For affirmance -- Chief Justice Weintraub and Justices Hall, Schettino and Haneman. For modification -- Justices Jacobs, Francis and Proctor. The opinion of the court was delivered by Weintraub, C.J. Jacobs, J. (concurring in part). Proctor, J. (concurring in part). Francis, J. (dissenting in part).
Plaintiff, Theobald, was severely injured in an automobile accident. Before trial he settled with two defendants. We are here concerned with the effect of those settlements upon the liability of the remaining defendant.
This litigation was before us in Theobald v. Angelos, 40 N.J. 295 (1963). As related in that opinion, the car of defendant Anderson went out of control and came to rest partly in the street and partly upon property of plaintiff. Defendant Angelos, a police officer of defendant Delaware Township, parked his police car behind Anderson's. While plaintiff was standing between these vehicles, defendant Conaty struck the rear of the police car, driving it forward and thereby crushing plaintiff. Just before trial plaintiff settled with Anderson for $1,500 and with Conaty for $88,500. The trial resulted in a judgment for $65,000 against Angelos and the municipality. (The municipality and its servant Angelos are a single tortfeasor for the purposes of the contribution statute, N.J.S. 2A:53A-1; we will refer to them hereafter as "Angelos" or "the defendant.")
Both Angelos and plaintiff appealed, Angelos complaining of the trial court's refusal to find the settlements with the co-defendants operated to satisfy the judgment, and plaintiff complaining the jury had been misled into returning a verdict for but part of the total damages. We ordered a retrial as to damages only and reserved for later consideration in the light of a new verdict the issues as to the effect of those settlements.
Upon the retrial the jury found total damages of $165,000. The trial court thereupon decided the reserved matters this way:
(1) Angelos contended the fact of settlement with Anderson conclusively established Anderson a co-tortfeasor and hence there should be a three-way division, reducing Angelos' share to $55,000. Plaintiff contended that Anderson was not a tortfeasor because the jury in the first trial found he was not, and hence the total figure of $165,000 should be divided between Conaty and Angelos, the parties the jury found to be
at fault. The trial court accepted plaintiff's position and reduced the share of Angelos to $82,500, but then applied upon that amount the sum of $1,500 paid by Anderson to plaintiff, leaving a net liability of $81,000. This so-called " pro tanto " credit of $1,500 is not challenged by plaintiff upon this appeal.
(2) Angelos contended alternatively that there should be applied to the total figure ($165,000) the full amount received from Conaty ($88,500) in addition to the sum received from Anderson ($1,500), leaving Angelos liable only for the balance of $75,000. The trial court accepted plaintiff's response that a joint tortfeasor who receives a pro rata credit because of the discharge of his co-obligor has no interest in whether the plaintiff did well or poorly in settling with the co-obligor.
Angelos appealed from this disposition of those issues and we certified the appeal before argument in the Appellate Division.
The issues must be considered in the context of our contribution statute as construed in Judson v. Peoples Bank & Trust Co., 17 N.J. 67 (1954), and Judson v. Peoples Bank & Trust Co., 25 N.J. 17 (1957). Those cases hold that a settlement with a joint tortfeasor, even though for less than a pro rata share of the total claim, nonetheless (1) reduces the total claim by the pro rata figure and (2) bars an action for contribution against the settling wrongdoer.
The first question is whether for the purposes of the contribution statute Anderson must be deemed a tortfeasor because plaintiff settled with him.
As stated before, the jury at the first trial found that Anderson was not culpably involved. Angelos complains, at least incidentally, that the issue of Anderson's fault was not fairly litigated. We think it was. Angelos had cross-claimed for contribution against both Anderson and Conaty. It is
agreed the trial court and counsel were aware of the then recent case of Hoeller v. Coleman, 73 N.J. Super. 502 (App. Div. 1962), certification later denied in 38 N.J. 362 (1962). There the Appellate Division held that whether a settling party is a tortfeasor is a triable issue of fact, and that if he is not, the only credit which a culpable defendant may have is in the actual sum the settlor paid. We have no doubt that Angelos understood the issue of negligence on the part of Anderson and Conaty was being tried. The jury's finding on the interrogatory submitted to it, that Anderson was not a tortfeasor, was fairly reached and should be accepted.
We proceed then to defendant's proposition that the naked fact of a settlement should establish his right to a pro rata reduction, however nominal the payment and however innocent of wrong the payor may be. Here, of course, plaintiff had no thought of accepting a mere $1,500 in satisfaction of a third of his heavy losses. We should not surprise him with that result unless we must. Surely there is no room for defendant's claim of estoppel; he had the same full opportunity to press his claim for contribution whether Anderson settled or not. Rather defendant would enjoy a windfall if we found that plaintiff stumbled over a misconception of law. The injustice would be so evident that equity might well relieve plaintiff of the settlement because of his mistake, a result which could not harm Anderson in view of the jury's verdict exculpating him. In any event, we agree with the holding of Hoeller, supra, 73 N.J. Super. 502, that a pro rata reduction will not be ordered if the party to the settlement was not in fact a tortfeasor.
The issue is now before us for the first time. In Klotz v. Lee, 36 N.J. Super. 6 (App. Div. 1955), plaintiff agreed to accept $12,500 from one defendant without regard to the jury's verdict and agreed to collect no more than 50% of the verdict from the codefendant if the verdict ran against both. The jury returned a verdict of $35,000 against the nonsettling defendant alone. The trial court ordered $12,500 to be applied on the amount of the verdict. The Appellate Division
affirmed. It is not clear from its opinion that the precise issue before us was pressed. Certification was denied, Klotz v. Breish, 19 N.J. 334 (1955), and an appeal was dismissed, Klotz v. Lee, 21 N.J. 148 (1956). In Judson v. Peoples Bank & Trust Co., supra, 25 N.J., at p. 34, we noted that no one questioned the finding that one of the settling parties (Peoples Bank) was a tortfeasor. We so noted out of an awareness of the issue now before us. In Oliver v. Russo, 29 N.J. 418, 420 (1959), the appellant sought to present the question but did so for the first time on appeal, asking for a remand to try the issue of the negligence of the settling party. We declined to accept the question in that posture of the case, and cited without comment Davis v. Miller, 385 Pa. 348, 123 A. 2 d 422 (Sup. Ct. 1956), and Swigert v. Welk, 213 Md. 613, 133 A. 2 d 428 (Ct. App. 1957), both of which held under the contribution law of those States that a defendant was entitled to pro rata credit only if the settling party was in fact a tortfeasor.
In Hoeller v. Coleman, supra, 73 N.J. Super. 502, the Appellate Division reviewed the prior cases and, as we have already said, held that where the jury found the settling defendant was not a party to the wrong, the culpable defendant could not claim a pro rata abatement because of that settlement but was entitled to a pro tanto reduction in the amount the settlor paid. The Appellate Division referred also to Steger v. Egyud, 219 Md. 331, 149 A. 2 d 762 (Ct. App. 1959), where in a case involving New Jersey law the Court of Appeals reached the same conclusions on a review of the decisions in our State. We denied certification in Hoeller, 38 N.J. 362 (1962). We add that in Hoeller the Appellate Division declined to follow Smootz v. Ienni, 37 N.J. Super. 529 (Cty. Ct. 1955), in which the trial court, upon a motion which plaintiff did not resist, seemingly held that a settlement leads to a pro rata reduction without regard to the payor's negligence. The trial court in Smootz did not refer to Klotz, supra, 36 N.J. Super. 6, which had been decided by the Appellate Division a few months before.
Our Joint Tortfeasors Contribution Law, N.J.S. 2A:53A-1 et seq., (enacted in 1952) does not direct that credit be given if there is a settlement with one who is not in fact a tortfeasor. Literally at least, the statute calls for an adjustment only if the payor was a party to the wrong. N.J.S. 2A:53A-1 defines "joint tortfeasors" to mean two or more persons jointly or severally "liable in tort," and it is a payment by one such person which brings the statute into play. Hence if a settlement is to have the consequences defendant demands, the basis for that result must be found outside the language of the statute itself.
We find no support for defendant's position in our cases prior to the statute. If anything, they tend the other way. We refer to cases dealing with two rules of great antiquity which likely developed because the early common law could not achieve contribution among co-obligors. One rule was that a claimant could have but one satisfaction. The other was that the release of one co-obligor released all without regard to intent or satisfaction in fact.
With respect to the one-satisfaction rule, our case law is here equivocal. In Brandstein v. Ironbound Transportation Co., 112 N.J.L. 585 (E. & A. 1934), it was held that the consideration received for a "covenant not to sue" had to be applied to the liability of other tortfeasors. The discussion throughout was upon the assumption that the payor was a culpable party. At the very end appeared the following paragraph (at p. 593):
"That payments by persons not interested in the cause of action, as wrongdoers, are not to be applied in diminution of damages does not lessen the force of the rule here applied. Such payments are not made by reason of any liability to answer for the wrongful act, but grow out of a relationship not connected with the wrongful act complained of. Such payments are by reason of gratuity or contract."
The court may there have had in mind payments received under contractual arrangements such as a policy of accident insurance. But the quoted paragraph could mean that a payment received from one charged by the claimant with wrongdoing
will not be applied if in fact the payor was not liable. Dean Prosser so reads Brandstein and upon that reading lists New Jersey with the minority jurisdictions on the issue. Prosser, Torts, § 46, p. 273 (3 d ed. 1964). That view of Brandstein would of course militate against defendant's position in the present case, for if a pro tanto reduction may not be had if the payor was free of fault, a fortiori the larger pro rata reduction should not be allowed in those circumstances.
On the other hand cases in our State decided since Brandstein and mentioned above would require a pro tanto application even though the payor was not a party to the wrong, and we think correctly so. Still defendant can claim no support therein because that view of the pro tanto rule is neutral in this controversy. As to moneys thus received from one charged with wrongdoing, a plaintiff has the sum in hand and there is no evident hardship in reducing his verdict against others by that amount. Indeed, it would rarely be worth the while of the litigants or of the judicial system to try out the question whether the payor was a party to the wrong when only a dollar-for-dollar application is at stake. Cf. Gelsmine v. Vignale, 11 N.J. Super. 481 (App. Div. 1951). So here plaintiff does not bother to pursue the question whether that credit was correctely ordered. Viewed in terms of fairness and utility, that rule is sound.*fn1 But there is an evident hardship to plaintiff and an equal windfall to defendant if a payment made by one who in truth did not inflict the wrong is used to bail out the one who did on a pro rata basis. There is a tremendous difference between a pro tanto credit of the $1,500 plaintiff received from Anderson and a pro rata reduction of $55,000 for which defendant contends.
Cases dealing with the other rule mentioned above, that the release of one tortfeasor released all without regard to intent
or satisfaction in fact, support plaintiff's position. That rule no longer obtains in our State, see Breen v. Peck, 28 N.J. 351 (1958), but when it did, it invited the question whether a release of one who in fact was not a tortfeasor should release those who were. That question parallels the one before us since in both there is the element of surprise to the plaintiff and a windfall to the culpable parties. The issue arose in Jacowicz v. Delaware, L. & W.R.R. Co., 87 N.J.L. 273, 277 (E. & A. 1915), where the court rested its result on two bases, one of which was that the release rule would not be applied unless in truth there was a joint wrong. That holding has substantial support elsewhere. 2 Williston, Contracts, § 338B, p. 726 (Jaeger 3 d ed. 1959); Annotations, 73 A.L.R. 2 d 403, 417 (1960); 148 A.L.R. 1270, 1292 (1944); 124 A.L.R. 1298, 1315 (1940); 104 A.L.R. 846, 861 (1936); 66 A.L.R. 206, 213 (1930); 50 A.L.R. 1057, 1093 (1927).
Thus the history of the subject points against defendant's position. So also does the nature of the right to contribution. Contribution is of equitable origin and stems from the maxim that equality is equity. 2 Pomeroy, Equity Jurisprudence (5 th ed. 1941), § 406, pp. 145-146; Prosser, Torts, § 47, p. 278 (3 d ed. 1964); 2 Williston, Contracts, § 345, pp. 763 and 767 (Jaeger 3 d ed. 1959). The equitable right to contribution is a right as among joint tortfeasors not to be burdened with more than a pro rata share of the dollar liability jointly incurred. Judson v. Peoples Bank & Trust Co., supra, 17 N.J., at p. 92. A defendant receives all the benefit the doctrine intends when he pays no more than his pro rata share. Our statute seeks to relieve tortfeasors of injustice as among themselves; it would be foreign to its purpose to penalize a plaintiff for a misstep which in truth deprived a tortfeasor of nothing. Cf. Judson v. Peoples Bank & Trust Co., supra, 25 N.J., at p. 38.
Nor can support be found for defendant's position in terms of utility. There is a strong policy in favor of settlements. A contribution law should provide the maximum room for settlements with a minimum of unfairness. Under the
approach of our statute, a plaintiff bears the whole burden of a low settlement with a culpable party, for it results in a full pro rata reduction of his claim. It is at best risky business for a plaintiff to settle with one of several. Defendant's position would burden the scene still further for it would require a pro rata credit even when the payor was not a party to the wrong. If that view were adopted, there of course would never be a settlement with a defendant whose liability is quite remote and who wants to get out of the case. If fairness required this further restraint, it would be another matter, but we see in defendant's proposition nothing but a trap for the unwary.
For whatever it may be worth, we note that defendant's position would not prevail under either the Uniform Contribution among Tortfeasors Act of 1939 or the revision of 1955, 9 U.L.A. 233, 1964 pocket part, p. 116. In addition to the circumstance that both statutes, as in the case of our own, speak in terms of settlements with persons "liable in tort" (§ 1), the 1939 act leaves the settling tortfeasor liable to the co-tortfeasor unless the settlement expressly provides for at least a pro rata reduction and the 1955 act leaves the settling tortfeasor liable for contribution only if the settlement was not in good faith. Under those plans a plaintiff is never chargeable with more than he received unless he agreed to a greater credit. Rather the defendant against whom the judgment runs must sue for contribution, and of course he cannot recover unless he proves contributory fault.
The second question is whether defendant should pay $81,000 as ordered below, or $75,000 for which he contends. It will be recalled that the trial court refused to apply to the jury verdict of $165,000 the whole of the sum of $88,500 paid by Conaty. The trial court's thesis was that the contribution statute controls, and that a ...