Cole v. Lumbermens Mut. Cas. Co.

• Court: Court of Appeal of Louisiana
• Writing for the Court: TATE
• Citation: Cole v. Lumbermens Mut. Cas. Co., 160 So.2d 785 (La. App. 1964)
• Decision Date: 18 February 1964
• Docket Number: No. 1049,1049
• Parties: Henry B. COLE, Jr., et al., Plaintiffs-Appellees, v. LUMBERMENS MUTUAL CASUALTY COMPANY et al., Defendants-Appellants.

Page 785

160 So.2d 785

Henry B. COLE, Jr., et al., Plaintiffs-Appellees, v. LUMBERMENS MUTUAL CASUALTY COMPANY et al., Defendants-Appellants.

No. 1049.

Court of Appeal of Louisiana, Third Circuit.

Feb. 18, 1964.

Durrett, Hardin, Hunter, Dameron & Fritchie, by Calvin E. Hardin, Jr., Baton Rouge, Stafford & Pitts, by John L. Pitts, Alexandria, for defendants-appellants.

Gravel, Sheffield & Fuhrer, by Camille F. Gravel, Jr., Alexandria, for plaintiff-appellee.

Donald Garrett, Alexandria, for defendant-appellee.

Before TATE, FRUGE , and HOOD, JJ.

TATE, Judge.

This is a suit for damages caused by personal injuries. The plaintiff Henry Cole's minor son, Denzel, lost part of his leg in a motor vehicle collision. Prior to trial, Denzel became emancipated by marriage and was substituted as a party plaintiff for recovery of general damages and of special damages incurred subsequent to his emancipation.

The plaintiffs sue (1) the driver (Jarrett) of the other vehicle involved, (2) the driver's employer (Hempen), and (3) a liability insurer (Lumbermens) which had issued liability policies insuring both the driver Jarrett and the employer Hempen.

The defendants appeal from adverse judgment casting them for the sum of forty thousand dollars (of which $2,908.24 were the stipulated special damages incurred by the plaintiff father prior to the son's emancipation). The plaintiff son answers the appeal, praying that the award in his favor be substantially increased.

Although there is a great deal of argument and testimony concerning the facts of the accident, the virtually uncontradicted evidence shows the following:

The plaintiff son, Denzel, was riding on his motor scooter down Third Street, the principal business thoroughfare of the city of Alexandria, proceeding at a reasonable speed. As Denzel approached a side-street dead-ending into Third to make a T-inter-section with it, the defendant Jarrett drove from the side-street into and across young Denzel's immediate path. Both Jarrett and Denzel knew or believed the much more heavily traveled Third Street to be the right-of-way thoroughfare.

Under these circumstances, there is little doubt that Jarrett's negligence, in entering into the right-of-way thoroughfare in the immediate path of the right-of-way vehicle, was the sole proximate cause of the accident. Nor under the facts could young Denzel have reasonably anticipated this gross disregard of his right-of-way by Jarrett, in time for him to have avoided the accident; nor in any other way could he have been guilty of contributory negligence barring his recovery.

Under the evidence, it is likewise unquestioned that, at the time of the accident, the driver Jarrett was engaged in the performance of his work for his employer Hempen, as a result of which Hempen was liable under the doctrine of respondeat superior for the negligence of his employee while in the course and scope of his employment. LSA-C.C. Art. 2320.

In our opinion, therefore, the only substantial questions of this appeal concern: (1) Is the plaintiff's claim barred by a release that the plaintiff father had executed with court approval, approximately one month after the accident? (This release was especially attacked by the plaintiff's petition; it was set aside by the trial court as a result of hearings in advance of the trial on the merits.); (2) Are the damages of forth thousand dollars awarded manifestly insufficient?

1. Setting aside the release.

The trial court set aside a release entered into by the plaintiff father, by which he had compromised his son's claims for $5000, the full limits of a liability insurance policy issued to Jarrett, the defendant driver. The Jarrett policy covered operation of the demonstration vehicle personally owned by him but also used by him in the performance of his duties as automobile salesman.

The release in question was executed by the plaintiff father on September 4, 1959, less than a month after the accident. The release was executed on a standard printed form, and by it Denzel's father and mother forever released 'Emmett Jarrett and Lumbermens Mutual Casualty Company and any and all other persons, firms, and corporations' from any further liability resulting from the accident of August 6, 1959.

In overruling the pleas of res judicata and in setting aside the release, the trial court rendered excellent and comprehensive written reasons for judgment which, in our opinion, adequately dispose of all the factual and legal contentions raised by the defendants to the effect that the release in question was valid and should not have been set aside, and that it is a complete bar to this action.

Without re-analyzing in detail the evidence concerning the release, we think that, as the trial court stated, it shows beyond a doubt:

At the time of the accident, the defendant Lumbermens was Jarrett's liability insurer under a $5000-limit policy covering his own individual car which was involved in the accident. At the same time, Lumbermens was the insurer of Jarrett's employer, Hempen, on a $50,000-limit policy which covered Hempen's liability for accidents caused through the negligence of Hempen's employees in the course and scope of their employment.

Soon after the accident, both of these circumstances were known to Lumbermens and to its adjuster handling the plaintiff Cole's claim against it arising out of the accident. At the same time, Lumbermens and its adjuster were fully aware that there was no defense to the substantial claim against it and both of its insureds, by reason of the loss of the young boy's leg, since Jarrett's fault was unquestionable and since he was unquestionably engaged at the time in his work for the defendant Hempen.

The evidence also proves that Lumbermens, through its adjuster, with design to avoid having the plaintiff Cole retain an attorney to handle the tort claim and thus learn of this much greater exposure, actively promoted a quick settlement for the full $5000 policy limits of the Jarrett policy only, upon both active and implied representations that this was the sole insurance policy applicable to the accident, that Jarrett was financially irresponsible and could not respond in damages, and that therefore it was to Cole's interest to accept the full $5000 limits, instead of retaining an attorney and having to share with such attorney approximately one-third of this very limited recovery (in view of the heavy medical expenses to be expected from the loss of the son's leg).¹

The evidence further conclusively proves that the only reason the plaintiff father agreed to settle his son's very serious claim for $5000, and the only reason the court approved authorization to settle same for this low figure, was because of the belief that this $5000 policy was the only responsible source of payment for the young boy's serious injuries, since Jarrett himself could not personally respond in damages.

What is even more important (as will be shown), however, is that the defendant Lumbermens through its agents Knew that this mistaken belief was the only reason the plaintiff Cole consented to settle his son's far more substantial claim--as to which, fault-liability was not at issue at the time the insurer settled for its supposed full policy limits. Additionally, the defendant Lumbermens actively promoted this mistaken belief by conversations with the Cole parents and even with the attending orthopedist (who was naturally interested with regard to payment for the expensive medical services).

As to the law applicable to these facts:

Under the civilian law of obligations, legally given consent of both parties is requisite to the validity of a contract, so that there is no consent and no valid contract where the consent has been produced by error or fraud. LSA-C.C. Arts. 1779, 1819, 1824.

Compromises are a species of contract which cannot be attacked because of error of law, but which may be rescinded because of error of fact, or in the case of fraud. LSA-C.C. Arts. 3078, 3079. However, as stated in McCastle v. Architectural Stone Co., La.App. 1 Cir., 4 So.2d 120, 123: 'As a general rule, a compromise settlement cannot be set aside for an error of law alone, yet if the error was caused by what was said or done by the other party under such circumstances as to lead the person in error to rely on such act or statement, there is such a mistake as will justify setting aside the agreement. C.C. Art. 3079; Reed v. Holderith, 3 La.App. (378) 379; 15 C.J.S. Compromise and Settlement, § 36c, p. 758.'

An error of fact is that 'which proceeds either from ignorance of that which really exists, or from a mistaken belief in the existence of that which has none.' LSA-C.C. Art. 1821. It is not every error that will invalidate a contract, only an error as to some point 'which was a principal cause for making the contract', including error 'as to the motive for making the contract'. LSA-C.C. Art. 1823.

As to error in the motive, LSA-C.C. Art. 1824 provides: 'The reality of the cause is a kind of precedent condition to the contract, without which the consent would not have been given, because the motive being that which determines the will, if there be no such cause where one was supposed to exist, or if it be falsely represented, there can be no valid consent.' Further, 'The error in the cause of a contract to have the effect of invalidating it, must be on the principal cause, when there are several; this principal cause is called the Motive, and means that consideration without which the contract would not have been made.' LSA-C.C. Art. 1825.

Likewise, and it is important to note the words italicized by this court: 'No error in the motive can invalidate a contract, Unless the other party was apprised that it was the principal cause of the agreement, or unless from the nature of the transaction it must be presumed that he knew it.' LSA-C.C. Art. 1826. Additionally, '* * * wherever the motive is...