Knutson v. Morton Foods, Inc.

603 S.W.2d 805
CourtTexas Supreme Court
DecidedJuly 23, 1980
DocketB-8540
StatusPublished
Cited by77 cases

This text of 603 S.W.2d 805 (Knutson v. Morton Foods, Inc.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Knutson v. Morton Foods, Inc., 603 S.W.2d 805 (Tex. 1980).

Opinions

POPE, Justice.

Wilma Knutson and her husband, Lonnie, sued Jack Chastain and his wife, Dorothy, for damages arising out of an automobile collision between vehicles driven by Mrs. Knutson and Mrs. Chastain. The Knutsons also sued Morton Foods, Inc., relying on the theory of respondeat superior. The Knut-sons settled with the Chastains for the sum of $10,000 but expressly reserved their cause of action against Morton Foods. The trial court then granted Morton Foods’ motion for summary judgment that the Knut-sons take nothing. The judgment was granted for two reasons: (1) the release of the Chastains operated to release Morton Foods, and (2) the undisputed evidence established that the Chastains were independent contractors. The court of civil appeals affirmed the judgment, addressing only the question concerning the effect of the Knut-sons’ release of the Chastains. 580 S.W.2d 876. We disagree with the holding of the court of civil appeals in this regard and hold that the unity of release rule does not apply to a settlement by an employee or agent to release his principal. We affirm the judgments of the lower courts, however, on the grounds that the undisputed evidence is that the Chastains were independent contractors.

In April, 1974, Dorothy Chastain and Wilma Knutson were in an automobile accident. At the time of the accident, Mrs. Chastain was allegedly delivering snack items for Morton Foods. The Knutsons sued the Chastains and Morton Foods, seeking recovery from Morton Foods under the theory of respondeat superior. The Knut-sons alleged that Dorothy Chastain was acting on behalf of her husband, who was an employee of Morton Foods. The Knutsons then entered into a covenant not to sue with the Chastains upon their paying the Knutsons ten thousand dollars. The agreement specifically reserved the Knutsons’ cause of action against Morton Foods, provided that the sum paid was in complete satisfaction of claims against the Chastains, and stated that the Knutsons agreed to indemnify the Chastains to the extent of $10,000 in the event Morton Foods obtained indemnity against the Chastains.1

The court of civil appeals, however, refused to enforce this agreement according to its terms. The court held that the Knut-sons’ release of the Chastains operated to release the alleged employer, Morton Foods, from any liability under respondeat superi- or. We hold that the unity of release rule does not apply to a case of vicarious liability under the doctrine of respondeat superior. [807]*807This is so whether the settlement is achieved by a covenant not to sue or a release. In McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971), this court held that the release of a party named or specifically identified released that party but no others. 467 S.W.2d at 196 [Emphasis added]. The second paragraph of the Knutsons’ release expressly reserved their cause of action against Morton Foods; the third paragraph expressly stated that the release did not extend to the action against Morton Foods. The release, therefore, factually satisfies the rule of Klingensmith. Our question is whether the unity of release should survive in this instance, that is, whether a settlement with and release of an employee operates to release the principal under the doctrine of respondeat superior.

Morton Foods advances several reasons that the release of the Chastains was a release of Morton Foods. The reasoning is that it was Chastain and not the employer who was the active tortfeasor; the action Morton Foods is derivative and not primary. This argument has its roots in an attack upon the whole respondeat superior doctrine. Neither this nor any other jurisdiction seems inclined to abandon the centuries-old doctrine. Bruckner v. Fromont, 101 Eng.Rep. 758 (1796); Hern v. Nichols, 91 Eng.Rep. 256 (1708); Liability to Third Persons, 4 VAND.L.REV. 260 (1951); PROS-SER, LAW OF TORTS § 46 (4th ed. 1978); Wigmore, Responsibility For Tortious Acts: Its History, 7 HARV.L.REV. 315, 383, 441 (1894). The doctrine, from its inception, was based upon public policy. It is the enterprising superior who puts his employees upon the road. Newspaper, Inc. v. Love, 380 S.W.2d 582, 588-89 (Tex.1964). The employer who reaps the benefits of the employee’s activities on the road should share the losses caused by those acts. The doctrine is a deliberate allocation of losses that are sure to occur in the conduct of the enterprise. The employer is also in a better position to distribute the costs. PROSSER, supra, sec. 46.

Morton Foods also says that the release of an employee should release the employer because the payment of $10,000 by the Chastains was satisfaction of the whole claim for damages. In other words, the Knutsons have already been paid. We disagree. This argument confuses a release with the theory of satisfaction. A satisfaction must be full and complete recompense in order to bar further action. Nothing in this record indicates that the money paid by the Chastains was such a full satisfaction. Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935).

Even during the ascendancy of the “unity of release” rule, a plaintiff could separately sue an employee and his employer and recover from both of them, so long as he did not recover more than one satisfaction. Hunt v. Zeigler, 271 S.W. 936, 938 (Tex.Civ.App.-San Antonio 1925), affirmed, 280 S.W. 546 (Tex.Com.App.-1926, jdgmt. adopted). The fact that an employee has been released in a settlement has no bearing on the continued liability of the employer unless the settlement is in full satisfaction of the plaintiff’s claims against both the employee and the employer.2

Morton Foods also argues that the release of the Chastains by the Knutsons will be undermined unless it operates to release the employer. Enforcement of the release, as written, will encourage a circuity of action. Morton Foods concludes that the only way to avoid a circuitous course of action is to prevent the trial of this case on its merits.

The Chastains may, as argued, be subjected to an indemnity suit by Morton Foods. It is true that the Chastains are not completely protected from all liability arising out of the accident. Moreover the Knut-sons, under their agreement to indemnify the Chastains up to $10,000, may have to return that sum to the Chastains. Morton [808]*808Foods says, therefore, that this suit by the Knutsons, a subsequent claim for indemnity by Morton Foods against Chastain, and the Chastains’ claim for indemnity up to $10,-000 against the Knutsons, presents an undesirable circuity of action and undermines the original settlement if Knutson has to give back the $10,000.

There are reasons, however, which favor a recognition of partial settlements and the application of Klingensmith to this case and situation.- We have long recognized that encouraging settlement and compromise is in the public interest. Gilliam v. Alford, 69 Tex. 267, 6 S.W. 757 (1887); Fidelity-Southern Fire Ins. Co. v. Whitman, 422 S.W.2d 552 (Tex.Civ.App.-Houston [14th Dist.] 1967, writ ref’d n. r. e.). The instant decision will aid in the achievement of that goal.

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603 S.W.2d 805, Counsel Stack Legal Research, https://law.counselstack.com/opinion/knutson-v-morton-foods-inc-tex-1980.