Finch v. Carlton

• Decision Date: 25 July 1974
• Docket Number: No. 43106,43106
• Citation: 524 P.2d 898,84 Wn.2d 140
• Parties: Daniel R. FINCH, Petitioner, v. Douglas W. CARLTON, Individually and the marital community of himself and Barbara Carlton, his wife, Respondents.
• Court: Washington Supreme Court

Page 140

84 Wn.2d 140

524 P.2d 898

Daniel R. FINCH, Petitioner, v. Douglas W. CARLTON, Individually and the marital community

of himself and Barbara Carlton, his wife, Respondents.

No. 43106.

Supreme Court of Washington, En Banc.

July 25, 1974.

Madison R. Jones, Walla Walla, for petitioner.

Herbert H. Freise, Walla Walla, for respondents.

FINLEY, Associate Justice.

Petitioner Finch seeks review of a summary judgment rendered by the Columbia County Superior Court. The grant of summary judgment was affirmed by the Court of Appeals, Div. III, Finch v. Carlton, 10 Wash.App. 32, 516 P.2d 212 (1973). We granted review to consider the question of whether an insurance release may be avoided because of subsequently discovered injuries.

According to the agreed upon statement of facts, on March 7, 1970, plaintiff-petitioner Finch was involved in an automobile accident in which his vehicle collided with that of respondent-defendant Carlton. On approximately March 10, 1970, Finch visited with Mr. Tone who was an insurance adjuster for the respondent's insurance company. A claim form was filled out cooperatively between Finch and Tone. The petitioner claimed no personal injuries at that time. About the same time, Finch took his automobile, which had been damaged in the collision, to Logan Chevrolet Co. for repairs. The amount of the bill incurred by the petitioner at Logan Chevrolet was $880.21. This sum was paid by respondent's insurance company on a company draft made payable to Logan Chevrolet and Finch jointly. No money or other consideration was given to petitioner. Petitioner signed a general release ¹ prepared by Tone. Finch was informed that he must sign the release before the $880.21 would be paid. At the time of the signing of the release and for several months thereafter, petitioner alleges that he was not aware that he had any personal injuries and did not consult a physician until he became ill in June, 1970. At that time, Finch consulted a number of physicians who treated him for internal injuries. Finch was then hospitalized for an extended period and incurred considerable medical expenses. Petitioner alleges these injuries were caused by the accident of March 7, 1970.

Finch filed suit in the Columbia County Superior Court claiming serious personal injuries and praying for damages of $100,000. The complaint alleged that Carlton had operated his vehicle in a wantonly negligent fashion and had caused his automobile to collide with that of Finch. Carlton responded with a general denial interposing the release executed by Finch and Tone as an affirmative defense. Thereupon, the trial court granted respondent's motion for summary judgment which was affirmed by the Court of Appeals.

This case squarely presents the court with the opportunity to choose between two conflicting lines of authority. Traditionally, absent fraud, duress, false representation or overreaching, this court has rigidly applied contract law, except in cases where mutual mistake is found. In Pepper v. Evanson, 70 Wash.2d 309, 422 P.2d 817 (1967), we stated the general rules for avoiding releases due to mutual mistake as:

1. When a release is in plain and unambiguous language, as is the release in this case, we have said that: (a) Before a plain, unambiguous instrument can be set aside on the ground of mutual mistake, the evidence must be clear and convincing. Spratt v. Northern Pac. Ry., 90 Wash. 592, 156 P. 563 (1916). (b) The courts will not interpret the meaning of unambiguous contracts. Silen v. Silen, 44 Wash.2d 884, 271 P.2d 674 (1954). (c) Where a release contains plain and unambiguous language, parol evidence will not be admitted to vary the release, Betcher v. Kunz, 112 Wash. 563, 192 P. 955 (1920); Unless the release was induced by fraud, false representations of overreaching. Reynolds v. Day, 93 Wash. 395, 161 P. 62 (1916).

2. A court of equity will limit a general release to matters contemplated by the parties at the time of its execution, Bakamus v. Albert, 1 Wash.2d 241, 95 P.2d 767 (1939); But that rule is not controlling when the release refers specifically to the matters being considered by the court, Schwieger v. Harry W. Robbins & Co., 48 Wash.2d 22, 25, 290 P.2d 984 (1955). In this latter case we quoted the following language:

'(I)f the words of a release fairly import a general discharge, their effect may not be limited so as to exclude a demand simply upon proof that at the time of its execution the releasor had no knowledge of the existence of the demand.'

3. A mutual mistake must be one involving both parties, a mistake Independently made by each party. If the defendant had no independent knowledge and accepted plaintiff's own diagnosis and opinion, the mistake is unilateral. Beaver v. Estate of Harris, 67 Wash.2d 621, 409 P.2d 143 (1965).

4. The law favors the amicable settlement of claims when the settlement is secured without fraud, misrepresentation or overreaching. Beaver, supra.

The instant case does not involve a mutual mistake, as we have defined that term, nor is there an informed, negotiated assumption of Known injuries subsequently compounded by later-discovery of more serious injuries as in Pepper v. Evanson, Supra. Unlike prior cases, this action presents a situation where the parties presumably did not contemplate the possibility of latent injuries.

As previously noted, there are essentially two lines of authority which have developed around similar cases in other jurisdictions. The line followed in a small minority of jurisdictions is typified by the Oregon case of Wheeler v. White Rock Bottling Co., 229 Or. 360, 366 P.2d 527 (1961). In Wheeler, the court adhered to traditional conceptions regarding contract law, and held a release binding upon a pregnant woman with subsequently discovered back injuries. While this case is not directly in point as the plaintiff in that case was aware of some back pain which her physician may have though pregnancy originated, it does illuminate the inflexible and dogmatic approach of some courts. In their considerations of the validity of general liability waivers, these jurisdictions appear not to differentiate between standards applicable to commercial transactions and those peculiar to personal injuries. See generally, Annot., § 15, 71 A.L.R.2d 82, 167--69 (1960).

The better reasoned rule adopted by an overwhelming majority of jurisdictions permits the avoidance of a release in circumstances where later-discovered injuries were clearly not contemplated by the parties at the time of release. A reasonably succinct statement of this line of authority is set forth by the California Supreme Court in Casey v. Proctor, 59 Cal.2d 97, 112--113, 28 Cal.Rptr. 307, 378 P.2d 579 (1963):

Under the majority rule, however, a release may not Ipso facto be avoided upon the ground of later discovered injuries. The essence of the rule is that the wording of the release is not conclusive; it is a question of fact whether the parties to a release actually intended to discharge such liability. As was stated in Denton v. Utley, 350 Mich. 332, 344, 86 N.W.2d 537 (1957) 'We would not be understood as holding . . . that it is not within one's competence to say 'I may have serious injuries I know nothing about. As to them I will take my chances.' This, one may do. He may, if he wishes, release his rights and assume the risk of future disablement for $1 'and other good and valuable...