Palestine Contractors, Inc. v. Perkins

• Decision Date: 02 December 1964
• Docket Number: No. A-10124,A-10124
• Citation: 386 S.W.2d 764
• Parties: PALESTINE CONTRACTORS, INC., Petitioner, v. Lois PERKINS et al., Respondents.
• Court: Texas Supreme Court

Page 764

386 S.W.2d 764

PALESTINE CONTRACTORS, INC., Petitioner, v. Lois PERKINS et al., Respondents.

No. A-10124.

Supreme Court of Texas.

Dec. 2, 1964.

Rehearing Denied and Dissenting Opinion Filed Jan. 27, 1965.

B. R. Reeves, Palestine, Garrison, Renfrow, Zeleskey, Cornelius & Rogers, Lufkin, for petitioner.

Johnston & Johnston, Palestine, Helm, Jones & Pletcher, Mabel Grey Howell, Houston, for respondents Mrs. Lois Perkins and F. Perkins.

John B. McDonald, Palestine, for respondent Herman C. Conoway.

Douglas E. Bergman, by John W. Clark, Jr., Dallas, amicus curiae.

GREENHILL, Justice.

This is an action to recover for personal injuries suffered by Mrs. Lois Perkins when a truck belonging to Palestine Contractors, Inc., collided with her automobile. The jury convicted Palestine's driver of several acts of negligence, each of which was a proximate cause of the collision. Herman Conoway, driver of a thord vehicle and third party defendant in this suit, was convicted of one act of negligence which was a proximate cause of the collision. Judgment was rendered against Palestine Contractors for $26,500 with recovery over against Conoway for $13,250. The Houston Court of Civil Appeals reformed the judgment for contribution to provide that Palestine recover only to the extent that it pays more than one-half of the judgment. As reformed the judgment of the trial court was affirmed. 375 S.W.2d 751; note, 43 Tex.L.Rev. 118 (1964).

Sometime after the collision in question, Mrs. Perkins gave Conoway a covenant not to sue. ¹ She agreed not to sue Conoway directly or indirectly but expressly reserved the right to sue Palestine Contractors. There was no agreement to indemnify Conoway against any suit over by Palestine Contractors. The covenant recites a tendollar consideration, but it was not paid. Plaintiff's testimony was that the reason for giving the covenant was to help Conoway retain his driver's license which the State was threatening to suspend under the provisions of the Texas Motor Vehicle Safety-Responsibility Act.

The important question to be decided is whether a covenant not to sue given to one of two negligent joint tortfeasors precludes the plaintiff from recovering more than one-half of the damages from the non-settling tortfeasor.

Palestine Contractors, in support of its contention that only one-half of the damages can be recovered against it, relies on a statement in Gattegno v. The Parisian, 53 S.W.2d 1005 (Tex.Com.App.1932), and on an article by Hodges, Contribution and Indemnity Among Tortfeasors, 26 Texas Law Review 150 (1947). The Gattegno case and Mr. Hodges' article will be again referred to. Judge Critz, writing for the Texas Commission of Appeals in Gattegno, said, 'Therefore, if it be found that Gattegno and Muir are both active tort-feasors as between each other, the release having discharged Muir as to all liability to The Parisian, has at least discharged one-half its damages.' 53 S.W.2d at 1008. The Court of Civil Appeals in this case refers to this statement as dictum, a matter we shall also comment upon later. In any event we have reviewed the principle of law to determine whether or not the statement in Gattegno should be followed.

Perkins relies on a number of Texas cases which state the rule that the nonsettling tortfeasor is entitled to credit on the judgment for the amount already paid for the covenant not to sue. Austin Road Co. v. Pope, 147 Tex. 430, 216 S.W.2d 563 (1947); Robertson v. Trammell, 98 Tex. 364, 83 S.W. 1098 (1904); Lottman v. Cuilla, 288 S.W. 123 (Tex.Civ.App.1926); Friedman v. Martini Tile & Terrazzo Co., 298 S.W.2d 221 (Tex.Civ.App.1957, no writ); Lone Star State Life Ins. Co. v. Foster, 250 S.W.2d 949 (Tex.Civ.App.1952, wr. ref., n. r. e.); Gillette Motor Transport Co. v. Whitfield, 186 S.W.2d 90 (Tex.Civ.App.1945, wr. ref., w. o. m.); Eckel v. First Nat. Bank, 165 S.W.2d 776 (Tex.Civ.App.1942, wr. ref.); Watkin Music Co. v. Basham, 48 Tex.Civ.App. 505, 106 S.W. 734 (1907, no writ); E1 Paso & S. R. Co. v. Darr, 93 S.W. 166 (Tex.Civ.App.1906, wr. ref.). With one exception, it does not appear that the contention was ever made in the adove-cited cases that plaintiff's recovery should be limited to one-half of the damages. Without such a contention, a mere holding that credit should be allowed on the judgment does not necessarily conflict with the theory that the judgment should be reduced by one-half.

The one exception mentioned involved co-makers of notes rather than joint tortfeasors. The notes were given for the purchase of a piano. After default of several installment payments, the plaintiff repossessed the piano from one co-maker and gave her a covenant not to sue. The plaintiff then sued the other co-maker alone for the full amount of the notes. The defendant co-maker argues that his liability was only one-half of the value of the notes. The Court of Civil Appeals held that he was liable for the full amount but had a right of contribution against the settling co-maker. That case is similar to the one before us in that no consideration was paid for the covenant not to sue. Watkin Music Co. v. Basham, 106 S.W. 734 (1907), an opinion of a Court of Civil Appeals which did not reach this Court.

In one other case, cited by Perkins, the contention was made by the non-settling defendant that plaintiff's recovery should be for only one-half of the verdict because of plaintiff's settlement with the other tortfeasor. Skyline Cab Co. v. Bradley, 325 S.W.2d 176 (Tex.Civ.App.1959, wr. ref., n. r. e.). In that case the plaintiff had sued both tortfeasors but dismissed one, Mrs. Foster, with whom plaintiff and settled. She still remained in the suit, however, by reason of the non-settling tortfeasor's third-party action to recover for damages to his cab. There was no prayer for contribution. The jury found both tortfeasors guilty of negligence proximately causing the collision. The Court of Civil Appeals at Houston held:

'(It is) clear that appellants are not in position to insist that the release discharged one-half of the damages awarded, since appellants made no effort to retain Mrs. Foster (the settling tortfeasor) in the suit and failed to plead over against her and wholly failed to ask for contribution. In these particulars the instant case is distinguishable from the case of Gattegno v. The Parisian * * * relied on by appellants.' 325 S.W.2d at 183.

Without again reviewing the wisdom of the distinction made in the Skyline Cab case, we can state that it is distinguishable from the case at bar wherein there is an action for contribution.

It is undisputed that a plaintiff may sue one of several joint tortfeasors and collect the full damages from him. Landers v. East Texas Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731 (1952). It is also undisputed that had Perkins sued Palestine Contractors without agreeing not to sue Conoway, Palestine Contractors would have had to pay the total damages. It could in turn sue Conoway for contribution, either in the same or in a subsequent suit. Here, however, Palestine Contractors contends that Perkins can recover only one-half of the damages against it since Perkins gave up her right to sue Conoway indirectly.

There are three possible solutions to the problem posed by this case: (1) In order to protect the settling tortfeasor from a subsequent suit that destroys the finality of his settlement, and in order to allow the plaintiff a full recovery, we could (but for the Texas Contribution statute) deny the defendant a right to contribution. This is the view of the Uniform Contribution Among Tortfeasors Act § 4(b) (1955), which will be discussed later. However, this result would be clearly contrary to Article 2212, Vernon's Annotated Civil Texas Statutes, which gives to a defendant who has paid more than his share of the damages a substantive right to a proportionate recovery against the other solvent defendants, who in turn retain a right of recovery of a judgment against the insolvent defendants. A plaintiff cannot cut off from a defendant not a party to the settlement the right to contribution by an agreement with a third party.

(2) The rule applied by the Court of Civil Appeals allows the plaintiff to recover from the non-settling defendant the full damages less a credit for the amount of the previous settlement. The non-settling defendant is then allowed to get contribution from the settling tortfeasor, notwithstanding the settlement and regardless of the plaintiff's covenant not to sue indirectly the latter. Under this rule, the tortfeasor who settled is not only faced with the expense of litigation but also with a judgment which, when added to his settlement, raises his loss to what it would have been had he not attempted to settle with the plaintiff. He loses the benefit of the covenant not to sue under which he thought he had bought his peace unless he can recover his loss from the plaintiff in a circuitous action for breach of covenant.

Whether plaintiff's suit against the nonsettling defendant for more than half of the damages is an indirect suit against the settling tortfeasor is a matter of dispute between the parties. On the one hand the covenant expressly declared that Palestine would be looked to for damages. It is argued that the parties to that instrument must have known that Palestine Contractors would sue Conoway for contribution. On the other hand, the intention of the parties was to release Conoway from the danger of liability so that he might retain his driver's license. This intent would fail if he remained liable for contribution; therefore, it is argued, the parties must have contemplated that Perkins recover only one-half of the damages so that Palestine Contractors would have no right of contribution against Conoway.

(3) The rule expressed in the Gattegno case and explained in Professor Hodges' article would allow the plaintiff to recover only one-half of the damages found by the...