In City of Houston v. Sam P. Wallace & Co., 585 S.W.2d 669 (Tex. 1979), the City of Houston sued Wallace Company and Precision Insulation Company, Inc. for property damages to a water cooling plant which resulted from an explosion and fire. Id. at 670.
Wallace Company had a contract with the City of Houston to construct certain additions to its water cooling plant and Precision Insulation had a subcontract with Wallace Company to perform certain insulation work. Id.
Maurice Little, an employee of Precision Insulation, brought a separate suit against Wallace Company for personal injuries sustained in the same incident. Id.
The trial court consolidated the two lawsuits. Id. Wallace Company's answer asked for indemnity against Precision Insulation, and Precision Insulation prayed for judgment against City of Houston. Id.
The trial court aligned the City of Houston and Little as co-plaintiffs and Wallace Company and Precision Insulation as defendants. Id.
During the trial, but after the close of evidence, Little secretly made a settlement with Wallace Company just before final arguments and then changed his posture by arguing that the City of Houston, rather than defendant Wallace Company, was at fault in causing both the property damages and personal injuries. Id. at 671.
While the jury was deliberating and counsel for City of Houston was absent from the courtroom, Little asked for a nonsuit. Id.
City of Houston did not discover the secret settlement or learn of the nonsuit until one week later. Id. The jury answered special issues adversely to both City of Houston and Little and the trial court rendered judgment that City of Houston take nothing. Id.
In analyzing this issue, the Texas Supreme Court concluded that Little's counsel had "no business making an argument to the jury at all." Id. at 672.
In reviewing the effect of the jury argument, the court discussed Degen v. Bayman, 86 S.D. 598, 200 N.W.2d 134 (1972), wherein the plaintiff settled with one co-defendant who then changed positions and argued for the plaintiff and against his co-defendant, and quoted with approval language from that case saying: "Not knowing the motive for the evaporation of adversary vigor between plaintiff and Bayman, this benevolent candor coming from a joint tortfeasor could only appear to the jury as a shattering admission." Id.
The court noted that after Little's settlement with Wallace Company, he had no further claim against any party and no other party had any claim against him, and that the jury findings on Little's issues would not affect the claims for indemnity. Id.
According to the court, candor required a disclosure to the court that Little had no further interest in the case in order to prevent submitting meaningless special issues that inquired about Wallace Company's negligence toward Little, Little's contributory negligence, and his damages. Id.
The court concluded that the trial court erred in refusing to grant City of Houston's motions for mistrial and new trial by reason of the misalignment of the parties at the argument stage of the trial in which the jury received a distorted and unfair portrayal of the posture of the parties. Id. at 673.