Rio Grande Gas Co. v. Stahmann Farms, Inc.

• Citation: 1969 NMSC 89,457 P.2d 364,80 N.M. 432
• Decision Date: 28 July 1969
• Docket Number: No. 8595,8595
• Parties: RIO GRANDE GAS COMPANY, Defendant-Third Party Plaintiff-Appellant, v. STAHMANN FARMS, INC., Third Party Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 364

457 P.2d 364

80 N.M. 432

RIO GRANDE GAS COMPANY, Defendant-Third Party Plaintiff-Appellant, v. STAHMANN FARMS, INC., Third Party Defendant-Appellee.

No. 8595.

Supreme Court of New Mexico.

July 28, 1969.

J. D. Weir, J. R. Crouch, Las Cruces, for appellant

William W. Bivins, Mark B. Thompson, III, Las Cruces, for appellee.

OPINION

NOBLE, Chief Justice.

Mrs. Losoya and Jose Losoya, in his own behalf and as next friend for their five children, recovered judgment against Rio Grande Gas Company (hereafter referred to as Rio Grande) for personal injuries and damages sustained by reason of a gas explosion. Rio Grande compromised and settled those judgments for an amount considerably less than the judgments. No appeal has been taken therefrom, but Rio Grande made Stahmann Farms, Inc. (hereafter referred to as Stahmann), the owner of the premises when the explosion occurred, a third-party defendant, claiming indemnity, or, in the alternative, contribution, if it should be determined that Stahmann was a joint tortfeasor. An instructed verdict dismissed the third-party action. Rio Grande has appealed from the directed verdict and the judgment entered pursuant thereto.

Stahmann has filed a motion to dismiss the appeal upon the grounds that (1) Rio Grande compromised and settled the judgment against it and in favor of the injured persons for less than the amount of the judgments without obtaining a release of the plaintiffs' claims against Stahmann, and (2) that if Stahmann had any liability to the plaintiffs, it and Rio Grande were joint tortfeasors, in pari delicto, and Stahmann is not liable for indemnity. We denied the motion to dismiss but granted leave to renew the contention at the time of argument of the case on its merits.

We first consider the motion to dismiss because even though the court may have erred in directing the verdict in Stahmann's favor, a reversal would accomplish nothing if, under the most favorable view of the evidence, Rio Grande could recover neither indemnity nor contribution.

The legal question of whether, by reason of its settlement of the judgments, Rio Grande is entitled to contribution from Stahmann arises under ch. 121, Laws 1947, known as the 'Uniform Contribution Among Tortfeasors Act' (§§ 24--1--11 to 18, N.M.S.A. 1953) (hereafter referred to as the 'Uniform Act').

The Uniform Act has now been adopted in its principal provisions by the States of Arkansas, Delaware, Hawaii, Maryland, Pennsylvania, South Dakota, Rhode Island and New Mexico. Thus, there are few decisions having considered the precise question presented in this case. Some provisions of the Uniform Act have been considered or referred to by this court in Bailey v. Jeffries-Eaves, Inc., 76 N.M. 278, 414 P.2d 503; Garrison v. Navajo Freight Lines, Inc., 74 N.M. 238, 392 P.2d 580; Salazar v. Murphy, 66 N.M. 25, 340 P.2d 1075; and Beal by Boatwright v. Southern Union Gas Co., 62 N.M. 38, 304 P.2d 566, but none of our decisions have discussed the issue presented by this appeal.

It is well settled that at common law there can be no contribution among joint tortfeasors, and that one of the purposes of the Uniform Act was to provide for a proportionate allocation of the burden among tortfeasors who are liable. 9 Uniform Laws Ann. 230; Annot., 34 A.L.R.2d 1107. Attention is called to an excellent discussion of the common-law rules and to the changes brought about in Arkansas by its adoption of the Uniform Act. 1 Ark.L.Rev. 190.

Section 24--1--12(3), N.M.S.A. 1953, of the Uniform Act, reads:

'(3) A joint tortfeasor who enters into a settlement with the injured person is not entitled to recover contribution from another joint tortfeasor whose liability to the injured person is not extinguished by the settlement.'

The statute is specific that the release by the injured person of one joint tortfeasor does not discharge other joint tortfeasors unless the release so provides. Sec. 24--1--14, N.M.S.A. 1953. Garrison v. Navajo Freight Lines, Inc., supra. The fact of the recovery of a judgment by the injured persons against Rio Grande alone does not operate as a discharge of other joint tortfeasors. Sec. 24--1--13, N.M.S.A. 1953. Williams v. Miller, 58 N.M. 472, 272 P.2d 676. See Salazar v. Murphy, supra, and Herrera v. Uhl, 80 N.M. 140, 452 P.2d 474.

We then examine this release to determine whether Rio Grande's settlement with the plaintiffs provides for extinguishment of Stahmann's liability, if any, to the injured persons. Plaintiffs' judgments, separately listed in the single judgment, totaled $122,754.01. The satisfaction recites that the judgments in that total amount were compromised and settled by Rio Grande for an aggregate amount of $107,000.00 and states:

'* * * in consideration of the payment of the total sum of $107,000.00, receipt of which is confessed and acknowledged, do hereby acknowledge full payment and satisfaction of said judgments, and hereby consent that the same be released and discharged of record; and the undersigned do hereby further release and forever discharge the Defendant, RIO GRANDE GAS COMPANY, from and on account of any claim or demand whatsoever.'

The satisfaction concludes with the statement that the release is without prejudice to Rio Grande's right to pursue its claim for indemnification or contribution from the third-party defendant, Stahmann Farms, Inc.

The release in this case is entirely different from that in Hodges v. United States Fidelity & Guaranty Co., 91 A.2d 473, 34 A.L.R.2d 1101 (Mun.Ct.App.D.C.1952), where the release discharged the named person and 'all other persons, firms and corporations, both known and unknown' from any claims for damages incident to the injury involved, and the court said that language completely excluded the possibility that the injured persons intended to reserve any claim against the other joint tortfeasors. East Coast Freight Lines, Inc. v. Mayor, etc., 190 Md. 256, 58 A.2d 290, 2 A.L.R.2d 386, and Kestner v. Jakobe, 412 S.W.2d 205 (Mo.Ct.App.1967), relied upon by Rio Grande, are distinguishable upon their facts. In Kestner v. Jakobe, the court construed the language of the release to be a satisfaction in full of all damages resulting from the automobile accident; thus completely releasing all other joint tortfeasors. In East Coast Freight Lines, Inc., joint tortfeasor releases were obtained from the plaintiffs. Furthermore, in Maryland, a plaintiff who has not asserted a claim against a third-party defendant, from whom contribution is sought by a joint tortfeasor, cannot thereafter assert a claim against such third party in a separate proceeding. State Farm Mut. Auto. Ins. Co. v. Briscoe, 245 Md. 147, 225 A.2d 270. No claim was made by the plaintiff against the third-party defendant in East Coast Freight Lines, Inc.

We are aware of but do not agree with the reasoning by the Supreme Court of Pennsylvania in Hilbert v. Roth, 395 Pa. 270, 149 A.2d 648, holding that because the legislature did not include 'satisfaction' of a judgment in section 3 of the Uniform Act, there was no intent to change the law concerning satisfaction of such a judgment and, consequently, the satisfaction of a judgment against one tortfeasor operates to discharge other joint tortfeasors even though the release does not so provide. In our view, the reasoning by which the Supreme Court of Rhode Island, in construing its identical statute, reached an opposite result is better reasoned and more persuasive. That court said, in Hackett v. Hyson, 72 R.I. 132, 48 A.2d 353, 166 A.L.R. 1096:

'In such a situation, if the Legislature intended 'recovery of a judgment' in sec. 3 to mean merely rendition of the judgment in favor of the injured person, then it accomplished nothing by declaring that recovery of a judgment against one joint tortfeasor did not discharge the other joint tortfeasors, as that was already the law. On the other hand, if it intended the words 'recovery of a judgment,' to mean actual recovery on the judgment and not mere rendition of the judgment, then it did accomplish something, namely, the reversal of the common-law rule that the satisfaction by one joint tortfeasor of the judgment discharged the other joint tortfeasors.'

The language of the release here makes it clear that the settlement between Rio Grande and the plaintiffs was for Rio Grande's benefit alone. Rio Grande settled its liability to the plaintiffs, separate and distinct from any liability of Stahmann to the plaintiffs, and without attempting to gain any benefit for Stahmann. Nor does the record reflect that Rio Grande gave notice to Stahmann of its intention to so settle with the plaintiffs. See Lacewell v. Griffin, 214 Ark. 909, 219 S.W.2d 227, 8 A.L.R.2d 189. Under these circumstances, Rio Grande is not entitled to contribution from Stahmann.

We cannot agree with Rio Grande that the question of whether it is entitled to recover indemnity from Stahmann is entirely a question of fact to be determined upon a retrial of the issues between Rio Grande and Stahmann. Before reaching the question of fact, it must first be determined whether, viewing the evidence most favorable to Rio Grande, the right of indemnity exists as a matter of law.

It is true that the Uniform Act expressly provides that it does not impair the right to indemnity. Sec. 24--1--16, N.M.S.A. 1953. We point, however, to important distinctions between the right to contribution and to indemnity. It has frequently been said that the difference between indemnity and contribution in cases between persons liable for an injury to another is that, with indemnity, the right to recover springs from a contract, express or implied, and enforces a duty on the primary wrongdoer to respond for all damages; with contribution, an obligation is imposed by law upon one joint tortfeasor to contribute his share to the discharge of the common liability. Where the facts warrant indemnity, the discharge of the obligation to the person...