Court Opinion

ID: 9660455
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:14:08.041399+00
Date Added: 2024-06-11T18:14:19.631658
License: Public Domain

DENTON, Justice,
concurring.
I would affirm the judgment of the court of civil appeals; however, I would do so on the premise that where primary liability of an agent has been effectively released, there is no remaining basis to support the cause of action against a principal under the doctrine of respondeat superior.
The Knutsons sued the Chastains and Mrs. Chastain’s employer, Morton Foods, to recover for injuries which Mrs. Knutson received in an automobile collision. The Knutsons settled their claim with the Chas-tains and executed a “Covenant Not To Sue,” which was filed of record. The claim against the Chastains was dismissed with prejudice. Morton Foods then filed a motion for summary judgment claiming that the “Covenant Not To Sue” had released the Chastains, and therefore had also released Morton Foods from any derivative liability. In addition, they claimed that the Chastains were independent contractors at the time of the alleged negligence. The trial court granted the summary judgment motion and entered a take nothing judgment for the Knutsons. The court of civil appeals affirmed, holding that the primary liability of the employee Chastain had been released and as a result had extinguished the vicarious liability of the employer, Morton Foods.
The primary issues before us are whether the “Covenant Not To Sue” executed by the Chastains was a general release, and whether it served to extinguish the derivative liability of Morton Foods. In the present case, Chastain and Morton Foods are not alleged to have joint and several liability, and it is conceded by the parties that any liability of Morton Foods arises solely from the employer-employee or master-servant relationship. See Marange v. Marshall, 402 S.W.2d 236, 238-39 (Tex.Civ.App.-Corpus Christi 1966, writ ref’d n.r.e.)
The court of civil appeals concluded that the agreement, although captioned a “Covenant Not To Sue,” was a general release of the cause of action against the employee, Chastain, which extinguished the derivative cause of action against the employer, Morton Foods. The Knutsons argue that the court of civil appeals and the trial court erred in construing the agreement as a release of their cause of action against Morton Foods. They point to the language of the agreement which states that the parties did not intend such a result, and that there is no language specifically releasing the Chastains, merely language promising not to pursue their cause of action against them. Morton Foods, however, argues that the language of general release controls, and that the agreement was in fact a release.
Therefore, the resolution of this case turns on the legal distinctions between a satisfaction, a covenant not to sue, and a release. “A satisfaction is an acceptance of full compensation for the injury; a release is a surrender of the cause of action, which may be gratuitous, or given for inadequate consideration.” W. Prosser, Handbook of the Law of Torts, § 49 (4th ed. 1971); McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971); Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935); Rexroat v. Prescott, 570 S.W.2d 457 (Tex.Civ.App.-Amarillo 1978, writ ref’d n.r.e.). A covenant not to sue is merely a promise not to pursue a claim or cause of action. Robertson v. Trammed, 98 Tex. 364, 83 S.W. 1098 (1904); Prosser, supra at 303. An agreement between the parties may encompass any or all of these concepts, and the legal effect of the agreement will be determined primarily from the parties’ intentions and will not be controlled by the label which the *811parties may apply. Quebe v. Gulf, G. & S. F. Ry. Co., 98 Tex. 6, 81 S.W. 20 (1904); Berry v. Guyer, 482 S.W.2d 719 (Tex.Civ.App.-Houston [1st Dist.] 1972, writ ref’d n.r.e.); Loy v. Kuykendall, 347 S.W.2d 726 (Tex.Civ.App.-San Antonio 1961, writ ref’d n.r.e.). Although an agreement may contain language of covenant, and purposely avoid the term “release,” the intent of the parties controls, and the legal effect of the instrument may be a general release. Prosser, supra at 303; See Hodges, Contribution and Indemnity Among Tortfeasors, 26 Tex.L.Rev. 150, 172 (1947).
In paragraph I of the “Covenant Not To Sue,” the Knutsons promised that they would not prosecute their cause of action against the Chastains. Paragraphs II and III expressly reserved any cause of action that the Knutsons might have against Morton Foods. In paragraph IV, the Knutsons agreed to indemnify the Chastains up to the amount of the settlement should Morton Foods obtain indemnity from the Chastains. Of particular significance is paragraph V, in which the parties agreed that the settlement was in complete satisfaction of any claims against the Chastains.1
Money paid an injured party in consideration for a covenant not to sue the tort-fea-sor is compensation for the injuries received. Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703, 705 (1935). Here the parties have agreed in paragraph V that the amount of compensation paid has fully satisfied any claim for damages against the Chastains. The Knutsons have not agreed to accept payment as partial satisfaction, but have expressly agreed to be fully satisfied. In so doing, they have surrendered their claim, and have released the Chastains from any liability on the underlying cause of action.2 When the agreement is considered as a whole, the parties clearly intended to release Chastain, but reserve their claim against the employer, Morton Foods. See W. Prosser, Handbook of the Law of Torts § 49 at 303 (4th ed. 1971).
Having decided that the Knutsons have released their claim against the Chastains, we reach the issue of whether Morton Foods has also been released from liability. The Knutsons point out that the agreement expressly reserved any cause of action against Morton Foods. They argue that even if the Chastains were released, under McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971), the agreement does not serve to release Morton Foods. Morton Foods relies on Spradley v. McCrackin, 505 S.W.2d 955 (Tex.Civ.App.-Tyler 1974, writ ref’d n.r.e.) and argues that the release of the primary tort-feasor has also released their derivative liability.
In Spradley, the plaintiffs executed a general release of the employee, and then brought suit against the employer. The court of civil appeals held that a release of the alleged tort-feasor employee by the plaintiff had also released the employer of any derivative liability. This result followed even though the parties had not expressed an intention to release the employer. The court in Spradley held that the employer could not be held liable on the theory of respondeat superior because:
the basis of such a cause of action against the employer is dependent upon an existing valid cause of action against the [employee]. If this court should construe the release as urged by *812appellants, this would in effect hold the release of [the employee] null and void since [the employee] would be held liable for any recovery made against the employer through right of indemnity.
Id. at 958.
The court in Spradley distinguished the holding in McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971). In McMillen, this court adopted the rule that a release of one tort-feasor did not release other joint tort-feasors unless they were specifically identified in the release. Id. at 196. The tort-feasors in McMillen were joint tort-feasors with joint and several liability. In this case, there is but one tort-feasor, the em-' ployee, and the employer’s liability is derivative. I agree with the reasoning in Sprad-ley, that the McMillen holding is not applicable in a case involving respondeat superi- or. I would hold that the release of the servant-employee for his torts also releases the derivative liability, of the master-employer under the theory of respondeat superior.
STEAKLEY and BARROW, JJ., join in this concurring opinion.
GARWOOD, J., writes concurring opinion.

. Id. at 877. In Paragraph V the parties agreed:
. that the sum paid to plaintiffs and their attorney is in complete and final Satisfaction of any and all claims for damages of whatsoever kind and character, which plaintiffs, or anyone claiming through them or on their behalf, may have against defendants Chastain or their insurer. (Emphasis added).

. This case is distinguishable from those cases in which a full and complete satisfaction of a cause of action is made by judgment or in accordance with a judicial determination. See T. L. James and Co. v. Statham, 558 S.W.2d 865 (1977); Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935); Hunt v. Ziegler, 271 S.W. 936 (Tex.Civ.App.-San Antonio 1925), aff’d 280 S.W. 546 (Tex.Com.App.1926, Judgment adopted). As noted in McMillen v. Klingensmith, 467 S.W.2d 193, 195 (Tex.1971), satisfaction of an underlying cause of action and release of a party are often confused.