Melvin E. MOORE
v.
James William YOUNG.
No. 522.
Supreme Court of North Carolina.
January 15, 1965.*706 Smith, Leach, Anderson & Dorsett, Raleigh, for plaintiff.
J. R. Barefoot, Benson, and C. C. Canaday, Jr., Smithfield, for defendant.
SHARP, Justice.
We deduce from this record that a settlement of plaintiff's claim against defendant was negotiated by and between plaintiff and defendant's liability insurance carrier without defendant's consent. Except that the settlement was made after plaintiff had instituted this action, and after defendant had asserted his counterclaim, presumably we would have had here a situation equivalent to that in Beauchamp v. Clark, 250 N.C. 132, 108 S.E.2d 535.
It may be that the jury in this case, which found plaintiff negligent and defendant free of contributory negligence, and awarded defendant $25,000 damages for his personal injuries, was correct. If so, the jury which found defendant guilty of involuntary manslaughter in the death of plaintiff's wife in the accident in suit erred egregiouslyas did defendant's insurance company, which, after investigation, concluded that defendant was solely liable for the collision and thereupon paid plaintiff his damages. But, be that as it may, we have here an anomalous situation, one not in the interest of the public, which is required to carry liability insurance and to pay for it premiums reflecting the liabilities imposed upon the carriers. The Motor Vehicle Financial Responsibility Act obliges a motorist either to post security or to carry liability insurance, not accident insurance to indemnify all persons who might be injured by the insured's car. Keith v. Glenn, 262 N.C. 284, 286, 136 S.E.2d 665, 667. When the Legislature passed the act it was not in the legislative contemplation that each driver in a two-car collision would recover from the other's insurance carrier.
Plaintiff, having agreed that the settlement with defendant's insurance carrier was "without prejudice to the defendant's counterclaim," had no right to plead the settlement or put it in evidence.
"(T)he words `without prejudice' have a distinct meaning in law, and * * * they import into any transaction that the parties have agreed that as between themselves, the receipt of money by one and its payment by the other shall not, *707 because of the fact of the receipt or payment, have any legal effect upon the rights of the parties in the premises, and that such rights will be as open to settlement by legal controversy as if the money had not been turned over by the one to the other (citations omitted)." Hinton v. Bogart, 79 Misc. 418, 420, 140 N.Y.S. 111, 113 (App.T.)
After having agreed that the compromise of his claim should be without prejudice to defendant's counterclaim, and after having taken a voluntary nonsuit as to his cause of action, plaintiff was not entitled to reinstate his complaint for the purpose of going forward with the evidence or of showing that he had first instituted the suit. By the terms of the consent judgment, plaintiff had, in effect, agreed that defendant should take the offensive in any future litigation. Each of plaintiff's six motions was properly overruled.
Had the consent judgment dismissed both plaintiff's claim and defendant's counterclaimthe latter without prejudice to the right of defendant to prosecute it later in a separate action in which he would have been the plaintiffthe rules laid down in Bradford v. Kelly, 260 N.C. 382, 132 S.E.2d 886, and followed in Keith v. Glenn, supra, would have been applicable. In such later suit, plaintiff here (the same as defendant in Bradford v. Kelly, supra) could have pled as a counterclaim the cause of action he alleged in his complaint in this cause. Defendant, as plaintiff in the second action, would then have been put to the election the consequences of which are spelled out in Keith v. Glenn, supra, and Bradford v. Kelly, supra. If defendant had refused to permit the dismissal of his counterclaim when his insurance carrier settled with plaintiff, the court, upon plaintiff's motion, doubtlessly would have relabeled defendant's counterclaim as the complaint it was and would have permitted plaintiff to withdraw his reply theretofore filed and to file an answer setting up his own counterclaim. When A and B have mutual personal-injury claims growing out of an automobile collision, and the insurance carrier of A, without his consent, settles with B, and when, thereafter, A sues B, every trial lawyer and every judge knows that B's defense is suspect if he makes no claim against A for his injuries, the jury having no knowledge of the settlement. On the other hand, if, by some mischance, the jury should learn of the settlement, A's case is suspect. If, however, the case is tried as if no settlement had been made and all knowledge of it is kept from the jury, neither party is prejudiced by it. The jury evaluates the collision in gross and appraises both claims together. In such a case, all that either party is entitled to is a fair trial and, if judgment is rendered against him, credit for whatever his insurance carrier has paid the judgment creditor in discharge of its liability. Keith v. Glenn, supra; Bradford v. Kelly, supra.
In this case plaintiff made every conceivable motion except one to be allowed to withdraw his reply and file an answer setting up his own counterclaim. Had he done so, the court applying the rationale of Keith and Bradford, supra, would no doubt have allowed the motion. Whether this procedure would have changed the course of events, no one can say, and speculation would be neither sensible nor profitable. Counsel for plaintiff presented plaintiff's evidence clearly and forcefully. If the jury had accepted it, defendant could not have recovered. Unfortunately for plaintiff, the jury decided the facts against him. We have examined this record, with its implications, microscopically, yet appellant's assignments point out no reversible error. Needless to say, no question arises, on this appeal, as to the liability of plaintiff's insurance carrier upon the judgment rendered.
No error.