Court Opinion

ID: 9660456
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:14:08.045402+00
Date Added: 2024-06-11T18:14:19.634128
License: Public Domain

GARWOOD, Justice,
concurring.
I join in that portion of the court’s opinion dealing with Chastain’s status as an independent contractor. With respect to the covenant not to sue, I agree that it did not bar the Knutsons’ suit against Morton Foods, but for reasons different than those stated in the court’s opinion.
The sole basis on which the Knutsons asserted any liability against Morton was that under the doctrine of respondeat superior it was liable for the negligence of its employee, Chastain, acting in the course and scope of his employment. Accordingly, if any judgment were rendered for the Knutsons against Morton, it would be entitled to judgment for indemnity in like amount against Chastain. Upon such an indemnity judgment being rendered against Chastain, Chastain would in turn be entitled to a judgment against the Knutsons in the same amount if, but only if, the prior settlement between the Knutsons and Chas-tain could properly be regarded as an agreement that the Knutsons, in consideration of the $10,000 paid them by Chastain, would not directly or indirectly subject Chastain to further liability on account of the Knut-sons’ damages from the incident in question. The end result of such a circular process would leave all three parties in the same place as when the Knutson-Chastain settlement was made. To avoid circuity of action, in that situation the various cross rights of the parties would simply be “collapsed.” Such a settlement between the Knutsons and Chastain would reduce the Knutsons’ recovery against Morton to the extent that Morton could have a recovery over against Chastain which Chastain could in turn recoup from the Knutsons. Such was the basis of the holding of this court in Palestine Contractors, Inc. v. Perkins, 386 S.W.2d 764 (Tex.1964), although there contribution, rather than indemnity, was involved.
There are two requirements, then, which are essential to invoking the rule of Palestine Contractors. The first is that the non-settling defendant be entitled to indemnity or contribution from the settling tort-fea-sor. That is plainly satisfied here, for as a matter of law Morton would be entitled to full indemnity from Chastain. The second requirement is that by virtue of the settlement agreement there be an express or implied obligation on the part of the plaintiff to hold harmless the settling tort-feasor from further liability, by indemnity or contribution, on account of the plaintiff’s damages from the incident in question. We held in Palestine Contractors that such an agreement should be implied from a covenant not to sue, even though it expressly reserved the right to proceed against third parties. I believe that holding is sound.1 A *813“settling” party normally expects to “buy his peace.” A purportedly full and final settlement which, without expressly so providing, results in the settling party still being indirectly liable for all or part of the very same damage claim as that “settled,” is a trap for the unwary.
Nevertheless, as between themselves parties should be free to structure a settlement in any way they see fit, consistent with our general rules of contract law, the rights of third parties, and the proper functioning of our court system. If a party against whom a claim is asserted desires to make a payment in settlement pursuant to an agreement under the plain terms of which he remains exposed to liability for indemnity or contribution in respect to the same claim, there is no sufficient reason for the courts to prevent him from doing so.2
Here the covenant not to sue speaks directly to the question of Chastain’s continued exposure to liability for indemnity or contribution, and provides that the Knut-sons will hold Chastain harmless in such regard “to the extent of the payment herein recited” (the $10,000 paid by Chastain to the Knutsons for the covenant). This is the equivalent of an express provision that the Knutsons will not hold Chastain harmless beyond such amount, and that in such regard Chastain remains fully at risk. Accordingly, except to the extent of the $10,-000 payment, the Knutson-Chastain settlement affords no basis for diminishing the Knutsons’ claim against Morton Foods. Though Morton Foods would be entitled to indemnity from Chastain, Chastain would not be entitled to any relief from the Knut-sons, and there would be no circuity of action.3
Under the express wording of this particular covenant not to sue, where the instrument expressly provides that the settling employee remains fully at risk for further liability, by way of indemnity or contribution, for the claimant’s damages in excess of the amount paid in settlement, there is no reason to hold that the covenant not to sue bars the claimant’s respondeat superior action against the employer. The settlement does not prejudice the employer, as it can still recover full indemnity from the employee. No circuity of action arises, because the employee has no suit against the claimant to recoup his indemnity liability to his employer. Whatever harm the settling employee suffers by reason of remaining liable, in indemnity or contribution, for the claimant’s damages is not the result of a “trap for the unwary” and does not constitute a frustration of the normal expectations attendant on one’s “buying his peace,” but is simply the result of the express provisions in the settlement agreement between the claimant and the employee. For these reasons, I agree that this particular covenant not to sue given Chastain by the Knut-sons does not bar the Knutsons’ suit against Morton as Chastain’s employer.
However, I disagree with the court’s disapproval of the result in Spradley v. McCrackin, 505 S.W.2d 955 (Tex.Civ.App.— Tyler 1974, writ ref’d n.r.e.). There the release by the claimant, Spradley, of the employee, Henry, was held to bar Sprad-ley’s suit based on respondeat superior against Henry’s employer. If the employer were liable it would clearly be entitled to indemnity from Henry. Since the release in Spradley was unqualified, and contained no indication that it did not protect against *814indemnity or contribution, it should be held to impliedly protect the released employee from claims for contribution or indemnity respecting the claimant’s damages. Certainly, such an unqualified release should not afford less protection than the Palestine Contractors covenant not to sue, which expressly reserved rights against third parties.4
The result in Spradley is not inconsistent with McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971). In the latter case the general release of the party to an automobile collision in which the plaintiff was injured was held not to bar the plaintiff’s malpractice suit against two doctors who subsequently treated her for these injuries. Clearly, the doctor defendants would not be entitled to indemnity from the released driver, so the plaintiff’s suit against the doctors could in no event be barred under the circuity of action theory. This court expressly reserved the question of the “impact of a release effective only as to the named original tort-feasor on the extent of the liability of the successive tort-feasor.” Id., 467 S.W.2d 193 at 197. [Emphasis added.]
It is true, of course, that Palestine Contractors is a joint tort-feasor case, and Spradley is a respondeat superior case. But this does not justify a holding contrary to the result in Spradley. The settling employee is certainly entitled to as much protection from the claimant against further liability for the same injuries as is the settling joint tort-feasor. Minimizing circuity of action is no less significant in the respon-deat superior setting than in the joint tort-feasor case.
It is also true that Article 2212a, Texas Revised Civil Statutes Annotated, has introduced significant changes in this area, the various ramifications of many of which have yet to be fully resolved. See, e. g., Deal v. Madison, 576 S.W.2d 409 (Tex.Civ.App.-Dallas 1978, writ ref’d n.r.e.); Comment, Multiple Party Litigation in Compar-a i/ve Negligence: Incomplete Resolution of Joinder and Settlement Problems, 32 Sw. L.J. 669 (1978). For cases governed by subsection (d) of section 2 the Palestine Contractors doctrine seems to be inapplicable, while its underlying principles apparently continue to apply in appropriately modified form to cases under subsection (e). However this may be, in my view section 2 of Article 2212a clearly was not intended to govern the common law right of indemnity respecting liability imposed entirely vicariously. In such instances the principles of Palestine Contractors should be applied. See, e. g., Craven v. Lawson, 534 S.W.2d 653 (Tenn.1976).
Here the settlement agreement expressly provided that Chastain would not be protected against further liability in indemnity or contribution. For this reason I would hold the suit against Morton was not barred. Had not such provision been made, a different holding would be required by the principles underlying Palestine Contractors. I think the correct result was reached in Spradley, where there was no such provision.

. See also, e. g., Holmstead v. Abbott G. M. Diesel, Inc., 493 P.2d 625 (Utah 1972); Dickey v. Estate of Meier, 197 N.W.2d 385 (Neb.1972). Compare Williams v. Marionneaux, 124 So.2d *813919 (La.1960), and Caldwell v. Montgomery Ward & Company, Inc., 271 So.2d 363 (La.App.1972).

. We are not here concerned with the authority of the tort-feasor’s liability insurer to make such a settlement on his behalf or with its duty, if any, to protect its insured in the terms of such a settlement.

. Under the rule preventing double recovery for a single loss, Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935), any recovery by the Knutsons from Morton, and accordingly the extent of Morton’s indemnity against Chastain, would be reduced by the $10,000 previously paid the Knutsons by Chastain. Thus, the hold harmless clause in the covenant not to sue is, in effect, self-executing; and there can be no occasion for a suit by Chastain against the Knutsons even for the $10,000 and even though Morton recovers indemnity against Chastain.

. Indeed the release in Spradley purported not only to release “Horace Henry” but also “all other persons, firms, and corporations,” and it contained no reservation of rights. Id., 505 S.W.2d 955 at 958.