Opinion
Opinion delivered December 9, 1949.
1. — Dismissal and Nonsuit. Statute providing that no dismissal, voluntary or involuntary, of a plaintiff's action in which a counterclaim or cross-claim has been filed shall operate to dismiss or discontinue such counterclaim or cross-claim, does not mean that a counterclaim cannot be dismissed or settled by agreement but merely means that a counterclaim shall not be dismissed merely because a petition is dismissed.
2. — Compromise and Settlement. Compromises favored.
3. — Compromise and Settlement. A party to a compromise is estopped from afterward urging matter constituting a set-off or counterclaim existing at time of making compromise.
4. — Compromise and Settlement. Where plaintiff seeking damages sustained to truck as result of collision was paid by defendant with stated objective of avoiding expense of further investigation and litigation and stipulation to dismiss petition expressly stated that counterclaim of co-defendant was not to be affected but was silent as to counterclaim of defendant and no mention was made of defendant's counterclaim in negotiations leading to settlement and release, defendant would be estopped from proceeding with his counterclaim.
Appeal from Circuit Court of Polk County. — Hon. James P. Hawkins, Judge.
AFFIRMED.
Elvin S. Douglas and F.B. Freeman for appellant.
The court erred in dismissing defendant's counterclaim for the reason that under the evidence and the law, and particularly Section 103 of the Civil Code of Missouri, the dismissal of plaintiff's cause of action or petition does not operate to dismiss or discontinue defendant's counterclaim. Civil Code of Missouri, Section 103; Mo. R.S.A., Section 847.103.
Ruark Ruark, Ray England, L. Cunningham and Scott Scott for respondent.
The Court did not err in dismissing the appellant's counterclaim. It was not the dismissal of plaintiff's cause of action or petition which operated to dismiss or discontinue appellant's counterclaim It was the compromise settlement, evidenced by the written stipulation of respondent and appellant filed in the cause which settled the appellant's counterclaim and estopped appellant from prosecuting it. Appellant is bound by the agreement of compromise and settlement which is set forth in the stipulation for dismissal of respondent's cause of action, the only matter excepted from the settlement being the counterclaim of defendant Ernie Davenport, which the stipulation expressly states is still outstanding and pending against plaintiff. A settlement is so far conclusive between the parties that it cannot be reopened or gone into, either at law or in equity, except on clear proof of fraud or mistake, or of an express understanding that certain matters were left open for future adjustment. There was no understanding or agreement expressed in the stipulation of settlement that the counterclaim of appellant was left open for future adjustment or trial. Caneer v. Kent, (Mo. Sup.) 119 S.W.2d 214, 216, 2nd Col., par. 2; Harley v. Webb, (Mo. App.) 153 SW (2) 796, 797, par. 2; McCormick v. Transit Ry. Co., 154 Mo. 191, 201, 2nd par.; Buffington v. South Missouri Land Co., 25 Mo. App. 492, 495, 2nd par.; Pickel v. St. Louis Chamber of Commerce, 10 Mo. App. 191, 195; Henry v. Swan, (La.) 200 So. 839, 840; Phillips v. Musgrave, (Ariz.) 206 P. 164. Where appellant's counterclaim was dismissed because the compromise settlement, evidenced by the written stipulation of respondent and appellant filed in the cause, settled the appellant's counterclaim and estopped the appellant from prosecuting it, the stipulation not having excepted appellant's counterclaim from said settlement nor provided that it was left open for future adjustment or trial, Section 847.103, Missouri Revised Statutes Annotated, did not apply. Niedringhaus v. Zucker, (Mo. Sup.) 208 S.W.2d 211, 212. Even if appellant had a good defense and counterclaim to respondent's cause of action set forth in her petition, yet the appellant, by a compromise in good faith of respondent's cause of action, is precluded from setting up such defense or from using such defense as a basis for relief in a subsequent action, because a party to a compromise is estopped from afterwards urging matter constituting a set-off or counterclaim existing at the time of making the compromise. 15 C.J.S., pp. 743, 744, Sec. 25, notes 93, 94, 96. Holy Cross Gold Mining and Milling Co. v. Goodwin, (Colo.) 223 P. 58, 59; West v. Wegeforth, (Colo.) 246 P. 204; McKee v. Woods, (N. Mex.) 291 P. 292; Hoyt v. Wickham, (C.C.A. 8) 25 F. (2) 777; Southern Trust Co. v. Vaughn, 277 F. 145; Peters v. Citizens Nat'l. Bank in Okmulgee, (Okla.) 165 Pac.2d 336, 338; Lindsay v. Lindsay, (Wash.) 267 P. 777; Rivers v. Blom, 163 Mo. 442; Marshall U Michel v. Larkin's Sons, 82 Mo. App. 635, 640. A settlement is presumed to have included all matters in controversy in the original suit. Appellant's counterclaim was on file as a part of its answer to the respondent's cause of action and all allegations contained in the counterclaim of appellant which were denied by respondent's reply to said answer and counterclaim were in controversy and therefore presumed to have been included in the settlement. Goldsborough v. County Trust Co., (Md.) 40 Atl. (2) 56. A compromise agreement is conclusive only as to those matters which the parties have fairly intended to include within its terms and the necessary consequences thereof. Obviously, it does not include matters expressly excepted, although a settlement that is final except as to certain matters is to be treated as final in its other particulars. The settlement made by the parties to this suit was expressed in the stipulation. The only matter expressly excepted which was left outstanding and pending against respondent was the counterclaim of the defendant Ernie Davenport. The settlement was final except as to that counterclaim and is to be treated as final in its other particulars. 15 C.J.S., pp. 745, 746, Sec. 27, notes 9, 10, 11, 12; Tucker v. Garner, 25 Kan. 315; Pratt v. Castle, (Mich.) 52 N.W. 52, 53. The intention of the parties is to be obtained from the intention expressed in the written agreement and cannot be obtained from parol evidence of some other or secret intention. Butler v. Missouri Insurance Co., (St. L. Ct. App.) 187 S.W.2d 56; Seavy Flarsheim Co. v. Monarch Peanut Co., (St. L. Ct. App.) 241 S.W. 643; Foster v. Aetna Life Ins. Co., (St. L. Ct. App.) 169 S.W.2d 423. Compromises are contracts of settlement, and compromise of one aliquot part of single disputed liability and payment of balance in full is a settlement of all parts of such single liability, and binds both parties and precludes suit to recover. Nelson-Wiggen Piano Co. v. United States, 84 F. (2) 47, 48, par. 3. The contract of settlement filed in this case is unambiguous. The rights of the parties must be determined from the settlement agreement alone and parol evidence is not admissible to contradict, vary or add to any of the terms of an unambiguous written contract which appears to be a settlement contract. Anderson v. Fletcher et al., (Ark.) 151 SW (2) 673, 674; Hattemer v. State Tax Commission, (Ala.) 177 So. 156, 158. The language of the written agreement of settlement is unambiguous and therefore the written agreement will be enforced according to its terms, there being no necessity to a resort to surrounding circumstances to determine its construction. The parol evidence of appellant was inadmissible and the respondent's objection thereto should have been sustained by the Court. The statement by the Court that "I think the objection is well taken" (to such oral testimony) (Tr. 37, 38) was correct and such oral testimony cannot be received to vary or change the written agreement of settlement. Schilling v. Milwaukee Bedding Co., (Wis.) 221 N.W. 743. A compromise settlement is as conclusive as a judgment. Chicago N.W. Ry. Co. v. Wilcox, 116 F. 913; Virginia Shipbuilding Corp. v. U.S. Shipping Board Emergency Fleet Corp., 292 F. 440, decree affirmed Same v. U.S., 22 F. (2) 38; Central Hanover Bank Trust Co. v. Brown, 30 N.Y.S. (2) 85. Before the appellant could have its counterclaim heard by the Court, it must have applied to the trial court to set aside the stipulation of settlement, which could have been set aside only after the parties were restored to the same condition in which they would have been had no agreement been made. A stipulation for settlement of a pending action, although in the nature of a contract, may be dealt with summarily by the court, which has power to relieve the parties therefrom so long as they may be restored to the same condition in which they would have been had no agreement been made. 15 C.J.S., p. 750, Sec. 30, notes 66, 67; LaSalle Extension University v. Parella, 294 N.Y.S. 146; Equitable Trust Co. of N.Y. v. MacLaire, 135 N.Y.S. 1022. The appellant herein, by the stipulation for settlement, obtained a dismissal with prejudice of the respondent's petition and cause of action against it, for which appellant paid respondent the sum of $500.00. Appellant cannot be allowed to rescind so much of the agreement as militates against its interest and retain the benefit of that portion which enures to its benefit or profit. Therefore appellant will not be allowed to proceed with its counterclaim against respondent where, by the agreement of settlement, appellant has procured the dismissal, with prejudice, of respondent's petition and cause of action against appellant. This rule merely states, in other language, the principle that a party to a compromise agreement must return whatsoever he has received thereunder as a condition of obtaining relief therefrom. 15 C.J.S., p. 751, Sec. 30 note 76; Wood v. Kansas City Home Telephone Co., 223 Mo. 537, 123 S.W. 6; Althoff v. St. Louis Transit Co., 204 Mo. 166, 102 S.W. 642; Alexander v. Grand Avenue Ry. Co. 54 Mo. App. 66; Smith v. Humphreys 266 S.W. 487; Sheppard v. Travelers Protective Ass'n. of America, 124 SW (2) 528, 233 Mo. App. 602; U.S. v. Connolly, (C.C. Colo.) 145 F. 43; Hirsh v. Blair, 176 N.Y.S. 545, 188 A.D. 119; Swan v. Great Northern Ry. Co., (N.D.) 168 N.W. 657; 12 C.J., p. 346, note 80. A compromise agreement may be impeached for causes sufficient to invalidate a contract, otherwise not. 15 C.J.S., p. 741, Sec. 31, note 77; Cleere v. Cleere, (Ala.) 3 So. 107; 12 C.J., p. 346, note 81; Di Raffaele v. Gerkhardt, 216 N.Y.S. 253, 217 A.D. 185, dis. 159 N.E. 685, 246 N.Y. 646; Auley v. Sloan, (N.C.) 91. SE 701.
This is an appeal from the action of the Circuit Court of Polk County in overruling a motion of the Yellow Transit Company (Appellant) to set aside a judgment of dismissal of its counterclaim.
The facts leading up to the Court's action are:
On June 12th, 1948, Josephine England filed in the Greene County Circuit Court a suit against appellant and one Ernie Davenport alleging that Davenport, while driving for appellant on U.S. Highway 66, negligently ran his truck into plaintiff's truck, driven by one Floyd Severs, and damaged it in the sum of $1500.00 and that she suffered further damages by loss of the use of the truck in the sum of $500.00. Her driver, so she alleged, was using the highest degree of care at the time of the accident and the collision was the result of defendant's negligence.
Defendant Davenport, on January 17, 1948, filed an answer denying negligence on his part and asserting that the collision was caused by the negligence of plaintiff's driver and the damages were a result of such negligence. He added a counterclaim for personal injuries to himself, etc., in the sum of $5000.00, praying judgment for the same.
The Yellow Transit Company on the 6th day of February, 1948, also answered, denying any negligence on the part of its driver or itself and in its counterclaim alleging that its driver, Ernie Davenport, at the time of the collision was exercising the highest degree of care and was traveling on the right hand side of the road at a reasonable rate of speed and that plaintiff's driver negligently collided with its truck causing the collision and resultant damages. It asked for $6500.00 as compensation therefor.
Replies to both answers and counterclaims were filed by plaintiff denying all the allegations therein. A change of venue was taken and the case sent to Polk County. On February 2, 1949 the following stipulation was filed:
"In consideration of the payment of the sum of Five Hundred Dollars ($500.00), the receipt of which is hereby acknowledged by plaintiff, it is stipulated and agreed between the parties that plaintiff's petition, cause of action or claim against the defendants shall be and is hereby dismissed, with prejudice, and at the cost of the defendants.
"It is expressly understood and agreed that the counterclaim of defendant Ernie Davenport is still outstanding and pending against plaintiff and is in no way affected by this dismissal."
Upon this stipulation, the Court, on February 7th, 1949, rendered judgment as follows:
"Now at this day, comes the parties, both Plaintiff and Defendants, by their respective Attorneys, by leave of Court, and file herein their stipulation for dismissal of Plaintiff's petition, and on their Motion and in accordance with said stipulation, it is ordered by the Court that the petition of Plaintiff be dismissed with prejudice, at the cost of Defendants, as per stipulation filed.
"It is further ordered by the Court that the counterclaim of Yellow Transit Company, and of Ernie Davenport is still outstanding and pending against Plaintiff and is no way affected by this dismissal."
On May 18, 1949, the plaintiff filed a motion to dismiss the Yellow Transit Company counterclaim, alleging the facts above recited, and further,
"* * * that by said written agreement of a compromise and settlement, defendant Yellow Transit Company procured the dismissal of plaintiff's said petition and its cause of action therein alleged against the defendants; that by reason of the fact that defendant Yellow Transit Company's said alleged counterclaim against the plaintiff was not excepted from the terms of said written agreement of compromise and settlement, as was the said alleged counterclaim of the defendant Ernie Davenport, and by reason of the fact that the said alleged counterclaim of defendant Yellow Transit Company was filed by it in the above entitled cause and both plaintiff and defendant Yellow Transit Company knew that defendant Yellow Transit Company had filed its said alleged counterclaim against the plaintiff before the said written agreement of compromise and settlement was entered into and filed herein, as aforesaid, the said alleged counterclaim of the defendant Yellow Transit Company was settled by said written agreement of compromise and settlement, and by reason of the premises, the defendant Yellow Transit Company is now estopped from prosecuting said alleged counterclaim against the plaintiff. * * *"
On the 23rd day of May, 1949, the plaintiff also filed a motion for a nunc pro tunc order to correct the court's judgment of dismissal on the ground that it was broader than the stipulation of dismissal in that it recited that the counterclaim of the Yellow Transit Company would be left pending. It asked the Court to correct the judgment of dismissal by striking out the words "Counterclaims of defendants Yellow Transit Company and of Ernie Davenport left pending" and to insert in lieu thereof the words "Counterclaim of Ernie Davenport left pending."
In support of this motion, plaintiff introduced the petition, the answers, counterclaims, and replies, the stipulation and judgment of dismissal. It was admitted that Ernie Davenport was represented by Mr. Flay Randle, an attorney, and that the Yellow Transit Company was represented all the time by the law firm of Neale, Newman, Freeman and Wampler, by F.B. Freeman, an attorney. The minutes made by the Court in his docket were also introduced in evidence and were:
"Petition dismissed with prejudice at the cost of Defendant, as per stipulations filed. Counterclaims of Defendants Yellow Transit Company and Ernie Davenport left pending."
Mr. Freeman, over the objection of plaintiff testified that at the time the settlement was made nothing was said about the counterclaim, in fact the witness had forgotten that one had been filed.
He further testified:
"And, after it (the stipulation) was filed, and the money was paid, I sent it to Mr. Elvin Douglas, (co-counsel at Bolivar) and I also wrote him a letter and told him * * * that to my recollection nothing had been said about the counterclaim, but, as I understood the Code, unless it was expressly dismissed it would still be left pending; and I asked Mr. Douglas to have the Court make the entry that the two counterclaims were left pending; that is entirely my responsibility, I felt like I had that right under the law; * * *."
On February 8, 1949, the insurance carrier of plaintiff, through its attorneys, was contending with witness that the settlement had resulted in the dismissal of the counterclaim and witness "contended to the contrary."
At the time the settlement was agreed upon, plaintiff, upon receipt of $500.00 from Defendant Yellow Transit Company, signed a release forever discharging both defendants from further liability for "damages, losses or injuries to persons or property, or both, * * * resulting or to result from a certain accident which occurred on or about the 4th day of December, 1947, on U.S. Highway 66, * * * and that said sum is paid in compromise settlement of, and to avoid the trouble and expense of further investigation and litigation on account of said accident."
It is true this release also stated "that all agreements and understandings between the parties are embodied and expressed herein" and undoubtedly one understanding on the part of plaintiff at least, was that the compromise settlement was to "avoid the trouble and expense of further investigation and litigation."
The oral testimony of Mr. Freeman was objected to but the court admitted it while expressing doubt of its admissibility. The release was rejected but appellant insisted and now insists it was admissible. We are not passing upon the admissibility of the oral testimony or the release, but are considering them because appellant insists we should do so.
The court corrected the judgment, as prayed for, and sustained the motion to dismiss the counterclaim. The court later overruled the motion of the Yellow Transit Company to set aside its judgment sustaining plaintiff's motion to dismiss the counterclaim and from the court's action in so doing, the Yellow Transit Company appealed.
It must be remembered that there was only one accident — one collision. All the accusations, charges and counterclaims grew out of it. Plaintiff said she was blameless and defendants were wholly responsible. Defendants denied any negligence on their part and charged plaintiff with the entire responsibility for the collision and resultant damages. Under these contentions, only one side could be liable and only one side could recover. Defendant, Yellow Transit Company, by its attorney, offered to pay and did pay $500.00 to plaintiff in settlement of her claim for damages and agreed that defendants pay the costs. The stated object of the settlement, as set out in the release, is "to avoid trouble and expense of further investigation and litigation on account of said accident * * *." The counterclaim of Yellow Transit Company was not mentioned in the stipulation to dismiss and its attorney frankly admits that he never thought of it and had forgotten that one was filed. But this does not give rise to the presumption or inference that plaintiff had considered it so lightly. Rather, a logical inference would be that the Yellow Transit Company was not seriously impressed with the merits of their counterclaim. After the settlement was agreed upon and the money paid to plaintiff, the attorney for the Yellow Transit Company, remembered the existence of the counterclaim and also remembering the provisions of Section 103 of the Code of Civil Procedure, wrote his co-counsel at Bolivar to see that the court's order expressly left the counterclaim of the Yellow Transit Company pending. The stipulation of settlement expressly excepted the counterclaim of Ernie Davenport for the obvious reason that he was not a party to the settlement and was represented by other counsel. However, the record shows that on May 23, 1949, Davenport voluntarily dismissed it. The court's order dismissing plaintiff's petition went further than the stipulation for dismissal, but this seems to be due to the reflection of Mr. Freeman after it was entered into, and was procured by his co-counsel upon instruction from him. It would indeed seem unusual for plaintiff to settle her claim for $500.00, and knowingly, leave pending against her a claim for $6500.00 for damages growing out of the same accident. And it would not seem less extraordinary for the Yellow Transit Company to pay out $500.00 and costs of litigation when it, in good faith, was claiming freedom from responsibility for an accident in which it had suffered damages to its property in the sum of $6500.00, and which it was seeking to recover in its counterclaim. To allow the Yellow Transit Company to pursue its counterclaim is in direct conflict with its expressed reasons for settlement, i.e. to avoid the trouble and expense of further investigation and litigation.
Section 103 of the Civil Code provides:
"No dismissal, voluntary or involuntary, of a plaintiff's action in which a counterclaim or cross-claim has been filed shall operate to dismiss or discontinue such counter-claim or cross-claim."
This is not new law in Missouri. (See repealed Sec. 1001 R.S. Mo. 1939). It is merely a restatement.
But it is not the dismissal of the petition that prevents the Yellow Transit Company from proceeding with its counterclaim. It is the compromise and settlement of the litigation. This section of the Civil Code does not mean that a counterclaim cannot be dismissed or settled by agreement. It merely means that it shall not be dismissed merely because the petition is and for that reason alone. Other reasons may justify its dismissal. Niedringhaus v. Zucker (Mo.) 208 S.W.2d 211.
The law favors compromises. Pfiffner v. Kroger Grocer Baking Co. (Mo. App.) 140 S.W.2d 79. Brown v. Corn Products Refining Co. 55 S.W.2d 706, 227 Mo. App. 548. Pickel v. St. Louis Chamber of Commerce 10 Mo. App. 191. Caneer v. Kent 119 S.W.2d 214, 342 Mo. 878.
The general rule governing this case is clearly and tersely stated in 15 C.J.S. Page 744, Sec. 25, where it is said:
"A party to a compromise is estopped from afterward urging matter constituting a set-off or counterclaim existing at the time of making the compromise, * * *."
It seems to us that the offer to pay, an actual payment of $500.00 to the plaintiff, an agreement to pay the expenses of the litigation, the failure to specifically except in the stipulation the counterclaim of the Yellow Transit Company, but specifically excepting the counterclaim of Ernie Davenport, the recital in the release that the purpose thereof was to avoid trouble and expense of further investigation and litigation, and failure to specifically mention the counterclaim in the negotiations leading to settlement and release, were all calculated to and did lead the plaintiff to believe that the entire controversy was being settled. She acted, in dismissing her case, receiving the payment and signing the release, in reliance upon that belief, and reasonably so. Under these circumstances the Yellow Transit Company is now estopped to proceed further with their counterclaim. The judgment of the learned trial court in overruling defendant's motion to set aside the court's judgment in dismissing the counterclaim should be affirmed. It is so ordered. Blair, J. and McDowell, J. concur.