Scurlock Oil Co. v. Smithwick, No. C-4838

CourtSupreme Court of Texas
Writing for the CourtKILGARLIN; McGEE; SPEARS; GONZALEZ; McGEE
Citation30 Tex.Sup.Ct.J. 74,724 S.W.2d 1
PartiesSCURLOCK OIL COMPANY, Petitioner, v. Maria C. SMITHWICK, Individually et al., Respondents.
Decision Date26 November 1986
Docket NumberNo. C-4838

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724 S.W.2d 1
SCURLOCK OIL COMPANY, Petitioner,
v.
Maria C. SMITHWICK, Individually et al., Respondents.
No. C-4838.
Supreme Court of Texas.
Nov. 26, 1986.
Concurring Opinion June 25, 1986 (J. McGee).
Rehearing Denied March 11, 1987.

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James A. Kronzer, Jr., Weitinger, Steelhammer & Tucker, Jack W. Tucker, Jr., Houston, White Huseman, Pletcher & Powers, Anthony Pletcher, Corpus Christi, James A. Smith, Port Lavaca, for petitioner.

Edwards, McMains, Constant & Terry, William R. Edwards and Russell H. McMains, Hunt, Hermansen, McKibben & Barger, Lev Hunt, Corpus Christi, for respondents.

OPINION ON MOTION FOR REHEARING

KILGARLIN, Justice.

Our opinion of June 25, 1986 is withdrawn, and the following is substituted.

Two principal questions confront us: (1) the admissibility of a "Mary Carter" agreement from a prior trial which involved the same defendants but different plaintiffs; and, (2) the collateral estoppel or issue preclusion effect to be given to jury findings made in the prior trial.

As a result of a van/truck collision in Victoria County in December, 1982, two men were killed. The heirs of one man, George Smithwick, filed suit in Nueces County against Missouri Pacific Railroad Company, Scurlock Oil Company and its driver, Ernest Lewis, and Victoria Carrier Service and its driver, Ronnie Wayne Bounds. The other man killed in the accident was Clay Carroll Dove, and his heirs filed suit in Matagorda County against the same defendants.

The Dove case was tried first, resulting in a verdict favorable to the Dove heirs. In that case, the Dove heirs had entered into a "Mary Carter" agreement with Scurlock Oil Company. The Smithwick heirs, in their case, entered into a "Mary Carter" agreement with Missouri Pacific. As impeachment evidence in the Smithwick case, the trial judge admitted the "Mary Carter" agreement between the Doves and Scurlock. Based on the jury verdict, the trial court rendered a $4,165,557 judgment for the Smithwicks against Scurlock Oil Company. The court of appeals affirmed that judgment. 701 S.W.2d 4. We reverse the judgment of the court of appeals and remand this cause to the district court of Nueces County for a new trial.

Smithwick and Dove were employees of Missouri Pacific Railroad Company. At the time of their death, they were being transported from the railroad's station in Bloomington, Texas, to Vanderbilt, Texas, where they were to perform duties for their employer. Scope and course of employment is not contested. Rather than use its own vehicles or employees, Missouri Pacific had engaged Victoria Carrier Service, and its driver, Bounds, to transport the men. At a point near a curve in the roadway, Bounds had pulled his vehicle off the opposite side of the road from which he was headed, and, it being nighttime, had left on the van headlights. A large oil transport truck, driven by Scurlock's employee, Lewis, was coming from the direction of Vanderbilt, headed toward Bloomington. The truck driver, seeing the lights ahead, pulled off on his side of the road, the side on which the van was stopped, and collided with the van, killing Smithwick and Dove.

In the Matagorda County action, brought by the Dove heirs, Scurlock entered into a guaranty with those heirs that they would recover at least 2.5 million dollars. A jury trial resulted in a finding that Missouri Pacific, through its borrowed servant,

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Bounds, was 90% negligent, and that Scurlock was 10% negligent. At the time that the Smithwick case went to trial in Nueces County, judgment was not yet final in Missouri Pacific Railroad Co. v. Bert L. Huebner, Administrator of the Estate of Clay Carroll Dove, Deceased, 704 S.W.2d 353 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.). Because Dove was still on appeal, Scurlock sought to abate the Smithwick trial until the Dove judgment became final, in order to benefit under a collateral estoppel theory from the jury's finding of Missouri Pacific's 90% negligence. The Nueces County District Court overruled the plea in abatement, and the Smithwick case proceeded to trial.

In this case, Missouri Pacific entered into a "Mary Carter" agreement with the Smithwick heirs, also guaranteeing a minimum recovery of 2.5 million dollars. Though the details of this agreement were not read to the Smithwick jury, the jury was advised during voir dire examination by Smithwick's lawyers of the Missouri Pacific guaranty, and the guaranty was commented on by Scurlock's lawyer during closing argument. Although the Smithwicks had non-suited Scurlock's driver, Lewis, who, by the time of trial, had retired, they called Lewis as an adverse witness, and after examining him as to the details of the accident, sought to impeach him with the "Mary Carter" agreement between the Doves and Scurlock, an instrument he had not signed. Scurlock, of course, interposed numerous objections to these questions of Lewis.

Thereafter, before resting, and without any witness on the stand, Smithwick's attorney was permitted, over objection, to state and read to the jury the following:

Your Honor, this is the portion of Plaintiff's Exhibit 72 which has been offered and has been admitted by the Court. This is an agreement in Cause Number 83-H-0157-C, Bert L. Huebner, Administrator of the Estate of Clay Carroll Dove, deceased, and on Behalf of Roselyn Helen Dove, Stephanie Rose Dove, and Trey Carroll Dove v. Missouri Pacific Railroad, et al.--and that just means others--in the District Court of Matagorda County, Texas, 130th Judicial District. Agreement: 'This agreement is made and entered into for the purposes set forth fully below by the following parties. Bert L. Huebner, Administrator of the Estate of Clay Carroll Dove, deceased, acting on behalf of Roselyn Helen Dove, widow of Clay Carroll Dove, Stephenie Rose Dove and Trey Carroll Dove, the minor children of Clay and Roselyn Helen Dove, Mr. and Mrs. Homer Dove, parents of Carroll Dove and Scurlock Oil Company.

On December 9, 1982, Clay Carroll Dove was killed while he was in the course and scope of his employment for Missouri Pacific Railroad Company. Mr. Dove went on duty at the railroad station in Bloomington, Texas, and he and his crew were told to go to Vanderbilt, Texas, to perform duties for the railroad. Scurlock Oil Company has agreed to accept the guaranty of Mr. Huebner on behalf of the remaining Dove family that Mr. Lewis and Scurlock Oil Company will never be required to pay more than Two Million Five Hundred Thousand Dollars in damages regardless of the verdict of the jury in this case.' And that's the end of that offer, Judge.

The court of appeals, in this case, determined that the examination of a non-party to establish an unquestionably prejudicial guaranteed settlement agreement from another trial, after that witness denied knowledge of the agreement, was erroneous. However, the court of appeals concluded that Scurlock had waived the error. The basis for the appellate court's conclusion that error had been waived was because Scurlock's lawyer, during closing arguments, had commented on both the Dove-Scurlock agreement and the MoPac-Smithwick agreement. We agree that the introduction of the Scurlock-Dove agreement was error. We disagree that Scurlock waived such error, and we further disagree with the additional conclusion of the court of appeals that such error was harmless because Scurlock did not complain of excessiveness of damages awarded the Smithwicks.

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As we said in General Motors Corp. v. Simmons, 558 S.W.2d 855 (Tex.1977), "[t]he traditional Texas rule is that settlement agreements between the plaintiff and a co-defendant should be excluded from the jury. A contrary rule would frustrate the policy favoring the settlement of lawsuits." Id. at 857. However, in Simmons, we qualified that rule by saying that when a settling defendant retained a financial stake in a plaintiff's recovery, the excluding of evidence of that fact from the jury was harmful error. Id. at 858-59. In order to show bias, Scurlock was entitled, in this case, to impeach Missouri Pacific's testifying principals or agents as to the guaranty to the Smithwicks if those persons sought to aid the Smithwicks recover. Clayton v. Volkswagenwerk, 606 S.W.2d 15 (Tex.Civ.App.--Houston [1st Dist.] 1980, writ ref'd n.r.e.). Of course, the Smithwicks preempted Scurlock by mentioning the matter during voir dire examination. Clayton prohibits voir dire disclosure of "Mary Carter" agreements, but, obviously, Scurlock would have no grounds to complain of error. Nevertheless, impeachment is the proper method by which relevant portions of "Mary Carter" agreements may be brought to the jury's attention. In the Dove case, Missouri Pacific was similarly entitled to show Scurlock's guaranty to the Doves.

Rule 408 of the Texas Rules of Evidence states:

Evidence of (1) furnishing or offering or promising to furnish or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount is not admissible to prove liability for, or invalidity of, the claim or its amount.

However, the rule does not require exclusion when the evidence is offered for the purpose of proving bias or prejudice or interest of a witness or party. The Smithwicks argue that the "Mary Carter" agreement between Scurlock and the Doves was admissible to prove bias and interest of Lewis. We find this argument unpersuasive. The settlement agreement was entered into between Lewis' employer, Scurlock Oil Company, and the Doves. Lewis did not sign the agreement, and there was absolutely no showing that Lewis was in any way interested in the outcome of the Smithwick case because of his former employer's settlement with the Doves. Cf. Hyde v. Marks, 138 S.W.2d 619 (Tex.Civ.App.--Fort Worth 1940, writ dism'd jdgm't correct). Further, were we to uphold the trial court's admitting the...

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186 practice notes
  • Elbaor v. Smith, No. D-1163
    • United States
    • Supreme Court of Texas
    • December 2, 1992
    ...[14th Dist.] 1989), writ denied per curiam, 793 S.W.2d 1 (Tex.1990). In his concurring opinion in Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 8 (Tex.1986) (on motion for rehearing), Justice Spears pointed out that "Mary Carter agreements should be prohibited because they are inimical to th......
  • Stewart Title Guar. Co. v. Sterling, No. C-8910
    • United States
    • Supreme Court of Texas
    • December 11, 1991
    ...Stafford, 787 S.W.2d 41, 42 (Tex.1990); Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989); Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986). Why resolve a multi-party case promptly when awaiting another party's settlement may produce a substantial credit? Moreover, ......
  • In re Davenport, Bankruptcy No. 03-38089-11.
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas
    • February 2, 2006
    ...`despite the taking of an appeal unless what is called an appeal actually consists of a trial de novo.'" Scurlock Oil Co. v. Smithwick, 724 S.W2d 1, 6 (Tex. 1986) (quoting Restatement (Second) of Judgments § 13 (1982); overruling Texas Trunk Ry. Co. v. Jackson, 85 Tex. 605, 22 S.W. 1030 (18......
  • S & A Restaurant Corp. v. Leal, No. 04-91-00551-CV
    • United States
    • Court of Appeals of Texas
    • March 14, 1994
    ...courts, avoiding the uncertainty of submitting a dispute to a jury, and finally in buying peace. See, e.g., Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986); Olivas v. State Farm Mut. Auto Ins. Co., 850 S.W.2d 564, 567 (Tex.App.--El Paso 1993, writ denied); Hernandez v. Telles, 663......
  • Request a trial to view additional results
187 cases
  • Elbaor v. Smith, No. D-1163
    • United States
    • Supreme Court of Texas
    • December 2, 1992
    ...[14th Dist.] 1989), writ denied per curiam, 793 S.W.2d 1 (Tex.1990). In his concurring opinion in Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 8 (Tex.1986) (on motion for rehearing), Justice Spears pointed out that "Mary Carter agreements should be prohibited because they are inimical to th......
  • Stewart Title Guar. Co. v. Sterling, No. C-8910
    • United States
    • Supreme Court of Texas
    • December 11, 1991
    ...Stafford, 787 S.W.2d 41, 42 (Tex.1990); Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989); Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986). Why resolve a multi-party case promptly when awaiting another party's settlement may produce a substantial credit? Moreover, ......
  • In re Davenport, Bankruptcy No. 03-38089-11.
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas
    • February 2, 2006
    ...`despite the taking of an appeal unless what is called an appeal actually consists of a trial de novo.'" Scurlock Oil Co. v. Smithwick, 724 S.W2d 1, 6 (Tex. 1986) (quoting Restatement (Second) of Judgments § 13 (1982); overruling Texas Trunk Ry. Co. v. Jackson, 85 Tex. 605, 22 S.W. 1030 (18......
  • S & A Restaurant Corp. v. Leal, No. 04-91-00551-CV
    • United States
    • Court of Appeals of Texas
    • March 14, 1994
    ...courts, avoiding the uncertainty of submitting a dispute to a jury, and finally in buying peace. See, e.g., Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 4 (Tex.1986); Olivas v. State Farm Mut. Auto Ins. Co., 850 S.W.2d 564, 567 (Tex.App.--El Paso 1993, writ denied); Hernandez v. Telles, 663......
  • Request a trial to view additional results

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