Richards v. Richards

• Decision Date: 08 March 1994
• Docket Number: No. 92-1690,92-1690
• Citation: 513 N.W.2d 118,181 Wis.2d 1007
• Parties: , 62 USLW 2584 Jerilyn RICHARDS, Plaintiff-Appellant-Petitioner, v. Leo J. RICHARDS, Defendant, Monkem Company, Inc., Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 118

513 N.W.2d 118

181 Wis.2d 1007, 62 USLW 2584

Jerilyn RICHARDS, Plaintiff-Appellant-Petitioner, v. Leo J. RICHARDS, Defendant Monkem Company, Inc., Defendant-Respondent.

No. 92-1690.

Supreme Court of Wisconsin.

Argued Nov. 10, 1993.

Decided March 8, 1994.

For the defendant-respondent there was a brief by Mark E. Coe and Coe, Dalrymple, Heathman, Coe & Zabel, S.C., Rice Lake and oral argument by Mark E. Coe.

SHIRLEY S. ABRAHAMSON, Justice.

This is a review of an unpublished decision of the court of appeals filed on January 20, 1993, 173 Wis.2d 908, 499 N.W.2d 301 affirming a judgment of the circuit court for Barron County, Edward R. Brunner, Circuit Judge. The circuit court granted summary judgment to Monkem Company, the defendant, dismissing the complaint with prejudice. It held that the form signed by Jerilyn Richards, the plaintiff, was an exculpatory contract that was not void or unenforceable as contrary to public policy. It further held that the plaintiff's claim for injuries suffered while riding as a passenger in a truck operated by Leo Richards, her husband, and owned by Monkem Company, her husband's employer, was clearly within the contemplation of the parties at the time the exculpatory contract was executed. The circuit court thus foreclosed the plaintiff's claim as a matter of law. The court of appeals affirmed the judgment of the circuit court. We reverse and remand for further proceedings.

The issue before this court is whether the form the plaintiff executed constitutes a valid exculpatory contract releasing the plaintiff's claims against Monkem Company, thereby barring this lawsuit. This issue arose in a motion for summary judgment, and this court is reviewing a decision affirming the summary judgment. Therefore the standard of review is the same as the standard used by the circuit court to determine whether to grant the motion for summary judgment. Dobratz v. Thomson, 161 Wis.2d 502, 513, 468 N.W.2d 654 (1991). If an exculpatory contract is found to be invalid on its face, the defendant's motion for summary judgment will be denied. Dobratz v. Thomson, 161 Wis.2d at 526, 468 N.W.2d 654. Thus, this court must determine whether, as a matter of law, the form was a valid exculpatory contract that bars the plaintiff's claim.

We conclude that the form at issue here is an exculpatory contract void as against public policy. As is often the case, neither a prior decision of the court nor the facts of a prior case is directly on point. An examination of the principles underlying the determination of the validity of exculpatory contracts leads us to the conclusion that the form is an unenforceable exculpatory contract due to a combination of three factors. None of these factors alone would necessarily invalidate the release; however, taken together they demand the conclusion that the contract is void as against public policy. First, the contract serves two purposes, not clearly identified or distinguished. Second, the release is extremely broad and all-inclusive. Third, the release is in a standardized agreement printed on the Company's form, offering little or no opportunity for negotiation or free and voluntary bargaining.

The facts relevant to our determination of the validity of the form as an exculpatory contract are not in dispute. In February of 1990, Leo Richards was hired by Monkem Company as an over-the-road truck driver. Shortly thereafter, the plaintiff and her husband discussed the possibility of her riding as a passenger with him. Before the plaintiff could accompany her husband, however, Monkem Company required that she sign a form entitled "Passenger Authorization," and she did so on or about May 22, 1990.

The "Passenger Authorization" form used by Monkem Company appears to have two purposes. First, it served as Monkem Company's authorization to the passenger to ride in a company truck. Second, it serves as a passenger's general release of all claims against the Company. The language of release attempts to transform the "Passenger Authorization" form into an exculpatory contract relieving Monkem Company and all of its affiliated companies, partnerships, individuals and corporations (as well as others) from any and all liability for harm to the person signing the form. See Merten v. Nathan, 108 Wis.2d 205, 210, 321 N.W.2d 173 (1982). The form reads as follows:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

In addition, the form contains an insert asking for the passenger's height, weight, hair color, eye color, driver's license number, and social security number. The appropriate information about the plaintiff was inserted on the form. The release was signed by Leo Richards as driver, Jerilyn Richards as passenger, and C.L. McCarley, Director of Risk Management for Monkem Company.

On June 14, 1990, the plaintiff accompanied her husband on one of his scheduled trips. When the truck, negotiating a left curve, overturned, the plaintiff was pinned inside the vehicle. The injuries she sustained as a result of this accident are the basis for the current lawsuit.

The principles applicable to the determination of the validity of exculpatory contracts were recently set forth by the court in Dobratz v. Thomson, 161 Wis.2d 502, 514-20, 468 N.W.2d 654 (1991), which incorporated, explained, and elaborated on the principles set forth in several earlier cases. See, e.g., Discount Fabric House v. Wisconsin Telephone Co., 117 Wis.2d 587, 345 N.W.2d 417 (1984) (contract releasing liability of telephone company for negligent omission of ad from yellow pages); Arnold v. Shawano Co. Agr. Socy, 111 Wis.2d 203, 330 N.W.2d 773 (1983) (contract releasing liability of race track to driver), overruled on other grounds, Green Spring Farms v. Kersten, 136 Wis.2d 304, 314, 401 N.W.2d 816 (1987); Merten v. Nathan, 108 Wis.2d 205, 321 N.W.2d 173 (1982) (contract releasing liability of horseback riding school to pupil); and College Mobile Home Park & Sales v. Hoffmann, 72 Wis.2d 514, 241 N.W.2d 174 (1976) (contract releasing liability of landlord to tenant).

We now reiterate several of the principles from these cases which are relevant to the case at bar. Exculpatory contracts are not favored by the law because they tend to allow conduct below the acceptable standard of care applicable to the activity. Exculpatory contracts are not, however, automatically void and unenforceable as contrary to public policy. Arnold v. Shawano Co. Agr. Socy, 111 Wis.2d 203, 209, 330 N.W.2d 773 (1983), overruled on other grounds, Green Spring Farms v. Kersten, 136 Wis.2d 304, 314, 401 N.W.2d 816 (1987); Dobratz v. Thomson, 161 Wis.2d 502, 514, 468 N.W.2d 654 (1991). Rather, a court closely examines whether such agreements violate public policy and construes them strictly against the party seeking to rely on them. Merten v. Nathan, 108 Wis.2d 205, 211, 321 N.W.2d 173 (1982).

In determining whether an exculpatory agreement violates public policy and is therefore void, courts recognize that public policy is not an easily defined concept. The concept embodies the common sense and common conscience of the community. Public policy is that principle of law under which "freedom of contract is restricted by law for the good of the community." Merten v. Nathan, 108 Wis.2d 205, 213, 321 N.W.2d 173 (1982) (quoting Higgins v. McFarland, 196 Va. 889, 86 S.E.2d 168, 172 (1955)). An exculpatory agreement will be held to contravene public policy if it is so broad "that it would absolve [the defendant] from any injury to the [plaintiff] for any reason." College Mobile Home Park & Sales v. Hoffmann, 72 Wis.2d 514, 521-22, 241 N.W.2d 174 (1976). See also Arnold v. Shawano Co. Agr. Socy, 111 Wis.2d 203, 210, 330 N.W.2d 773 (1983), citing College Mobile Home Park with approval. In Dobratz v. Thomson, 161 Wis.2d 502, 520, 468 N.W.2d 654 (1991), a unanimous court, striking down an overly broad release, stated that "this court will not favor an exculpatory contract that is broad and general in its terms."

In reviewing an exculpatory agreement for violation of public policy, a court attempts to accommodate the tension between the principles of contract and tort law that are inherent in such an agreement. The law of contract is based on the principle of freedom of contract; people should be able to manage their own affairs without government interference. Freedom of contract is premised on a bargain freely and voluntarily made through a bargaining process that has integrity. Contract law protects justifiable expectations and the security of transactions. The law of torts is directed toward compensation of individuals for injuries resulting from the unreasonable conduct of another. Tort law also serves the "prophylactic" purpose of preventing future harm; tort law seeks to deter certain conduct by imposing liability for conduct below the acceptable standard of care. Merten v. Nathan, 108 Wis.2d 205, 211-212, 214, 321 N.W.2d 173 (1982).

Applying these principles to this case we conclude that the exculpatory contract at issue is void as against public policy. In this case, the public policy "of imposing liability on persons whose conduct creates an unreasonable risk of harm" outweighs the public policy of "freedom of contract." Merten v. Nathan, 108 Wis.2d 205, 215, 321 N.W.2d 173 (1982). Accordingly we conclude that it would be contrary to public policy to enforce the exculpatory language in Monkem Company's "Passenger Authorization" form. A combination of three factors in this case leads us to this conclusion.

First, the contract serves two purposes, not clearly identified or distinguished. As we stated previously, those purposes appear to be: (1) the Company authorizes the passenger to ride in a Company truck, and (2) the passenger releases the Company and others from liability. This dual function, however, is not made clear in the title of the contract; the form is designated merely as a "Passenger...