Blackhurst v. Transamerica Ins. Co.

• Citation: 699 P.2d 688
• Decision Date: 22 February 1985
• Docket Number: No. 18907,18907
• Parties: Robert L. BLACKHURST, as personal representative of the estates of Priscilla S. Blackhurst and Brigham Douglas Blackhurst, Plaintiff and Respondent, v. TRANSAMERICA INSURANCE COMPANY, a corporation, and Leila P. Shipp, an individual, Defendants and Appellants.
• Court: Supreme Court of Utah

Page 688

699 P.2d 688

Robert L. BLACKHURST, as personal representative of the

estates of Priscilla S. Blackhurst and Brigham

Douglas Blackhurst, Plaintiff and Respondent, v. TRANSAMERICA INSURANCE COMPANY, a corporation, and Leila P.

Shipp, an individual, Defendants and Appellants.

No. 18907.

Supreme Court of Utah.

Feb. 22, 1985.

Wendall Bennett, Salt Lake City, for Shipp.

Raymond M. Berry, Robert Henderson, Salt Lake City, for defendants and appellants.

Stuart H. Schultz, Salt Lake City, for plaintiff and respondent.

DURHAM, Justice:

Plaintiff Robert Blackhurst brought this action as personal representative for the estates of his parents, Priscilla and Brigham Blackhurst, to enforce a settlement agreement whereby the defendant insurer had agreed to pay $150,000 to settle Mrs. Blackhurst's personal injury claim against its insured, Leila Shipp. The lower court in a summary judgment held the agreement enforceable although Mrs. Blackhurst died prior to the appointment of a general guardian and approval of the settlement by the court. We affirm.

Mrs. Blackhurst, a relatively healthy 82-year-old, was struck by a car driven by Leila Shipp on August 21, 1980. Mrs. Blackhurst suffered brain injury as a result of the accident and was rendered incompetent and unable to care for herself or her husband. Robert Blackhurst began negotiations with Rex Hess, a Transamerica agent, regarding his mother's personal injury claim in October 1980. In December 1980, he retained an attorney, Keith Nelson, to represent him. The insurer at all times knew of Mrs. Blackhurst's condition.

Throughout February and March 1981, the parties were unable to come to an agreement. On March 23, 1981, Nelson personally delivered a summons and complaint to Hess. It had not been filed with the court. The action, entitled Brigham and Priscilla Blackhurst v. Leila Shipp, claimed $500,000 in special damages for Mrs. Blackhurst, $1,000,000 in general damages, and $500,000 for Mr. Blackhurst. The next day, March 24, Hess and Nelson orally agreed on a settlement figure of $150,000. Nelson confirmed the agreement by letter, hand delivered that same day.

On or around Wednesday, March 25, Nelson prepared a petition for appointment of a conservator for Mrs. Blackhurst and a release in accordance with his agreement with Transamerica and submitted them to the Third District Court of Salt Lake County. The presiding probate judge requested that Nelson return on Monday, March 30, when the probate clerk would return from vacation and could handle the filing and submission of the petition.

Mrs. Blackhurst died on Sunday, March 29. The cause of her death was listed as "severe brain damage due to a remote injury seven months, possible pneumonia." Robert Blackhurst was appointed special administrator for his mother's estate on April 1. Later that same day, Nelson informed Hess that Mrs. Blackhurst had died. Nelson was thereafter told that the insurance company did not intend to pay the amount named in the settlement documents. Mr. Blackhurst died shortly thereafter.

The issue on appeal is whether the settlement agreement can be enforced by the personal representative of Mrs. Blackhurst's estate. In an appeal from a summary judgment, we view the evidence and all reasonable inferences to be drawn therefrom in the light most favorable to the losing party. Hall v. Warren, Utah, 632 P.2d 848, 849 (1981).

We first address Transamerica's argument that neither Robert Blackhurst nor Keith Nelson had the authority to compromise the claims of Mrs. Blackhurst. Specifically, Transamerica argues that only general guardians can compromise the claims of an incompetent person. We acknowledge this to be the general rule. See Hansen v. Gossett, Utah, 590 P.2d 1258, 1260 (1979). However, the rule requiring guardians for incompetent persons is for their protection. Morris v. Russell, 120 Utah 545, 553, 236 P.2d 451, 455 (1951). "Its purpose is not to burden nor hinder them in enforcing their rights; nor to confer any privilege or advantage on persons who claim adversely to them or who may be trying to take advantage of them." Id. In the present case, the application of the rule would not benefit the incompetent person or her estate, but rather would penalize her estate.

Moreover, as plaintiff argues, Transamerica is estopped to deny that Nelson had authority to enter into a binding settlement agreement with Transamerica on behalf of Mrs. Blackhurst. The elements of equitable estoppel are: "conduct by one party which leads another party, in reliance thereon, to adopt a course of action resulting in detriment or damage if the first party is permitted to repudiate his conduct." United American Life Insurance Co. v. Zions First National Bank, Utah, 641 P.2d 158, 161 (1982) (footnote omitted).

In the present case, Hess, Transamerica's representative, knew that Mrs. Blackhurst was incompetent to negotiate on her own behalf, and he likewise knew that no general guardian had yet been appointed. Hess nevertheless expressed no concern about dealing with Robert Blackhurst and later Keith Nelson. No objections were raised with regard to Nelson's authority to negotiate or enter into an agreement. Hess willingly entered into a settlement agreement with Nelson on March 24 that was confirmed by the following letter from Nelson, hand delivered that same day:

This will confirm the settlement of this case on this date for $150,000, together with the PIP benefits for the remainder of the year.

Robert Blackhurst will be appointed as guardian for Brigham and Priscilla Blackhurst, his parents. Once this appointment has been completed, we will present you with certified copies in exchange for the draft, and make arrangements for the filing of the appropriate release.

Thus, Transamerica's agent Hess contemplated all along that the appointment of Robert Blackhurst as guardian would occur at the time the court's approval of the settlement agreement was sought. To permit Transamerica to repudiate the agreement under those circumstances would deprive the Blackhursts' estates of the compensation the parties agreed would satisfy Mrs. Blackhurst's claims resulting from the automobile accident and would be patently unfair. Transamerica is therefore estopped from claiming Nelson lacked authority to negotiate as a means to avoid the settlement agreement. The Supreme Court of Wisconsin, under facts similar to those in the present case, concluded that an insurer was estopped from objecting to an attorney's authority to negotiate a settlement contract on behalf of an incompetent person where no objection was raised at any time during the negotiations. Carey v. Dairyland Mutual Insurance Co., 41 Wis.2d 107, 116-18, 163 N.W.2d 200, 205-06 (1968).

Finally, even if Nelson's acts on Mrs. Blackhurst's behalf were unauthorized, as Transamerica now claims, they were subsequently ratified by Robert Blackhurst after he was appointed special administrator of his mother's estate. See Bradshaw v. McBride, Utah, 649 P.2d 74, 78 (1982). Since ratification relates back to the time when the unauthorized act was done, id., the March 24 agreement between Nelson and Hess is enforceable.

Transamerica also claims that, assuming Nelson had authority to act on Mrs. Blackhurst's behalf, her death caused such authority to be revoked. Restatement (Second) of Agency § 120(1) (1958) is cited for the proposition that the death of the principal terminates the authority of the agent. In our view, the agreement reached by the parties on March 24, five days prior to Mrs. Blackhurst's death, was a completed contract and as such is valid and enforceable. See Lawrence Construction Co. v. Holmquist, Utah, 642 P.2d 382, 384 (1982). " 'An accord is an agreement between parties, one to give or perform, the other to receive or accept, such agreed payment or performance in satisfaction of a claim.' " Id. (quoting Browning v. Equitable Life Assurance Society of the United States, 94 Utah 532, 549, 72 P.2d 1060, 1068 (1937)). Therefore, whether any "agency" terminated on the death of Mrs. Blackhurst is irrelevant since the contract was completed prior to her death.

Nor may Transamerica be excused from performance on its theory that the settlement was "conditioned" on the appointment of a general guardian and court approval. Transamerica relies on Polyglycoat Corp. v. Holcomb, Utah, 591 P.2d 449 (1979), which held that a material breach by one party permits the other party to rescind a contract. Id. at 451. That case is inapposite here. The essential terms of the settlement contract were agreed to by Transamerica's representative. Nelson's letter confirming the settlement agreement noted that Robert Blackhurst would be appointed guardian and the release would be submitted to the court. Neither the confirmation letter nor the deposition testimony of any of the parties indicates that these contemplated occurrences were express or implied conditions to the $150,000 settlement agreement. We have held previously that an enforceable accord was reached by the parties. The record also supports the conclusion that it was not the settlement agreement that was conditioned upon appointment of a guardian and court approval. Rather, the appointment was a condition precedent to payment of the amount agreed on by the parties. The parties merely agreed that appointment and court approval would be undertaken before Transamerica delivered its draft for $150,000, at which time the contract would be fully performed. The equivalent of those acts occurred when Robert Blackhurst was appointed special administrator for his mother's estate and special conservator for his father and received court authorization to execute releases in favor of Transamerica.

Finally, Transamerica argues that it is entitled to rescind because of a mutual mistake of fact, since neither Transamerica nor Nelson knew that Mrs. Blackhurst had pneumonia, which Transamerica argues was the cause of...