Putney v. Haskins, Docket No. 63769

• Decision Date: 28 September 1982
• Docket Number: Docket No. 63769,No. 7,7
• Citation: 414 Mich. 181,324 N.W.2d 729
• Parties: Loretta J. PUTNEY, Individually and as Administratrix of the Estate of Stanley M. Putney, Deceased, Steve Brian Putney, Curtis G. Putney and Curtis G. Putney, Jr., Plaintiffs- Appellees, v. Allen H. HASKINS and Sharol A. Haskins, Individually, Jointly and d/b/a "Melody Bar", Defendants-Appellants. Calendar414 Mich. 181, 324 N.W.2d 729
• Court: Michigan Supreme Court

Page 729

324 N.W.2d 729

Loretta J. PUTNEY, Individually and as Administratrix of the Estate of Stanley M. Putney, Deceased, Steve Brian Putney, Curtis G. Putney and Curtis G Putney, Jr. Plaintiffs- Appellees, v. Allen H. HASKINS and Sharol A. Haskins, Individually Jointly and d/b/a "Melody Bar" Defendants-Appellants.

Docket No. 63769.

Calendar No. 7.

414 Mich. 181, 324 N.W.2d 729

Supreme Court of Michigan.

Argued Oct. 8, 1980.

Decided Sept. 28, 1982.

Released for Publication Sept. 28, 1982.

Cicinelli, Mossner, Majoros & Alexander, P. C., Eugene D. Mossner, William S. Pearson, Saginaw, for plaintiffs-appellees.

A. T. Lippert, Jr., Thomas A. Connolly, Smith & Brooker, P. C., Saginaw, for defendants-appellants.

RYAN, Justice.

The dispositive issue in this action under the "dramshop act" ¹ is whether the plaintiffs were properly allowed to continue their suit against the defendant "dramshop" after settling with the allegedly intoxicated defendant. The fact that the allegedly intoxicated defendant continued as a nominal party and was not formally dismissed from the suit until the close of the proofs in this case is insufficient to satisfy the "name and retain" provision of the statute. We hold that a defendant has not been "retained in the action", within the meaning of the statute, if a settlement of any kind is reached between the plaintiff and the allegedly intoxicated defendant before "the litigation is concluded by trial or settlement". Accordingly, the trial court erred in denying the dramshop defendants' motion to dismiss, and the decision of the Court of Appeals must be reversed.

The plaintiffs' decedent, Stanley M. Putney, was killed when the motorcycle he was driving was struck from the rear by an automobile. The plaintiffs subsequently filed a suit alleging negligence against Paul S. Gibson, who drove the automobile, and Judith M. Gibson, who owned it. The plaintiffs also alleged that the defendant owners of the taverns, the Melody Bar and the Hoover Corner Bar, had sold or furnished alcoholic beverages to defendant Paul S. Gibson while he was visibly intoxicated, in violation of the dramshop act.

On the morning of the first day of trial, the plaintiffs settled with defendant Charles Good, the owner of the Hoover Corner Bar, for $8,000 in return for a covenant not to sue. The jury was then impaneled. On the morning of the second day of trial, counsel for the plaintiffs informed the court that plaintiffs' suit against defendants Paul S. Gibson and Judith M. Gibson had been settled for $40,000 in exchange for a covenant not to sue. However, the Gibsons were not formally dismissed as defendants at that time, nor was the jury informed of the settlement. The trial judge instructed the Gibsons' attorney to "do what you consider appropriate without attempting to hurt or help either side". Although he examined several witnesses, he did not participate in the examination of Paul Gibson nor did he call any witnesses on behalf of his clients.

At the conclusion of the proofs, but prior to the trial court's instructions to the jury, counsel for the Gibsons requested that the trial judge inform the jury that the Gibsons were no longer interested parties in this suit. Counsel for plaintiffs concurred in this request. Counsel for the Haskins requested that the trial judge require the continued trial participation of the Gibsons through closing arguments and jury deliberation in spite of the settlement between plaintiffs and defendants Gibson. The trial judge found as fact that there had been no collusion between the plaintiffs and the Gibsons, and that the $40,000 settlement was not a mere token settlement. The trial judge concluded that to require continued participation by the Gibsons would amount to an injustice and would discourage future settlements in similar cases and ruled that the jury should be informed that the Gibsons were no longer parties to the suit. At that point, counsel for the remaining defendants, the Haskins, moved to dismiss the plaintiffs' suit against his clients. The motion to dismiss was denied.

The trial court informed the jury that the suit against the defendants Gibson had been dismissed. After final argument, the jury was instructed and, following deliberation, returned a verdict in favor of the plaintiffs totaling $25,050. The defendants' post-trial motion for a new trial, based on the failure to "retain" defendant Paul S. Gibson as a defendant, was denied. On appeal, the Court of Appeals affirmed. Putney v. Gibson, 94 Mich.App. 466, 289 N.W.2d 837 (1979). We granted leave to appeal. 408 Mich. 897, 291 N.W.2d 358 (1980). We reverse.

The relevant portion of M.C.L. Sec. 436.22; M.S.A. Sec. 18.993, provided ² that:

"No action against a retailer or wholesaler or anyone covered by this act or his surety, shall be commenced unless the minor or the alleged intoxicated person is a named defendant in the action and is retained in the action until the litigation is concluded by trial or settlement."

In Salas v. Clements, 399 Mich. 103, 108-109, 247 N.W.2d 889 (1976), this Court agreed with the Court of Appeals as to the purpose of the provision:

" 'The provision will eliminate the common practice whereby the intoxicated person enters into a settlement with the injured plaintiff for a token sum, and thereafter energetically assists the plaintiff with the prosecution of a suit against the tavern owner. The provisions will also discourage possible collusion and perjury by those too weak to resist the obvious temptation inherent in the original dramshop act, which has now been recognized by the Legislature and corrected through this amendment.' "

The plaintiffs-appellees argue that since the trial judge found that the $40,000 settlement was no "mere token" amount, and that no fraud or collusion in fact existed, this Court should find "substantial compliance" with the "name and retain" provision of the statute. We disagree. In the first place, in the absence of a record adequately supporting such factual findings, we cannot presume that the $40,000 settlement precludes all possible collusion. It is not at all obvious that a $40,000 settlement in a wrongful death case arising from the defendant's alleged drunken driving is more than "token". ³ However, such difficult factual questions were avoided when the Legislature adopted a per se rule requiring the defendant to be "retained in the action until the litigation is concluded by trial or settlement". The Legislature could have required the allegedly intoxicated defendant to be retained "unless the trial judge finds the absence of fraud and collusion and approves the settlement". For some reason, perhaps because it recognized the difficulties inherent in that sort of inquiry and the resulting drain on judicial resources, the Legislature chose not to write such an exception into the statute. We similarly decline to create such an exception by judicially amending the statute.

The plaintiffs also argue that since defendant Paul Gibson was not formally dismissed as a party defendant until the close of the proofs, he was "retained" long enough to satisfy the "name and retain" provision of the statute. We must disagree. Plainly the litigation was not "concluded" at that point. The trial judge felt it would be "unnecessary" to retain the defendant any further. That observation was eminently correct in a practical sense. Once defendant Paul Gibson settled with the plaintiffs, he ceased to be a real party in interest and should have been dismissed. It was "unnecessary" to retain him from the moment of settlement and to have done so was meaningless, since the litigation no longer affected his rights and liabilities. See GCR 1963, 207. ⁴

For purposes of the "name and retain" provision, however, it is clear that Mr. Gibson should have been retained as an interested party defendant until the litigation was concluded. One of the ways the "name and retain" provision prevents fraud and collusion is by ensuring that the defendant will have a direct financial stake in personally testifying, examining witnesses, and arguing that he did not act in a negligent manner. Once the defendant's liability is fixed and...