Cox v. Kelsey-Hayes Co.
594 P.2d 354
Okla.
1978
Check Treatment

*1 COX, Appellee, Michael Paul COMPANY,

KELSEY-HAYES

corporation, Carl-Built, corporation, Appellants,

(Leslie II, Non-Appealing

Defendant.)

No. 49317.

Supreme Court of Oklahoma.

Nov. 1978.

Rehearing May Denied

DOOLIN, Justice: two appeal by This is .defendants in a tort action based negli- products liability and manufacturers’ gence. single dispositive issue is ques- appeal we reverse on this and because errors sub- tion we will not consider other by appellants. mitted high- driving haya truck on Plaintiff was way Watonga. 270 toward Defendant approached him from the Scott’s vehicle pulling a As other direction horse-trailer. on the two neared each other vehicles off the horse-trailer lane road wheel came highway in front of and rolled across the truck, went lost control of He injured, ulti- and was down an embankment leg. mately losing Scott, Kel- brought suit Plaintiff sey-Hayes allegedly manufactured who Carl-Built, assembly of the trailer and axle He loss of the distributer. claimed improper from the trailer due wheel defective manufac- assembly by Scott and hub. Plaintiff lug bolts on the ture of suit without dismissed his initial Prior to refil- during trial but later refiled. following into the he entered car- insurance and his with defendant Scott rier: EXECUTION

LIMITATION OF AGREEMENT (Mi- plaintiff, undersigned, “Whereas the Cox) judg- Paul event chael favor, has an unlimited in his levy of election as execution jointly to be defendants determined severally liable for and, damages; defend- is more than one Whereas there ant, might be such election whom Cox, styled Michael Paul made Hunt, Thomas, Dawson & Gile Jake Kelsey-Hayes versus Hunt, by George Hastie & W. Kirschner Carl-Built, Inc., corporation, a Delaware Dahnke, City, appellee. Oklahoma Leslie corporation, and Oklahoma CJ-73-691, defendants, Scott, II, No. Ray Wm. G. and Edward L. Smith County, Fenton, Fenton, Smith, Moon, Court of Oklahoma & the District Reneau Oklahoma; and, City, appellants. Oklahoma Scott, II, Whereas Leslie equals defendants or exceeds Two Hun- one of the potential- described defendants Fifty ($250,- dred Thousand Dollars execution; ly exposed and, levy to° 000.00),plaintiff will reimburse defend- Whereas it is the plaintiff carrier, desirable for ant or his insurance Oklahoma compensation receive immediate for the Farm Bureau Mutual Insurance Com- *3 limitation right of his unlimited of elec- pany, Forty in the amount of Thousand tion levy as to of any judg- execution of ($40,000.00);and, Dollars in addition to may behalf; ment that be rendered in his ($40,- Forty Thousand Dollars and, 000.00),plaintiff will reimburse defend- equally Whereas it is desirable for the ant and his insurance carrier on the defendant, Scott, II, Leslie liquidate twenty percent (20%) basis of any of potential exposure levy to such excess amount recovered over Two by plaintiff’s execution unlimited elec- Fifty Hundred Thousand Dollars tion; ($250,000.00) by plaintiff collected Now, therefore the Michael from the other defendants but not to Cox, Paul defendant, Leslie exceed the Fifty amount of Thousand Scott, II, agree that: Dollars original over and above the Scott, II, A. Defendant Leslie through Forty ($40,000.00).” Thousand Dollars carrier, his insurance Oklahoma Farm Under this would re- Scott Bureau Mutual Insurance Company although main as a defendant he and his pay will the sum Ninety Thousand insurer had conditionally plain- settled with ($90,000.00) Dollars plaintiff upon tiff trial. Further and his Scott execution agreement; of this insurer proportion could receive a in rebate B. Plaintiff will limit his of elec- to the size plaintiff’s of the verdict in favor tion levy as to of execution as follows: against the non-agreeing Kel- 1. In the event judgment of a in favor sey-Hayes Carl-Built, appellants and herein. plaintiff against and the defend- Appellants became agree- aware of this ant, Scott, II, Leslie only, and not ment through interrogatories. answers to against any defendant, other plaintiff Following discovery appellants filed mo- will execute and deliver to defendant a tions to realign parties, dismiss and to release discharge and judgment of such original answers, amendments to their payment him, by Leslie claiming in a resulted defect Scott, II, carrier, or his insurance Okla- parties and was a fraud and sham on the homa Farm Bureau Mutual Insurance court. The trial appellants’ court overruled Company, of the sum of Ten Thousand motions and further appel- refused to allow ($10,000.00), Dollars plaintiff will lants to cross regarding agree- examine proceed against Les- ment or Scott, introduce it into The II, lie evidence. or Oklahoma Farm Bureau court also permit any impeach- refused to Mutual Insurance Company questions sum or amount in Scott as to his financial excess of Ten Thou- sand interest in a ($10,000.00) against appellants. Dollars regardless of amount The judgment entered, returned a verdict in inter- est expenses accrued or favor all incurred. three defendants $1,800,000.00. The trial ap- court overruled the event judgment in favor pellants’ plaintiff judgment motions for new trial or the defend- ant, v., Scott, II, n. o. Leslie denied a remittitur and refused to and one or more of $90,000.00, the other defendants, credit previously paid to will use his Scott, best by efforts to collect judg- all of said judgment from the appeal other said ment. This defend- resulted. Scott ant or defendants. If the amount col- course appeal does not as he benefited from lected the plaintiff from the other the verdict. agrees with the allegations secretly

Appellants numerous submit that defendant will continue as active concerning of error suit, his own maximum ment, basically arguing they did not receive proportionately liability will be diminished longer trial because non-agree- by increasing the They argue the adversary defendant. trial ing defendants. refusing court erred allow and the effect consider courts, Mary Carter de- since the Florida testimony. had on Scott’s cision, admonishing that these while for extreme potential ments have pre-trial agreement is in the nature con- defendants have against non-agreeing contract, aleatory of which of an execution provid- cautiously upheld them tinually and contingency depends on the mitigated» full ed harm must judi- agreement verdict. This defend- if the disclosure. Further cially spawned Booth v. *4 liability reduced ant will have maximum (Fla.App.1967). Company, Paint 202 8 So.2d co-defendant, liability a by increasing $15,- a in a In ease trial resulted agreement these courts have held plaintiff. Af- 000.00verdict in favor of the (cid:127) into evidence.1 should be admitted ter trial it was revealed one of the defend- in es- ants had contracted of variations Obviously the number sence, the verdict was for more than only by the is limited agreements such $37,500.00, plaintiff only the mind of man.2 would execute typical ingenuity Mary Carter Paint usually has the fol Mary agreement Carter under no circumstances would the contract- lowing features: $12,- defendant be liable more than secrecy A. provided 500. The contract further con- in the contracting B. remains tracting defendant would continue de- lawsuit agreement kept fend- and the should be guarantees contracting C. jury. secret and not revealed The recovery monetary plaintiff a certain appellate apparently court sanctioned the liability is contracting D. defendant’s upheld. as agreement the trial court was proportion to decreased in direct Court, Supreme the Florida al- non-agreeing defend- increase though ostensibly overruling Mary Car- liability. ants’ decision, type ter found this settlement unique is to the It element that is the last agreement valid. The v. court Ward creates “Mary agreement Carter” Ochoa, (Fla.1973) required 284 So.2d 885 non-agreeing prejudice to most unfair Ap- full disclosure vacated Court trial.3 right to a fair defendant and his peals decision that held a of amount set-off certain amount guaranteed is Plaintiff paid total of the out- regardless from one defendant any possible injustice award cured created In return that defend- come of the verdict. by the contract. ant to benefit receives against the solely

The Florida Court Ward coined or verdict agreeing de- The “Mary Agreement” defining non-agreeing name Carter inter- direct partakes aas contract which one co-defendant fendant therefore Rountree, Industries, supra, Industries, Rountree, n. Inc. v. 2. Maule Inc. v. 264 So.2d 1. Maule (Fla.App.1972), 445 remanded on other 1. (Fla.1973); grounds, v. 284 So.2d 389 Ward Ochoa, (Fla.1973); v. Mary agreements 284 Swanson So.2d 385 similar to “loan- Carter Co., Casualty agreements” State 202 exe- receipt Farm Fire & 349 So.2d not to and “covenants (Fla.App.1977) cute”, potentially prejudicial ele- which held it was error admit but contain form; Friers, usually Inc. in a modified not found these ments Co., R. So.2d 208 v. Seaboard Coastline 355 These two alternatives analysis (Fla.App.1978). special require and are discussed in this decision. litigation. ticipating est in deprived the outcome of the co-defendant is not The adversary relationship normal trial. between distorted, and defendant becomes Supreme recently The Texas re- Court destroyed. versed a where he had “Mary type agree- entered into a Carter” Ordinarily settlement ment with one defendant. court held and a defendant should interest, financial defendant’s derived from jury, excluded from the otherwise the subject proper was á policy favoring lawsuits proof. cross-examination and Exclusion of would be frustrated.4 But Carter” requiring evidence was error harmful type agreements really cannot be classified reversal, alignment though even of ad- controversy settlements because the versaries was disclosed. General Motors only contingently settled. The de Simmons, Corporation v. 558 S.W.2d 855 party, fendant remains a and the still (Tex.1977). liability determines the extent of his but in Baker, In Breitkreutz inverse ratio to the imposed on (Alaska 1973) the trial limited the non-agreeing defendant. participation of the agreeing defendant and vary approach Jurisdictions in their informed the of the settlement. The upheld Arizona Supreme Alaska Court held such an where the terms were correct, questioning propriety fully disclosed the court appeal *5 allowing agreeing even to re- defendant ing advantage defendant failed to take main as a It if nominal defendant. stated opportunity to reveal the terms of the not the had informed of the jury by to the cross-examination settlement terms it would have been error. agreeing the City defendant. See type Several courts hold Carter Gallagher, 140, Tucson v. 108Ariz. agreements primarily are admissible for the 1197, (1972). 65 A.L.R.30 597 Unlike the purpose impeaching testimony the present case, there was no issue raised on agreeing party; prejudice to show bias or appeal regarding the refusal of the trial by revealing agreeing party the stands to allow testimony regarding the to gain financially plaintiff’s from a verdict. agreement. Burlington Quincy Chicago, See Reese v. & courts, Similarly guardedly other while 356, R.R. Company, 55 Ill.2d 303 N.E.2d 382 accepting Mary type agreements, (1973); Bedford District v. Caron School choose to them treat on a to case basis (N.H. Company, A.2d 1051 Construction 367 rather by categorical than condemnation or 1976). absolute approval. Nevada held a Mary Carter Indemnity Pacific Company Thomp- v. insurer, agreement, also was involving son, Inc., Yaeger, (Minn. 260 N.W.2d 548 against public policy, champertous void as 1977) the upheld Minnesota court such an v. legal violative ethics. In Lum agreement because its terms were read into Stinnett, 402, (1971), 87 Nev. 488 P.2d 347 the record and the effect the agreement the appellant’s request trial court denied to argued was jury. to call testify a witness to to the terms of the The court in Burkett v. Trucking Crulo Supreme Court reversed Company, (Ind.App.1976) 355 N.E.2d 253 holding agree- purposely a “fired shot across bow” to deprived proper its trial of adver- discourage agreements, character, misuses of such sary appellants thus were denied suggesting courts and counsel exercise a irregularities warped scru- so trial because tiny and presentation restraint to non-par- insure that a The court case. distin- Corp. Simmons, Stephenson, 4. General Motors v. v. Great American Life Ins. Co. 558 295, (Tex.1977); (1936). S.W.2d 855 Gibson v. Chickasha 55 176 Okl. P.2d 56 Co., Cotton Oil (1932); 159 Okl. 15 P.2d 41

359 Lee, will agreeing profit if the defendant N.J.Su- of Klotz v. 36 guished the case larger must per. 114 A.2d 746 on which Scott award to the present heavily case. relies the contents of the be informed of provi- ment, monetary if even exact nothing paid In Klotz might be con- agreements sions. These also prior to trial. A cross-claim remained be- public policy because sidered violative of agreeing Also the de- tween defendants. the less the burden of the loss shifts to compelled pay half of fendant blameworthy in that the judgment against There- both defendants. willing be usually will legal fore no benefit such an offer under more company or his insurance would exist from escape responsibility thus judgment. large plaintiff’s or proportionate for his share damages commentators, recognizing Courts and altogether.5 liability hopefully escape non-agree substantial ing defendants, nearly not frown on all certainly unanimous in We do we im- their be dis Neither do belief the must present ply closed to trial and there was fraud liability appel- defendant’s maximum will be re was known case. The by increasing way of his co- duced But there was lants and court. defendant, liability except must informed of escape could contents of the even This large favor of award in monetary provisions. the exact Bed See with de- alienated Scott —not ford v. fendants, School District Caron Construction suggested in v. Stin- hum Co., Kemp, supra; Anderson v. 184 So.2d nett, its true supra, deprived the trial of man, (Ala.1966); Degen Bay adversary character. (S.D.1972); N.W.2d 134 v. Burke’s Grillo settled pre-trial agreement has If a (Or. Company, Paint 551 P.2d 449 plaintiff and completely suit 1976); Sequoia Mfg. Company, Inc. v. Hale should then that defendant one (Ariz. Construction 570 P.2d 782 *6 dispo being unnecessary to be dismissed as App.1977). the sition of case. In Oklahoma cross-examination of a witness as to with an insurer is absolutely does not agreement If the permitted. of a claim Settlement conflict, on the hinges but rather settle the opposing party an is proper evidence to should trial court of the the amount show or bias of a witness. Refus agreement the the circumstances of review al to allow cross-examination agree portion of the and hold that either tending credibility matters to affect inter agreeing granting ment it though incidentally witness is error even verdict unenforcea large plaintiff’s est in a protected by would disclose defendant is the policy, or dismiss against public ble as Hines, 426 insurance. See Frierson v. P.2d In no the suit. agreeing defendant from (Okl.1967). who will should a defendant circumstances present plaintiff the insists case In be verdict profit large plaintiff’s from a jury was bias was cured because the ostensi in the suit to remain allowed How indeed informed of the settlement. is agreeing If ble defendant. only jury the ever the record indicates that affecting his dismissed, cross-examination partially was told “had Scott settled” the protect credibility should interest and overcome This is not sufficient to If non-agreeing defendant. interest prejudicial the the nature of in suit and the agreeing defendant remains void as declared agreement the has been previously jurisdictions accept-

As noted adversary against public policy, then the ing generally in accord at 65 5. See annotation A.L.R.3d BARNES, WILLIAMS, BERRY, proceedings

nature of pre- has been and SIMMS, JJ., served and the is agreement longer no rele- concur.

vant. J., LAVENDER, V. specially. C. concurs In most eases full disclosure to the exact proba- terms of the is IRWIN, J., dissents. bly inadvisable. Full disclosure could in LAVENDER, Justice, Vice Chief concur- some cases be non-agree- detrimental ring specially: defendant who would be torn between need inform the appellant I to a concur that is entitled self-serving and the potentially statements my new trial. view the plaintiff defendant con- Agreement,” that agrees insofar as tained therein.6 party Scott shall in the action remain as a (2) provides We do not here outlaw all ments or settlements shall between and ment between and the Scott or one, one more binding remain defendant’s a secret attorney certainly be should entitled to con- trial court it is collusive because and for tract for a advantageous settlement most purpose permitting plaintiff obvious client. But the should obtain testimony and other assistance rights affect non-parties which during to the Scott trial of the matter agreement, by shifting one would defendant’s lia- not otherwise be available. To bility to the adversary other. extent the nature of the matter compromised. has been has Because Scott We any agreement hold wherein one defending further interest defendant will directly benefit from a claims I would hold award to be void and unenforceable as should dismiss him from the against public policy Because, as a defendant. the terms remains in the lawsuit. stands Scott to benefit large plaintiff’s event of a any pre-trial We further agree hold be appellants, such fact should and a defendant testifies, jury, revealed so must be parties revealed to all jury, considering that the testimo- Scott’s to trial in some ny, may Breit- weigh his bias and interest. appropriate degree decided Baker, opin- majority kreutz v. cited in the trial court.7 Tray- ion. dissenting opinion by See also We do not comment on the effect the nor, Corporation, J. in Pellett Sonotone *7 recently legislation enacted providing for (1945) 26 Cal.2d 160 P.2d 783 wherein contribution among tort-feasors will have significance” “real of an on such Oklahoma See Session which requires settling Laws 1978 p. c. 142. We save that for remain party as a is discussed. day. another Trial court erred in allowing Scott to

remain as a defendant in the lawsuit and in

denying appellant’s attempts to admit the

agreement into evidence.

REVERSED AND REMANDED A FOR

NEW TRIAL. Stinnett, 347, 352, Solving See Lum v. Set- the Problems of Collusive ment — (Nev.1971). Freedman, Actions; tlements in Joint Tort The Expected She Demise Carter”: 7. Two excellent notes this issue and such Well!, (1975). Never Was 633 Ins.L.J. 602 may general be found at 47 So. Agree- Cal.L.R. 1393