Mackley v. Allstate Ins. Co., KCD
| Decision Date | 03 April 1978 |
| Docket Number | No. KCD,KCD |
| Citation | 564 S.W.2d 634 |
| Parties | Patty MACKLEY, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent. 29552. |
| Court | Missouri Court of Appeals |
Richard E. Duggan, Duggan & Keleher, Kansas City, for appellant.
Max W. Foust, G. Spencer Miller, Morris, Foust, Beckett & Ponick, Kansas City, for respondent.
Before SOMERVILLE, P. J., and DIXON and TURNAGE, JJ.
Plaintiff filed suit against defendant for "fraud and deceit". The gravamen of plaintiff's action being that "defendant's agents, servants and employees" fraudulently (fraud in the treaty as opposed to fraud in the factum) induced her to execute a general release as to all claims for damages for personal injuries sustained in an automobile accident on or about October 11, 1975, involving defendant's insured. Defendant's motion "to dismiss plaintiff's petition for failure to state a cause of action for which relief may be granted" was sustained by the trial court and plaintiff appealed.
One epochal question whether the releasor of an unliquidated tort claim can stand upon a fraudulently induced release and maintain an action for fraud and deceit for the damages growing out of the fraud practiced upon him is presented on appeal.
It is axiomatic that a release is a species of contract. Using that as a starting point, plaintiff contends on appeal that general principles of contract law are determinative of whether her petition states a claim or cause of action under prevailing substantive law. One principle of contract law in particular is heavily relied upon by plaintiff, namely, that a party who has been fraudulently induced (fraud in the treaty) to enter into a contract has an election of remedies because a fraudulently induced contract is voidable. This basic principle of contract law has been pungently stated in Hostler v. Holland Furnace Company, 327 S.W.2d 532, 534 (Mo.App.1959) as follows:
Although the above prevails in this state as a general principle of contract law, plaintiff's reliance upon it as controlling authority in the instant case is misplaced as a specific exception or variation thereto has heretofore been judicially carved with respect to fraudulently induced releases of unliquidated tort claims. This exception or variation was carved in Lomax v. Southwest Missouri Electric Ry. Co., 106 Mo.App. 551, 81 S.W. 225 (1904). The trial court's sustension of a demurrer to the petition of the plaintiff therein was affirmed on appeal. The court in Lomax reasoned that the plaintiff therein had no cause of action for fraud and deceit by reason of having been fraudulently induced to release an unliquidated tort claim for personal injuries because the fraudulently induced release was void rather than voidable and therefore the releasor suffered no damage. This synoptic view of Lomax is garnered from the following portion of said opinion, 81 S.W. at 225-6: (Emphasis added.)
The reasoning behind the ultimate holding in Lomax appears highly cursory at first blush. A closer look, however, impresses one with the strength and depth of its pithy logic and reasoning. Since the releasor for a consideration merely settled his unliquidated tort claim without resort to litigation, he parted with nothing and stood undamaged if the release was induced by fraud. Under such circumstances his original cause of action remained viable and the releasee's liability, if any, for damages sustained by the releasor as a result of the underlying tort was never discharged. In short, no damage inured to the releasor by reason of the fraudulently induced release.
Concededly, a split of authority exists among various jurisdictions concerning the issue at hand. The following cases are illustrative of jurisdictions holding that the releasor of an unliquidated tort claim may stand upon a fraudulently induced release and maintain an action for fraud and deceit for the damages growing out of the fraud practiced upon him: Urtz v. New York Cent. & H.R.R. Co., 202 N.Y. 170, 95 N.E. 711 (1911); Automobile Underwriters, Inc. v. Rich, 222 Ind. 384, 53 N.E.2d 775 (1944); Brown v. Ocean Accident & G. Corp., Ltd., of London, 153 Wis. 196, 140 N.W. 1112 (1913); Kordis v. Auto Owners Ins. Co., 311 Mich. 247, 18 N.W.2d 811 (1945); and Ware v. State Farm Mutual Automobile Ins. Co., 181 Kan. 291, 311 P.2d 316 (1957). The cases just cited principally turn on the fact that no pragmatic distinction is recognized between contracts in general and releases of unliquidated...
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