Summary
In Carey v. Dairyland Mutual Ins. Co. (1968), 41 Wis.2d 107, 163 N.W.2d 200, this court held there was a legal offer and acceptance when the parties entered into a settlement agreement conditioned upon the appointment of a guardian ad litem for the injured party and the subsequent approval of the court.
Summary of this case from Alt v. American Family Mutual InsuranceOpinion
No. 64.
Argued: November 26, 1968.
Decided: December 20, 1968.
APPEAL from a judgment of the county court of Dunn county: QUENTIN JOHNSON, County Judge of Sawyer county, Presiding. Affirmed.
For the appellant there was a brief by Wilcox Wilcox of Eau Claire, and oral argument by Francis J. Wilcox.
For the respondent there was a brief and oral argument by Frank W. Auer of Eau Claire.
The plaintiff, Ronald J. Carey, as guardian ad litem for Kenneth Ernest Brown, incompetent, commenced this action to enforce an alleged settlement contract. The matter was tried to the court without a jury, and judgment was rendered in favor of the plaintiff. This appeal is from that judgment.
On January 9, 1962, an automobile driven by Kenneth Lehman was involved in an accident in Chippewa county. Kenneth Ernest Brown, the incompetent who is represented by a guardian ad litem in this action, was a passenger in the vehicle driven by Lehman. Also involved in the accident was an automobile driven by Marvin Michels, which was insured by the appellant, Dairyland Mutual Insurance Company (hereinafter referred to as "Dairyland"), and a truck owned by the L. C. L. Transit Company. Mr. Brown was apparently rendered incompetent due to the injuries he suffered in the accident.
At the time of the accident, Mr. Lehman and Mr. Brown, who were partners in a beer distributing company, were allegedly engaged in a partnership business. Consequently, Mr. Lehman contacted the attorney for the partnership, Mr. Ronald Carey, to investigate the accident in order to determine how the partnership was affected. Mr. Carey also initially represented Mr. Lehman personally. Mrs. Brown subsequently contacted Mr. Carey and requested that he also act on behalf of her husband in matters arising from the accident.
In the course of investigating the events surrounding the accident, Mr. Carey contacted Mr. Vance Sinclair, an attorney who is also the sole employee of his own independent adjusting company. Mr. Sinclair had been authorized by Dairyland to act as its adjuster with reference to the aforementioned accident.
The discussions between Mr. Sinclair and Mr. Carey regarding Mr. Brown's injuries are particularly pertinent to this appeal. Mr. Sinclair found out early in the discussions that Mr. Brown had been rendered legally incompetent by the accident. It was also obvious that Dairyland's insured (Mr. Marvin Michels) was at least somewhat responsible for the accident.
After some discussions between these two attorneys, Mr. Sinclair received authority from Dairyland to adjust Mr. Brown's claim for $9,000. Subsequently, Mr. Sinclair made an oral offer to Mr. Carey on behalf of Dairyland to settle all the claims of Mr. Brown for the sum of $9,000. The offer was conditional upon the appointment of a guardian ad litem for Mr. Brown and the approval by the court of the settlement. The offer was agreeable to Mr. Carey. None of the parties to this lawsuit could remember the dates of the discussions between the attorneys, nor could they remember the original date of the settlement offer, but an analysis of the record indicates that the offer occurred sometime in March, but before March 22, 1962.
The limit of Dairyland's liability was $10,000.
Mr. Carey testified that the agreement was reached before Mrs. Brown was appointed general guardian. She was so appointed on March 22, 1962. Mr. Sinclair testified the offer was made in late March or early April, 1962.
Some of the dates are certain. On March 22, 1962, Mrs. Brown was appointed general guardian of her husband. On November 19, 1962, Mr. Ronald Carey was appointed guardian ad litem of Mr. Brown by the county court of Dunn county
". . . to negotiate a compromise or settlement of the cause of action which the above named incompetent [Mr. Brown] has against the said Marvin Michels and the Dairyland Mutual Insurance Company . . ."
The consent to act as guardian ad litem was signed and filed with the county court on December 6, 1962.
It was on December 6, 1962, that the county court of Dunn county entertained a petition for an order approving the settlement of Mr. Brown's cause of action against Marvin Michels (and Dairyland) pursuant to sec. 269.80 (2), Stats.
"COMPROMISE OR SETTLEMENT WITHOUT ACTION. A cause of action in favor of or against a minor or mentally incompetent person may, with the approval of any court of record, be settled by a guardian ad litem without the commencement of an action thereon; and for such purpose, the court may appoint a guardian ad litem upon application made as provided in s. 260.23 (2). An order approving a settlement or compromise under this subsection and directing the consummation thereof shall have the same force and effect as a judgment of the court."
At the hearing Mr. Carey appeared as guardian ad litem and Mrs. Brown appeared as the general guardian. Mr. Lehman and Mr. Michels were also present, as was Mr. Sinclair, who appeared as the authorized representative of Dairyland. During the course of the hearing Mr. Sinclair stated:
". . . we have offered to settle the thing. We are not contesting it. We want approval of the settlement for $9,000. We have got $10,000 exposure. We thought by offering $9,000, we would save some costs and terminate the matter in a most profitable way for all parties concerned. We wouldn't offer this if we didn't think we had some liability here."
The county court did not approve the settlement until March 24, 1965. The apparent reason for the delay was that the county judge was anxious to preserve Mr. Brown's rights to proceed against the other parties to the accident, and he was concerned about the type of release which would be given to Dairyland.
The county judge, Mr. Sinclair, and Mr. Carey communicated frequently on the matter until the late summer or fall of 1963, when some further information was discovered by Mr. Carey which led him to believe that the third vehicle involved in the collision, i.e., the truck, might have been the initiating cause of the accident. Consequently, a suit was begun against Mr. Smith, the truck driver, and the L. C. L. Transit Company. The action was tried beginning on January 11, 1965, but the verdict absolved the truck driver of any negligence. Mr. Carey later explained that Mr. Michels and Dairyland were not named as defendants in that suit because he felt that there was already a settlement with them. Mr. Carey explained also that he did not seek to recover damages from Mr. Lehman or Mr. Lehman's insurance company because it was his conclusion that Mr. Lehman and Mr. Brown were on a joint business venture at the time of the accident. A further reason was that Mrs. Brown did not want to sue Mr. Lehman.
Finally, about two months after the decision in the suit against the truck company, and more specifically on March 24, 1965, the county court approved the original settlement. However, when Mr. Carey made a demand for payment of the $9,000, Dairyland refused to pay on the ground that its offer had not been accepted within a reasonable time.
The primary dispute in this appeal concerns the result of the negotiations between Mr. Carey and Mr. Sinclair. It is Dairyland's position that these negotiations resulted in the making of a settlement offer, that the offer was not accepted for almost three years, and that the change of circumstances between the making of the offer and its acceptance, namely, the running of the statute of limitations on the commencement of a personal injury action made the acceptance ineffective to create an agreement.
Respondent contends that the negotiations led to a binding agreement, the performance of which depended upon the occurrence of two conditions: (1) The appointment of a guardian ad litem; and (2) the approval of the settlement by the trial court.
From the above contentions the issues appear to be:
(1) Did the negotiations result in a settlement agreement; and
(2) Did the delay following the submission of the agreement (or offer) to the county court make the approval (or acceptance) ineffective?
Results of Negotiations.
The trial court specifically stated in its findings of fact that:
". . . the parties hereto did negotiate, and agree by offer on the part of defendant and acceptance on the part of the plaintiff to the settlement and compromise of a tort cause of action as more fully set forth in the complaint herein, said offer and acceptance being conditional and predicated upon approval by this Court, as required pursuant to Section 269.80 (2), Wisconsin Statutes."
The pertinent allegations in the complaint which were adopted by the trial court as its findings of fact as set out above appear to be:
"That, pursuant to the authority granted to him as Guardian Ad Litem, the plaintiff herein did negotiate a compromise and settlement of the liability of the said Marvin Michels and the said Dairyland Mutual Insurance Company with the duly authorized representatives of said defendant, and that the said parties hereto did mutually agree, prior to the 6th day of December, 1962, to settle and compromise the alleged liability of the said Marvin Michels and Dairyland Mutual Insurance Company, as insurer, in the sum of Nine Thousand and no/100 Dollars ($9,000.00), and did, on the 6th day of December, 1962, petition the County Court for Dunn County, State of Wisconsin, for an order approving said settlement and agreement, pursuant to Section 269.80 (2), Wisconsin Statutes."
"A trial court's finding of fact made on conflicting evidence should not be set aside if a judicial mind could, on due consideration of the evidence as a whole, reasonably have reached that conclusion . . . ." McManus v. Hinney (1967), 35 Wis.2d 433, 441, 151 N.W.2d 44, and cases cited therein.
The gist of the appellant's objection to the findings of fact is that the respondent did not consent to act as guardian ad litem until December 6, 1962. Thus, it is contended, Mr. Carey could not, and did not, have authority to enter a settlement contract until December 6th. Yet the trial court found that the settlement contract was entered into "prior to" December 6, 1962. Appellant concludes that since Mr. Brown was legally incompetent, until the guardian ad litem was appointed and consented to act, no one could expressly authorize Mr. Carey to enter a settlement agreement.
It is true that an attorney must be expressly authorized to compromise a client's cause of action for personal injuries. Krueger v. Herman Mut. Ins. Co. (1966), 30 Wis.2d 31, 139 N.W.2d 592. However, there is no doubt that Mr. Sinclair, Dairyland's representative, negotiated with Mr. Carey prior to the December 6th hearing with the full knowledge that a guardian ad litem would have to be appointed and that the court would have to approve the settlement before it became final. Mr. Sinclair's testimony in that regard is as follows:
Possibly Mrs. Brown, who was appointed general guardian of Mr. Brown, could have authorized the settlement agreement. However, Mr. Carey testified that the agreement had been made before Mrs. Brown was appointed general guardian.
"Q. You made the offer of nine thousand dollars? A. Right.
" Q. Mr. Carey said it was agreeable to him? A. Well, I don't know if he agreed right that day, but he subsequently agreed that this was an acceptable offer.
" Q. And it was understood or discussed that he would have a guardian ad litem appointed? A. Right.
" Q. And that you would have to have an approval of the Court? A. Right."
There is additional evidence that prior to the December 6, 1962, hearing, Mr. Sinclair was fully informed that Mr. Carey was going to act as the guardian ad litem in this matter. Mr. Carey was appointed the guardian ad litem on November 19, 1962 (although he did not file his consent to act as such until December 6, 1962). Prior to the December 6, 1962, hearing, Mr. Sinclair received a copy of the draft of the order appointing Mr. Carey the guardian ad litem and a copy of the petition for the approval of the settlement.
Prior to the hearing on December 6, 1962, Mr. Sinclair, Dairyland's representative, negotiated with Mr. Carey with full knowledge of Mr. Carey's actual authority and with full knowledge that Mr. Carey would be appointed guardian ad litem. No objection was ever raised at any time concerning Mr. Carey's authority to negotiate. Dairyland should now be estopped from raising that objection on this appeal.
Even if the trial court's finding (that the settlement agreement was reached "prior to" December 6, 1962) was not supported in the record, it is obvious that Mr. Sinclair's statements in open court on December 6, 1962, constituted at least an offer which was immediately accepted by the guardian ad litem when he petitioned the court for an order "approving said settlement." It is the function of the trial court under sec. 269.80 (2), Stats., to approve or disapprove a settlement agreement. It is not the function of the trial court under that section to entertain offers or to negotiate settlements.
Dairyland also contends that Mr. Sinclair did not have the authority to bind Dairyland to a settlement contract. The record amply refutes that contention.
" Q. Did you some time during the spring of 1962 receive authority from your company to attempt to adjust the Brown claim? A. [Mr. Sinclair] Yes.
" Q. Did that authority come before or after you had had some negotiations and discussions with Mr. Carey? A. After.
" Q. And what was the figure that you received authority to adjust this claim on? A. My recollection is it was up to nine thousand dollars.
". . .
" Q. After you received the authority from your company what did you do? . . . A. . . . ultimately I offered him nine thousand dollars."
Dairyland now contends that although Mr. Sinclair was authorized to offer $9,000, he was not authorized to enter into an agreement to pay $9,000.
An authorized offer from an insurance company, if accepted (and assuming consideration), must be held to create a settlement contract. Mr. Sinclair never conditioned the settlement offer upon approval by Dairyland. That approval of Dairyland was obtained before the offer was ever made, and Dairyland never disavowed Mr. Sinclair's actions on its behalf.
This case is thus distinguished from Goetz v. State Farm Mut. Automobile Ins. Co. (1966), 31 Wis.2d 267, 142 N.W.2d 804, where the authority of the adjuster to bind the insurance company could not be established. In Goetz the adjuster was not authorized to make any offer, let alone an offer up to a particular amount. The court there stated at page 273:
". . . We do not hold an insurance adjuster cannot enter into a valid contract of settlement . . . but . . . the authority [to enter into the contract] . . . must be pleaded to state a cause of action against the insurance company."
In this case the authority of the representative of Dairyland to enter into the contract was both pleaded and proved.
". . . When an insurance company delegates the power of adjustment, an adjuster so employed has the power to make arrangements with the insured after loss, and to bind the insurer thereby." Zager v. Gubernick (1965), 205 Pa. Super. 168, 173, 208 A.2d 45, 48, 49.
". . . an agent with power `to adjust a loss' has authority to bind the insurer by an agreement of settlement, . . ." 4 Couch, Insurance (2d ed.), p. 265, sec. 26:327.
There is not even a question in this case as to whether Mr. Carey accepted the offer. It is undisputed that he did so. The question is, however, whether he had the authority to accept it. As previously set out, we believe Dairyland should be estopped from denying Mr. Carey's authority to settle on behalf of Mr. Brown. It follows, therefore, that there was an offer and an acceptance. There was obvious consideration. The contract which was immediately created was not enforceable until two conditions were met:
1. A guardian ad litem had to be appointed; and
2. The approval of the court had to be obtained pursuant to sec. 269.80 (2), Stats.
We conclude from the evidence presented that a conditional settlement contract had been agreed to by authorized representatives of the parties prior to December 6, 1962.
Effect of Approval Delay.
Although it has already been established that Dairyland's offer was accepted prior to the December 6, 1962, hearing, it is still important to determine the effect of the delay in the approval of the settlement contract until March 24, 1965.
It is undisputed that neither the appellant nor the respondent ever made any effort to withdraw the settlement agreement from the trial court's consideration. It is also undisputed that the two conditions upon which the enforcement of the contract hinged were eventually fulfilled; one, when the guardian ad litem was appointed on December 6, 1962, and the other when the order approving the settlement issued on March 24, 1965. Nor is there any contention here that the guardian ad litem has ever objected to signing any form of release submitted by the appellant. The only argument is that the passage of time and the running of the statute of limitations on the personal injury action had so changed the situation that the contract could no longer be enforced.
We think the appellant's claim of a change of circumstances based on the running of the statute of limitations is without merit. We hold that the filing of a petition for approval of a settlement agreement under sec. 269.80 (2), Stats., tolls the statute of limitations on the cause of action involved until a decision is rendered on the petition. Such a proceeding, we think, is equivalent to the commencement of an action.
The above conclusion, however, is not essential to this case. Ordinary contract principles lead to an identical result.
"The law is well settled that time will not be regarded as of the essence unless it is made so by the terms of the contract or the conduct of the parties." Rottman v. Endejan (1959), 6 Wis.2d 221, 225, 94 N.W.2d 596.
The parties to this settlement contract never specified a time within which the conditions precedent had to be met, nor the time within which the contract was to be performed.
"`. . . Condition precedent' is one calling for performance of some act after the contract is entered into on performance of which the obligations depend." 5 Williston, Contracts (3d ed.), pp. 142, 143, sec. 666A.
"`If a party means to rescind a contract because of the failure of the other party to perform it, he should give a clear notice of his intention to do so, and where time is not of the essence of the contract he must give the other party a reasonable time thereafter to comply . . . .'" 17 C. J. S., Contracts, p. 918, sec. 435 (now 17A C. J. S., Contracts, p. 540, sec. 435), as quoted in Guentner v. Gnagi (1951), 258 Wis. 383, 391, 46 N.W.2d 194.
There is testimony in this case that Mr. Sinclair was fully informed concerning the reasons for the delay in the approval of the petition. The record does not contain any indication that Mr. Sinclair or any other representative of Dairyland ever objected to the delay. Dairyland never attempted to rescind the agreement or to set a final date for performance. The only objection ever made was after the petition for settlement was approved and demand was made for performance.
We conclude that the trial court was correct in granting judgment in favor of the plaintiff.
By the Court. — Judgment affirmed.