In this suit, the plaintiff, Thomas Williams, Jr., has appealed from an adverse judgment of the lower court sustaining exceptions of no cause or right of action and res judicata. The alleged facts out of which this cause of action arose are that on July 7, 1958 the plaintiff, while a pedestrian on the Mississippi River Bridge at Baton Rouge, was seriously injured when he was struck by a portion of a log truck owned and operated by Albert Blanchard. Blanchard carried with the American Fidelity and Casualty Company a policy of public liability and property damage insurance with limited coverage of $5,000 for injuries to any one person. The plaintiff entered into a compromise agreement with Blanchard and his liability insurer, fully and completely releasing them in consideration of the sum of $4,750 which was paid and accepted. The release instrument contained the following pertinent language:
The above release agreement was signed on October 2, 1958 and then on November 4, 1958 the plaintiff filed this suit against Walter Marionneaux, Jr. and his liability insurer, General Accident Fire and Life Assurance Corporation, Ltd., for the sum of $59,110.90. In his petition the plaintiff alleges that he was injured by the negligence of Albert B. Blanchard and that the said Blanchard at the time of said accident was the agent, servant and employee and engaged in the course of such employment of Walter Marionneaux, Jr. No negligence is alleged on the part of Marionneaux. The sole grounds on which recovery is sought against him is that of respondeat superior.
The defendants, Marionneaux and General Accident, filed an answer denying both agency and negligence and then a few weeks later Marionneaux and General Accident filed a supplemental answer in which it was alleged that if it should be determined that Blanchard was the agent for Marionneaux, then the release as to Blanchard constituted a release as to Marionneaux. On the same day they filed their supplemental answer, Marionneaux and General Accident filed a third party complaint in which they sought to bring in the American Fidelity and Casualty Company, Blanchard's liability insurer, as a third party defendant on the theory that if judgment is rendered in this suit in favor of the plaintiff and against Marionneaux and General Accident, then they are entitled to have judgment over against American Fidelity and Casualty Company, Inc., as liability insurer for Blanchard, for the full amount of any judgment which may be rendered against Marionneaux and General Accident in favor of the plaintiff. Then American Casualty Company filed a third-party complaint in which they sought to bring in Thomas Williams, Jr., the original plaintiff, on the theory that Williams has in the act of release agreed to indemnify and save harmless American Fidelity and Casualty Company and its insured, Albert B. Blanchard, and therefore if any judgment is rendered herein over and against American Fidelity and Casualty Company, then under the specific contractual language of said release instrument, American Fidelity and Casualty Company is entitled to be indemnified and held harmless from said judgment by the plaintiff Williams.
Exceptions of no right or cause of action and exceptions of compromise and res judicata were then filed by the defendants Marionneaux and General Accident and also by the third-party defendant, American Fidelity and Casualty. The lower court in a well-reasoned opinion rendered judgment sustaining all of these exceptions and dismissing plaintiff's suit at his cost. From this judgment plaintiff has appealed.
The question presented to this Court for determination is whether the contract of release discharging the employee and his liability insurer and agreeing to indemnify and hold them harmless from all further claims, necessarily and automatically releases and discharges Marionneaux, the employer and his liability insurer whose liability is only vicarious and derivative under the doctrine of respondeat superior, despite the attempted reservation of rights against Marionneaux and his liability insurer.
Able counsel for the plaintiff argues in his brief to this Court that there is no precedent in Louisiana jurisprudence with facts exactly like the present case and that an affirmation of the judgment of the lower court will have far-reaching effect and will preclude the possibility of making such a settlement as this with the employee who is primarily liable and then proceeding against the employer who is only secondarily liable under the doctrine of respondeat superior. Counsel for the plaintiff admits that the employee and the employer are not joint tort-feasors, that there is only one tort-feasor, the employee Blanchard, and there is only one debt or obligation for the injuries arising out of the action, but counsel argues that there are two persons who are liable for this debt, although one is primarily liable and the other only secondarily liable, and there is no reason under our statutes or jurisprudence why you cannot make a settlement with the one who is primarily liable and then proceed against the one who is secondarily liable. Plaintiff's counsel has cited no authority from Louisiana or any other of our sister states which hold this to be the law. He simply attempts to distinguish on the facts the case of Cox v. Shreveport Packing Company, 213 La. 53, 34 So.2d 373, and McKnight v. State, La. App., 68 So.2d 652, which were cited by the lower court and which will be discussed later in this opinion and then he cited Landry v. New Orleans Public Service Commission, 177 La. 105, 147 So. 698, as authority for the general proposition that relinquishment of rights is not favored by our jurisprudence and no one is presumed to have renounced his rights unless it clearly appears that he intended to do so.
Able counsel for the defendants have filed exhaustive briefs in which they have absolutely destroyed plaintiff's position. Defendants call our attention to the fact that the sole and only grounds on which Marionneaux is sought to be cast in judgment is respondeat superior. They further call our attention to the particular phraseology in the act of release by which plaintiff Williams, in consideration of a payment of $4,750, fully and completely releases Blanchard and American Fidelity and Casualty Company and agrees to hold them harmless and to indemnify them for all losses, costs, expenses, etc. growing out of said accident. They next call our attention to the well-established rule of law that a party secondarily liable, if cast in judgment upon vicarious responsibility, has a right of indemnification over against the actual tort-feasor. Defendants cite the recent case of Spurlock v. Boyce-Harvey Machinery, Inc., La.App., 90 So.2d 417, 427, decided by the First Circuit Court of Appeal and from which they quote the following:
"(9, 10) Under the doctrine of respondeat superior Boyce-Harvey (and therefore Travelers under its policy insuring Boyce-Harvey against such liability) is liable to third parties for the negligence of its employees (such as Jones) while acting in the scope and course of employment. But such liability is vicarious only and does not constitute Boyce-Harvey a joint-tort-feasor or render it solidarily liable with its negligent employee, Cox v. Shreveport Packing Co., 213 La. 53, 34 So.2d 373. Ordinarily, in fact, an employer may recover from his employee the damages the latter's negligent conduct has caused the employer to pay a third party, Costa v. Yoachim, 104 La. 170, 28 So. 992; Brannan, Patterson & Holliday v. Hoel, 15 La.Ann. 308; see also, Hardtner v. Aetna Casualty & Surety Company, La.App., 189 So. 365 at page 370."
See also Appalachian Corporation v. Brooklyn Cooperage Company, 151 La. 41, 91 So. 539; Sutton v. Champagne, 141 La. 469, 75 So. 209, and Rumpf v. Callo, 16 La.
Following this line of argument, we therefore see that if the plaintiff Williams should take judgment in these proceedings against Marionneaux and his insurer, then Marionneaux would be entitled to judgment over against Blanchard and his insurance carrier, and Blanchard and his insurance carrier would be entitled to judgment over against the plaintiff, Williams, under the indemnification and hold harmless agreement which is contained in the act of release. As counsel for defendants have aptly put it, "We would have an endless circle of legal futility."
In addition to the above argument that allowing plaintiff to proceed with this suit would only result in an endless circle of legal futility, we find many authorities holding that release of the primary obligor also discharges the secondary obligor because this result is inescapable under the laws of subrogation. It is elementary that where the claimant sues only the party secondarily liable and obtains judgment, the party secondarily liable is then subrogated to the rights of the claimant and legally stands in his shoes. He has all of the rights, but is also subject to all of the limitations of the subrogor. See 83 C.J.S. verbo Subrogation §§ 9, 10, 14, pp. 604-612. See also Stevens v. Mitchell, Sup.Ct.1958, 234 La. 977, 102 So.2d 237. Therefore, if the claimant has fully released the tort-feasor, the claimant's subrogee is also bound by this release. Where the claimant's subrogee is the secondary obligor attempting to obtain judgment over against the party primarily liable, the secondary obligor would then be cut off from his rights to indemnification by a contract of release to which he was not a party but by which he is denied his legal rights. This result would obviously deny to secondary obligors their legal right to recovery over against primary obligors.
Some of the many authorities supporting this conclusion are:
(1) 76 C.J.S. Release § 50, p. 689:
This same general rule of law has been recognized in Louisiana jurisprudence. In the case of McKnight v. State, La.App., 68 So.2d 652, decided by the First Circuit Court of Appeal in 1953 and in which writs of certiorari were denied, the facts were slightly different from the present case but the rationale clearly supports the position of defendants. There the plaintiff first sued three policemen whose negligence had allegedly caused the death of plaintiff's husband. After trial on the merits, the court held that these policemen were not negligent and rendered a decision against the plaintiff. Then, after obtaining legislative authorization, the same plaintiff brought a suit against the State. Exceptions of no right or cause of action and of res judicata, were filed. The Court sustained the exception of res judicata, on the theory that the discharge of the primary obligor by final judgment of Court, necessarily discharges a secondary obligor whose liability, if any, is vicarious under the doctrine of respondeat superior. We quote at length from the opinion in the McKnight case:
It is true that in the McKnight case and the cases cited therein, the discharge of the primary obligor was by judgment of Court whereas in the present case, the discharge of the primary obligor was by a written instrument of release containing an agreement to indemnify and hold harmless, but this does not prevent the McKnight case and the cases cited therein from being direct authority here. The LSA-Civil Code specifically provides in Article 3078, "Transactions have, between the interested parties, a force equal to the authority of things adjudged. * * *" In the case of Jackson v. United States Fidelity & Guaranty Company, La.App., 199 So. 419, 421, the Second Circuit Court of Appeal held as follows:
Other Louisiana cases to the same effect are Cassidy v. Joseph, 204 La. 664, 16 So.2d 225, and Gregory v. Central Coal & Coke Corporation, 197 La. 95, 200 So. 832.
It is therefore indisputable that an act of compromise and release is equivalent to a definitive judgment of court discharging the primary obligor and the McKnight case and the cases cited therein hold that a judgment of Court discharging the primary obligor, necessarily and automatically renders the matter res judicata insofar as a later claim against the vicariously liable party is concerned. It is our opinion that the exception of res judicata as well as the exception of no cause of action were properly sustained.
For the reasons hereinabove set forth, the judgment appealed from is affirmed.