A HISTORY OF RELEASE LAW IN ALABAMA
Pre-1989 Release Law
Alabama law was clear that by executing a general release, a party released all tort-feasors against whom a cause of action was not specifically reserved, regardless of whether those tort-feasors were parties to the release or were expressly mentioned therein. Johnston v. Bridges, 288 Ala. 156, 258 So.2d 866, cert. denied, 409 U.S. 847, 93 S.Ct. 52, 34 L.Ed.2d 88 (1972)
“The contract of release was sufficiently supported by consideration so as to cover, in addition to those specifically named, but not actual parties to the execution of the settlement agreement, those persons referred to therein. “* * * A consideration for a release moving from a third person on behalf of the releasee to the releasor * * * is as adequate as a consideration moving directly from the releasee to the releasor.” 76 C.J.S. Release § 12, p. 636.” Johnston v. Bridges, supra.
An example of the sometimes harsh results of this rule is found in Conley v. Harry J. Whelchel Co., 410 So.2d 14 (Ala.1982) In Conley, Mrs. Conley’s hair became caught in the unguarded parts of a grain auger and this caused her injury. The auger was being operated by her husband, Ricky Conley. Ricky worked part-time as a farmhand for W. A. Beavers, the owner of the auger.
Mrs. Conley filed suit approximately one month after the action was filed, the Conlet’s settled with Mr. Beavers for $15,000.00 plus $500.00 in medical benefits. “In consideration for that amount, appellant and her husband were asked to sign a form release and they did.”
“The release in question states that Mr. Beavers is released from all liability in connection with appellant’s accident and that “any and all other persons … whether herein named or referred to or not, and who . . . may be jointly or severally liable to the undersigned” are also released. The trial court found that the release “clearly releases the subject defendants, the wording and the meaning of the words are neither complex nor misleading. There is no ambiguity in its terms.” We agree.”
The result was the Conley’s product liability suit against the other defendants was dismissed. In his dissent, Justice Jone explained the rationale:
“The development of our cases is clear that the “any and all other persons” language discharges the obligation, including the nonparty obligors. This arose out of the common law concept that the right of action is one and indivisible, and that satisfaction extinguishes the demand, Steenhuis v. Holland, 217 Ala. 105, 115 So. 2 (1927); and this had its inception in the earlier common law notion that a creditor’s release of any one of several joint debtors extinguishes the debt. See, Orr v. Reed Phosphate Co., 215 Ala. 562, 112 So. 145 (1927). The rule of judgments which permits but a single satisfaction likewise became the rule that “satisfaction” by one without suit inures to the benefit of all, or, rather, cuts off the right of action by extinguishment.” Conley, 410 So.2d at 16
Justice Jones then went on to state:
“My quarrel lies with those cases that interpret “boilerplate” language-”any and all other persons”-as extending the discharge effect of the release to unnamed and undisclosed non-parties-persons, as here, who have paid no part of the consideration, know nothing of the release transaction, and who stand in no position of privity or other legal nexus with either of the signatories party to the agreement.” Conley, 410 So.2d at 17
Another example of the general rule was found in Baker v. Ball, 473 So.2d 1031 (Ala.1985). Mr. and Mrs. Baker sold a residence to Mr. and Mrs. Dexter. A lawsuit rose out of the sale and they eventually settled. The release they signed stated it released “and any and all other persons.”
After the settlement, they sued their lawyer Ball. The court held the lawyer was released along with the Dexters. “Therefore, we hold that Ball is released from all liability arising out of his representation of the Bakers in the matter in question and that the trial court was correct in granting summary judgment in favor of Ball.”
The Baker court explained the general rule with respect to releasing unnamed third parties was grounded upon the concept of joint and several liability among joint tort-feasors.
Alabama law is clear that by executing a general release, like the one signed by the Bakers, a party releases all tortfeasors against whom a cause of action is not specifically reserved, regardless of whether those tortfeasors are parties to the release or are expressly mentioned therein. Johnston v. Bridges, 288 Ala. 156, 258 So.2d 866, cert. denied, 409 U.S. 847, 93 S.Ct. 52, 34 L.Ed.2d 88 (1972). As this Court has previously stated:
“[I]n the absence of fraud, a release supported by a valuable consideration, unambiguous in meaning, will be given effect according to the intention of the parties to be judged by the court from what appears within the four corners of the instrument itself, and parol evidence is not admissible to impeach it or vary its terms.”
Miles v. Barrett, 233 Ala. 293, 134 So. 661 (1931).
Baker v. Ball, 473 So.2d 1031, 1035 (Ala.1985).
For years, Alabama lawyers knew of the problems in signing a general release. Generally, the answer to the problem was to either execute a pro tanto release or to file an action in equity to reform the release. An example of an equitable action is found in Ford Motor Co. v. Neese, 572 So.2d 1255 (Ala. 1990): “In light of the testimony presented, the trial court could find that State Farm’s intent was to settle the case only as it pertained to any party insured by State Farm. Thus, the reformation of the release was not error.”
Pierce v. Orr Changed the General Rule
In Pierce v. Orr, 540 So.2d 1364 (Ala. 1989), the Alabama Sureme Court reconsidered and reevaluated its treatment of general releases. The Court stated:
“We think the time is long past due to accept at face value the legislative will as expressed in § 12-21-109 and, thus, to give effect to contracts of release according to the intentions of the parties. Henceforth, unnamed third-parties, referred to in the release as “any and all parties” or by words of like import, who have paid no part of the consideration and who are not the agents, principals, heirs, assigns of, or who do not otherwise occupy a privity relationship with, the named payors, must bear the burden of proving by substantial evidence that they are parties intended to be released, i.e., that their release was within the contemplation of the named parties to the release. This shift in the burden of proof, of course, does not preclude unnamed third-parties from timely interposing a defense to the extent of claiming credit for any amounts paid by named parties to the release.” 540 So.2d at 1367 (Ala. 1989.
