Pemrock, Inc. v. Essco Co.

• Decision Date: 10 February 1969
• Docket Number: No. 78,78
• Citation: 249 A.2d 711,252 Md. 374
• Parties: PEMROCK, INC. v. ESSCO CO., Inc., et al.
• Court: Maryland Court of Appeals

Page 374

252 Md. 374

249 A.2d 711

PEMROCK, INC. v. ESSCO CO., Inc., et al.

No. 78.

Court of Appeals of Maryland.

Feb. 10, 1969.

Hamilton P. Fox, Jr., Salisbury (Hearne, Fox & Bailey, Salisbury, on the brief), for appellant.

Ernest M. Thompson, Easton (Dorothy H. Thompson, Easton, and Stanley G. Robins, Salisbury, on the brief), for appellees.

Before HAMMOND, C. J., and MARBURY, BARNES, SINGLEY and SMITH, JJ..

HAMMOND, Chief Judge.

Involved in this appeal are the pertinence of the doctrine of election of remedies and of the collateral source rule, and the effect of a release in favor of all of mankind.

Pemrock, Inc. of Wicomico County, engaged Essco Co., Inc., to erect two prefabricated poultry houses of a design which eliminated most vertical supports, supplied by Anderson Box Company, Inc. About a year after Pemrock had accepted the houses from the builder and begun to use them, a storm with strong winds and heavy snow struck and soon the houses collapsed with great resultant damage. The New Castle Mutual Insurance Co. had insured the houses up to $40,000 against all direct loss by windstorm, including damages to the interior and property therein caused by direct action of the wind.

Pemrock and First National Bank of Maryland, its mortgagee, sued New Castle which impleaded Essco and Anderson on the claim that there had not been a direct loss caused by wind but rather a loss resulting proximately from faulty materials and negligent construction. ¹ No point was made below or here that this was not a proper case for impleader.

Pemrock then filed an amended declaration in two counts, the first claiming from New Castle on the insurance policy, and the second claiming against Essco and Anderson for their negligence. There was a mistrial, and Pemrock thereafter succeeded in having an equity court reform the policy to show clearly that there had been windstorm coverage. New Castle appealed and during the pendency of the appeal Pemrock settled with New Castle for $10,000 and executed an order which was filed in the case in the following language:

'Please mark the above case agreed, settled, satisfied and dismissed with prejudice as to the defendant, New Castle Mutual Insurance Co., only.'

Pemrock and First National Bank of Maryland each also executed a writing under seal, which provided that in consideration of $10,000 they released New Castle,

'and all other persons, firms, corporations, associations or partnerships of and from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever, which the undersigned now has/have or which may hereafter accrue on account of or in any way growing out of any and all known and unknown, foreseen and unforeseen bodily and personal injuries and property damage and the consequences thereof resulting or to result from the accident, casualty or event which occurred on or about the 30th day of January, 1966 at or near Pemberton Drive, Rt. 5, Salisbury, Wicomico County, Maryland, and particularly with reference to any Company liability under its Policy No. 49651 dated August 1, 1964, issued to Pemrock, Inc., and all endorsements made and attachable or attached thereto.'

Essco and Anderson thereupon each moved for summary judgment, on the basis of the order of satisfaction and the release. Pemrock answered, alleging that the effect of the order of satisfaction was only to terminate the case as if there had been an adjudication in favor of New Castle and that the filing of the order was equivalent to a finding that the poultry houses had not been destroyed by windstorm, so that there was no bar to further proceedings against Essco and Anderson. The answer further alleged that the release was no more than 'an agreement not to sue the New Castle Mutual Insurance Company given pursuant to an agreement (handwritten between New Castle's lawyer and Pemrock's lawyer), a copy of which is attached hereto,' that New Castle will pay $10,000 for Pemrock's order of satisfaction running to New Castle alone, retaining the action of Pemrock, Inc. against all other defendants and this agreement is the real agreement between Pemrock and New Castle and Essco and Anderson are not parties to it and cannot claim any benefit by it. No mention was made in the handwritten memorandum of a release. New Castle's lawyer made an affidavit in support of Pemrock's answer, in which he said, inter alia,

'there was no intention * * * to enlarge or change our agreement * * * by the execution * * * of the general release under date of September 21, 1967; and that it was not our intention that the release given to (New Castle) * * * should release any of the other parties to these proceedings as (New Castle) was acting only for itself * * *.'

Essco moved that the parts of Pemrock's answer setting forth its construction of the order of satisfaction and the handwritten memorandum attached to its answer and relied on by it to limit the effect of its release be not received or, if already received, stricken on the grounds that the memorandum was not under seal and could not be used to vary the release which was under seal, and that prior negotiations and agreements had been merged in the final integration.

Judges Travers and Mace granted summary judgments in favor of Essco and Anderson after striking out the handwritten memorandum and the parts of Pemrock's answer Essco had moved be stricken. Pemrock did not challenge these actions in brief or oral argument, although it did argue the release was ineffective to bar its claim against Essco and Anderson. Under the view we take of the matter the outcome would be the same whether or not the handwritten memorandum and Pemrock's full answer had or had not been before and considered by the trial court. The court relied on the doctrine of election of remedies that a litigant shall not be allowed to approbate and reprobate, after first rejecting Pemrock's right to avail itself of the benefit of the collateral source rule (which requires a tortfeasor to pay in full the damages suffered by the injured person, without credit for amounts received by the injured person from other sources such as an employer or an insurer), saying:

'Our understanding of the 'Collateral source rule' makes it unavailable to the plaintiff in this case because the two claims here are as divergent and inconsistent as is possible under any given circumstance. Double redress for a single wrong is, in our belief, never permitted where the causes of action are inconsistent.'

The doctrine of election of remedies has been said to be a rule of procedure or judicial administration rather than one of substantive law, and to be equitable in nature. Although it has been widely recognized, it has also been criticized strongly, particularly since the advent of modern procedural rules. Some United States Courts have said the doctrine is no longer applicable under federal rules of procedure. 25 Am. Jur.2d Election of Remedies, §§ 1, 2, 3.

The Maryland Rules case the fear of inconsistency that was said to be the hobgoblin of little minds and permit the pleading of alternative inconsistent claims. Rule 313 a permits a plaintiff to join in one action either as independent or alternative claims as many claims as he may have against a defendant, and Rule 313 c provides that where the plaintiff is uncertain against which of several persons he is entitled to relief, he may join any or all of them as defendants in the alternative, although the claim or right to relief against one may be inconsistent with the claim or right to relief against the other. Rule 301 d provides that a party in any action may plead in answer to any pleading cumulatively or in the alternative as many matters as he may deem necessary regardless of consistency. In Petillo v. Stein, 184 Md. 644, 652, 42 A.2d 675, 678, this Court said that the doctrine of election of remedies is a severe one 'which it is now generally held should not be extended.'

The cases have said that if one claim or remedy is pursued to judgment an inconsistent claim is thereafter barred. Bolton Mines Co. v. Stokes, 82 Md. 50, 33 A. 491, 31 L.R.A. 789; Kirchner v. Allived Contractors, Inc., 213 Md. 31, 131 A.2d 251; Travelers Indemnity Co. v. Nationwide Construction Corporation, 244 Md. 401, 416, 224 A.2d 285. The theory of the Maryland statements seems to have been that the plaintiff may not again vex the same defendant if he has already taken judgment against him for the same wrong. Hamlin Mach. Co. v. Holtite Mfg. Co., 197 Md. 148, 78 A.2d 450. None of the cases cited just above involved a settlement without judgment or inconsistent claims against separate defendants and the collateral source rule was not considered in them in relation to the doctrine of election of inconsistent rights or remedies, although there are cases in other States of settlements and separate defendants which support the decision of the trial court.

Various cases in Maryland have said or held that there can be but one recovery for a single wrong, whether the wrongdoers are joint tortfeasors or not. See, for examples, Lanahan v. Heaver, 79 Md. 413, 29 A. 1036; Cox v. Md. Elec. Rwys., 126 Md. 300, 95 A. 43; Grantham v. Board of County Com'rs For Prince George's County, 251 Md. 28, 246 A.2d 548, but none is fully comparable to the case before us on the facts.

We are entirely persuaded that Pemrock is barred as a matter of law by reason of the release it gave New Castle from proceeding against Essco and Anderson and that no useful or beneficial purpose would be served by discussing further or deciding the applicability to the case before us of the doctrines and rules of law to which we have referred.

For a substantial valuable consideration...