Sullivan, Foley and Leonard. The opinion of the court was delivered by Sullivan, S.j.a.d. Foley, J.A.D. (dissenting).
The Unsatisfied Claim and Judgment Fund (Fund) appeals from an order of the trial court directing the Fund to pay to plaintiffs the sum of $6,211.87, being one-half of the amount of a judgment recovered by plaintiffs in a motor vehicle accident case. The issue involved is to what extent, if any, is the Fund liable to pay plaintiffs' judgment.
The facts are not in dispute. Plaintiff William Dodd was a passenger in an automobile owned and operated by George D. Copeland when it collided with a vehicle owned and operated by Samuel J. Cox. Dodd was injured as a result of the accident and filed suit against both Copeland and Cox. Since he was a minor at the time of the accident (he is now of age), his parents joined in a count for medical expenses.
Copeland had $10,000 insurance coverage and an answer was filed on his behalf by his carrier. Cox was uninsured. The Fund, having received due notice, filed an appearance on his behalf. Both defendants filed crossclaims for contribution under the Joint Tortfeasors Contribution Law.
When the case came to trial Copeland's insurance carrier settled with plaintiffs for $5,000 and received a covenant not to sue. The Fund refused to settle and the case continued against Cox, but resulted in a mistrial. In the meantime, the crossclaims for contribution were dismissed. At the retrial of the case against Cox the jury was asked to decide Cox's liability, the extent of plaintiffs' damages and whether Copeland was a joint tortfeasor. The jury found Cox liable and returned a verdict in favor of Dodd and against Cox for $12,000. Dodd's parents were awarded $423.75. The jury also found that Copeland was a joint tortfeasor. Judgment was entered for $12,423.75. Plaintiffs issued execution on their judgment and examined Cox in discovery proceedings, but were unable to collect their judgment.
Plaintiffs then made application for payment of their judgment from the Fund. They conceded that, having
settled with one of two joint tortfeasors, the remaining defendant Cox is only liable to pay one-half of the $12,423.75 judgment, or $6,211.87. They asked that the Fund be ordered to pay said amount. As heretofore noted, the trial court granted plaintiffs' application.
Initially, the Fund argues that it is not required to pay any part of plaintiffs' judgment against Cox because of their settlement with Copeland who was found to be a joint tortfeasor. The Fund's argument is that under the Unsatisfied Claim and Judgment Fund Law, the Fund becomes liable to pay a judgment only after the holder of the judgment has fully pursued and exhausted all remedies available to him for recovering damages against all persons against whom he has a cause of action in respect of his damages, by commencing an action against such persons and prosecuting the same to judgment; that, in any event, the Fund may not be called upon to pay in excess of $10,000 on account of injury to or death of one person in any one accident, and that plaintiffs' damages were assessed by the jury at $12,423.75; that the same jury also found that Copeland was a joint tortfeasor. Since Copeland had insurance coverage of $10,000, the Fund argues that plaintiffs could have collected at least $10,000 from him had no settlement been made, in which case the Fund could not have been called upon to make any payment whatever.
It is the Fund's argument that plaintiffs, by settling with Copeland, deprived the Fund of the benefits it would have received had plaintiffs exhausted all remedies available, and it cannot now be required to pay damages that plaintiffs could have recovered against Copeland.
We do not agree with this contention since its practical effect would be to bar any settlement in a case in which the Fund appears for one of the defendants unless the Fund participates in the settlement. The general policy of the law is to encourage the good faith settlement of claims and thereby avoid or terminate litigation. We do not consider that the provisions of the Unsatisfied Claim and Judgment
Fund Law are at odds with this general policy. Settlement with other persons can and often does reduce the amount which the Fund is called upon to pay.
The Fund Law does state that before an order for payment of a judgment is made, a plaintiff must have fully pursued and exhausted all remedies available to him for recovering damages against all persons against whom he has a cause of action in respect of his damages, by commencing an action against such persons and prosecuting the same in good faith to judgment. N.J.S.A. 39:6-71(b).
However, the sense of any statute is to be collected from its object and the nature of the subject matter. Particular phrases must be read in the light of the contextual setting. The import of such language is controlled accordingly. The literal sense of terminology cannot prevail over the reason and ...