Krenz v. Medical Protective Co. of Fort Wayne, Indiana

• Decision Date: 27 February 1973
• Docket Number: No. 1,1
• Citation: 204 N.W.2d 663,57 Wis.2d 387
• Parties: Peggy I. KRENZ and Norman Krenz, Respondents, v. MEDIAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA, and Dr. David J. Sievers, Appellants.
• Court: Wisconsin Supreme Court

Page 663

204 N.W.2d 663

57 Wis.2d 387

Peggy I. KRENZ and Norman Krenz, Respondents, v. MEDIAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA, and Dr David J. Sievers, Appellants.

No. 1.

Supreme Court of Wisconsin.

Feb. 27, 1973.

Fulton, Menn & Nehs, Ltd., Appleton, for appellants; Peter S. Nelson, Appleton, of counsel.

Paul & Slate, Markesan, for respondents; William R. Slate, Markesan, of counsel.

HALLOWS, Chief Justice.

Two issues are raised on this appeal: (1) Whether a release for personal injuries which barred a claim for medical malpractice could be amended by the parties thereto to reserve to the releasors their claim for malpractice against Dr. Sievers; and (2) whether the amended release which did not contain a reservation-of-rights clause released Dr. Sievers.

The original release was in such a form that by operation of law it had the effect of including the cause of action for malpractice. When this was realized, the Krenzes set about obtaining an amendment to the release. This took the form of a new release. The court did not amend the release but found the release was amended with the consent of parties to the original release. The affidavits in support of the motion to reopen the judgment against Laing and Schultz show the attorney for the insurance company insuring Schultz used a printed form release, filled in the blanks, and submitted it to the attorney for the Krenzes. The insurance company's attorney knew there was an action pending for malpractice against Dr. Sievers but gave no thought to what effect the release would have on the malpractice action, as he was concerned only with protecting his client. Neither he, his client, the other defendant, nor his insurer had any particular intent to release Dr. Sievers and in fact did not think about that possibility. They apparently would have accepted a release with a reservation of rights. The attorney for the Krenzes apparently did not know the legal effect of the release which he had his clients sign.

Dr. Sievers argues there was no ground for reformation because there is no mutual mistake of fact presented, relying on Bryan v. Noble (1958), 5 Wis.2d 48, 92 N.W.2d 226, and Holton State Bank v. Greater Milw. Good M. Ass'n (1960), 9 Wis.2d 95, 100 N.W.2d 322, 79 A.L.R.2d 1176. But, these cases are not on point. This is not a case of a court's reforming a contract against the opposition of one party. The parties here were agreeable. A release is a unilateral contract and the intention of the parties as to its scope and effect is relevant. See Peiffer v. Allstate Ins. Co. (1971), 51 Wis.2d 329, 187 N.W.2d 182; Pokorny v. Stastny (1971), 51 Wis.2d 14, 186 N.W.2d 284; Plummer v. Leonhard (1969), 44 Wis.2d 686, 172 N.W.2d 1; Rensink v. Wallenfang (1959), 8 Wis.2d 206, 99 N.W.2d 196; Nelson v. Boos (1959), 7 Wis.2d 393, 96 N.W.2d 813. We think the parties to a release can agree to amend it to conform to their intention or more precisely in the context of this case to exclude an effect they did not intend. Dr. Sievers relies on the Holton State Bank Case for the point that a court will not grant reformation if it will result in an injury to third parties. But we see no injury to Dr. Sievers. The original release in effect gave him a free ride without his knowledge, consent, or any consideration so far as the Krenzes' rights are concerned. He cannot stand in the position of a third-party beneficiary of a contract because the parties did not intend to contract for his benefit or intend any part of the promised consideration to go to him. Dr. Sievers stands in no equitable position. He is an alleged independent tortfeasor liable for his wrongdoing. He did nothing to his damage in reliance on the original release and therefore the original parties to the release are not precluded from amending the release without his consent to fully express their intent.

Dr. Sievers contends the trial judge had no power under sec. 269.46(1), Stats., to affect documents not a part of the original stipulation and order when he reopened the judgment in the case against Laing and Schultz and allowed the amended release to be the basis for the judgment. Stipulations upon which judgments have been entered have been reformed by the court under sec. 269.46(1) Stats.; Kramer v. Bohlman (1967), 35 Wis.2d 58, 150 N.W.2d 357; and we see no reason why a release forming the basis of a stipulation is not susceptible to reformation by the parties and to be substituted of record for it. It is quite true the original order granting judgment still stands, but the judgment entered pursuant thereto was reopened so that the original order, whether or not the court expressly so stated, has lost its vitality; the fact a new judgment has not been entered is immaterial to Dr. Sievers' rights.

It is also contended the amended release is in effect an assignment of a barred claim such as that which was struck down by this court in Hartley v. St. Francis Hospital (1964), 24 Wis.2d 396, 129 N.W.2d 235, 130 N.W.2d 1. In Hartley, on the ground of public policy, this court would not recognize an assignment from the released tortfeasor of the right it received by subrogation from the assignee. The instant situation does not give rise to an assignment of a barred claim or of any claim to the Krenzes. Mr. and Mrs. Krenz had a cause of action against Dr. Sievers. By amending the release they expressed as of the time of the original release that only a certain part of the damages suffered by them--those which would normally be ascribed to the acts or omissions of Laing and Schultz--were to be covered by the settlement. Consequently, the Krenzes reserved their cause of action for the remaining damages caused by the alleged negligence of Dr. Sievers.

Dr. Sievers argues that at the time of the original release, the statutes of limitation for any subrogated claim had run in his favor and thus he acquired a right to be free from subrogation. There is no merit in this claim because the instant suit stopped the statutes of limitation from running and if the release had not been amended, Laing and Schultz, or their insurers would have succeeded by subrogation to the Krenzes' rights in this action. Whether Dr. Sievers was free from liability depends upon whether the original release can be amended. The amendment was not effective as of its date but related back to the date of the original release. That was the intent of the parties. The fact the amendment took the form of a rewritten, separate instrument and carried a later date is immaterial.

The trial court found the amended release was sufficient to reserve the malpractice cause of action against Dr. Sievers, but under existing law this was error. The release contained no reservation to that effect. The amended release eliminated from the original release the words 'all other persons, firms or corporations who are or might be liable,' and purported to release only William J. Laing and Edward R. Schultz 'from any and all claims . . . of whatever kind or nature . . . arising out of or resulting in any manner from injuries . . . sustained as a result of an accident which occurred . . .' The acceptance of $15,000 was 'a compromise and final settlement of all claims on account of any dispute between the parties hereto as to whether the above named parties are liable . . .' The amended release does not express is language the intent of the parties to reserve to the plaintiffs their cause of action against Dr. Sievers as the present case law requires such intention to be expressed. While the release is restricted to Laing and Schultz, it is general as to them and under the present law is sufficient to release Dr. Sievers because the liability of Laing and Schultz includes the damages attributable to the negligence of Dr. Sievers.

Wisconsin has long adhered to the doctrine that the enhancement of an injury resulting from malpractice is a direct result of the original injury and consequently the tortfeasor causing the original injury is liable, not only for the original injury but also for the subsequent aggravation by malpractice. Selleck v. Janesville (1898), 100 Wis. 157, 75 N.W. 975, 41 L.R.A. 563; Selleck v. Janesville (1899), 104 Wis. 570, 80 N.W. 944; Pawlak v. Hayes (1916), 162 Wis. 503, 156 N.W. 464. This doctrine in Wisconsin was based upon the rationale underlying the now rejected 'but for' rule in torts and upon the theory of proximate cause. Hooyman v. Reeve (1919), 168 Wis. 420, 170 N.W. 282. ¹ This doctrine has been followed in Wisconsin to the present; ² although it does not apply where the malpractice results in a new injury rather than an aggravation of the original injury, the cases are in conflict as to what constitutes a new injury. See Annot. (1971), 39 A.L.R.3d at p. 270. As a practical effect, the rule shifts from the injured party to the original tortfeasor the difficult burden of proving what part of the damages were caused by the original tortfeasor and what part by the subsequent negligence of the doctor, if such tortfeasor wishes to recoup by subrogation part of the damages he paid to the injured party. On public policy it is perhaps logical that tortfeasors should have the responsibility of dividing the loss and damage in terms of money unless the injured party, as here, sues the subsequent tortfeasor separately.

The traditional corollary rule followed in Wisconsin has been that a general release given to the tortfeasor responsible for the original injury, in the absence of a different intention positively revealed by the language of the release, precludes a malpractice action against the physician or surgeon for damages incurred by his negligent treatment of the injury. We think this release rule works a hardship and an injustice in many cases and is not necessary to avoid a double recovery by the injured party.

In Hooyman the court was considering a general release and did not find it necessary in applying the release...