Esquibel v. Brown Const. Co., Inc.

• Decision Date: 18 July 1973
• Docket Number: No. 1177,1177
• Parties: Patricio B. ESQUIBEL, Plaintiff-Appellant, v. BROWN CONSTRUCTION COMPANY, INC., and Mountain States Mutual Casualty Company, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 1269

513 P.2d 1269

85 N.M. 487

Patricio B. ESQUIBEL, Plaintiff-Appellant, v. BROWN CONSTRUCTION COMPANY, INC., and Mountain States Mutual

Casualty Company, Defendants-Appellees.

No. 1177.

Court of Appeals of New Mexico.

July 18, 1973.

Certiorari Denied Aug. 16, 1973.

[85 NM 487] Quincy D. Adams, Adams & Foley, Albuquerque, for plaintiff-appellant.

James A. Parker, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, for defendants-appellees.

OPINION

WOOD, Chief Judge.

The appeal is concerned with plaintiff's effort to set aside a settlement of his workmen's compensation claim. Plaintiff claims: (1) the settlement was entered by mistake and (2) the settlement had not been completed.

Plaintiff received a compensable injury. Temporary total compensation benefits and medical benefits were paid. The compensation benefits were subsequently reduced in amount on the basis of a medical report. Plaintiff sued, claiming he was totally and permanently disabled. Defendants' answer denied the claim of disability and affirmatively alleged that plaintiff's compensation benefits were limited to those payable for a scheduled injury (See § 59--10--18.4, N.M.S.A. 1953 (Repl.Vol. 9, pt. 1, Supp.1971)), and that scheduled injury benefits had been tendered to plaintiff.

Trial was scheduled beginning at 1:30 p.m. on October 27, 1972. Before any testimony was taken, the parties began negotiating for a settlement. At 2:45 p.m. on October 27, 1972, the trial court was informed that settlement had been reached. Plaintiff testified as to the terms of the settlement; that the settlement had been explained to him; and that he was satisfied with it. The court announced: '* * * The settlement will be approved.' 'Prepare the papers and I'll sign them.'

On November 2, 1972, before the 'settlement papers' had been signed, plaintiff moved that the '* * * settlement heretofore agreed upon * * * be set aside. * * *' Plaintiff filed affidavits in support of the motion; defendants filed an opposing affidavit. The motion to set aside the settlement was denied. A judgment was entered on the basis of the settlement. This judgment recites that payment of the judgment (for the amount of the settlement) '* * * shall constitute full, final and complete disposition * * *' of plaintiff's workmen compensation claim. Plaintiff appeals.

Mistake.

This Court decided Witcher v. Capitan Drilling Company, 84 N.M. 369, 503 P.2d 652 (Ct.App.1972), on October 20, 1972. Its first publication was in the New Mexico State Bar Bulletin of October 26, 1972. Plaintiff's counsel states, without contradiction, that he did not become aware of the Witcher decision until the afternoon of October 27, 1972, '* * * after the alleged settlement agreement had been entered into. * * *' Plaintiff's counsel asserts he was not negligent in failing to be informed of the Witcher decision at an earlier point in time. This assertion is also uncontradicted.

Plaintiff's motion to set aside the settlement agreement asserts the Witcher decision changed prior law '* * * that even where a scheduled injury results in total disability to a workman, the workman is limited to the compensation set out in the statute for the scheduled injury unless the workman has some bodily impairment distinct from the scheduled injuries. * * *' While we do not necessarily agree that Witcher changed prior law, in candor we recognize Witcher could be so viewed. Regardless, defendants do not object to plaintiff's characterization of Witcher as a change in law and, for purposes of this opinion, we also consider that decision as a change in the law.

Plaintiff's motion asserts that if the Witcher decision '* * * remains the law * * * then plaintiff's case has a greater settlement value than it otherwise would have, and if plaintiff's attorney had been aware of this decision at the time the settlement agreement was entered into in this case he would not have advised the plaintiff to agree to such settlement.' The motion also asserts: '* * * While there will be a dispute of fact between the plaintiff and the defendants as to the extent and nature of plaintiff's disability, plaintiff's burden of proving total and permanent disability which he claims, will be much easier if Witcher v. Capitan Drilling Co. remains the law than if it does not.' The New Mexico Supreme Court issued a writ of certiorari in Witcher but, on May 2, 1973, quashed its writ on the basis it had been improvidently issued. Plaintiff claims the trial court erred in refusing to set aside the settlement because it was entered under a mutual mistake of fact or law.

The mistake alleged is ignorance of a change in the law. The claim is that the law had changed; that this change resulted in the case having a greater settlement value; that if plaintiff had been aware of the change in the law he would not have agreed to settle. This is a mistake of law. See Wooley v. Shell Petroleum Corp., 39 N.M. 256, 45 P.2d 927 (1935); McGill v. Bison Fast Freight, 245 N.C. 469, 96 S.E.2d 438 (1957).

The trial court found that neither party was aware of the change in the law. The finding is not challenged. Thus, the mistake of law was mutual.

The question is whether the trial court erred in refusing to set aside a settlement agreement because of a mutual mistake of law, that mistake being ignorance of a change in the law.

Tocci v. Albuquerque & Cerrillos Coal Co., 45 N.M. 133, 112 P.2d 515 (1941) states:

'It is not a proper function of the courts to relieve either party to a contract from its binding effect where it has been entered into without fraud or imposition and is not due to a mistake against which equity will afford relief. It is not enough that in the light of subsequent events the agreement of settlement proves to have been unwise or unfortunate.' (Citations omitted).

See Herrera v. C & R Paving Company, 73 N.M. 237, 387 P.2d 339 (1963).

Here, there is neither claim of fraud nor of imposition. Under Tocci, supra, the issue is whether ignorance of the law is a mistake against which equity will afford relief. Compare Marrujo v. Chavez, 77 N.M. 595, 426 P.2d 199 (1967).

The so-called general rule is stated in Allen v. Town of Plymouth, 313 Mass. 356, 47 N.E.2d 284 (1943):

'It is a general rule of law that relief is not granted for a mere mistake of law where a person is either ignorant of the law or mistaken as to what it prescribes. * * *'

13 Williston on Contracts, § 1581 (3d Ed., Jaeger 1970) criticizes this general rule and states that the injustice of some of the results produced by its application has led to an increasing number of exceptions, with the result it is difficult to determine in what cases it may still be applicable.

However, where the mistake is a matter of law antecedent to the bargain, Williston, supra, § 1588 states:

'There may be a general law affecting the subject matter of the contract, of which the parties are ignorant or which they misunderstand. In this case there is a mistake of law in the inducement to the contract rather than in the writing of it; and generally if the only mistake of the parties related to some matter, either of fact or law in the situation of affairs prior to the execution of the writing in question, making it desirable or undesirable to enter into a written contract or conveyance, there can generally be no question of reformation.

'* * *

'* * * Rescission for mistake of law is also commonly denied where the basis of the bargain was the settlement of a disputed claim.' Williston, supra, § 1589 states:

'An exception has been made to the rule denying relief for mistake of the law governing a situation prior to the bargain, where the mistake relates to the private rights of the parties as distinguished from a mistake as to the general law. * * *'

This exception is not applicable in this case because the mistake here was a mistake of the general law; the mistake was as to the...