Van Averyv.Seiter

Michigan Court of AppealsAug 28, 1968
13 Mich. App. 88 (Mich. Ct. App. 1968)
13 Mich. App. 88163 N.W.2d 643

Docket No. 3,911.

Decided August 28, 1968. Leave to appeal granted by Supreme Court December 12, 1968.

Appeal from Isabella, Campbell (Robert H.), J. Submitted Division 3 April 4, 1968, at Grand Rapids. (Docket No. 3,911.) Decided August 28, 1968. Leave to appeal granted by Supreme Court December 12, 1968. 381 Mich. 793.

Action by Ernest William Van Avery against David Seiter and others, and Auto-Owners Insurance Company, a Michigan corporation, to enjoin assertion of a release as a defense to negligence action. Complaint dismissed. Plaintiff appeals. Affirmed.

Gray Thompson, for plaintiff.

Cotter, Janes O'Connell, for defendants.


On January 20, 1961, plaintiff Van Avery, employee of a construction company, was operating an earth mover which was crossing a highway. A collision occurred with the defendant Seiter's truck which was being driven by the defendant McPhall. Plaintiff claims that a flagman employed by the construction company had a stop sign on the highway directing traffic to stop so that the earth mover could proceed across the highway. The defendant driver denied that the flagman had indicated for him to stop. As a result there was a collision and plaintiff was injured. Plaintiff suffered known injuries to his elbows. On March 9, 1961, one day after plaintiff was informed by his physician that he could return to his employment, a settlement was reached between plaintiff and the defendant Auto-Owners Insurance Company on behalf of their insureds for the sum of $1,050, which covered medical expenses, actual lost wages, and $300 for pain and suffering.

Plaintiff returned to work until the latter part of 1961, when severe headaches caused him to be unable to continue his job. He has not worked since that time.

The plaintiff filed a negligence action against the Seiter brothers and their driver. The executed release and settlement of the claim was raised as a defense. Plaintiff then filed this action in equity, joining Auto-Owners Insurance Company as a defendant, seeking to enjoin the assertion of the release as a defense because a mutual mistake of a material fact existed at the time of the release. The trial court refused to set aside the release and dismissed the complaint.

The trial court made several findings in his opinion as follows:

"Now so as to make it clear, there is no question in the court's mind that at the time that this settlement was made by plaintiff and his wife and the defendant insurance company, there was no knowledge on the part of either party nor the plaintiff's doctor that there was any head injury to plaintiff. There is nothing on the record to indicate that this was talked about nor even thought about by any of the parties * * *. The court notes in reading the Hall v. Strom Construction Company case, 368 Mich. 253, 260, 261, Justice BLACK is very much concerned with haste and nominal payment, and also at the bottom of p 261 mentions that in that case, the liability of defendant Strom appears to be clear. Such is not so in the case at bar.

"In the case at bar there is no indication by the plaintiff that he was hurried or `hounded' by the defendant insurance company adjuster to settle this matter and in the court's opinion the sum of $1,050 is not a nominal sum under the circumstances. The court also wishes to point out in plaintiff's deposition from p 54 through p 63 which concerns the matter of the settlement and release itself, that it appears the negotiations were above board and that the plaintiff was entirely satisfied with the settlement. And it further appears in these same pages of plaintiff's deposition that he knew that the release covered anything that might happen to him in the future that might be related to this accident. The court feels that even though none of the parties knew or had reason to know of the injury about which plaintiff now complains, that there was no haste or pressure put on the plaintiff by defendant insurance company adjuster and that looking at the facts that were known at the time that the release was signed, that the consideration paid was adequate under the circumstances and was not such that would shock the conscience of the court. Plaintiff's complaint will be dismissed."

The plaintiff appeals and asserts that the law on the issue of mutual mistake in releases was well settled in Hall v. Strom Construction Company (1962), 368 Mich. 253, and Ryan v. Alexy (1964), 373 Mich. 50, and that the facts in the present case as determined by the trial court are clearly within the scope of this doctrine. Plaintiff asserts that the conclusion of the trial court in its application of law to the facts was in error.

Each side relies on the same cases and treatises, to wit: Denton v. Utley (1957), 350 Mich. 332; Hall v. Strom Construction Company, supra; Ryan v. Alexy, supra; 71 ALR2d 87; and Williston on Contracts, § 1551. This case presents facts upon which reasonable minds could well differ as to the proper application of the rules set forth in the foregoing authorities as they concern this factual situation.

There are many statements in the cited authorities which, standing by themselves, tend to support the plaintiff's position. For example, Justice TALBOT SMITH in Denton, supra, (pp 343, 344) said:

"The cases put it very simply, and without dependence or reliance upon the language employed in the release form thereof: A releasor who believes he is without personal injuries, or that he has certain minor injuries only, and who, secure in his belief, executes a general release, will not be bound by it if other and more serious injuries are discovered later."

This principle standing alone would dictate reversal of this case as would the following in Hall, supra, where Justice BLACK said (p 258):

"To make the rule pinpoint plain, we construe it as applicable where the releasor's proof persuasively shows a fair and mutual want of knowledge of a hidden injury which eventually comes to consequential light, distinguished from a then want of knowledge of unexpected adverse consequences of a known yet apparently negligible injury. Here, by all fair intendment, Mr. Hall and the adjuster knew that Mr. Hall had been struck injuriously on the head and back. They did not know of the simultaneous internal injury, that is the brain injury which upon present assumption was serious enough to cause the epileptic seizures Mr. Hall experienced later. The rule therefore applies."

However, as is true in the study of all cases, but even more so in the cases here cited as authority, these cases must be read in their entirety to get the full import of their meaning. For example in Denton (pp 332, 333) Justice TALBOT SMITH wrote:

"This case must be read with great care. We are upsetting the particular release here involved. We are not saying that all releases are vulnerable. What we are saying is that releases have no particular immunity of their own to attack on the grounds of mistake or fraud. There is no form of words, there is no formula, no instrument, no transaction that rises above the chancellor's scrutiny or resists his intervention." (Emphasis added.)

At p 342 he wrote:

"To put it affirmatively, any release, to be sustained must be `fairly and knowingly' made."

And in Hall (p 254), Justice BLACK indicated that what was being written must be limited to the "precisionally assembled facts." Further (p 258), he stated:

"The essence of such authorities is that relief is available to the releasor when he is able to plead and prove that the injury — to which the symptoms of delayed disease or disability is provably attributable — was mutually unknown when the release he would avoid was signed in return for a nominal consideration." (Emphasis added.)

In addition, in Hall, Justice BLACK, in commenting on the case wrote (p 261):

"* * * Hasty appraisal and hurried negotiations seem to have been in order. And the very fact of `haste,' when coupled with nominal payment, is a potent factor courts take into account when cases like this arrive before them." (Emphasis added.)

And (p 261) Justice BLACK summarized the Hall case as follows:

"To recapitulate: This release was obtained for the nominal sum of $425. Of the amount paid $175 was represented by accrued hospital, medical, and ambulance expenses. Mr. Hall's injuries were sustained December 13, 1956. The settlement was negotiated and concluded at Plaintiff's home 27 days later. Liability of Defendant Strom for the results of whatever injuries Mr. Hall actually suffered was clear so far as the record discloses. Plaintiffs, the negotiating adjuster as well, looked upon the blow to the head as of little or no consequence. All were particularly concerned with the blow to Mr. Hall's back. The blow to the head was apparently severe enough to injure the brain and ultimately cause epilepsy, yet neither party was cognizant of the fact of such internal injury. The mistake was mutual within the stated rule; hence, plaintiffs are entitled to the relief granted below." Emphasis added.)

Subsequently, in Ryan, supra (p 57), Justice BLACK asserted that doubtful or nonexistent liability would be an element that the chancellor should take into "decisional consideration." Justice T.M. KAVANAGH concurred. In that same case Justice O'HARA with Justice DETHMERS and Justice KELLY concurring, stated in his opinion (p 55):

"Nonetheless a finding of mutual mistake as to the releasor and releasee and a finding of the absence of fraud as to the releasee do not alone answer the earlier question mentioned in Denton, and which to use requires answer here." (Emphasis added.)

In the same case (p 56), Justice O'HARA continued:

"We cannot, nor do we believe, could the able chancellor determine this essential question of fact unless and until the degree to which the question of the extent of the legal liability of the party paying was in the minds of both parties at the time of the execution of the release." (Emphasis added.)

A reading of the cases and authorities thus reveals that in addition to the question of whether there was a mutual mistake as to existence of the injury, there are other factors to be considered such as whether the negotiations were conducted in haste, whether the payment made was nominal, and whether the liability of the defendant was clear in the minds of the parties at the time of the execution of the release.

The trial judge here found that there was a mutual mistake as to the head injury to the plaintiff. But he also found that there was no haste or nominal payment involved. He found that liability of the defendant was not clear. He found that there was no indication that plaintiff was hurried or hounded to settle the matter. He found that the plaintiff was entirely satisfied with the settlement and that the plaintiff knew that the release covered anything that might happen in the future that might be related to this accident. He found that there was no haste or pressure put on the plaintiff and that the consideration paid was adequate under the circumstances. All of the findings of the trial court are supported by the depositions and evidence submitted to the court.

The cases of Hall, supra, and Ryan, supra, support defendants' position that there are other factors for the chancellor to take into consideration over and above mutual mistake as to the injuries. The case at bar is distinguishable from Hall in that the trial court here found that there was no haste in negotiating this release, the payment made was not a nominal sum, and the liability of the defendants is not clear. In Hall there was haste, (27 days from injury to settlement); liability was clear; and the payment was nominal. The trial judge here properly considered all the factors involved and properly applied the law to the facts.

For the foregoing reasons the trial court's decision is affirmed. Costs to appellee.

QUINN, J., concurred with ZIEM, J.

I cannot agree with the majority decision in this case.

The majority opinion quotes Justice BLACK from Hall v. Strom Construction Company (1962), 368 Mich. 253, 258:

"To make the rule pinpoint plain, we construe it as applicable where the releasor's proof persuasively shows a fair and mutual want of knowledge of a hidden injury which eventually comes to consequential light, distinguished from a then want of knowledge of unexpected adverse consequences of a known yet apparently negligible injury. * * * The rule * * * applies." (Emphasis supplied.)

In the present case it is undisputed that there was a mutual mistake. The release was signed in the adjuster's automobile in a hospital parking lot (plaintiff's wife being in a hospital recovering from an operation) during the adjuster's second discussion with the plaintiff. The plaintiff had been authorized by his physician to return to work because he had recovered from the injuries to his elbows. Plaintiff stated in his deposition:

"I would say that I knew that when I signed that release, I would say because I didn't anticipate no other injuries, I mean, if I would have known I would have never signed it."

The adjuster stated in his deposition:

"A. As far as I recall he indicated his injuries were confined to what we already knew, which was injuries to both elbows. * * * "Q. So your settlement in this case was based on injury to his elbows?

"A. That is correct."

Neither party knew of the head injuries involved in the present case.

It is my understanding that Michigan has adopted the general rule that a release will be set aside on the ground of mutual mistake. In the Hall Case, supra, the Court did discuss several reasons for its ruling, but the Court did not say that these reasons were restrictions or limitations on the general rule.

It would be possible to make several similar comparisons between the Hall Case and the present case. However, in my opinion the Supreme Court meant exactly what it said in the Hall Case, and in the present case it is "pinpoint clear" that when the plaintiff signed the release there was a fair and mutual want of knowledge of the head injuries which eventually came to light, as distinguished from a want of knowledge of an unexpected adverse consequence of a known yet apparently negligible injury.

I would reverse.