Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.
This is an appeal by the plaintiff from the Order of the District Court for the Eastern District of Pennsylvania dismissing with prejudice plaintiff's personal injury action against defendants arising out of an automobile accident in Bowling Green, Virginia, in 1956. Plaintiff is a citizen and resident of New York; defendants are citizens and residents of Pennsylvania. Plaintiff's automobile was first hit by another operated by Luther L. Waring, a citizen and resident of New York, who was killed in the collision, and then by the defendants' car. Plaintiff filed an action in the New York state courts against the administratrix of Waring's estate which he settled for $9,000. In making the settlement plaintiff gave the administratrix a "General Release" which expressly reserved and excepted from its terms "any and all claims and causes of action" which he might have against the defendants. The District Court dismissed plaintiff's action on the ground that under Virginia law "* * * a release of one joint tortfeasor operates to release all joint tortfeasors, regardless of the fact that the release may specifically reserve all rights of action by the releasor against those joint tortfeasors not parties to the release". Bittner v. Little, D.C.E.D.Pa.1958, 168 F.Supp. 30, 31, 32. In doing so, the District Court held that "The determination of extent of liability questions is referred by Pennsylvania courts to the law of the place of the wrong" and "* * * Pennsylvania appellate courts would refer to the law of the place of the wrong to determine the effect of a release arising out of such wrong on the defendant's liability."
On this appeal plaintiff contends (1) the "General Release" is simply a covenant not to sue and under settled New York law it did not operate as a release of defendants; (2) scope of the "General Release" is governed by New York law, and (3) there was no tortfeasor relationship between the administratrix and the defendants.
This case is in Federal Court solely by reason of diversity. The Federal Court takes its applicable rule of law from the state courts of the District in which it sits and this, of course, includes their conflict of laws references to laws of other states where they are relevant. Accordingly, the District Court was constrained, as we are, to apply the conflict of laws rule of Pennsylvania.*fn1
In a case involving a tort in another state Pennsylvania follows the general rule of reference to the place of wrong for the legal effect to be given the facts and events. In Rennekamp v. Blair, 1954, 375 Pa. 620, at page 621, 101 A.2d 669, at page 670 the Supreme Court of Pennsylvania said:
"The substantive rights of the parties are to be governed by the lex loci delicti * * *."
Earlier, in Foley v. Pittsburgh-Des Moines Co., 1949, 363 Pa. 1, at page 9, 68 A.2d 517, at page 521, the same court had said:
"The law of the place where the injury was sustained - the lex loci delicti - determines whether a right of action exists: * * *"*fn2
The Pennsylvania courts have not dealt with the specific issue here presented as to what law governs the effect of a release, viz., the law of the state where the tort involved in the release occurred, or the law of the state where the release was executed.
It thus becomes incumbent on us to make our own determination of what the Pennsylvania Supreme Court would probably rule in a similar case.*fn3
The general rule is "A liability to pay damages for a tort can be discharged or modified by the law of the state which created it."*fn4 Otherwise stated, "The reciprocal rights and duties of the parties and the defenses that may be invoked to escape liability for a breach of duty are governed by the laws of the place where the tort occurred, rather than the law of the forum."*fn5 "The validity of a release as a defense in an action in tort is governed by the law of the place of injury."*fn6
In discussing the general rule as to the construction of releases in tort cases, Judge (now Mr. Justice) Whitaker, stated, in Western Newspaper Union v. Woodward, D.C.W.D.Mo.1955, 133 F.Supp. 17, at page 23:
"The first question then is: What law governs, first, the tort, and, second the contract of release? Inasmuch as the claimed bar of this action rests entirely upon the release, it would not be necessary presently to determine what law governs the tort were it not for the fact that the cases hold that a contract of release, absent, as here, express designation of other laws to control it, is presumed to have been made in contemplation of, and, hence, to be governed by, the laws of the state that created or gave rise to the right thereby released, but because of ...