Ray Korte Chevrolet v. Simmons

• Citation: 117 Ariz. 202,571 P.2d 699
• Decision Date: 15 September 1977
• Docket Number: No. 1,CA-CIV,1
• Parties: RAY KORTE CHEVROLET, an Arizona Corporation, Appellant, v. Caroline F. SIMMONS, a single woman, Appellee. 3465.
• Court: Arizona Court of Appeals

Page 699

571 P.2d 699

117 Ariz. 202

RAY KORTE CHEVROLET, an Arizona Corporation, Appellant, v. Caroline F. SIMMONS, a single woman, Appellee.

No. 1 CA-CIV 3465.

Court of Appeals of Arizona, Division 1, Department A.

Sept. 15, 1977.

Rehearing Denied Oct. 21, 1977.

Review Denied Nov. 15, 1977.

Burch, Cracchiolo, Levie, Guyer & Weyl, P.A. by Daniel Cracchiolo, Robert A. Guyer, Phoenix, for appellant

Langerman, Begam, Lewis, Leonard & Marks, P.A. by Samuel Langerman, James J. Leonard, Jr., Barry C. Schneider, Noel A. Fidel, Phoenix, for appellee.

OPINION

NELSON, Presiding Judge.

This is an appeal by Ray Korte Chevrolet (Korte) from a jury verdict in a personal injury case that awarded to the plaintiff-appellee, Caroline F. Simmons (Simmons), the total sum of $671,520.00 damages. The appellant raises several questions on appeal, including the trial court's jurisdiction, the finding of liability, the admissibility of evidence, the propriety of the closing argument of counsel and the trial court's refusal to give certain instructions. For the reasons stated below we find there was no error and affirm the judgment.

The facts disclose that James L. Stone was a salesman employed by Korte. On May 3, 1971, the automobile he was driving struck the car appellee was driving, head-on. Stone was killed in the accident and Simmons was severely injured. Stone was in the wrong lane of traffic at the time of the collision and had consumed some alcohol prior to the accident. Further facts will be presented as they become pertinent to a discussion of the issues.

I. JURISDICTION

Initially we must consider whether this Court has jurisdiction over the appeal. Gabriel v. Murphy, 4 Ariz.App. 440, 421 P.2d 336 (1966).

On August 23, 1974, the trial court entered a summary judgment dismissing the complaint. Subsequently on August 28, within the requisite time period, Arizona Rules of Civil Procedure 59(d), Simmons filed a motion for rehearing which the trial court granted, and on September 30, 1974, by minute entry the original judgment of dismissal was vacated. On March 20, 1975, a formal written order vacating the judgment was filed and a trial on the merits followed.

Appellant now contends that the trial court's action in vacating the dismissal was without jurisdiction since the 60-day appeal period, Rule 73(b), Arizona Rules of Civil Procedure, 16 A.R.S., had run on the judgment of dismissal prior to the issuance of the formal written order on March 20, 1975. Thus, the appellant argues the subsequent trial, and this appeal from its results, are a nullity.

We reject this contention on the authority of Maganas v. Northroup, 112 Ariz. 46, 537 P.2d 595 (1975), which held that a motion for new trial can be asserted against a summary judgment pursuant to Rule 59, Arizona Rules of Civil Procedure. See also the recent decision of this Court in John Carollo Engineers v. Sharpe, (No. 1 CA-CIV 3806, filed May 19, 1977). As a consequence, the time for filing an appeal from the summary judgment was suspended until the order granting the motion was entered. The trial court therefore had jurisdiction to vacate the summary judgment.

Nonetheless, it is argued that the motion was not a "motion for new trial" but a "motion for rehearing" and therefore not a Rule 59 motion which would suspend the running of the appeal period under Rule 73(b). The problem raised here is whether the correct name must be placed on the motion in order for it to be effective in suspending the running of the appeal period.

We hold that the trial court correctly treated the motion as one for a "new trial" under Rule 59, even though it was not labeled as such. We will look to the substance and not the form in this instance. There is, however, disagreement on this issue in Division One of the Court of Appeals. See Spradling v. Rural Fire Protection Company, 23 Ariz.App. 549, 534 P.2d 763 (1975) (cf. dissenting opinion of Judge Froeb); Matter of Estate of Balcomb, 114 Ariz.App. 519, 562 P.2d 399 (1977); Hegel v. O'Malley Insurance Company (unpublished order presently on review in the Arizona Supreme Court, 1 CA-CIV 3705, Supreme Court No. 13223-PR).

In the instant case, therefore, the appeal period on the judgment was suspended by the timely motion for rehearing and was subsequently properly vacated by the court, making the ensuing trial and this appeal jurisdictionally proper.

II. COVENANT NOT TO SUE

The second issue revolves around a covenant ¹ executed by the appellee releasing the principal tortfeasor, Stone, from suit, but expressly reserving any action the appellee might maintain against the appellant. There is an unquestionable split of authority on the issue of whether a document covenanting not to sue one primarily liable operates to release one whose liability is solely derivative, see Annot. 20 A.L.R.2d 1044, 92 A.L.R.2d 533. However, because of the nature of this covenant, we need not reach that issue here.

Since the covenant herein is clearly a covenant not to sue and not a release from liability on the underlying tort, it did not release Korte.

Two Arizona Supreme Court decisions have held that since a covenant not to sue does not adjudicate the merits of the case, it releases only those parties specifically mentioned in the agreement. Hovatter v. Shell Oil Company, 111 Ariz. 325, 529 P.2d 224 (1974); Fagerberg v. Phoenix Flour Mills Company, 50 Ariz. 227, 71 P.2d 1022 (1937).

In the Hovatter decision, the principal would similarly have been liable only on respondeat superior grounds. The Court there said that since the covenant expressly reserved the right to proceed against the principal, and since the covenant should be interpreted following the intent of the parties, citing Fagerberg v. Phoenix Flour Mills Company, the covenant would not release the principal. The Court agreed with an Illinois opinion which states:

"In our opinion it matters greatly how the servant's liability was extinguished. Where the master's liability rests solely on respondeat superior, if the servant is exonerated by trial on the merits, then, of course, the master cannot be held liable, but there is no logical or legal basis for extending the rule to situations where a servant terminates his liability by obtaining a covenant not to sue. Holcomb v. Flaving (sic), 62 Ill.App.2d 245, 249, 210 N.E.2d 565, 567 (1965)."

The Illinois Supreme Court subsequently reversed this appellate decision, explaining:

". . . if the defendants (employers) would have to respond in damages, they could sue their alleged employee, the covenantee, for the amount they had to pay. The employee would then have to respond in the very damages which the covenant was supposed to guard against. The contrary result reached by the appellate court herein would certainly involve an undesirable circuity and multiplicity of actions." Holcomb v. Flavin, 34 Ill.2d 558, 216 N.E.2d 811 (1966).

Therefore, the judge reasoned, if the employer was entitled to common law indemnity from the employee, the covenant would be of absolutely no value to the employee since he would be unprotected against an action by the employer. Consequently the Illinois court held that a covenant releasing the employee necessarily released the employer. This was not, however, Illinois' last word on the issue.

In a subsequent case distinguishing Holcomb, the Illinois Supreme Court held that where a party is specifically excluded from the covenant, he may still be sued. Edgar County Bank & Trust Co. v. Paris Hospital, Inc., 57 Ill.2d 298, 312 N.E.2d 259 (1974). In fact, in Holcomb itself, the judge pointed out that in those jurisdictions which have held that the covenant not to sue the servant or agent did not bar an action against the master or principal, the instruments had contained express reservations of the covenantor's right to proceed against the covenantee's master or principal.

Similarly, in the instant case the issue of whether a covenant executed in favor of the principal tortfeasor releases the party secondarily liable need not be reached since the Arizona Supreme Court in Hovatter has said that such covenants shall be governed by the intent of the parties. Here there was clearly an intent to reserve a right of action against Korte. See Note 2, supra. We do not reach the issue of what would happen were rights against the principal not so expressly reserved.

III. EVIDENTIARY QUESTIONS

Appellant's next several allegations of error go to the heart of this controversy. In order to establish Korte's liability, plaintiff had to prove that Stone was acting within the course and scope of his employment at the time of the accident. Scottsdale Jaycees v. Superior Court of Maricopa County, 17 Ariz.App. 571, 499 P.2d 185 (1972).

The testimony on this issue is conflicting and must be viewed in the light most favorable to sustaining the verdict. Mahurin v. Schmeck, 95 Ariz. 333, 390 P.2d 576 (1964). Stone was officially off his regular shift when the accident occurred. He had gone to a neighborhood bar with another salesman after work and consumed approximately three beers. He subsequently returned to his office, made several business phone calls, including one to a Mr. Charles Urban, and then left to pick up Mr. Urban. Appellant seeks to have Urban's testimony regarding the phone conversation he had with Stone excluded from evidence. That testimony, while not completely dispositive, was an important part of appellee's case.

The phone conversation was admitted to show that Stone planned to pick up Urban just prior to his death and take him to the Ray Korte showroom. Mr. Urban's testimony regarding Mr. Stone's stated intention to pick him up to show him trucks is admissible as evidence of Stone's state of mind.

Wigmore pronounces the rule as follows:

"It has already been seen . . . that the existence of a design or plan to do a specific act is relevant to show that the act was probably done as planned. The design or plan,...