Munson v. United States

• Decision Date: 04 August 1967
• Docket Number: 17286.,No. 17285,17285
• Citation: 380 F.2d 976
• Parties: Lois MUNSON, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. D. James MUNSON, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

380 F.2d 976 (1967)

Lois MUNSON, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

D. James MUNSON, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

Nos. 17285, 17286.

United States Court of Appeals Sixth Circuit.

August 4, 1967.

Craig Spangenberg, of Spangenberg, Hasenflue, Shibley & Traci, Cleveland, Ohio, for appellants.

J. F. Bishop, Atty., Dept. of Justice, Washington, D. C. (J. William Doolittle, Acting Asst. Atty. Gen., Morton Hollander, Atty., Dept. of Justice, Washington, D. C., Merle M. McCurdy, U. S. Atty., Cleveland, Ohio, on the brief), for appellee.

Before WEICK, Chief Judge, and PECK and COMBS, Circuit Judges.

WEICK, Chief Judge.

On April 3, 1961, Venneth L. Beard, a Secret Service agent, acting in the course of his official employment, was involved in an automobile collision with plaintiff, Lois Munson, in Toledo, Ohio. As a result of this accident a cause of action for negligence arose on her behalf against Beard personally and against the United States as his employer, under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671-2680. In addition, another set of actions, for loss of services and consortium, arose against the same two defendants on behalf of D. James Munson, the husband of Lois Munson.

Mrs. Munson brought suit against Beard individually in the Ohio courts and later she and her husband filed separate actions against United States in the District Court. After negotiations between plaintiff's counsel and Beard's liability insurer, the Munsons executed an instrument entitled "Covenant Not to Sue" for the benefit of Beard, in exchange for the payment of $10,000, the full limits of Beard's insurance policy. The covenant recited that the payment was neither represented nor intended as full compensation for the Munsons, nor was it to constitute a release or full satisfaction Finally, it stated that the Munsons "specifically reserve unto themselves all their rights and causes of action against the United States of America under the Federal Tort Claims Act * * *."

It is the effect of this express reservation that is at issue in this appeal.

After the Munsons settled with Beard in the state suit, the United States moved for summary judgment in the two suits against it in the Federal Court. The basis for this motion was the contention that the covenant not to sue constituted in fact a full and complete release of Beard and therefore of his employer, United States, despite the express reservation to the contrary. The District Court granted the motion, holding that under Ohio law a release of the tortfeasor primarily liable (Beard, the servant) necessarily released the tortfeasor secondarily liable (United States, the master). From this order plaintiffs now appeal.

The Federal Tort Claims Act provides, in general, for a waiver of sovereign immunity to which the Federal Government is entitled. Under its basic provisions the United States is liable for the negligent or wrongful acts or omissions of its employees acting within the scope of their official employment "Under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b); see also 28 U.S.C. § 2674. This language means that state law governs these actions, and this is so in the present case. Matland v. United States, 285 F.2d 752 (3rd Cir. 1961); Air Transport Associates, Inc. v. United States, 221 F.2d 467 (9th Cir. 1955).

Although this provision generally subjects the United States to the same liabilities as other employers under state law doctrines of respondeat superior, there are several unusual features of the Tort Claims Act which do not correspond to familiar procedures under state law.

It seems clear that under the Act as it read at the time of this accident, plaintiff could proceed against the individual employee, or the United States, or both at the same time, although she would be entitled to but one satisfaction. Moon v. Price, 213 F.2d 794 (5th Cir. 1954).

However, Congress also provided specifically by statute that a judgment against the Government constitutes a complete bar to any later action by the claimant against the employee of the Government who caused the injury. 28 U.S.C. § 2676. Further, unlike the usual employer, the Government has no right to exact any indemnity from the employee who caused the injury, for which it, as master, is held liable alone. United States v. Gilman, 347 U.S. 507, 74 S.Ct. 695, 98 L.Ed. 898 (1954). The only relief which the United States may claim is a limited right of indemnity from the liability insurer of the negligent employee, where the Government qualifies as an insured under the terms of the policy. Grant v. United States, 271 F.2d 651 (2d Cir. 1959); Irvin v. United States, 148 F.Supp. 25 (D.S.D. 1957); Rowley v. United States, 140 F. Supp. 295 (D.Utah 1956).

The issue thus framed is whether or not Munsons' attempt to reserve their rights against the United States after their settlement with Beard was effective under the law of Ohio, read in the light of the special provisions and interpretations of the Federal Tort Claims Act. It is important to note that although this question appears to be a matter of first impression concerning a case of settlement for full policy limits, our decision will be of limited future practical effect. This is so because the 1961 Amendments to the Federal Tort Claims Act now require a claimant to proceed directly against United States as his exclusive remedy. 28 U.S.C. § 2679(b). Thus in future cases under the Act it seems unlikely that releases and/or covenants given by an employee will play a part in settlements or litigation.

For many years Ohio recognized and applied the old common law rule that a release of one joint or concurrent tortfeasor automatically released the others, regardless of the intent of the parties to the release, or whether full satisfaction of plaintiff's claim had been made. Ellis v. Bitzer, 2 Ohio 89 (1825). The Ohio Supreme Court later rejected such an abstract "metaphysical" doctrine in favor of the modern view that the intent of the parties governs the interpretation of releases with express reservations of rights against third parties in cases where full compensation for plaintiff's injury has not been made. Adams Express Co. v. Beckwith, 100 Ohio St. 348, 126 N.E. 300 (1919).

In the case of so-called primary and secondary tortfeasors, however, the older rule of automatic release is still enforced. Thus, a release of the negligent servant necessarily releases his master. Since the rule in primary-secondary tortfeasor situations was an outgrowth of the original doctrine in regard to joint and concurrent tortfeasors, it is important to determine the reason why the modern trend of the Adams Express case has not been applied to the master-servant relation.

Although there are no Ohio cases directly in point where a release of the servant was held to release his master, the authorities on the subject emphasize that the reason for such a rule was to protect the normal right of indemnity which the master holds by subrogation through any judgment rendered against him in favor of the plaintiff.

"A settlement with and release of the servant will exonerate the master. Otherwise, the master would be deprived of his right of reimbursement from the servant, if the claim after settlement with the servant could be enforced against the master." Losito v. Kruse, 136 Ohio St. 183, 188, 24 N.E.2d 705, 707, 126 A.L.R. 1194 (1940).

That is, where plaintiff recovers from the master, he, in turn, is subrogated to plaintiff's rights against the servant and may recover from him.

However, where plaintiff has first released the servant, the master would be unable to pursue his indemnity from the servant since his claim is based upon that of the plaintiff and would be blocked by the agreement concluded between plaintiff and the servant. In that case, no action would be allowed against the master since he would thus be forced to bear the entire burden of the servant's tort. See Losito v. Kruse, supra; Herron v. City of Youngstown, 136 Ohio St. 190, 198-199, 24 N.E.2d 708 (1940); Bello v. City of Cleveland, 106 Ohio St. 94, 106, 138 N.E. 526 (1922).

It should be clear that the primary-secondary characterization of the relationship between master and servant is a definition of their rights between themselves and has no bearing on their liability to the third party who has been injured. Thus, the master's right to indemnity from his servant, by way of subrogation to plaintiff's claims, is the crucial factor in releasing the master when the servant is released. It is not, as the...