Case Name: Richard G. LOWE, et al., Plaintiffs, v. NORFOLK AND WESTERN RAILWAY COMPANY, Defendant and Third-Party Plaintiff-Appellant, v. GATX CORPORATION, Dresser Industries, Inc., and Monsanto Company, Third-Party Defendants-Respondents
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 1988-05-17
Citations: 753 S.W.2d 891
Docket Number: No. 69761
Parties: Richard G. LOWE, et al., Plaintiffs, v. NORFOLK AND WESTERN RAILWAY COMPANY, Defendant and Third-Party Plaintiff-Appellant, v. GATX CORPORATION, Dresser Industries, Inc., and Monsanto Company, Third-Party Defendants-Respondents.
Judges: BILLINGS, C.J., and RENDLEN and HIGGINS, JJ., concur.
Reporter: South Western Reporter Second Series
Volume: 753
Pages: 891–901

Head Matter:
Richard G. LOWE, et al., Plaintiffs, v. NORFOLK AND WESTERN RAILWAY COMPANY, Defendant and Third-Party Plaintiff-Appellant, v. GATX CORPORATION, Dresser Industries, Inc., and Monsanto Company, Third-Party Defendants-Respondents.
No. 69761.
Supreme Court of Missouri, En Banc.
May 17, 1988.
Rehearing Denied June 14, 1988.
Stephen Schoenbeck, St. Louis, for appellant.
Kenneth R. Heineman, Bruce D. Ryder, Timothy Noelker, Ted L. Perryman, W. Munro Roberts, Jr., Laura B. Allen, William W. Evans, St. Louis, for respondents.

Opinion:
BLACKMAR, Judge.
We now answer a previously unanswered question precipitated by this Court's epo- chai decision in Missouri Pacific Railway Co. v. Whitehead & Kales, 566 S.W.2d 466 (Mo. banc 1978), in which we abolished the long-established rule that a joint tort-feasor had no right to contribution from another joint tort-feasor, except when a joint judgment has been rendered. Prior to that decision a plaintiff had the unqualified right to sue one, some, or all persons who may have contributed to an injury. Those who were sued had no basis for complaint that others equally or more at fault were not sued. The case held that a defendant could institute third-party proceedings against possible joint tort-feasors whom the plaintiff had not chosen to sue. Later, in Safeway Stores, Inc. v. City of Raytown, 633 S.W.2d 727 (Mo. banc 1982), we held that the action for contribution or indemnity could be prosecuted as a separate action and did not have to be brought by way of third-party proceedings in the initial action.
Left unanswered was the question whether a remaining defendant could proceed against a defendant or potential defendant who had settled with the plaintiff. The question was laid to rest for the future by amendment to Section 537.060, RSMo 1986, effective September 28, 1983, which permits alleged tort-feasors to buy their peace by good faith settlement with the claimant. The railroad argues that its right to contribution or indemnity accrued when the other parties settled in March of 1982 and that the amended statute cannot properly be given retroactive application so as to cut off this right. The settling defendants contend that the railroad's right to indemnification accrued, if at all, only after it settled with the plaintiffs, citing State ex rel. General Electric v. Gaertner, 666 S.W.2d 764 (Mo. banc 1984), and Rowland v. Skaggs Drug Co., 666 S.W.2d 770 (Mo. banc 1984), which hold that the statute of limitations does not run against a party seeking indemnification until that party pays or becomes obligated to pay the claimant. It follows, they say, that the amended statute was in place at the time the railroad's asserted rights accrued, and that there is no attempt to apply it retroactively to bar previously vested rights. They also cite Aherron v. St. John's Mercy Medical Center, 713 S.W.2d 498 (Mo. banc 1986), holding that the amendment applies to a release executed after the effective date even though the injury occurred before that date. We do not need to resolve this dispute, because we conclude that the same result would obtain whether or not the amendment is applied.
This claim arose because of the derailment of and spillage from a single tank car in Sturgeon, Missouri, on January 10,1979. The car was manufactured by third-party defendant GATX Corporation. It was brand new and on its initial run. The derailment was caused by the failure of a coupler yoke supplied by third-party defendant Dresser Industries, Inc. The car carried chemicals produced by third-party defendant Monsanto Company, allegedly containing a small quantity of an extremely dangerous substance commonly known as dioxin. The appellant Norfolk and Western Railway Company, the operator of the train, directed a group of its employees to assist an independent contractor in cleaning up the spill. These employees claimed damages caused by contact with the dangerous substances during the cleanup.
Suit was brought by 47 plaintiffs against Norfolk and Western, GATX, Dresser, and Monsanto in the Circuit Court of Madison County, Illinois, under the Federal Employers Liability Act, 45 U.S.C. 51 et seq. The plaintiffs charged that the railroad failed to warn plaintiffs of the danger, failed to provide them with a safe place to work and the necessary protective clothing, and failed to provide decontamination facilities. All defendants except the railroad settled the case on the courthouse steps on March 15, 1982, Monsanto for $3,500,000, Dresser for $2,175,000, and GATX for $1,325,000. The trial proceeded against the railroad with the jury returning verdicts in favor of the plaintiffs totalling $57,965,000. The railroad appealed the verdicts, and also appealed the trial court's order dismissing its cross-claims for contribution or indemnity from the other defendants.
The Appellate Court of Illinois, Fifth District, to the surprise of many and the consternation of some, reversed the judgments in favor of the plaintiffs, finding that Madison County, Illinois, was an inconvenient forum for the maintenance of these claims. It specifically held that the settlements had been reached in good faith and that they barred claims for contribution, but not for products liability, under applicable Illinois statutes. The opinion was handed down on April 19, 1984, and is reported as Lowe v. Norfolk and Western Railway Company, 124 Ill.App.3d 80, 79 Ill.Dec. 238, 463 N.E.2d 792 (1984).
The plaintiffs then filed suit in the Circuit Court of the City of St. Louis against the defendant railroad, which filed third-party claims against the three settling defendants. The trial court dismissed the third-party claims after a hearing, concluding that the plaintiffs had entered into good faith settlements with the third-party defendants and that the settlements were effective to discharge these defendants from all liability. The railroad then reached a settlement with the plaintiffs for a total of $15,700,000, expressly reserving its rights against the settling defendants. It now appeals the dismissal of the third-party claims. The court of appeals affirmed the dismissal but transferred the case to us because it perceived special importance. We likewise affirm.
The third-party claims are set out in eight counts, as follows:
COUNT NO. AGAINST BASIS
I GATX Strict products liability II GATX Negligence
III Dresser Strict products liability
IV Dresser Negligence
V Monsanto Negligence
VIMonsanto Strict products liability
VII Monsanto Strict liability for ultra-hazardous activity
VIII Monsanto Contractual indemnity based on bill of lading.
The railroad argues that the trial court was in error in concluding that the settlements had been reached in good faith. The Illinois appellate court expressly rejected this contention. It could not be predicted, at the time the settlements were entered into, that the courts of the forum state would ultimately conclude that the case should have been brought someplace else. The settling defendants were confronted with a very substantial trial, and each of them paid a seven figure amount to dispose of the claim against it. The policy underlying the doctrine of collateral estop-pel calls for its application here, as to an issue expressly presented to and decided by the Illinois courts.
But we do not have to rest our conclusion on collateral estoppel. The court below held a hearing at which the parties had the opportunity to present evidence, and concluded that the third-party defendants had settled in good faith. The railroad argued bad faith (1) because counsel for all defendants had previously agreed that there would be no settlement, (2) because pretrial discovery had focused on Monsanto, against whom there was a claim for punitive damages, and (8) because the settlement figures were small in proportion to the size of the Illinois verdict. Judge Gallagher rejected these assertions. Nothing in the record supports a contention that the plaintiffs or the settling defendants had any consideration other than their own economic interests in agreeing to settle. No similar case had been tried. The seven-digit settlement figures hardly bespeak collusion. The railroad concedes that it made no attempt to settle before the Illinois trial. The finding of good faith is adequately supported by the evidence.
The railroad cites cases from California indicating that a settlement may not be in good faith if the settling defendants do not contribute a substantial portion of the damages claimed, or ultimately awarded. We are not persuaded by these cases, which seem to espouse a view contrary to ours about the nature and purpose of settlement, which is to substitute present assurance for future uncertainty.
We conclude that the Whitehead and Kales decision did not change the prior law allowing a defendant to buy peace by a good faith settlement with the plaintiff. Such a settlement protects the settling defendant against claims of the other defendants as well as those of the plaintiff. This is consistent with State ex rel. Maryland Heights Concrete Contractors, Inc. v. Ferriss, 588 S.W.2d 489 (Mo. banc 1979), in which we held that a defendant against whom a verdict had been rendered had no right to a reduction of the award, or to contribution, because a person insulated from liability by the workers compensation statutes might be guilty of negligence which contributed to the accident. Also in line is Kendall v. Sears, Roebuck and Co., 634 S.W.2d 176 (Mo. banc 1982), holding that a defendant sued by an unemancipated minor had no right to contribution from the plaintiffs father, who was immune to suit by his son, or to mitigation of the judgment against him. By the same token a settling defendant is no longer liable to the plaintiff, and therefore not subject to a claim for contribution by a fellow tort-feasor.
Our prior decisions indicate the assumption of several Judges of this Court, over the years, that a settlement by one defendant would bar claims for contribution by other defendants. See, State ex rel. Maryland Heights Concrete Contractors v. Ferriss, 588 S.W.2d 489, 492 (Mo. banc 1979), (Donnelly, J., dissenting, joined by Rendlen, J.); Kendall v. Sears, Roebuck and Co., 634 S.W.2d 176, 181 (Mo. banc 1982), (Bard-gett, J., concurring, joined by Higgins, J.); State ex rel. Tarrasch v. Crow, 622 S.W.2d 928, 937 (Mo. banc 1981), (Rendlen, J., dissenting). Although it has been suggested that the principal opinion in that case supports a contrary view, (Kendall, supra, Welliver, J., dissenting in part), the majority opinion did not rule the merits of the issue of settlement, but simply held that the trial court should not be prohibited from entertaining an inquiry into the rather unusual facts of the case before it. There is an excellent discussion of the problem in Milholland, "The Sequel to Settlement by Covenant Not to Sue?", 38 Mo.BarJ. 559 (1982), in which the author expresses the opinion that settlements effectively excluded actions for contribution.
The parties did not cite Safeway Stores, Inc. v. City of Raytown, supra, but it is suggested that the opinion governs the case now before us. That case did not deal with settlement but rather with the right of a defendant against whom a verdict has been rendered to make a claim for contribution in a separate action against a person the plaintiff did not choose to sue. The opinion did not purport to answer, and does riot answer, the question here in issue.
Considerations of policy strongly support our conclusion. The policy of the law is to encourage settlements. A defendant settles to obtain peace and repose. If these are not available, there will be no settlement. Some defendants, after Whitehead & Kales, devised bizarre settlement agreements, by reason of which the plaintiff would agree to reimburse the settling defendant on account of any indemnity the settler might later be obliged to pay. Such a solution is not satisfactory because some plaintiffs may conclude that it is better to stand trial than to leave their ultimate entitlement in limbo. Settlements are surely impeded if any one defendant may effectively prevent others from settling. Whitehead and Kales was decided in the pursuit of good legal objectives. There is no reason to construe it in a way which would defeat the consistent policy of the law. The advantages of promoting settlement outweigh the possible disadvantage to those who settle late, or who do not settle at all and stand trial.
The railroad argues that Counts I, III, VI and VII involve different considerations, in that they are strict liability claims. The Illinois appellate court held that claims of this kind were not barred by settlement under the Illinois contribution statutes. It limited the effect of this holding to further proceedings in the Illinois courts, and stated that it did not purport to establish a rule which applied to litigation elsewhere. We conclude that there should be no distinction between products liability claims and negligence claims insofar as the right to contribution or indemnity is concerned. The same policy considerations are present.
The railroad also tries to revive the pre-Whitehead and Kales theory which distinguished between "active" and "passive" negligence, in holding that there was no contribution among joint tort-feasors, but that one whose negligence was derivative, or purely passive, could obtain indemnity from a party who was actively negligent. Whitehead and Kales rejected this distinction, and held that all noncontractual indemnity should be governed by its holding. We conclude that the defendants should be protected by the releases, and should not lose that protection because their fault may be found to be greater, or more active, than that of the railroad. It is quite doubtful, furthermore, that the railroad could sufficiently demonstrate that its conduct was purely passive. It contends that it was not at all at fault on account of the derailment of a brand new tank car and faced a claim only on account of the strict provisions of the Federal Employers Liability Act, which allows recovery for any negligence, however slight. The basis of the claim against the railroad has to do not so much with its having caused the derailment and spill as with its sending its employees into the area to clean up without taking sufficient precautions. The petition expressly charged it with negligence which took place after the derailment had taken place, and did not involve the other defendants in any respect. The petition clearly alleges active negligence.
Another claim is that the plaintiffs sought to impose a "vicarious liability" against the railroad. If so, the statute would not bar a claim for indemnification, and, presumably, the antecedent law would have the same effect. Vicarious liability is a liability based on a legal relationship, such as employer-employee, principal-agent, or partnership. An F.E.L.A. claim requires a showing of some negligence on the part of the carrier.
The railroad argues, finally, that its Count VIII states a contractual claim against Monsanto, on account of bill of lading provisions about the shipment of hazardous cargo without advising the carrier. This is a matter of federal law. The persuasive authorities hold that the railroad may not make a claim for contractual indemnity when it has been guilty of negligence. Union Pacific Railroad Company v. United States, 292 F.2d 521, 154 Cl.Ct. 427 (1961). Unless the plaintiffs can show some negligence on the railroad's part there is no F.E.L.A. claim. It makes no difference that the standard of negligence under that act may be lower than under our common law. The railroad's rights on settlement rise no higher than the rights following an adverse verdict. The trial court was correct in dismissing Count VIII.
We believe that our holding is sound from a policy standpoint and in accord with the expectations of lawyers and litigants. A contrary holding would result in stirring some sleeping dogs, in the form of cases in which some parties settled prior to September 28, 1983 and which are still pending, or which have been tried or settled within the past five years. There would also be problems as to whether the defendants would be precluded from challenging the amount of the settlement, or what burden the railroad would have of demonstrating the reasonableness of its settlement. The benefits of repose are manifold. The legal system is best served by affirmance.
The judgments of dismissal are affirmed.
BILLINGS, C.J., and RENDLEN and HIGGINS, JJ., concur.
DONNELLY, J., dissents in separate opinion filed.
WELLIVER, J., dissents in separate opinion filed and concurs in separate dissenting opinion of DONNELLY, J.
ROBERTSON, J., dissents in separate opinion filed.
. The statute now in force reads as follows:
Defendants in a judgment founded on an action for the redress of a private wrong shall be subject to contribution, and all other consequences of such judgment, in the same manner and to the same extent as defendants in a judgment in an action founded on contract. When an agreement by release, covenant not to sue or not to enforce a judgment is given in good faith to one of two or more persons liable in tort for the same injury or wrongful death, such agreement shall not discharge any of the other tort-feasors for the damage unless the terms of the agreement so provide; however such agreement shall reduce the claim by the stipulated amount of the agreement, or in the amount of consideration paid, whichever is greater. The agreement shall discharge the tort-feasor to whom it is given from all liability for contribution or noncontractual indemnity to any other tort-feasor. The term 'non-contractual indemnity" as used in this section refers to indemnity between joint tort-feasors culpably negligent, having no legal relationship to each other and does not include indemnity which comes about by reason of contract, or by reason of vicarious liability.
. See dissents in Tech-Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal.3d 488, 213 Cal.Rptr. 256, 698 P.2d 159 (1985).
. See also, Parks v. Union Carbide, 602 S.W.2d 188, 202 (Mo. banc 1980) (Welliver, J. dissenting).
. See, e.g., State ex rel. Tarrasch v. Crow, 622 S.W.2d 928 (Mo. banc 1981).
. This holding is in line with Sharp Brothers v. American Hoist and Derrick Co., 703 S.W.2d 901 (Mo. banc 1986), holding that products liability law is designed to protect injured persons, and has limited application among commercial parties who can define their rights and duties by contract.
. E.g., Kansas City Southern Railway Co. v. Payway Feed Mills, Inc., 338 S.W.2d 1, 7 (Mo.1960).
. Even actions characterized as passive are often "careless and blameworthy." This is one of the primary reasons we have abolished the importance of the active/passive distinction. See, Whitehead & Kales, supra, 566 S.W.2d at 472.
. Cf., Safeway Stores, Inc. v. City of Raytown, supra, 633 S.W.2d at 732.