McGuire v. Commercial Union Ins. Co. of N. Y., B-728
| Decision Date | 10 July 1968 |
| Docket Number | No. B-728,B-728 |
| Citation | 431 S.W.2d 347 |
| Parties | Billy Pat McGUIRE et ux., Petitioners, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, Respondent. |
| Court | Texas Supreme Court |
Gibson, Ochsner, Harlan, Kinney & Morris, S. Tom Morris, Amarillo, for petitioners.
Hardie, Grambling, Sims & Galatzan, El Paso, Underwood, Wilson, Sutton, Heare & Berry, R. A. Wilson, Amarillo, for respondent.
This is a declaratory judgment action brought by respondent Commercial Union Insurance Company to determine its obligations under a liability insurance policy issued to Charles A. Pryor. The controversy arose from a two-car collision in which the insured, Charles Pryor, was killed, and petitioner Billy Pat McGuire was seriously injured. Karen Sue Pryor, the surviving widow of Charles Pryor, filed a wrongful death action against Billy McGuire and Leonard Traylor on behalf of herself, her minor child, and the parents of Charles Pryor. The plaintiffs prayed for wrongful death damages and also sought damages for the funeral services and burial expenses occasioned by the death of Charles Pryor. That suit alleged that Billy McGuire's negligence was the proximate cause of the accident that resulted in Charles Pryor's death, and that at the time of the accident, McGuire was acting as an employee of Leonard Traylor.
The insurance carrier of McGuire and Traylor indicated its willingness to pay $10,000 on behalf of McGuire and Traylor in settlement of this wrongful death claim, and a compromise settlement agreement was prepared. The attorneys who represented that insurance company also filed an answer on behalf of McGuire, asserting a cross-action or counterclaim which alleged that the accident was proximately caused by the negligence of the deceased, Charles Pryor. This counterclaim named as defendant Karen Sue Pryor, 'individually and as community survivor of the marital partnership and community estate of Karen Sue Pryor and Charles A. Pryor.'
The following events also took place on December 28, 1965, the day that the McGuire answer and counterclaim were filed. The attorneys for McGuire filed a motion requesting that the McGuire counterclaim be severed from the original suit; and the compromise settlement agreement between Karen Sue Pryor and the insurance company representing McGuire and Traylor was filed with the court for approval. The district court entered an order granting the severance motion, severing the Pryor wrongful death suit from the McGuire counterclaim. Thereafter, the trial court approved the compromise settlement agreement (because a minor plaintiff was involved); and the settlement agreement became an agreed judgment.
Commercial Union Insurance Company had issued a non-owner type policy of insurance to the above-mentioned Charles A. Pryor, a highway patrolman. As indicated below, Mrs. Pryor was served with citation on the cross-action on December 28 during the above proceedings. She promptly mailed the citation to Commercial.
Commercial Union duly received the Pryor citation and filed an answer on her behalf, but reserved its right to refuse to defend the suit or pay any judgment in favor of the McGuires. Thereafter, Commercial Union filed this suit as a declaratory judgment action, seeking a determination that it was not obligated to defend the McGuire counterclaim or pay any amount which might be adjudged against Karen Sue Pryor in favor of the McGuires. The trial court denied Commercial Union any relief. The Court of Civil Appeals, however, reversed the action of the trial court and rendered judgment for Commercial Union. It held that 'when Mrs. Pryor, as survivor of the community estate, made and entered into the . . . agreement without the knowledge or consent of Commercial 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 disposes of one conflicting claim arising out of a motor vehicle accident while purporting to preserve and not prejudice the other conflicting claim. It is admitted that the liability insurance policy issued to Charles Pryor was in force on the date of the accident, but it is contended by Commercial Union that the settlement agreement and agreed judgment operated to discharge it from its obligations under the insurance policy issued to Charles Pryor.
The compromise settlement agreement expressly included provisions intended to preserve the McGuire counterclaim and to insure that the McGuire claim would not be affected by the entry of an agreed judgment in the Pryor wrongful death claim. The pertinent provisions of the compromise settlement agreement which was approved by the trial court are set out in the opinion of the Court of Civil Appeals. 423 S.W.2d at 365 and 366. In substance, it recognized that a dispute existed between the parties as to liability and the amount thereof, if any; that although disclaiming any liability on the part of McGuire and Traylor, the Phoenix of Hartford Insurance Company (insurer for McGuire and Traylor) was willing to pay $10,000 in settlement; it therefore was agreed that in consideration of the payment of $10,000 by Phoenix to Karen Sue Pryor, individually and as community survivor, and to the other plaintiffs in that suit, the plaintiffs Pryor et al. released McGuire, Traylor and Phoenix from all liability from all claims arising out of the death of Charles Pryor. The agreement then recites that it was understood that the McGuires had asserted counter-claims for damage because of the injury to Billy Pat McGuire. It continues to state that:
'. . . said counter-claim has been severed by order of the Court . . . and shall remain pending as a separate cause . . .; 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 the settlement and the judgment entered in pursuance hereof shall never be used or admissible in evidence against any of the parties released hereby.'
As stated, the Court of Civil Appeals held that the execution of the above agreement by Karen Sue Pryor operated to discharge Commercial Union from its obligations under the Pryor insurance policy.
In order for the settlement and agreed judgment to have such effect, it must have interfered with Commercial Union's contract right to defend the McGuire claim by prejudicing Commercial Union or depriving it of an otherwise available defense. The opinion of the Court of Civil Appeals includes holdings that the provisions of the settlement agreement which preserved the McGuire counterclaim deprived Commercial Union of several defenses, including the McGuires' failure to assert a compulsory counterclaim, res judicata, and the right to introduce the...
To continue reading
Request your trial
-
Texas Farmers Ins. Co. v. Soriano
...settlements. The law favors settlements. See Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986); McGuire v. Commercial Union Ins. Co., 431 S.W.2d 347, 352 (Tex.1968). And settlements in multi-claimant cases involving underinsurance would be severely curtailed if an insurer acted at i......
-
American Physicians Ins. Exchange v. Garcia
...558 S.W.2d 855, 857 (Tex.1977); City of Houston v. Sam P. Wallace and Co., 585 S.W.2d 669, 673 (Tex.1979); McGuire v. Commercial Union Ins. Co., 431 S.W.2d 347, 352 (Tex.1968). See Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986). 18 The settlement agreements in cases such as Stewa......
-
Avila v. St. Luke's Lutheran Hosp.
...be contended that the court's judgment included an adjudication of the issues of liability or negligence. Cf. McGuire v. Commercial Union Ins. Co., 431 S.W.2d 347, 352 (Tex.1968). In the instant case, neither St. Luke's nor Abel seriously construes the judgment in question as anything but a......
-
Dalisa, Inc. v. Bradford
...matters of severance. Guaranty Fed. Say. Bank v. Horseshoe Oerating Co., 793 S.W.2d 652, 658 (Tex. 1990) (citing McGuire v. Commercial Union Ins. Co., 431 S.W.2d 347 (Tex.1968)). Indeed, severance of claims "rests within the sound discretion of the trial court." Liberty Nat. Fire Ins. Co. v......
-
Table of Cases
...Corp., 769 S.W.2d 261, 264 (Tex. App.—Houston [1st Dist.] 1988, writ denied), §12.03.2 McGuire v. Commercial Union Ins. Co. of N.Y ., 431 S.W. 2d 347, 352 (Tex. 1968), §9.05 McKinley v. Drozd , 685 S.W.2d 7 (Tex. 1985), §§1.02.15, 9.20 McKinney v. National Union Fire Ins. Co. of Pa., 772 S.......
-
Trial: Part One Voir Dire to Close of Evidence
...1964, writ ref’d n.r.e.). Settlement agreements generally are inadmissible in evidence, McGuire v. Commer‑ cial Union Ins. Co. of N.Y ., 431 S.W. 2d 347, 352 (Tex. 1968); therefore, settlement offers, negotiations or agreements may not be discussed in voir dire. Clayton v. Volk‑ swagenwerk,......