No. 8 5 - 5 9 4
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
STATE OF MONTANA, ex rel., DEERE
& COMPANY, and R0BER.T L. CAMPBELL,
Relator,
THE DISTRICT COURT OF THE FIFTH
JUDICIAL DISTRICT OF THE STATE OF
MONTANA, IN AND FOR THE COUNTY OF
BEAVERHEAD, THE HONORABLE FRANK M.
DAVIS, presiding District Judge,
Respondents,
and
WADE HANSEN, d/b/a WADE'S BACKHOE
SERVICE,
Real Party in Interest.
ORIGINAL PROCEEDING:
COUNSEL OF RECORD:
For Relator:
Moulton, Bellingha-m,Longo & Mather; Brent R. Cromley
argued for Deere & Co, Billings, Montana
Schulz, Davis & Warren, Dillon, Montana
Burgess, Joyce & Whelan; Thomas F. Joyce argued for
Campbell, Butte, Montana
For Respondent:
Poore, Roth & Robinson; Gary L. Walton; Rrendon J.
Rohan argued for Wade Hanson, Butte, Montana
Hon. Frank M. Davis, District Judge, ill on, Montana
For Amicus Curiae:
Corette, Smith, Pohlman & Allen; Marshall L. Mick-
elson, Butte, Montana
Kevin Q. Davis for Asbestos Claims Facility, Portland,
Oregon
David R. Black for Burlington Northern, Salt Lake City,
Utah
Moore, Rice, OtConnell & Refling; Kathy Cullen,
Bozeman, Montana
Submitted: August 7, 1 9 8 6
Decided: December 1 9 , 1 9 8 6
Filed:
*
g z z Clerk~ z a , u
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Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
In this original proceeding in this Court, relators
Deere & Company and Robert L. Campbell make application for a
writ of supervisory control directed to the District Court,
Fifth Judicial District, Beaverhead County, to grant Deere's
motion for summary judgment which the District Court had
denied. We determine that the writ should. issue.
The principal issue we decide here is that a joint
tortfeasor who settles with the claimant before judgment on
the claim is entered in a district court is not subject to
claims for contribution or indemnity from the nonsettling
joint tortfeasors. We further hold that the claim of the
plaintiff against the remaining tortfeasors is to be reduced
by a dollar credit in the amount of consideration paid by the
settling tortfeasor, and not by a percentage amount
proportional to the degree of fault of the settling
tortfeasor.
In May, 1982, plaintiff Robert L. Ca.mpbel1 was working
for Beaverhead Irrigation Company installing an irrigation
system. As Campbell was helping to move a mired dump truck,
a bulldozer manufactured by Deere & Company backed into him.
The bulldozer was operated by an employee of Wade's Backhoe,
Jim Lott.
In April, 1983, Campbell filed suit for his injuries
against Wade's Backhoe and Deere & Company. In May, 1983,
Campbell and Deere reached a settlement agreement whereby
Deere paid plaintiff $25,000 and Campbell released Deere from
all claims. Campbell also agreed. in the release to indemnify
Deere for any amount it might be required to pay to a joint
tortfeasor thereafter. Campbell reserved in the release his
claim against Wade's Backhoe.
The District Court then dismissed Campbell's action
against Deere with prejudice in May, 1983, pursuant to
stipulation, leaving Wade's Backhoe as the sole defendant.
In March, 1984, Wade's Backhoe filed a third party
complaint against Deere for indemnity and contribution
because of alleged negligence and strict liability.
In April, 1984, Deere filed an answer which generally
denied the third party complaint. In October, 1985, Deere
filed a motion to amend its answer to include the defense of
release. At the same time, Deere filed a motion for summary
judgment relying on the release of Deere by plaintiff
Campbell. Deere also argued that it had not been properly
brought into the action under S 27-1-703, MCA.
In November, 1985, the District Court denied Deere's
motion to amend its answer to include the affirmative defense
of release. The District Court also denied Deere's motion
for summary judgment.
Thereafter, Deere and Campbell, as relators, filed an
application in this Court in an original proceeding to
procure a writ of supervisory control directed to the
District Court. We ordered a response and set up a briefing
schedule. We have received such response from Wade's
Backhoe, and have the benefit of briefs from amici curiae as
follows:
The Asbestos Claims Facility in support of relators; a
brief by the law firm of Moore, Rice, O'Connell and Refling
in support of relators; a brief of Burlington Northern
Railroad advocating adoption of a rule under which the
plaintiff's recovery against the nonsettling tortfeasor is
reduced by the equitable percentage of negligence of the
settling tortfeasor or the amount paid, whichever is greater;
and a brief from the law firm of Corette, Smith, Pohlmann &
Allen advocating a percentage reduction of the plaintiff's
claim proportional to the degree of fault of the settling
joint tortfeasor.
We identify the issues to be determined in this cause as
follows:
1. (a) Whether defendant Wade's Backhoe can bring an
action for contribution against a joint tortfeasor who
settled with the plaintiff and obtained a release;
(b) and if not, what effect should the settlement
have upon the liability of the nonsettling tortfeasor.
2. Whether the defendant Wade's Backhoe's claim for
indemnity can defeat Deere's motion for summary judgment.
3. Whether a writ of supervisory control should be
granted.
4. Whether a denial of indemnity or contribution to
Wade's Backhoe is a constitutional violation.
5. Whether Wade's Backhoe followed the correct
procedures a-gainst Deere & Company in its claims for
contribution or indemnity.
We discuss first the effect of a prejudgment settlement
by one or more joint tortfeasors with a plaintiff on the
rights to contribution or indemnity of the remaining
nonsettling joint tortfeasors.
This issue is the natural outgrowth of our decision in
Consolidated Freightways Corporation of Delaware v. Osier
(1979), 185 Mont. 439, 605 P.2d 1076 and the subsequent
amendment by the Legislature of § S 27-1-702 and -703, MCA.
Useful to this discussion would be a thumbnail review of
the growth and development of the law on the subject of
contribution between joint tortfeasors.
A starting point is that a non-negligent plaintiff could
and stil.1 can recover his damages against any of several
concurrently negligent tortfeasors who proximately caused his
injuries [we leave aside from this discussion the development
of legal cause vis-a-vis proximate cause!. The non-negligent
injured plaintiff could sue one or more or all of the
concurrent tortfeasors jointly or separately, and could
recover against one or all. Black v. Martin (1930), 88 Mont.
No right of contribution to pay the non-negligent
plaintiff's damages existed among joint tortfeasors against
whom plaintiff obtained judgment. Panasuk v. Seaton (D.C.
Mont. 1965), 277 F.Supp. 979; Consolidated Freightways,
supra, 185 Mont. 442, 605 P.2d 1078. No right of
contribution existed between tortfeasors against whom
judgment had been obtained and any unsued tortfeasors.
Contributory negligence, however, even in the slightest
degree, barred a plaintiff prior to 1975 from recovery for
his injuries from any tortfeasor, joint or several. Sztaba
v. Great Northern Railway Company (1966), 147 Mont. 185, 411
The harshness of the contributory negligence rule was
abated when the Montana Legislature adopted the comparative
negligence statute in 1.975. Section 58-607.1, R.C.M. (1947)
[later § 27-1-702, MCA]. That statute stated:
Contributory negligence--when bars recovery.
Contributory negligence shall not bar recovery in
an action by any person or his legal representative
to recover damages for negligence resulting in
death or injury to person or property, if such
negligence was not greater than th.e negligence of
the person against whom recovery is sought, but any
damages allowed shall be diminished in the
proportion to the amount of negligence attributable
to the person recovering.
In 1977, the Legislature adopted a right of contribution
between joint tortfeasors. Section 58-607.2, R.C.M. (1947)
[later § 27-1-703, MCA]. That statute reads:
Multiple defendants jointly - severally
and
liable--right of contribution. (1) Whenever the
comparative negligence of the parties in any action
is an issue and recovery is allowed against more
than one party, each such party is jointly and
severally liable for the amount awarded to the
claimant but has the right of contribution from any
other party from against whom recovery is allowed.
Contributions shall be proportional to the
negligence of the parties against whom recovery is
allowed.
(2) If for any reason all or part of the
contribution from a party liable for contribution
cannot be obtained, each of the other parties
against whom recovery is allowed is liable to
contribute a proportional part of the unpaid
portion of the noncontributing party's share and
may obtain judgment in a pending or subsequent
action for contribution from the non-contributing
party.
Such was the state of the law in Montana when this Court
decided Consolidated Freightways, supra, 185 Mont. 439, 605
Consolidated Freightways came
certified question from the Federal District Court as to
whether a tortfeasor who had been sued had a cause of action
for contribution against a joint tortfeasor who had not been
joined in the suit by the plaintiff. The facts in
Consolidated Freightways were that June Osier, a passenger in
a Plymouth automobile was injured in a collision between the
Plymouth and a tractor-double-trailer unit operated by
Consolidated. June Osier sued Consolidated, but did not name
the driver of her car, her mother, Margaret Collins, as a
co-defendant. Consolidated sought to bring the driver of the
Plymouth, Margaret Collins, into the action as third pa.rty
defendant on a claim of contribution between joint
tortfeasors. The question we had to resolve was whether
under the statutes foregoing, Consolidated had any right of
contribution from Margaret Collins, since there was not
otherwise a common law right of contribution between joint
tortfeasors.
The right of Consolidated to contribution from Margaret
Collins had to be found, if it existed, in. the provisions of
27-1-703 above (S 58-607.2, R.C.M. (1947)). We held that
on its face the sta-tute applied only to cases where
comparative negligence was an issue and that no right of
contribution accrued under the statute when a tortfeasor was
sued by a non-negligent complainant.
. We further held that
even in comparative negligence cases, under 27-1-703
contribution applied only to those defendants against whom
judgment had been recovered by the plaintiff. Part of the
reason for our decision in that regard was the action of the
Legislature in 1977, when it was considering the bill t.ha.t
eventually became S 27-1-703, MCA, in refusing at the same
time to provide for the joinder of any party whose negligence
might have contributed to the damages claimed by a plaintiff.
In 1981, the Legislature, obviously grappling with our
ruling in Consolidated Freightways, moved to amend 5 27-1-703
(formerly S 58-607.2, R.C.M. (1947)). As amended by the
Legislature in 1981, 5 27-1-703, MCA, now reads:
IJIultiple defendants jointly and severally liable-
-right of contribution. (1) Whenever the
negligence of any party in any action. is an issue,
each party against whom recovery may be allowed is
jointly and severally liable for the amount that
may be awarded to the claima.nt but has the right of
contribution from any other person whose negligence
may have contributed as a proximate cause to the
injury complained of.
(2) On motion of any party against whom a claim is
asserted for negligence resulting in death or
injury to person or property, any other person
whose negligence ma.y have contributed as a
proximate cause to the injury complained of may be
joined as an additional party to the action.
Whenever more than one person is found to have
contributed as a proximate cause to the injury
complained of, the trier of fact shall apportion
the degree of fault among such persons.
Contribution shall be proportional to the
negligence of the parties against whom recovery is
allowed. Nothing contained in this section shall
make any party indispensable pursuant to Rule 19,
M.R.Civ.P.
(3) If for any reason all or part of the
contribution from a party liable for contribution
cannot be obtained, each of the other parties
against whom recovery is allowed is liable to
contribute a proportional part of the unpaid
portion of the noncontributing party's share and
may obtain judgment in a pending or subsequent
action for contribution from the noncontributing
party.
The amendment in 1981 of 27-1-703 has three principal
effects:
(1) While preserving joint and several liability for
plaintiff's recovery, it provides a right of contribution
between joint or concurrent tortfeasors whenever the
negligence of party is an issue, and not just when
comparative negligence is an issue; (2) it allows the
joinder of concurrent or joint tortfeasors who are unsued as
additional parties to the action; and, (3) it may be said
additionally that S 27-1-703 allows contribution between
joint tortfeasors on the basis of comparative fault (a
different concept from comparative negligence).
The 1981 amendment of S 27-1-703, MCA, is in derogation
of the common law as we pronounced it in Consolidated
Freightways. Though in derogation of the common law, the
statute is to be libera.11~
construed with a view to effect
its object and to promote justice. Section 1-2-103, MCA.
Consolidated Freightways, however, was concerned with an
unsued defendant. The case at bar presents a different facet
of the problem. Deere & Company was sued by the plaintiff
Campbell as a co-defendant with Wade's Backhoe. In the
course of litigation, Deere & Company has entered into a
compromise settlement with the plaintiff, leaving the case
open as to Wade's Backhoe. Deere & Company has been
dismissed from the action. Wade's Backhoe seeks to bring
Deere & Company back into the litigation by means of a third
party complaint for contribution or indemnity.
Once more a thumbnail review of the judicial history in
our state of the effect of a release by the plaintiff before
judgment of one or more joint tortfeasors as to the remaining
joint tortfeasors is necessary. (The term "joint tortfeasor"
in this Opinion includes the term "concurrent tortfeasor. " )
Originally it was assumed that the release of one joint
tortfeasor by the plaintiff operated as a release of all
joint tortfeasors:
All the courts agree that, if consideration paid by
one tortfea.sor for the release is full compensation
for the injury, the other tortfeasor is discharged;
beyond that there is disagreement. (Citing
authority.) Upon the basis that for the one injury
the injured party has but one "cause of action"
arose the ancient rule that, where there is a joint
cause of action against two or more persons, a
discharge as against one of them operates as a
discharge to all: "the rule of law that a release
which discharges the liability of one joint
tortfeasor releases the others seems to be based
upon the nature of their liability, which is one
and indivisible and is necessarily destroyed by the
discharge of one." (Citing authority.) To this
doctrine many courts of this country give assent;
many adhere to it in the face of a written
stipulation that the discharge of one tortfeasor
shall not release the other. The reason given is
that since there is but a single injury, there can
be but one satisfaction, that the release implies
satisfaction; hence, another suit is repugnant
thereto.
Black v. Martin, supra, 88 Mont. at 266, 292 P. at 580.
In Black v. Martin, supra, plaintiff sustained injuries
through the concurrent negligence of three persons, and
entered into a written agreement with two of them, whereby in
consideration of a given amount she discharged them from any
liability on account of the accident, but reserved her right
to proceed against the third. This Court held that the
reservation of right negated the idea that she had received
more than partial satisfaction and was free to maintain her
action against the third party for the remaining satisfaction
to which she deemed herself entitled. Even so, following
Black v. Martin, this Court continued to hold that the
release of one joint tortfeasor operated to discharge all
others unless the release instrument specifically reserved
the right to proceed against the others. McCloskey v. Porter
(1973), 161 Mont. 307, 506 P.2d 845; Beedle v. Carolan
(1944), 115 Mont. 587, 148 P.2d 559; Lisoki v. Anderson
(1941), 112 Mont. 112, 112 P.2d 1055. However, in Kussler v.
Burlington Northern, Inc. (1980), 186 Mont. 82, 606 P.2d 520,
we adopted the rule of the Restatement (Second) of Torts, S
885 (1985) to the effect that the release of one joint
tortfeasor is not a release of any other joint tortfeasors
unless the document is intended to release the other
tortfeasors, or the payment is full compensation, or the
release expressly so provides. Kussler held that parole
evidence as to the intent of the parties executing the
release was admissible to determine if the plaintiff reserved
his action against the remaining joint tortfeasors.
In the case at bar then, following Kussler, there can be
no doubt that as between the plaintiff Campbell and Deere &
Company, the latter defendant is completely exonerated from
any further liability for damages to Campbell. If therefore,
following Deere's compromise settlement with Campbell, Wade's
Backhoe can bring Deere & Company back into the action on a
theory of contribution between joint tortfeasors, the
finality of Deere's compromise settlement is in serious
question.
No clear answer to this issue is to be found from
examination of the amended statute itself (a not unusual
circumstance when the legislature changes established
precepts of common law). Wade's Backhoe contends that it has
a right to assert contribution against Deere on the basis of
the language in amended 5 27-1-703 ( 2 ) , MCA, that "any other
person whose negligence may have contributed as a proximate
cause to the injury complained of may be joined as an
additional party to the action." Deere, on the other hand,
contends that contribution from it is not permissible because
"contribution shall be proportional to the negligence of the
parties against whom recovery is allowed," and recovery by
Campbell cannot now he allowed against Deere. Wade's Backhoe
additionally contends that it now has a statutory right of
contribution from Deere which is constitutionally guaranteed
under the right of access to the courts clause of the State
Constitution (Art. 11, $ 16); and that denying Wade's Backhoe
3
a right of contribution here opens the door to collusion
between a plaintiff and a joint tortfeasor who in equity
ought to bear more of the plaintiff's damages than the
compromise calls for. Deere contends that the law favors
compromise, that the danger of such collusion is remote, and
that the amendment by the Legislature in 1981 of S 27-1-703,
MCA, was not intended to preclude prejudgment settlements by
one or more joint tortfeasors such as the case at bar
presents.
We are not helped to determine this issue by looking to
the decisions of sister states. The results are
contradictory, depending in some instances upon statutory
provisions in the respective states which dictate the
results. In Montana, there is but one statute on the
subject, the amended S 27-1-703, MCA, and from it we
determine that a joint tortfeasor who settles with the
claimant before judgment on the claim is entered in a
district court is not subject to claims for contribution or
indemnity from the non-settling joint tortfeasors against
whom judgment may be rendered. Even though the amended
section does give a sued joint tortfeasor the right to bring
in other joint tortfeasors as defendants in order to insure
contribution, and even though the section states that the
trier of fact is to determine the degree of negligence among
each of the joint tortfeasors, the right of contribution
under the amended statute is "proportional to the negligence
of the parties against whom recovery j s allowed."
. Clearly
that statutory language exc1ud.e~ a party against whom
recovery is not allowed, e.g. a tortfeasor who has previously
settled.
Consequently, under amended 5 27-1-703, there is no
right of contribution under Montana law in favor of a joint
tortfeasor or tortfeasors against whom judgment for the
plaintiff is entered from other joint tortfeasors who have
settled with the plaintiff prior to judgment. The judicial
tenets that the law favors compromise and that a compromising
party ought to be able to buy his peace with finality
override the seeming unfairness to non-settling parties who
did not participate in the compromise nor control its
direction; this because the non-settling defendant or
defendants, by virtue of the judgment rendered against them,
have been found by the trier of fact to be jointly and
severally liable for the plaintiff's injuries und-er 5
We, having reached that conclusion, the next question
presented. is what effect should the settlement by the
settling tortfeasor have upon the liability the plaintiff
of the non-settling tortfeasor.
It has been the law in Montana that such a pre-judgment
settlement reduces the Liability of the non-settling
defendants pro tanto only.
An instrument, qualified as is the one in suit,
even if it be termed a "release" shows on its face
that it was not the intention of the parties to
destroy the injured person's right of action
against the other tortfeasors, and negatives the
idea that the injured person has received more than
part satisfaction. Such an instrument is to be
considered according to its intention. It releases
the tortfeasor to whom it is executed as if it were
in fact an express agreement not to sue, and to
that extent releases the other tortfeasors pro
tanto only.
As each tortfeasor is liable for the entire damage,
if one sees fit to secure acquittance for himself
by compromise with the injured person, he does no
wrong to those who are jointly liable with him.
How can they complain if he has paid part of the
damage? They are not prejudiced by the settlement,
but on the contrary are benefited, for each is
entitled to have the amount of any judgment
rendered against him reduced by the amount paid by
his "cotort-feasor" (Citing authority.)
The law favors compromises. This is especially
true in tort actions, not only because they relieve
the labors of the courts, and avoid expense, but
also because, where the parties agree between
themselves upon a settlement of the claim, the
result reached is frequently a more equitable
adjustment than is possible to be had in a court of
law.
Black v. Martin, supra, 88 Mont. at 267-269, 292 P. at 581.
More recent support of this rule came from this Court in
Azure v. City of Billings (19791, 182 Mont. 234, 596 ~ . 2 d
460. There we said:
If liability is joint and several the plaintiff is
entitled to only one recovery. In that event
deduction of an amount already paid by a joint
tortfeasor is proper.
182 Mont. 247-248, 596 P.2d 468. - Benner v. B. F.
See,
Goodrich (1967), 150 Flont. 97, 430 P.2d 648.
In this case counsel for Wade's Backhoe contends that S
27-1-703 (2), MCA, now provides a method to determine the
comparative fault of all joint tortfeasors under which "the
trier of fact shall apportion the degree of fault among such
persons." Thus Wade's Backhoe argues that even though Deere
& Company is no longer liable to the plaintiff by reason of a
settlement, it may still be liable for contribution to Wade's
Backhoe, if Deere's proportional fault, as applied to any
judgment the plaintiff recovers, exceeds the $25,000 paid to
the plaintiff by Deere. Burlington Northern, as amicus,
contends that we should adopt a rule whereby Deere's fault
would be determined by the trier of fact and Deere would be
liable for its proportion of fault as applied to the eventual
judgment, or to a dollar credit of S25,000 whichever should
be greater.
Campbell and Deere, on the other hand, contend that
nothing in the legislative history of the amendment of S
27-1-703(2), MCA, leads to the conclusion that the
legislature intended to make a settling concurrent tortfeasor
liable to the other joint tortfeasors up to a proportional
amount of his fault as applied to the judgment, instead of a
dollar credit.
In brief, Wade's Backhoe argues for a percentage
determination of the eventual judgment as applied to Deere;
Deere contends for a d-ollar credit on the amount paid in
settlement to reduce plaintiff's judgment.
Between them, all counsel have provided us with an
exhaustive review of the cases examining this problem and
there is no dearth of authority on the subject. Our sister
states are not in agreement on the subject, and the reasons
for their holdings go off in all directions. Mostly their
decisions are controlled by statutory provisions which direct
the result for the respective courts. One state, North
Dakota, has adopted a rule of percentage deduction although
its statutes provide for a dollar credit. Bartels v. City of
Williston (N.D. 1979), 276 N.W.2d 113.
There are two model acts addressing the issue. The
first is the Uniform Contribution. Among Joint Tortfeasors
Act, suggested in 1957. The second is the Uniform
Comparative Fault Act, promulgated in 1977. (Montana has not
adopted either Act. ) The Uniform Contribution Among Joint
Tortfeasors Act provides that settlement with one joint
tortfeasor for a covenant not to sue or execute "reduces the
claim against the others to the extent of any amounts
stipulated by release of covenants . . ." In other words the
reduction of the claim against the remaining tortfeasors is
done on a pro tanto basis. The Uniform Comparative Fault
Act, on the other hand, advocates adoption of a proportionate
or percent credit rule which reduces the non-settling
defendant's liability by the percentage of causation
allocated to the settling tortfeasor.
Among states covered by the Pacific Reporter, New
Mexico, Nevada, Hawaii, Alaska, Wyoming, Colorado, and
Arizona have adopted the Uniform Contribution Among Joint
Tortfeasors Act, the latter three states after the
promulgation of the Uniform Comparative Fault Act. No state
has yet statutorily adopted the Uniform Comparative Fault
Act, but some states by judicial process have adopted the
percentage deduction concept.
Apparently because of the conflict between the two model
acts, the Restatement (Second) of Torts, 8 8 6 A sets forth
three possible solutions for the situation where one
tortfeasor pays a sum to the plaintiff and takes a release
not in full satisfaction of plaintiff's damages and where the
plaintiff reserves the right to proceed. against the remaining
defendants. The first solution would follow the Uniform
Contribution Among Joint Tortfeasors Act, the third solution
follows the Uniform Comparative Fault Act and the second
solution follows what has been the practice in Montana:
No. 2. The money pa.id and the release given in
good faith extinguishes both the claim of the
injured party and a claim for con.tribution by any
other tortfeasor. However, the money paid is
credited against any judgment obtained against the
other tortfeasors.
The Comment of the Restatement states that the second
solution is preferred by claimants and insurance companies.
It is the position advocated in this case by amicus Asbestos
Claims Facility.
Important to our discussion here is that the legislature
in amending 5 27-1-703, MCA, retained specifically the
concept of joint and several liability for the amount awarded
to the plaintiff, even though the plaintiff's damages could
be diminished proportionately to his comparative negligence.
In retaining joint and several liability, the legislature saw
the wisdom of protecting even a comparatively negligent
plaintiff. Without several liability, a concurrent
tortfeasor whose negligence proximately caused the
plaintiff's injuries could pay plaintiff only an amount based
upon the concurrent tortfeasor's proportional fault. This
would leave the injured plaintiff to bear the portion of the
judgment that could not be collected from another
impecunious, immune, or otherwise deficiently-funded
concurrent tortfeasor.
In reality, our decision on this issue is hinged upon
our earlier interpretation of the statute herein that no
right of contribution exists from a settling tortfeasor. It
would make no sense to keep a settling concurrent tortfeasor
in the action as an additional defendant or a third party
defendant to determine its proportional fault for plaintiff's
injuries, when the non-settling defendants have no right of
contribution from the settling defendant. Contribution under
27-1-703 is the obligation of "parties against whom
recovery is allowed." Since no contribution is allowed
against a settling defendant, it is pointless to keep a
settling party in the action simply to determine his
comparative fault when the remaining defendants are severally
liable to the plaintiff.
In the light of the provisions of 5 27-1-703, which
appear to be unique, we determine the better practice is to
follow what has long been the standard in Montana, that a
plaintiff's recovery is diminished pro tanto, that is, given
a dollar credit based on the consideration paid or to be paid
by the settling concurrent tortfeasor. Such a holding
encourages compromise, lends finality to such compromises,
and keeps in force the practice which the legislature has not
been shown to have intended to change.
Wade's Backhoe's next issue is that its claim for
indemnity from Deere requires that Deere be kept in the
action as a third party defendant.
In Paragraph VI of the third party complaint against
Deere, Wade's Backhoe alleges:
The dump truck became mired in boggy ground, and
Jim Lott walked to where Jim Beitler and plaintiff
Campbell were working to request their assistance
in retrieving the dump truck. Beitler told Lott to
drive Beaverhead's JD450B crawler-tractor to where
the dump truck was mired, and Beitler and Campbell
drove to that location separately. Lott backed the
crawler-tractor near the front of the dump truck,
placed the shift lever in neutral and closed the
shift locking gate with the clutch depressed. At
that time, plaintiff Campbell went between the two
vehicles with a chain to connect them. To assist
Campbell, Lott began to climb off the
crawler-tractor lifting his foot from the clutch as
he did so, believing the vehicle to be locked in
neutral. The vehicle was actually in reverse gear,
and upon action of the delayed hydraulic clutch, it
lurched violently backwards. Lott immediately
reseated himself and redepressed the clutch pedal,
but wasn' t able to do so quickly enough to prevent
the tractor from striking the plaintiff Campbell.
The foregoing paragraph is the basis both for Wade's
Backhoe's claim for contribution, and for indemnity. As to
indemnity, it is obvious that Wade's Backhoe is relying upon
the implied concept of indemnity, and not upon contractual
indemnity. In the light of the allegations, Wade's Backhoe
had not stated a cause for implied indemnity as a matter of
law.
Wade's Backhoe argues that its negligence, if any, is
at most passive, and not active, that it is not - pari
in
delicto with Deere, and that it has been exposed to liability
by the negligence of Deere, or on principles of strict
liability. See, Great Northern Railway Company v. United
States (D. Mont. 1960), 18 F.Supp. 690, 693. Yet the only
way that Wade1s Backhoe can be found liable to Campbell in
this case is if the negligence of its employee, Lott,
proximately caused the injuries sustained by the plaintiff
Campbell. In that situation, Wade's Backhoe is not entitled
to indemnity. Repeating what we said in Consolidated
Freightways, supra, 185 Mont. at 448, 605 ~ . 2 d 1081:
at
In American Home Assurance Company v. Cessna
Aircraft Company (U.S.C.A. 10th 1977), 551 F.2d
804, 808, the court of appeals said "the Montana
law is that when each tortfeasor is affirmatively
negligent neither is entitled to indemnity." We
see no need to change this settled principle of our
law.
The remedies of indemnity and contribution are in theory
mutually exclusive. Indemnity is an all-or-nothing
proposition, representing in effect total contribution.
Counsel for Wade's Backhoe has chosen to characterize the
allegation in Paragraph VI of the third party complaint as
constituting a claim for indemnity, but that characterization
is not determinative. As the Court in Missouri Pacific
Railroad Company (Missouri 1978), 566 S.W.2d 466, 471,
observed:
This is not a sensible way to fix responsibility in
ind-emnity. It comes about by attempting to find a
formula by which to excuse one of two joint or
concurrent tortfeasors completely. When as a
practical matter they both are to blame, the true
difference between them being only a matter of
degree or relativity of fault. With a little
ingenuity and phrasing, negatives can be made to be
either "active" or "passive" as suits the writer.
For example, "driving an automobile with bad
hrakes" or "running through the stop sign" or
"using a defective crane" might be said to be
"active" negligence while "omitting maintenance of
brake fluid level" or "neglecting to apply the
brakes" or "failing to inspect the crane in order
to discover its defectiveness" might be "passive"
negligence--these are the same acts or omissions
but the outcome depends not upon the facts, but
upon how someone chooses to characterize them.
In this case the facts alleged by Wade's Backhoe do not
constitute a claim for indemnity.
It should be clear from our discussion foregoing that we
do not find a common law right of contribution or of
indemnity in favor of Wade's Backhoe. Further, because we
find no common law nor statutory right to contribution or
indemnity the argument of Wade's Backhoe that it has a
donstitutional right here is of course foreclosed.
We hold therefore that Deere & Company is entitled to a
writ of supervisory control or other appropriate writ
requiring the respondents to vacate the order denying Deere's
motion for summary judgment in Cause No. 10061 in the
District Court, and directing that summary judgment in favor
of Deere & Company dismissing the third party complaint of
Wade's Backhoe Service be entered forthwith.
We turn now to the other issues raised by the parties in
the cause. Wade's Backhoe contended that this cause does not
present a sufficient reason for the issuance of a writ of
supervisory control or other appropriate writ. In view of
the importance of the issue presented here such a contention
is really a subissue. If we had decided to deny the
application for writ without comment on the grounds that the
matter could later be looked at by us on appeal, we would be
foregoing an important opportunity for the instruction of the
courts and counsel as to our interpretation of amended S
27-1-703, MCA, under the facts presented. In matters
involving supervisory control, this Court has followed the
practice of proceeding on a case-by-case basis though we are
careful not to substitute the power of supervisory control
for an appeal. State ex rel. Reid v. District Court (1953),
126 Mont. 489, 255 P.2d 693. Justice and judicial economy is
served when, faced with a record that shows the relator is
deprived of a fundamental right, we resolve the issue in
favor of the relator and assume jurisdiction. State ex rel.
Coburn v. Bennett fMont. 1982), 655 P.2d 502. We have also
said that when a cause in the District Court is mired in
procedural entanglements and an appeal is not an adequate
remedy, we will issue a writ of supervisory control. State
ex rel. Leavitt v. District Court (1977), 172 Mont. 12, 560
P.2d 517. We determine that this is an appropriate case for
supervisory control and have therefore assumed jurisdiction.
Deere & Company contends that Wade's Backhoe did not in
this case follow the correct procedure in filing its claim
for contribution by means of third party complaint.
Technically, Deere & Company is correct in this
contention. The provisions of 27-1-703, MCA, allow
bringing a concurrent tortfeasor into the action by joinder
"as an additional party to the action." This apparently
con.templates a motion under Rule 19, M.F.Civ.P. In this
case, Wade's Backhoe sought to bring Deere t Company into the
action by means of a third party claim under Rule 14,
M.R.Civ.P. While the preferred method may well be to proceed.
under Rule 19, we see no disadvantage to any party if Rule 14
is followed, as was done in this case.
Deere & Company is entitled to a writ of supervisory
control to be issued from this Court in accordance with our
discussion and directions foregoing. This Opinion shall be
and serve the office of such a writ, and when a copy of this
Opinion signed by a majority of the members of this Court
shall be filed with the Clerk of the District Court, the
District Court shall forthwith act in accordance therewith.
We Concur:
Mr. Justice 1. C. Gulbrandson, concurring and dissenting.
For the most part, I concur with the majority opinion.
I respectfully dissent from that part of the majority opinion
which retains the dollar cred.it rule in Montana. In my view,
this Court should follow the modern trend and adopt the
percent credit rule.
Courts and commentators have established three
alternative solutions to the issue presented here, i.e., what
effect will a joint tortfeasor's out of court settlement have
~,
upon a judgment entered. against a non-settling joint
tortfeasor (given that the latter has no right of
contribution against the former). Those alternatives are:
(1) the dollar credit rule--the amount of the settlement or
covenant not to sue is credited against the judgment entered
against the non-settling defendant, (2) the pro rata credit
rule--this rule reduces the non-settling defendant's
liability on the judgment in a proportion equal to the number
of settling tortfeasors divided by the total number of
tortfeasors; and (3) the percent credit rule --the
non-settling defendant's liability on the judgment is reduced
by the percentage of causation allocated to the settling
tortfeasor. As the following hypothetical example will show,
the dollar credit rule can yield unjust and devastating
results.
Let us suppose the following. A supplies B with a.
defective car which B crashes into D who is crossing a
street. The defective brakes in the car are the main cause
of the accident and we will assume that A is 90% negligent.
However, B was slightly careless and he was 10% at fault. D
settles his suit against A for $10,000. D then wins a
$100,000 judgment against B in a negligence action. Under
the majority's dollar credit rule, the $10,000 settlement is
credited against the verdict and B, who was only 10% at
fault, has to pay $90,000. Under the percent credit rule,
the amount of A's negligence, 90%, is credited against the
judgment and B has to pay $10,000. Results of the majority's
dollar credit rule include: (1) the plaintiff can insulate.
a settling tortfeasor from his true degree of liability by
entering into a low settlement (the remaining defendant will
have no right of contribution from the settling tortfeasor);
and (2) the plaintiff can impose a completely
disproportionate share of liability upon the remaining
defendant.
Many courts criticize the dollar credit rule, and
rightly so. The Texas Supreme Court stated:
A dollar credit reduces the liability of
the non-settling defendants, pro tanto,
by the dollar amount of any settlement.
The defendant ' s liability thus may
fluctuate depending on the amount of a
settlement to which he was not a party.
This fluctuation cannot be reconciled
-- policy - apportioning liability
with the
in relation
of
to each arty's
-
responsibility, theconceptual bs & of
comparative causation. A dollar credit
also encourages collusion by shielding
plaintiffs from the effect of bad
settlements while denying them the
benefit of good settlements. (Emphasis
added. )
Duncan v. Cessna Aircraft Co. (Tex. 1984), 665 S.w.2d 414,
430. The North Dakota Supreme Court criticized the dollar
credit rule and stated, "[Tlhere may be serious doubt that
one tort-feasor and the plaintiff could, by or through a
release, impose greater liability on other joint tort-feasors
not covered by the release." Bartels v. City of Williston
(N.D. 1979), 276 N.W.2d 113, 121. Similarly, the Fifth
Circuit Court of Appeals stated:
The problems with a [dollar credit rule]
arise from the fact that it provides no
rational basis for allocating damages
among the joint tortfeasors. (Citation
omitted.) Certainly, nothing prevents a
collusive, low settlement with a less
solvent tortfeasor, who might even be
largely responsible for the harm, in
exchange for that tortfeasor's assistance
in prosecuting a claim against the less
responsible, more solvent joint
tortfeasor.
Dobson v. Camden (5th Cir. 1983), 705 F.2d 759, 768, vacated
on rehearing, 725 F.2d 1003 (5th Cir. 1984). In a decision
authored by Mr. Justice William J. Brennan, Jr., now of the
United States Supreme Court, the New Jersey Supreme Court
also criticized a modified dollar credit rule.
If the injured party is required to
credit only the amount received in
settlement (citation omitted) he may be
tempted to make collusive settlements, a
mischief incident to the denial of
contribution which was one of the
strongest reasons for the statutory
change allowing a right of contribution.
Judson v. Peoples Rank & Trust Company of Westfield (N.J.
As shown by the majority, a number of states have
statutory dollar credit rules. This is largely a result of
those states' adoption of one version or another of the
Uniform Contribution Among Tortfeasors Act which provid.es for
the dollar credit rule.
Section 6 of the 1977 Uniform Comparative Fault Act
(UCFA) was intended to replace S 4 (the dollar credit rule)
of the 1955 Uniform Contribution Among Tortfeasors Act in a
state (such as Montana) following the principle of
comparative fault and, as stated by the majority, the newer
Act provides for a percent credit rule rather than a dollar
credit rule. A comment to the UCFA advises those states
adopting that Act that,
A state that has adopted either of the
two Uniform Contribution Among
Tortfeasors Acts will of course plan to
repeal it. This is also true of other
statutory provisions on contribution for
tortfeasors.
Uniform Comparative Fault Act 5 11 comment, 12 U.L.A. 47
(Supp. 1986). A further comment to the UCFA reveals that,
" [ t]he 1955 Act [Uniform Contribution Among Tortfeasors Act]
should be replaced by this Act in any state that adopts the
comparative fault principle, and would be eventually
replaced." Uniform Comparative Fault Act, prefatory note, 12
U.L.A. 38 (Supp. 1986) . An observation of the Texas Supreme
Court partially explains this comment. "The - dollar
- old
credit [which the Uniform Contribution Among Tortfeasors Act
provides for] - considered inappropriate - jurisdictions
is in
adopting a system of comparative causation." (Emphasis
added.) Duncan, 665 S.W.2d at 4 3 0 , n. 10. Montana is such a
jurisdiction.
The Duncan case is the most recent case in the modern
trend towards adoption of the percent credit rule. The Texas
Supreme Court found that the percent credit rule was
consistent with Texas1 comparative causation system. The
court adopted the percent credit rule and stated:
The system of comparative causation we
adopt allows allocation of liability
between the parties, even when the injury
itself is indivisible. (Citation
omitted. ) Because each defendant's share
can now be determined, it logically
follows that each may settle jus-t that
portion - - plaintiff's suit.
of the -
The
settlement - - affect - amount of
does not the
harm caused the remaining defendan=
-
and likewise shxld - affect their
not
liability. (Emphasis added.)
Duncan,665 S.W.2d at 431.
Bartels, the North Dakota Supreme Court case cited
above, is a leading case in the modern trend. The
Bartels court adopted the percent credit rule in North Dakota
notwithstanding the fact that the state legislature had
statutorily enacted a dollar credit rule. The court found
th.at the North Dakota comparative negligence statute (which
is very similar to Montana's) impliedly repealed the
statutory dollar credit rule. The Bartels court reasoned
that when the North Dakota legislature borrowed the
comparative negligence statute from Wisconsin and Minnesota,
it also borrowed the Wisconsin and Minnesota courts'
interpretation of that statute. Bartels followed the
Wisconsin cases and construed the North Dakota comparative
negligence statute as requiring the percent credit rule. See
Pierringer v. Hoger (Wisc. 1963), 124 N.W.2d 106; Bielski v.
Schulze (Wisc. 1962), 114 N.W.2d 105.
This Court should adopt the percent credit rule as the
logical complement to our comparative negligence statute,
just as Wisconsin, Minnesota and North Dakota. did with
respect to their comparative negligence statutes. Montana's
comparative negligence statute indicates a legislative intent
to apportion fault among the parties. More importa.ntly,
Montana's contribution statute, § 27-1-703, MCA, ind.icates a
legislative intent to apportion fault among tortfeasors,
whether those tortfeasors have settled - -
or not. In pertinent
part, § 27-1-703, MCA, provides, "[wlhenever more than one
person is found to have contributed as a proximate cause to
the injury complained of, the trier of fact shall apportion
- degree -
the of fault among such persons." (~mphasisadded.)
Significantly, that statute -- limit its application -
does not to
parties but applies to persons.
In Doyle v. United States (D.C.S.C. 1977) , 441 F.Supp.
701, the federal court also found that the percent credit
rule was particularly consistent and compatible with a
comparative fault doctrine. The court adopted the percent
credit rule in a case where the settlement bars contribution
and in the context of admiralty jurisprudence which has a
comparative fault doctrine.
In Dobson v. Camden (5th Cir. 19831, 705 F.2d 759,
vacated on rehearing, 725 F.2d 1003, (5th Cir. 1984), the
Fifth Circuit Court of Appeals adopted the percent credit
rule in the context of a section 1983 action. The court
found that federal law was deficient on the effect of a
plaintiff's settlement with one joint tortfeasor as against a
later judgment against a non-settling ioint tortfeasor. The
court rejected the local state's dollar credit rule and
reasoned that the dual policies of section 1983, compensation
and deterrence, called for a percent credit rule.
Other courts have also adopted or advocated the percent
credit rule. See Frey v. Snelgrove (Minn. 1978), 269 N.W.2d
918; Cartel Capital Corp. v. Fireco of New Jersey (N.J.
1980), 410 A.2d 674; Gomes v. Brodhurst (3rd Cir. 19673, 394
F.2d 465; Gustafson v. Benda (Mo. 1983), 661 S.W.2d 11
(criticizing Missouri's statutory dollar credit rule and
advocating the legislative adoption of the percent credit
rule). Commentators have also recommended the percent credit
rule. See, e.g., Fleming, Report to the Joint Committee -
of
the California Legislature - -
on Tort Liability - - Problems
on the
Associated with American Motorcycle Association - Superior
v.
Court, 30 Hastings L.J. 1464, 1498 (1979); Comment,
Comparative Negligence, Multiple Parties, and Settlements, 65
Cal.L.Rev. 1264 (1977).
The majority opinion rests on the conclusion that
non-settling defendants should. be jointly and severally
liable for the judgment (less the amount of settlement) even
where the plaintiff has settled with one joint tortfeasor for
a sum completely inadequate as to that tortfeasorls
liability. The better view is that the plaintiff, by
settling with one tortfeasor, has waived his right to hold
the remaining tortfeasor jointly and severally liable for the
remainder of his damages. In Bartels, the North Dakota
Supreme Court held that the plaintiff Is right joint and
several liability was for his/her benefit and that the
plaintiff waived that right as to a non-settling defendant by
releasing a joint tortfeasor. Montana statutory law provides
a basis for a similar holding. Section 1-3-204, MCA, states
" [alnyone may waive the advantage of a law intended solely
for his benefit. But a law established for a public reason
cannot be contravened by a private agreement." In the
context of a single case, the plaintiff's right to joint and
several liability is solely for his/her benefit and not for a
public reason. We should follow the Bartels ruling on this
point.
The majority states that:
It would make no sense to keep a settling
concurrent tortfeasor in the action as an
additional defendant or a third party
defendant to determine its proportional
fault for plaintiff's injuries, when the
non-settling defendants have no right of
contribution from the settling
defendant. ... Since no contribution
is allowed against a settling defendant,
it is pointless to keep a settling party
in the action simply to determine his
comparative fault when the remaining
defendants are severally liable to the
plaintiff.
That statement misses the point. As shown in the preceding
paragraph, the better view is that the remaining defendants
should not be severally liable to the plaintiffs as
plaintiffs have waived their right to that benefit.
Moreover, the percent credit rule does - require that the
not
settling tortfeasor be retained as an additional defendant or
third party defendant, as the majority implies.
The issue between the plaintiff and the
nonsettling defendant, which should be
framed by an amendment to the pleadings,
is the percentage of causal negligence,
if any, of the nonsettling defendant, but
such percentage of negligence can only be
determined by a proper allocation of all
the causal negligence, if any, of all the
joint tort-feasors and of the plaintiff
if contributory negligence is involved.
The determination of this issue between
the plaintiff and the nonsettling
defendant does not require the settling
defendants to remain parties because the
allocation, if any, of the causal
negligence to the settling tort-feasors
is merely a part of the mechanics by
which the percentage of causal negligence
of the non settling tort feasor is
determined. It makes no practical
difference to the settling tort-feasors
what percentage of causal negligence is
allocated to them because they have
bought their peace in any event.
Pierringer, 124 N.W.2d at 111-112. The Texas Supreme Court
stated in Acord v. General Motors Corp. (Tex. 1984), 669
S.W.2d 111, 117, that, "[tlhe settling party's liability can
be determined even though the settlor is not joined.
Requiring joinder of a settling tort-feasor as a party serves
no useful purpose. " (Citation omitted. ) See also, fteeton,
Torts, 28 Southwestern L.J. 1, 1-4 (19741,
Failure to join an alleged settling
tortfeasor neither precludes nor,
arguably, should it preclude the
submission of the existence or amount of
his negligence. The determination of the
existence or amount of his negligence is
in no way dependent on his being a party,
and there is no value in making him a
formal party to the litigation except for
procedural and tactical reasons on the
part,of claimant or defendants.
The dollar credit rule simply requires the non-settling
defendant to shoulder the burden of an inadequate, low
settlement entered into by the plaintiff and the settling
joint tortfeasor. The better rule is the percent credit rule
which requires the plaintiff to shoulder the burden of any
insufficient settlement he has voluntarily entered into.