Dansby v. Buck

• Decision Date: 06 July 1962
• Docket Number: No. 6718,6718
• Citation: 373 P.2d 1,92 Ariz. 1
• Parties: Ruth DANSBY, Appellant, v. Harry Ames BUCK and Bireley's Beverages of Phoenix, Inc., an Arizona corporation, Appellees.
• Court: Arizona Supreme Court

Page 1

373 P.2d 1

92 Ariz. 1

Ruth DANSBY, Appellant, v. Harry Ames BUCK and Bireley's Beverages of Phoenix, Inc., an Arizona corporation, Appellees.

No. 6718.

Supreme Court of Arizona, In Division.

July 6, 1962.

Rehearing Denied Sept. 18, 1962.

Evans, Kitchel & Jenckes, Phoenix, for appellant.

Stockton & Aldrich, Robert Ong Hing, Phoenix, for appellees.

WREN, Superior Court Judge.

This is an appeal by plaintiff, Ruth Dansby, from a judgment in favor of defendants and from an order denying plaintiff's motions to vacate said judgment and enter judgment for the plaintiff or, in the alternative, to grant a new trial.

The facts are not in dispute. Plaintiff brought suit in the Superior Court of Maricopa County to recover for personal injuries received in the collision of an automobile driven by plaintiff and owned by Sands Motor Company, and a truck owned by defendant Bireley's Beverages of Phoenix and being operated by its employee, defendant Harry Ames Buck. As part of her action, plaintiff sought to have set aside a release executed by plaintiff in favor of defendants, on the ground that such release was entered into under a mutual mistake as to the nature and extent of the injuries sustained by her in the accident. Plaintiff alleged that at the time the release was entered into all parties assumed that she had not suffered injury of any consequence; whereas, in truth and in fact, she had sustained a serious injury to her knee.

Defendants, in addition to a general denial of liability and plaintiff's injuries and damages, pleaded as an affirmative defense the release executed by plaintiff. The trial court granted defendants' motion for separate trials on the issues of (1) the validity of the release and (2) the negligence action. It is conceded by plaintiff that if the release is valid and binding, it constitutes a complete defense to the negligence action. The issue involving the release was tried to the court without a jury, and judgment sustaining the release was entered in favor of defendants. It is from the court's ruling on the release that this appeal was taken. It was stipulated at the trial that, as to the issue involving the release, the court could assume plaintiff would be able to prove the allegations of her complaint that she had a severe fracture of the kneecap together with torn ligaments of the knee necessitating surgery, Lospitalization, and medical treatment; that he suffered a permanent disability; and that all of said injuries were proximately caused by the accident.

Plaintiff had experienced a bruised knee as a known result of the accident, but had no difficulty in using it and did not believe the injury to be of any consequence. The discoloration lasted from four or five days to a week. She did not consult a doctor, and immediately returned to her employment. Approximately two weeks after the accident, she received in the mail from Sands Motor Company the release involved here, together with an accident report. This release, which purported to discharge defendants from 'any and all rights of action, claims, demands and liabilities sustained, or damage suffered in mind, body or estate, which is known at this time or which may hereafter develop,' was handed to Sands Motor Company by defendants' insurer. The only demand made upon defendants and their insurer had been by Sands Motors, Inc., for property damage to the automobile driven by plaintiff, which had been appraised at one hundred fifty-two and 17/100 dollars ($152.17).

Plaintiff kept the release for approximately one week; then, at the request of Mr. Sands, signed and returned it along with the accident report. Defendants' insurer subsequently issued its check in the amount of one hundred thirty-seven and 65/100 dollars ($137.65), payable jointly to Sands Motors, Inc., and Ruth Dansby. The draft was endorsed by plaintiff and turned over to the Motor Company.

Plaintiff had made no claim of any kind and did not receive any money. There had been no negotiations as to any personal injury. She testified she would not have executed the release had she known, at the time, of the serious injury received by her as a result of the accident. Evidence adduced at the trial established that at the time plaintiff executed the release, and at the time defendants' insurer issued its check for one hundred thirty-seven and 65/100 dollars ($137.65), neither she nor the said insurer knew or had reason to believe that plaintiff had actually sustained severe injuries. To the contrary, testimony required the assumption she had sustained only a bruised knee.

Plaintiff brings this appeal on two assignments of error:

1. The trial court erred in entering judgment in favor of defendants, for the reasons and upon the grounds that (1) the evidence clearly established that the release was entered into under a mutual mistake as to an unknown injury caused by the accident and existing at the time of the release and purported settlement, and not taken into consideration therein; and (2) it being so established, plaintiff was entitled to a judgment and decree setting the release aside.

2. The trial court erred in denying plaintiff's motions to vacate the judgment in favor of defendants and enter judgment in favor of plaintiff or, in the alternative, to grant a new trial, for the reasons and upon the grounds set forth in Assignment of Error No. 1.

There seems to be great confusion in the opinions of the various courts as to what is required to void a general release for personal injuries on the grounds of mutual mistake, where one who has sustained personal injuries, with his attention directed to the known injuries which are trivial in their nature, executes such release in ignorance of other and more serious injuries, both parties believing at the time that the known injuries are the only ones sustained. However, many of the cases which do not appear in harmony can be reconciled when the particular facts to which the statements of the court applied are taken into consideration.

The plaintiff asserts to this court that even though the release signed by plaintiff expressly covers unknown injuries which might thereafter develope, it is not a bar to an action for such unknown injuries if it can be shown that such injuries were not within the contemplation of the parties when the settlement was agreed upon. Plaintiff argues that where the parties, with their attention directed to known injuries, contract for a settlement with reference thereto in ignorance of other and more serious injuries, believing the known injuries are the only ones sustained, there is 'mutual mistake;' that a release executed under such mistake is no bar to an action for the unknown injuries; and that even an expression in the release that it includes unknown injuries is not conclusive, and mutual mistake may be shown for the purpose of vitiating the agreement. Aronovitch v. Levy, 238 Minn. 237, 56 N.W.2d 570, 34 A.L.R.2d 1306 (1953); Nygard v. Minneapolis Street Ry. Co., 147 Minn. 109, 179 N.W. 642 (1920); Denton v. Utley, 350 Mich. 332, 86 N.W.2d 537 (1957).

It is uniformly held that a general release of a claim for personal injuries may, under proper circumstances, be avoided on the ground of mutual mistake as to the nature or seriousness of the injury. Robert Hind, Ltd., v. Silva, 75 F.2d 74 (9th Cir.1935); annot. 48 A.L.R. 1462, and authorities cited thereunder. See, in particular, pp. 1467-1471. We believe sound logic, as well as the greater weight of authority, supports the rule laid down by those authorities. Arizona cases on this point involve factual situations in which there was either actual or constructive fraud. See Atchison T. & S. F. Ry. Co. v. Peterson, 34 Ariz. 292, 271 P. 406 (1928); Pacific Gas & Electric Co. v. Almanzo, 22 Ariz. 431, 198 P. 457 (1921); Southern Pacific Co. v. Gastelum, 36 Ariz. 106, 283 P. 719 (1929).

It is well recognized that a release will be set aside, notwithstanding its broad and general terms, if it is clearly established that the release was entered into under a mutual mistake as to a substantial injury, existing but unknown at the time and not taken into consideration. It matters not that the releasor read and understood the release. Southwest Pump & Machinery Co. et al., v. Jones, 87 F.2d 879 (8th Cir.1937); Atchison T. & S. F. Ry. Co. v. Peterson (supra).

Defendants argue that this rule is not applicable to the consequences or future development of a known injury and that under the facts of the case at bar plaintiff had an actual, known knee injury at the time she gave the release; that any mistake was merely as to the future development of a known injury. Defendants point out the trial court could reasonably have so found.

Both parties agree on the law applicable to this contention but not its factual application here. The arguments are summarized in 48 A.L.R., pp. 1473-1475:

'The distinction between cases where the release is executed under mistake as to the future development of a known injury, in which event there is no ground for avoidance, and cases where unknown injuries exist which were not taken into contemplation and for which no consideration was paid when the release was executed, under which circumstances it may be avoided, is pointed out in a Nebraska case [Simpson v. Omaha and C. B. Street Ry. Co., 107 Neb. 779, 186 N.W. 1001 (1922)], in which the court said: '* * * What we believe to be the true rule is that the mistake must relate to either a present or past fact or facts that are material to the contract of settlement, and not to an opinion as to future conditions as the result of present known facts. A mistake as to the future development of a known injury is a matter of opinion, and is not one of fact, and is not such a mistake as will avoid a release; but, where the mistake is as to the extent of the injury, due to unknown conditions, or relates to injuries that were wholly unknown, then the release may...