Vol. 4, No. 3, Pg. 22. Don't Boycott the Mary Carter Paint Store.

• Author: By Edward Mullins Jr. and Robert O. Meriwether

South Carolina Lawyer

1992.

Vol. 4, No. 3, Pg. 22.

Don't Boycott the Mary Carter Paint Store

22Don't Boycott the Mary Carter Paint Store23By Edward Mullins Jr. and Robert O. MeriwetherI went down to the Mary Carter Paint Store.

I said, "Give me one of them Smith and Wesson Magnum 44s." *

--Hank Williams Jr.

Whether or not their tastes run to Southern country-rock, executives at the Mary Carter Paint Company probably wince at Mr. Williams' linking their corporate name with the focus of violent debate over handgun control. Even worse, the protagonist in the song intends to use his purchase for a little vigilante justice.

Poor Mary Carter Paint Company. Popular music wrongly associates it with pistol-packing retribution, but that is not the end of the company's woes. The press, both legal and popular, also associates the company name with sliding scale settlement agreements, a.k.a. "Mary Carter Agreements," which have been called "a species of dirty trick that no respectable lawyer would undertake." The Los Angeles Daily Journal, June 28, 1984, p. 3.

Let us try to restore some lustre to the Mary Carter name. We have no popular musical forum (or expertise) enabling us to tackle Hank Jr.'s ballad, but we can do something about the undeserved reputation of the settlement agreements that bear Mary Carter's name.

Mary Carters Defined

First, what is a Mary Carter Agreement? While these arrangements may have been used in maritime litigation as early as 1918 (see Michael, Mary Carter Agreements in Illinois, 64 Ill. Bar J. 514 (1976)), the popular name derives from Booth v. Mary Carter Paint Co., 202 So.2d 8 (Fla. Dist. Ct. App., 1967), overruled, Ward v. Ochoa, 284 So.2d 385 (Fla. 1973).

In Booth, a multiple defendant case, the agreeing defendants pledged that in the event of a verdict for defendants, the agreeing defendants--those other than the Mary Carter Paint Company--would nonetheless pay plaintiff $12,500, effectively guaranteeing plaintiff a recovery of $12,500 at least. If the verdict should be against all defendants or against the Mary Carter Paint Company alone but for less than $37,500, the agreeing defendants would pay the difference, up to $12,500. Should the verdict exceed $37,500, enforceable against the Mary Carter Paint Company, however, plaintiff agreed to collect only from the Mary Carter Paint Company and the agreeing defendants would pay nothing. Meanwhile, the agreement would be secret and all defendants would remain in the case for trial.

Since 1967, this sort of agreement has appeared in a variety of forms and under several names. "Gallagher," "sliding scale," "guarantee clause" and "loan receipt" agreements are all arguably Mary Carters. The essence of these arrangements guarantees a plaintiff a minimum recovery, caps the agreeing defendant's liability and makes some provision for reducing the agreeing defendant's liability according to the recovery plaintiff obtains from other defendants. Any requirement that the agreement remain secret has been attackedvigorously and rejected in most states by case law or even by statute. (See In Defense of Mary Carter, For the Defense, p. 14 (Feb. 1984).)

An interesting Mary Carter variant deals with the admissibility of documents in a multi-defendant case. A plaintiff who foresees problems with adrnissability against some but not all defendants may enter into an evidentiary Mary Carter providing that the agreeing defendant remains in trial only long enough for the evidence to be introduced against it. These agreements may be far less formal than traditional Mary Carters, resting on a tacit understanding that plaintiff will settle for a reasonable amount with the agreeing defendant, after the first day's introduction of evidence. These Mary Carter kin are beyond the scope of this article but aptly illustrate the creativity of the lawyers who do not boycott the Mary Carter store.

Pact Attack

These pacts have been attacked as champertous, violative of the real-party-in-interest rule, collusive and tending to promote litigation rather than settlement. See, e.g., Lum v. Stinnett, 87 Nev. 402, 488 P.2d 347 (1971). These are serious allegations indeed.

The proponents of this line of attack allege that in every situation Mary Carter agreements run contrary to basic public policy. These advocates would close the Mary Carter store for good, just

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* "I've Got Rights," written by Hank Williams Jr., produced by Jimmy Bowen, 1990 Warner Bros. Records, Inc.

24 because Mr. Williams' musical persona bought a handgun there for a nefarious purpose.

A more balanced view is to look at all the various Mary Carter products available and support those which are sound in light of the practicalities of the specific situation in which they are to be used. Predictably, more reasoned jurists have long adopted such a balanced approach to these complex contracts.

For example, faced with a comprehensive assault on Mary Carter agreements in general, the...