Cramer v. The Kansas City Railways Company

• Decision Date: 09 December 1922
• Docket Number: 23,909
• Citation: 211 P. 118,112 Kan. 298
• Parties: LEROY A. CRAMER, Appellee, v. THE KANSAS CITY RAILWAYS COMPANY, Appellant
• Court: Kansas Supreme Court

211 P. 118

112 Kan. 298

LEROY A. CRAMER, Appellee, v. THE KANSAS CITY RAILWAYS COMPANY, Appellant

No. 23,909

Supreme Court of Kansas

December 9, 1922

Decided July, 1922.

Appeal from Wyandotte district court, division No. 1; EDWARD L FISCHER, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. COMPENSATION ACT--Release by Injured Workman--Misrepresentation of Matter of Law--May Furnish Ground for Relief. Among the exceptions to the general rule that a misrepresentation of a matter of law will not furnish a basis for relief on the ground of fraud is where a mistake was induced or encouraged by the misrepresentations of the other party, who took advantage of the other's ignorance, and where misrepresentations involving a point of law were so intended and understood and amounted to an implied assertion that facts existed which justified the conclusion of law expressed.

2. SAME--Release--Misrepresentation by Employer--Release Set Aside. A release obtained from an injured workman under the compensation act by an agent of the employer, who told the workman that the company would pay him the amount he was entitled to recover under the compensation law, which was $ 350, when in fact he was entitled under the act to recover $ 2,150, there being no misunderstanding as to the extent of his injuries, will be set aside, the representation being considered as one not purely of law but to some extent a question of fact.

3. SAME. A workman employed under the compensation act lost three fingers of his right hand and the index finger was rendered useless. The compensation act fixes a schedule for injuries of this character, and the amount of the liability of the employer under the act can be ascertained by a mathematical computation to be $ 2,150. The employee of the defendant who had charge of the settlement of compensation cases informed plaintiff that the company was ready to settle with him for the amount he was entitled to recover under the compensation act and that the amount was $ 350, and obtained his signature to a release upon the payment of that sum. Held, because of the great disparity between the amount paid, and the amount the workman was entitled to under the compensation act, public policy will justify the setting aside of the release on the ground of fraud.

4. SAME--Act Passed for Benefit of Employee, Employer and the Public. The compensation act was not passed for the benefit only of the injured employee and the employer. Three parties are interested: the employee, the employer and the public. Public policy requires the courts to scrutinize carefully a release that is grossly inadequate, and which is obtained upon the representation of the employer that the lesser sum is the amount fixed by the compensation act, where it appears that the employee was ignorant of the amount he was entitled to recover for his injuries.

E. S. McAnany, M. L. Alden, T. M. Van Cleave, O. L. Miller, and C. C. Glandon, all of Kansas City, for the appellant.

David F. Carson, James T. Cochran, both of Kansas City, Charles M. Blackmar, and Henry A. Bundschu, both of Kansas City, Mo., for the appellee.

OPINION

PORTER, J.:

This is a compensation case. The plaintiff, while in the employ of the defendant, had his right hand caught in a valve gear, resulting in the loss of three of his fingers, which were cut off below the second joint; the index finger was made stiff and his hand was otherwise injured so as to render it permanently useless. He alleged in his petition that he made claim upon the defendant for compensation and that an attempted settlement was made by which he was paid the sum of $ 350; that he accepted the sum because of the defendant's promises to furnish him a lifetime job or position, but that defendant did not reemploy him or furnish him a place to work, and that the sum paid was wholly inadequate to compensate him for his injuries. He alleged that the defendant by its agents obtained his signature to a written settlement or release by fraud, the representation being that it would not be necessary to insert in the release any consideration other than the amount of money they were paying him, and that because of his crippled condition they could not tell him just what work he could perform and for that reason it was not necessary to insert in the release a condition as to his employment. He asked for judgment for the amount allowed under the compensation law and offered to credit the $ 350 received.

After plaintiff's counsel had made his opening statement to the jury, the defendant moved for judgment on the ground that the statement showed that there was no fraud or misrepresentation which would in law authorize the setting aside of the release. Before the court ruled upon the defendant's motion, plaintiff, over objections, obtained leave and amended his petition by alleging that the defendant's agent who obtained the release informed him that $ 350 was all he could get under the compensation act; that plaintiff believed the statement, relied thereon and accepted the $ 350. Counsel then made a further opening statement to the jury setting forth the facts alleged in the amendment. The facts set forth in the amendment were testified to by the plaintiff on the trial. There was a verdict in favor of plaintiff for $ 1,800, after crediting the $ 350 received in the attempted settlement.

The sole question urged by the defendant is that a misrepresentation as to a matter of law is not a sufficient basis upon which to predicate fraud. The defendant relies upon decisions holding that the workmen's compensation act and amendments thereto recognize the legality of voluntary settlements and releases of a workman's claim for injuries, and that, in the absence of fraud or a mutual mistake, the release of such a claim upon a voluntary settlement will not be set aside on the ground of gross inadequacy of compensation. (Odrowski v. Swift & Co., 99 Kan. 163, 162 P. 268; Weathers v. Bridge Co., 99 Kan. 632, 162 P. 957; Dotson v. Manufacturing Co., 102 Kan. 248, 169 P. 1136.) It is insisted, therefore, that the sole question is, Did the statement made by the defendant's agent to the plaintiff constitute such fraud as will invalidate the release? The defendant cites numerous authorities in support of the well-established proposition that ordinarily the rule is that a settlement will not be set aside because one of the parties did not understand its legal effect. The rule rests upon the fundamental assumption that persons of sound and mature mind are presumed to know the law. (2 Pomeroy's Equity Jurisprudence [3d ed.] § 842.) The defendant relies also upon the general rule that where there is no relation of confidence and trust such as imposes an obligation upon one of the parties to give full information to the other, "the latter cannot proceed blindly, omitting all inquiry and examination, and then complain that the other did not volunteer to give the information which he had." (12 C. J. 353.)

It is the contention that the only exception to the general rule is where there exists some relation of confidence or trust between the parties which imposes an obligation upon the one not to take advantage of the other and to give to the other full information. We think there are other exceptions to the general rule. In Epp v. Hinton, 91 Kan. 513, 138 P. 576, where the well-known rule was recognized, that false representations with respect to the law of another state may be the basis of an action for damages on the ground of fraud, it was said in the opinion:

"The modern tendency--a wholesome one--is to restrict rather than extend the immunity of one who gains an advantage over another by purposely misleading him." (p. 515.)

In the notes to 26 C. J. 1207, 1208, cases are cited to the effect that misrepresentations of law are grounds for redress in particular cases or with reference to particular transactions. The particular transactions and cases are referred to again in the notes to 12 C. J. 353, under the title, "Compromise and Settlements." Among the exceptions recognized by Corpus Juris is a mistake of law where the opposite party was in some way instrumental in producing the result, and cases are cited holding that it is well settled that relief will be granted against a compromise "not made merely under the impression that the law is doubtful and uncertain, with a view of bringing peace, but made under an entire and thorough mistake of law, as for instance, where the agreement is made in ignorance of the existence of a right or title, for in such case the mistake may be deemed a mistake of fact as well as of law." (12 C. J. 352.) Other exceptions are...