P sought recovery of damages for injuries which she suffered when she fell on property of D.
Tenant of property paid Ps $2500 in consideration of P's execution of a document entitled "Covenant Not to Proceed with Suit."
Document stated that Ps reserved the right to sue any other person against whom they may have or assert any claim on account of damages arising out of the above described accident.
D claimed that the covenant released them from liability.
Procedural History:
Trial court granted summary judgment for D.
Issues:
Does a covenant not to sue executed between P and one D release the other Ds from liability and suit?
Holding/Rule:
A covenant not to sue executed between P and one D does not necessarily release the other Ds from liability and suit if the damages are not satisfied by the settlement.
Reasoning:
In Price, the court held that the release of one tortfeasor is the release of all. The court overruled this decision.
This rule of law is harsh and illogical and gives refuge and absolution to wrongdoers.
The manifest intent of parties to a contract should always be given effect unless it is in violation of law or public policy.
The intent here was the Ps should be able to sue others who might be liable.
D is benefitted by the prior agreement since their liability will be reduced by the amount of the settlement.
This was not a technical release since the consideration paid was not meant to be full compensation for the injuries and the intent of the agreement was to allow P to sue others who were not a party to the agreement.
Dissent:
None.
Notes:
Satisfaction is receiving full compensation for the injury (based on settlement value or on jury's verdict).
Release is a surrender of the P's claim which may be for only partial compensation or for no compensation at all.
Contracts not to sue work because if the P sues, then the D can countersue for breach of contract.
The original rule is that the release of one D releases all has been modified…
Some states distinguish between a release and a covenant not to sue, and hold that the release necessarily releases other tortfeasors, but the covenant does not unless full compensation has been paid.
Some states hold that a release with express reservation of rights against other tortfeasors is to be treated as a covenant not to sue, regardless of the words of release.
Some states hold that even a release without such reservation of rights does not release other tortfeasors unless it shows an intention to do so or full compensation has been paid.
Statutes in some states have provided that a release with an express reservation of rights against other tortfeasors does not release them.
