W.2d 758. The basic elements of contribution in negligence situations were established in Farmers Mutual Automobile Insurance Co. v. Milwaukee Automobile Insurance Co. (1959), 8 Wis.2d 512, 515, 99 N.W.2d 746, 748:

'1. Both parties must be joint negligent wrongdoers; 2. they must have common liability because of such negligence to the same person; 3. one such party must have borne an unequal proportion of the common burden.'

The party asserting the right of contribution has the burden of alleging and proving these necessary conditions. Id. at 519, 99 N.W.2d 746. To facilitate efficiency and eliminate the necessity of additional subsequent litigation, this court has approved the practice of allowing the contribution action to be considered in the same proceeding involving the underlying damage claim despite the contingent nature of this cross action. Wait v. Pierce (1926), 191 Wis. 202, 209 N.W. 475, 210 N.W. 822; Gies v. Nissen Corp. (1973), 57 Wis.2d 371, 372, 204 N.W.2d 519; Wagner v. Daye (1975), 68 Wis.2d 123, 125, 227 N.W.2d 688. The common liability necessary for contribution is determined from the point of time of the damage occurrence, State Farm Mutual Automobile Insurance Co. v. Continental Casualty Co. (1953), 264 Wis. 493, 563, 59 N.W.2d 425, irrespective of whether the common liability has been later extinguished as to one of the joint tortfeasors, such as by the failure to fulfill a statutory notice requirement, Ainsworth v. Berg (1948), 253 Wis. 438, 34 N.W.2d 790, 35 N.W.2d 911. The Continental Casualty Case concerned a covenant not to sue entered into by the injured claimant and one of the joint tortfeasors, who unsuccessfully asserted that his 'extinguished' common liability prevented a contribution action by his co-tortfeasors. As noted in Continental Casualty Co., supra, at 501--02, 59 N.W.2d at 429:

'The fact that one tort-feasor has secured a defense, such as purchasing a covenant not to sue, to a claim by an injured party does not alter the fact that there has been an injury and loss resulting partially from the tortious act of that person. Justice requires that he pay his fair and honest share of the underlying abligation. The later acquired defense does not alter the basic equities of the situation."

Development of the law, of course, has enabled a joint tortfeasor to 'buy his peace' and avoid being subject to a contribution action of the agreement meets the requirements of Pierringer, so as to satisfy the equities that normally afford the contribution right to the other joint tortfeasors.

Expiration of the statute of limitations within which the claimant must bring his damage action results in an extinguishment of that claim against those potential defendants not then parties to a commenced proceeding. See Heifetz v. Johnson (1973), 61 Wis.2d 111, 115, 211 N.W.2d 834. This particular bar does not affect the right of contribution, Schara, supra, at 264--65, 201 N.W.2d 758, unless a completed statute of limitation somehow eliminates responsibility and thus joint liability before the damage incident, Hartford Fire Insurance Co. v. Osborn Plumbing Co. (1975), 66 Wis.2d 454, 461, 225 N.W.2d 628.

If State Farm had been an initial party defendant in the damage claim of the Johnsons, no objection could be raised to the fact that the plaintiff and a joint tortfeasor defendant were exercising the option approved by Pierringer. The settlement of the claim against a defendant under those circumstances requires that he be dismissed from the action. Unfortunate effects from a viewpoint of trial tactics may or may not result to the nonsettling codefendants, but these incidences do not constitute a legally cognizable bar to the release, which is facilitating a policy of reducing litigation and stimulating accord.

Should the untoward effects on trial tactics be recognized as a valid objection when the settlement and dismissal is made to the perceived jeopardy of the party who has the sole right of action against one of the 'settling' parties? Although State Farm and the Johnsons make much of the 'consideration' that has flowed between them, it is clear that they have erroneously assumed the answer of a legal question that is still in issue, i.e., could the purported release satisfy the claims against State Farm and thus justify its dismissal from the action? The cited factors of 'indirect financial exposure' or 'assumed risk of a finding of causal negligence against State Farm' which would greatly reduce the nonsettling defendant's exposure are no equivalent to the contribution claim which is the sole basis for State Farm's presence in the lawsuit, irrespective of how they offer an inducement to settle. State Farm is free, as the Johnsons point out, to settle claims which arguably do not constitute valid causes of action, yet such 'settlement' does not justify the insurer's release from the independent cause of action for contribution. Respondents claim that the Pierringer-form release so protects Mrs. Heintz and her insurer, but the Pierringer releases are effective to dismiss the settlor precisely because they satisfy the underlying claim between the parties while protecting the equities that normally afford contribution to the nonsettling defendant.

Plaintiff here failed to bring a claim against State Farm, yet purported to...