Manns v. State, Dept. of Highways

• Decision Date: 13 June 1988
• Docket Number: No. 50A03-8706-CV-167,50A03-8706-CV-167
• Citation: 524 N.E.2d 334
• Parties: Lonnie R. MANNS, Plaintiff-Appellant, v. STATE of Indiana, DEPARTMENT OF HIGHWAYS, Defendant-Appellee.
• Court: Indiana Appellate Court

Page 334

524 N.E.2d 334

Lonnie R. MANNS, Plaintiff-Appellant, v. STATE of Indiana, DEPARTMENT OF HIGHWAYS, Defendant-Appellee.

No. 50A03-8706-CV-167.

Court of Appeals of Indiana Third District.

June 13, 1988.

Ted A. Waggoner, Peterson & Waggoner, Rochester, Peter L. Obremsky, Parr, Richey, Obremskey & Morton, Lebanon, for plaintiff-appellant.

Linley E. Pearson, Atty. Gen., Wm. Eric Brodt, Deputy Atty. Gen., Indianapolis, for defendant-appellee.

GARRARD, Presiding Judge.

Lonnie Manns commenced this action to recover for personal injuries he sustained when the motorcycle he was riding struck an automobile driven by Everett Hintz. After stopping for a stop sign the Hintz vehicle entered an intersection directly into the path of the motorcycle which was on a preferential highway.

Manns sued Hintz and the state contending the latter was guilty of negligent design of the intersection. Subsequently, Manns executed a covenant not to sue in favor of Hintz in exchange for $125,000 and the case proceeded to trial against the state. A jury returned a verdict for the defendant.

During the trial Manns called Hintz as a witness. On cross examination the state was permitted, over objection, to elicit that Hintz had been given a covenant not to sue in exchange for $125,000. On redirect Manns was precluded from placing before the jury the six page covenant. The asserted errors in these rulings provide the basis for this appeal.

At the outset we observe that the state has not argued nor does the record support an argument that introduction of the evidence was necessary to demonstrate bias or prejudice on the part of Mr. Hintz. Moreover, and unlike the situation in many so-called loan receipt agreements, the contract in this case contained no provision calling for the repayment of any money to Hintz in the event of a recovery against the state.

Manns correctly asserts that the evidence introduced has been allowed in Indiana on the theory that the payment was either intended to constitute total satisfaction of the plaintiff's claim or it, in fact, did so. The watershed case for this position is Bedwell v. DeBolt (1943), 221 Ind. 600, 50 N.E.2d 875. ¹

He also urges that the considerations are essentially the same whatever the instrument is called, as long as it is not a release. (For the effect of releases see, e.g., Young v. Hoke (1986), Ind.App. 493 N.E.2d 1279, transfer denied. We agree, except to the extent that additional considerations occur where the instrument calls for a repayment to the recipient of the covenant in the event plaintiff succeeds against other parties.

The appellant has eloquently presented the risks of undue prejudice which arise from presenting to the jury evidence of settlements with other parties. We need not repeat them here as they have been previously recorded in the opinions in State v. Ingram (1980), Ind.App., 399 N.E.2d 808 (Staton, J. dissenting), rev'd. 427 N.E.2d 444 and State v. Thompson (1979), 179 Ind.App. 227, 385 N.E.2d 198 except to acknowledge appellant's assertion that oftentimes the amount paid and accepted concerning such a third party is, in reality, more a consequence of the limits of that party's liability insurance than other considerations.

In addition, counsel urges that three Indiana cases are sufficiently at odds with the rule of admissibility that a reevaluation of the rule is called for.

In Scott v. Krueger (1972), 151 Ind.App. 479, 280 N.E.2d 336 a settlement with one defendant was reached after the evidence had been concluded and while the jury was in deliberations. The appellate court held it was not error for the court to refuse to call the jury back in and instruct them concerning the fact of a covenant not to execute and that they could consider it in their deliberations. The court determined that the settlement did not constitute a wrongful misleading of the court because the agreement was not entered into before completion of trial and because of Indiana's rule prohibiting contribution among joint tortfeasors. In other words the court was not misled as to the real status of the parties and the remaining defendant's inability to seek contribution precluded him from being exposed to any increased liability. Thus, the result was closely akin to that of the more ordinary cases where a party seeks to introduce additional evidence after the parties have rested and deliberations have begun. ²

In Sanders v. Cole Municipal Finance (1986), Ind.App., 489 N.E.2d 117 it appears that the trial court was confronted with multiple defendants and several covenants not to sue or not to execute together with one loan receipt agreement. The point argued on appeal was whether the only remaining defendant at trial was entitled to pro tanto discharge of the judgment to the extent of the settlement payments, and the court held that it was, except for payments made under the loan receipt agreement. While it appears that the settlements were not presented to the jury, no issue was presented on appeal that they should have been. Thus, the case should be distinguished.

Thirdly, Manns refers us to Gray v. Davis Timber & Veneer Corp. (1982), Ind.App., 434 N.E.2d 146. In that case the First District found the trial court committed reversible error by admitting into evidence a loan receipt agreement in its entirety including the amount of money received. While stating that the agreement was admissible for impeachment purposes, the court determined it was error to...