WD Rubright Co. v. International Harvester Co., Civ. A. No. 68-482.

• Decision Date: 10 May 1973
• Docket Number: Civ. A. No. 68-482.
• Citation: 358 F. Supp. 1388
• Parties: W. D. RUBRIGHT COMPANY, a corporation, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, a corporation, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

358 F. Supp. 1388

W. D. RUBRIGHT COMPANY, a corporation, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, a corporation, Defendant.

Civ. A. No. 68-482.

United States District Court, W. D. Pennsylvania.

May 2, 1973.

On Motion for Judgment May 10, 1973.

COPYRIGHT MATERIAL OMITTED

Rosenberg & Kirshner, Pittsburgh, Pa., for plaintiff.

Dickie, McCamey & Chilcote, Pittsburgh, Pa., for defendant.

On Motion for Judgment N.O.V. May 10, 1973.

OPINION

SCALERA, District Judge.

HISTORY

Plaintiff, W. D. Rubright Company, owned and operated a 1960 International six-wheel truck, model No. CoFl92-AFA 6742 H.

On August 7, 1967, this International truck was being operated by an agent of Rubright when it was involved in an accident which inflicted considerable injuries upon one Jack Cowan.

Cowan brought suit against Rubright in the Court of Common Pleas of Lawrence County, Pennsylvania, at No. 8 December Term 1967.

Rubright joined International Harvester Company as an additional defendant in the Cowan suit.

On March 4, 1968, the claim of Cowan was settled for the sum of $180,000. Rubright paid the entire amount of the settlement which also released International from further liability.

When International refused to contribute to Rubright one-half of the settlement, or the sum of $90,000, Rubright brought the present suit.

Immediately prior to trial, International stipulated that the $180,000 paid to Cowan was a reasonable fee in compensation for his injuries and other losses.

The jury empaneled in this matter returned answers to special interrogatories which, together with International's stipulation on the reasonableness of the damages, rendered International liable to Rubright for the sum of $90,000.

Prior to trial and again after the verdict had been reached, both parties stipulated that the court determine whether the plaintiff should recover interest from the time of settlement and that given the confines of this record, the court would have the power to resolve all issues of fact and questions of law inherent in such a decision.

The question submitted by that stipulation is the subject of this opinion.

In its brief on this matter, International takes the position that Rubright's suit for contribution grows out of a personal injury tort suit and therefore retains all the legal characteristics of a personal injury suit. International further argues that the rule of McGonnell v. Railways Co., 234 Pa. 396, 83 A. 282, (1911), barring additional damages in the nature of interest for delay in personal injury suits should be applied in the case sub judice. In opposition, Rubright argues that Pennsylvania law classifies a suit for contribution as an action in assumpsit or contract and that such suits do not retain any tort identity. Rubright further points out that when the amount of damages is fixed or determined (as they were in this case by the stipulation that the Cowan settlement was reasonable), and a jury subsequently finds a party liable to pay such damages, Pennsylvania law permits additional damages for delay in receiving the payment.

I

As indicated, the basic question before this court is whether or not a personal injury tortfeasor who settles all of the injured party's claims may obtain interest on the pro rata share of the settlement fee which is shifted to a second party (by way of contribution) when a jury subsequently finds that the second party is jointly liable with the settling tortfeasor. Before we can answer this basic question, we must examine the nature of the right to contribution and the method used by a settling tortfeasor to secure that right.

II

Recovery under the Pennsylvania Uniform Contribution Among Joint Tortfeasors Act has been characterized as a recovery in assumpsit or contract rather than one in tort. Harger v. Caputo, 420 Pa. 528, 218 A.2d 108 (1966); Martin v. United States, 162 F.Supp. 441 (D.C. 1958); Parker, to use of Bunting v. Rodgers, 125 Pa.Super. 48, 189 A. 693 (1937).

In fact, the right to contribution accorded by the Pennsylvania statutes to one joint tortfeasor against the other creates a cause of action of a different nature from the tort action which was the subject of the original suit or claim.

Moreover, the right to recover under the principles of contribution embodied in the Pennsylvania Uniform Contribution Among Joint Tortfeasors Act, 12 P.S. § 2082 et seq., is a right

. . . which arises under the substantive law of the state. It has its foundation in, and is controlled by, the principles of equity and natural justice . . ..

The doctrine of contribution rests upon the principle that when the parties stand in aequali jure the law requires equality, which is equity, and one of them is not to be obliged to bear a common burden in ease of the rest. Thus, the doctrine is founded on the broad equitable maxim that equality is equity, and that he who receives a benefit must incur the burden.

The right of contribution is also explained as a quasi contractual right which arises by reason of an implied engagement on the part of each obligor to help bear the common burden. P.L.E., Contribution § 2.

In short, the right of contribution has been viewed by the Pennsylvania courts as a dual one — a right sounding in equity and a right at law sounding in quasi contract.

III

The right to contribution arises in the following manner. If one joint tortfeasor settles a case with an injured plaintiff, and in the process extinguishes the liabilities of the other joint tortfeasors, the law implies a quasi contractual obligation or an equitable one on the part of those other joint tortfeasors to reimburse the settling tortfeasor for their pro rata shares of the settlement fee. See P.L.E., Contribution § 8.

When, as in the present case, settlement occurs before the injured plaintiff has proven his original case at trial, the settling tortfeasor cannot enforce his right to contribution unless in a separate proceeding he proves that:

(1) The settlement figure was reasonable.

(2) The parties from whom he seeks contribution were in fact joint tortfeasors. Swartz v. Sunderland, 403 Pa. 222, 169 A.2d 289 (1961), Restatement Restitution § 86(d).

IV

Against the backdrop of Swartz, supra, the theory of plaintiff's case is that the plaintiff settled all of Cowan's claims for $180,000 and in so doing conferred a benefit upon its co-tortfeasor, International. Having received this benefit, International has breached its equitable obligation or its implied promise (quasi contractual promise) to pay Rubright one-half of whatever amount was reasonably paid in settlement with Cowan.

The final element of Rubright's theory and the one which concerns us here is Rubright's request for additional damages in the nature of interest for International's delay in assuming its half of the reasonable settlement figure. We note at the outset that Rubright is not asking for interest qua interest, but it does desire additional damages in the nature of interest for International's delay in paying a sum due under either a quasi contractual duty or an equitable duty.¹

The law controlling the allowance of additional damages in the nature of interest for breach of a quasi contractual duty is summarized by the Restatement of Contracts § 337, which states that:

If the parties have not by contract determined otherwise, simple interest at the statutory legal rate is recoverable as damages for breach of contract as follows:

(a) Where the defendant commits a breach of a contract to pay a sum of money, or to render a performance the value of which in money is stated in the contract or is ascertainable by mathematical calculation from a standard fixed in the contract or from established market prices of the subject matter, interest is allowed on the amount of the debt or money value from the time performance was due, after making all the deductions to which the defendant may be entitled.

(b) Where the contract that is broken is of a kind not specified in Clause (a), interest may be allowed in the discretion of the Court, if justice requires it, on the amount that would have been just compensation if it had been paid when performance was due.

Comment (d) to this section states that:

The fact that the defendant in good faith denies the existence of the debt or other duty asserted by the plaintiff or denies that he has committed any breach of contract, does not prevent the allowance of interest as damages for his breach.

Section 337 has been expressly adopted and followed in Pennsylvania cases. Lewis v. Guseman, 103 F.Supp. 735 (W. D.Pa.1952); In Re Guardian Bank and Trust Co., 330 Pa. 411, 199 A. 171.

The law which controls the allowance of additional damages in the nature of interest for the failure to perform an equitable duty (e. g., returning the value of a benefit conferred by making contribution) is set forth in the Restatement of Restitution § 156, which states that:

Subject to the rules stated in § 157, a person who has a duty to pay the value of a benefit which he has received, is also under a duty to pay interest upon such value from the time he committed a breach of duty in failing to make restitution if, and only if:

(a) the benefit consisted of a definite sum of money, or

(b) the value of the benefit can be ascertained by mathematical calculation from the terms of an agreement between the parties or by established market prices, or

(c) payment of interest is required to avoid injustice.

The comments appended to this section do not indicate what effect a good-faith, non-prevailing liability defense would have on the right to interest from the time of the breach. Logic, however, compels us to conclude that such a defense would not affect that right. Otherwise the rule would have no purpose and would merely restate the rule that automatically grants interest on judgments. See 12 P.S. §§ 781 and 782.

A comparison of § 156 Restitution with § 337 Contracts reveals that § 156 merely restates the same...