PELLETT v. SONOTONE CORPORATION ET AL

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District Court of Appeal, Second District, Division 3, California.

PELLETT v. SONOTONE CORPORATION ET AL.*

Civ. 14392.

Decided: October 02, 1944

Joseph D. Taylor and Russell F. Hager, both of Los Angeles, for appellant. Leonard Wilson, of Los Angeles, for respondents.

Upon completion of the testimony given in this case the trial court directed the jury to return a verdict in favor of all defendants, namely, Sonotone Corporation, John E. Brown and G. L. Compton. Judgment was entered thereon and from that judgment plaintiff appeals.

On a prior occasion, when the parties to this action were before the superior court in a jury trial, a nonsuit was granted after plaintiff's testimony was presented. An appeal was taken from this judgment resulting in a reversal. Pellett v. Sonotone Corporation, 1942, 55 Cal.App.2d 158, 130 P.2d 181. That opinion states, in a general way, the testimony that was before the court formerly and with slight variations we adapt it to our present recital. On March 22, 1939, the plaintiff, accompanied by the defendant Brown, an agent of defendant Sonotone Corporation, called at the office of defendant, G. L. Compton, a dentist, to whom he was introduced at that time by Brown. Previously Brown had arranged with Compton to make a plaster impression of plaintiff's ear, which impression was necessary to properly fit the plaintiff with an individually molded eartip, constituting part of a hearing device which the plaintiff had agreed to purchase from defendant Sonotone Corporation and for which he paid the sum of $100. On the occasion of their meeting, Dr. Compton poured plaster of Paris in the plaintiff's ear in order to obtain a plaster impression thereof. Previously, cotton pellets had been placed in plaintiff's ear and after about five minutes defendant Compton removed the cast. Defendant Brown was present during the operation and the cast was handed to him upon being removed from the plaintiff's ear. Brown, as salesman for Sonotone Corporation, had previously been instructed in the method of taking plaster impressions of the human ear. As the plaintiff was leaving Dr. Compton's office he asked how much he owed him and upon being told $2.50 wrote his check for that amount. Upon leaving the office plaintiff complained to Brown that his ear hurt, but was informed that such pain was to be expected. At a later time in the same year, plaintiff again complained to Brown that his ear hurt but was then informed that he would get used to the “eartip.” On February 5, 1940, almost a year after the plaster cast was made, the plaintiff, still suffering pain, consulted Dr. Nilsson, an ear specialist, who upon examination told plaintiff that there was a hard substance like stone in his ear which he was unable to soften by the use of acetic acid and which, in the doctor's opinion, would have required, at that time, an operation to remove. More than a year thereafter, about March 10, 1941, a small piece of plaster washed out of plaintiff's ear, and this was subsequently introduced as an exhibit in both trials. The first time plaintiff learned of this hard object in his ear was on February 5, 1940. Dr. Nilsson testified that there was an instrument, an otoscope, which has a light enabling anyone to look into the ear as far as the drum to ascertain the presence of any foreign substance. The defendant Compton did not use any instrument in examining plaintiff's ear after making the plaster cast to ascertain whether he had removed all the plaster and cotton which had been placed therein.

Applying the familiar rule which requires a reviewing court to give the most favorable consideration to plaintiff's testimony upon the granting of a motion for nonsuit, the court, in Pellett v. Sonotone Corporation, supra, 55 Cal.App.2d 158, 161, 130 P.2d 181, 182, said: “We are of the opinion that the trial jury might reasonably have believed that defendant Compton and defendant Brown were agents of defendant Sonotone Corporation and that defendant Compton and defendant Brown were negligent in not having used an appropriate instrument to examine plaintiff's ear after the plaster cast was made to be certain that none of the plaster or cotton used remained in his ear, and likewise that plaintiff was not dilatory in discovering that some of the plaster and cotton had been negligently left in his ear. For the foregoing reasons the judgment is reversed.”

Since the evidence offered at the second trial relating to agency and negligence was substantially the same as that introduced at the first trial, we would agree with appellant's present contention that the instant case should have gone to the jury, were it not for the fact that a document signed by appellant and Dr. Compton, which was not produced or referred to at the earlier trial, was received in evidence in the instant case. That document in our opinion furnished a sound basis for the directed verdict. It reads as follows:

“Whereas, Charles S. Pellett, through his attorneys, has become satisfied that the defendant, G. L. Compton, in the performance of any acts or of his negligent failure to do anything which should have been done, was subject to the direction and control and supervision of John E. Brown and the Sonotone Corporation, and that any negligence on the part of said Dr. G. L. Compton, was not due to any culpability of the said G. L. Compton, and,

“Whereas, Charles S. Pellett is also satisfied that a great portion of the property of G. L. Compton is exempt from execution and that the levy of an execution upon any property of G. L. Compton will work a hardship upon him, and

“Whereas, in any event, Charles S. Pellett has been advised by his counsel that the covenant hereinafter made will in no wise prejudice his case or prevent recovery and collection from the defendant Sonotone Corporation, and the defendant, John E. Brown;

“Now, therefore, Charles S. Pellett hereby agrees and covenants with G. L. Compton as follows:

“Said G. L. Compton, as a consideration for the covenant hereby made by Charles S. Pellett, does hereby agree to pay to the said Charles S. Pellett the sum of $10.00 in the event a judgment is entered in favor of Charles S. Pellett and defendant in said action, and said G. L. Compton agrees to pay to said Charles S. Pellett the sum of $5.00 on or before 60 days from date hereof in any event and regardless of what judgment may be entered in the above entitled action.

“In consideration of the promises herein contained on the part of G. L. Compton, Charles S. Pellett covenants and agrees with said G. L. Compton that in the event a judgment is entered against said G. L. Compton, in the above entitled action, that he will not levy execution issued upon said judgment against any property of said G. L. Compton and that he will make no demand upon G. L. Compton to pay said judgment or any portion thereof.

“Said G. L. Compton, as further consideration for the covenant herein contained agrees not to file this covenant and agreement in the above entitled action, except in the event any proceedings are commenced by Charles A. Pellett contrary to and in violation of this covenant.

“Said G. L. Compton further agrees that he will defend said action by his attorney in the interests of justice and will not withdraw his attorney from said action until a verdict of the jury has been rendered or until the court has by directed verdict or non–suit terminated the trial of said action.

“In witness whereof the parties hereto have signed this covenant this _ day of June, 1941.

“Charles S. Pellett

“Plaintiff

“G. L. Compton,

“Said defendant.”

A copy of this agreement was attached to a supplemental answer which defendants Sonotone Corporation and Brown filed on April 21, 1943, approximately two months before the second trial was called. As to this document the defendants alleged that “said instrument constitutes a full and complete release to all defendants herein * * *,” and in their brief, as respondents before this court, argue that the trial court was justified in directing a verdict in favor of all defendants under the principle that the release of one joint tort–feasor operates as a release of all. Appellant, on the other hand, contends that this is not a release but a covenant not to sue defendant Compton further than to judgment and, under the principles stated in Lewis v. Johnson, 1939, 12 Cal.2d 558, 86 P.2d 99, 101, resort may be had to defendants other than Compton for the injury suffered by plaintiff. The document, under which, in Lewis v. Johnson, supra, a settlement was made with two of the four tort–feasors joined as defendants, was entitled “Covenant Not to Sue and Covenant Not to Sue Further,” and agreed to hold the two named defendants harmless from any liability arising out of the accident or treatment. It concluded by stating that the plaintiff did not waive any claims against others, and in the opinion of the Supreme Court: “This instrument was unmistakably intended to constitute a covenant not to sue. ‘Its language is of covenant an indemnity, not of release.’ Kincheloe v. Retail Credit Co., 4 Cal.2d 21, 23, 46 P.2d 971, 972. Unlike a release, a covenant not to sue one joint tort–feasor does not relieve the others.” In the agreement under consideration we fail to find words of covenant and indemnity as they customarily appear in absolute covenants not to sue. See Lewis v. Johnson, supra, 12 Cal.2d 558, 86 P.2d 99; Kincheloe v. Retail Credit Co., Inc., 1935, 4 Cal.2d 21, 46 P.2d 971; Cowles v. Independent Elevator Co., 1937, 22 Cal.App.2d 109, 70 P.2d 711. In Rust v. Schlaitzer, 1933, 175 Wash. 331, 27 P.2d 571, 573, the court, considering a problem similar to that before us, aptly stated that: “The distinction, in legal effect and consequence, between a covenant not to sue and a release is clear enough, but it is often difficult, in cases of tort, to determine whether an agreement falls within one category or the other. In classifying such an agreement, we may, so far as it affects joint tort–feasors, look to its consideration, its effect, and the circumstances attending its execution. We cannot accept the recitals of the parties to the agreement as a conclusive determination of its character. If we did, any release could be couched in the formal language of a covenant not to sue and thus circumvent a salutary rule of law.” An examination of the document which we have quoted discloses that it is more than a simple covenant not to levy execution, or as appellant calls it “a covenant not to sue”; it is also an agreement on the part of the plaintiff to make “no demand” upon the defendant Compton “to pay said judgment or any portion thereof,” the consideration therefor being the sum of “$10.00 in the event a judgment is entered in favor of Charles S. Pellett and [against?] defendant in said action” and the sum of “$5.00 on or before 60 days from date hereof in any event.” The statement of respondents that plaintiff did receive from Dr. Compton the sum of $5 is not denied and the language employed by the parties clearly evinces an intent to discharge the “above entitled action” as to defendant Compton. This conclusion is further strengthened by the proviso which permits Dr. Compton to “file this covenant and agreement in the above entitled action * * * in the event any proceedings are commenced by Charles A. Pellett contrary to and in violation of this covenant.” The word “file,” as used in the above clause, clearly means the agreement may be set up as a defense to whatever “proceedings” plaintiff might pursue contrary to its terms, whereas in a true covenant not to sue the covenantee, in event of a breach by the covenantor, may not set the agreement up in defense of the tort action but must sue separately for damages resulting from the breach. The court, in Hawber v. Raley, 1923, 92 Cal.App. 701, 703, 268 P. 943, 944, discussed at length the distinction between a release and a covenant not to sue and said:

“In dealing with the question of the legal effect of a covenant not to sue as contra–distinguished from a release and satisfaction, Ruling Case Law, vol. 23, p. 408, states: ‘The authorities almost uniformly hold that a covenant or agreement not to sue one of several joint tort–feasors made on a sufficient consideration is not a technical release of the damages sustained, and will not be held to release either, but the person with whom the agreement or covenant was made must be left to his action on it.’ (Italics ours.) And, upon the same subject Cyc. vol. 34, p. 1090, declares: ‘An absolute covenant not to sue one or less than all of several joint tort–feasors never operates as a release, and not even the covenantee can plead it as a defense, for such a covenant does not extinguish the cause of action, but he must seek his remedy in an action on his covenant.’ (Italics ours.) In other words, as said in City of Chicago v. Babcock, 143 Ill. 358, 32 N.E. 271: ‘The legal effect of such a covenant (not to sue) is not the same as that of a release. A covenant not to sue a sole tort–feasor is, to avoid circuity of action, considered in law a discharge, and a bar to an action against such tort–feasor. But the rule is otherwise where there are two or more tort–feasors, and the covenant is with one of them not to sue him. In such case the covenant does not operate as a release of either the covenantee or the other tort–feasors, but the former must resort to his suit for breach of the covenant, and the latter cannot invoke the covenant as a bar to the action against them.’

“It would therefore appear to be a rule of construction that, where two or more tortfeasors are involved and the document is such that the covenantee may plead the same in abatement of any action which the covenantor might subsequently commence in breach of the obligation contained in said document, and the remedy thereunder is not restricted to an action on the covenant, the document constitutes a release and satisfaction, and not a mere covenant not to sue.”

As we understand the agreement the parties intended that it would serve as a defense to any further proceedings against Dr. Compton. In this respect it did not differ in substance from the one considered in the Hawber case, which was held to be a release and satisfaction and not merely a covenant not to sue.

This raises the question as to whether plaintiff has actually received satisfaction, or “what in law is deemed the equivalent.” Whatever may be the rule in other jurisdictions, it has been held in California that in cases involving unliquidated tort demands the payment of any sum in consideration of the release of one of several joint tortfeasors will be presumed to have been made and accepted as full compensation or satisfaction for the alleged injury. Hawber v. Raley, supra, 92 Cal.App. 701, 268 P. 943; Flynn v. Manson, 1912, 19 Cal.App. 400, 126 P. 181; Chetwood v. Calif. Nat. Bank, 1896, 113 Cal. 414, 45 P. 704; Tompkins v. Clay Street R. R. Co., 1884, 66 Cal. 163, 4 P. 1165. In the Flynn case, the court said, at page 404 of 19 Cal.App., at page 183 of 126 P.: “However conflicting may be the current of authorities in respect to the proper construction of a release of the kind in question, it is a well–settled principle of law that in actions ex delicto plaintiff can recover compensation but once. Where the demand is unliquidated, as in the case here, the court cannot hold that the payment of any sum, however small, in consideration of a release does not or cannot operate as compensation for the alleged injuries.”

We have not overlooked the case of Schramm v. Brooklyn Heights R. Co., 1898, 35 App.Div. 334, 54 N.Y.S. 945, upon which appellant relies, but find that that case is readily distinguishable from the present situation in that no consideration was paid nor was any effective settlement made with the plaintiff. Nor have we overlooked the fact that there is language in the preamble of the agreement which the parties signed which, broadly construed, would indicate a reservation on the part of plaintiff to prosecute his action against defendants Sonotone Corporation and Brown to completion, but as was said in Bee v. Cooper, 1932, 217 Cal. 96, 100, 17 P.2d 740, 742: “This purported reservation of plaintiffs' rights against the remaining defendants herein is nugatory and of no effect. Flynn v. Manson, supra, 19 Cal.App. pages 402–406, 126 P. 181. Such a provision is void as being repugnant to the legal effect and operation of the release itself. Gunther v. Lee, 45 Md. 60, 24 Am.Rep. 504.” In view of our decision as to the effect of the agreement it is unnecessary to consider other grounds urged by respondents in support of the judgment.

Judgment affirmed.

DESMOND, Presiding Justice.

SHINN and PARKER WOOD, JJ., concur.