Schmidt v. Smith

• Decision Date: 29 March 1974
• Docket Number: No. 44206,44206
• Parties: Ina H. SCHMIDT, et al., Appellants, v. Kenneth H. SMITH, et al., Respondents.
• Court: Minnesota Supreme Court

Page 669

216 N.W.2d 669

299 Minn. 103

Ina H. SCHMIDT, et al., Appellants, v. Kenneth H. SMITH, et al., Respondents.

No. 44206.

Supreme Court of Minnesota.

March 29, 1974.

Syllabus by the Court

While neither the instrument nor the circumstances surrounding its execution are ordinarily sufficient of themselves to prevent the avoidance of a release of unknown personal injury, the release will be held binding where the terms of the instrument, coupled with the circumstances surrounding its execution, make its intended finality as to all claims for known and unknown injury clearly apparent.

Grathwol, Ploetz, Oberhauser & Nodland and Alan Miles Albrecht, Wayzata, for appellants.

Robb, Van Eps & Gilmore and Don James Chantry, Minneapolis, for defendants.

Heard before KNUTSON, C.J., and OTIS, MacLAUGHLIN, and MULALLY, JJ., and considered and decided by the court.

EDWARD D. MULALLY, Justice. ^*

This is an appeal from a judgment in favor of defendants.

On March 6, 1966, in Waconia, Minnesota, Wilfred H. Schmidt was operating an automobile in which his wife, Ina H. Schmidt, was riding as a passenger. The Schmidt automobile was struck by a car owned by Kenneth H. Smith and driven by David P. Smith.

On March 7, 1966, as a result of the accident, Ina Schmidt sought medical care from Dr. C. V. Carlson, a general practitioner. Dr. Carlson observed that Mrs. Schmidt had soreness in her neck and in both hips. He also noted a history of recurrent acute lumbar back strain dating back to 1951. X-rays of the cervical spine were negative. Treatment advised was entirely 'symptomic' with heat and motion.

The Schmidts retained legal counsel relative to this matter not later than April 1966.

The soreness persisted until May 27, 1966, at which time Mrs. Schmidt was complaining of discomfort on left rotation and lateral flexion discomfort in her neck. On July 27, 1966, Mrs. Schmidt was referred by Dr. Carlson to Doctors Sherer, Eichhorn, and Kane, specialists in internal medicine. Their examination report shows that Mrs. Schmidt had some osteoarthritic changes in the thoracic and lumbar spine; that she has a 'rare constant dull aching at the base of her neck' which radiates up and across her shoulders; that she has had some numbness involving the fingers of both hands; that she had previously injured her back in a fall 5 years before while employed at General Mills; and that X-rays of the cervical spine were negative. Their diagnosis as of August 8, 1966, was 'acute muscular strain' involving the muscles of the neck.

Copies of medical reports were submitted to defendants' insurance company. The defendants' insurance company did not have Mrs. Schmidt medically examined.

On March 4, 1967, Wilfred and Ina Schmidt executed a release, witnessed and notarized by their attorney, which, in consideration of the sum of $2,100, purported to discharge Kenneth and David Smith from any and all claims. ¹ In May 1967, Mrs. Schmidt again consulted Dr. Carlson and complained of low lumbar back muscle spasm and discomfort. She also complained of pain in the right shoulder, arm, and hand. X-rays of the cervical spine were negative. Dr. Carlson considered the possibility of a cervical disc syndrome and on June 12, 1967, referred her to Dr. Robert C. Stoltz, a neurologist. Dr. Stoltz, in turn, referred her to Dr. John A. Hartwig, an orthopedic surgeon, and on September 25, 1967, a surgical disc removal and spinal fusion C--5 to C--7 was performed.

The Schmidts commenced this action in December 1968, seeking damages totaling $95,000 as a result of the March 6, 1966, collision. In their answer defendants affirmatively allege the release.

Defendants moved for summary judgment under Rule 56, Rules of Civil Procedure, or, in the alternative, for dismissal of plaintiffs' action for failure to prosecute under Rule 41.02. Summary judgment was granted by the trial court, and on December 12, 1972, judgment was entered dismissing the plaintiffs' action.

It is apparent that before plaintiffs can recover there must be an avoidance of the release. Plaintiffs make no claim of fraud or concealment of facts by the defendants. They contend that the disc condition was a separate and distinct injury which was present but unknown at the time they entered into the release. Plaintiffs assert that summary judgment should not have been granted against them because there was a genuine issue of fact. They further contend that they may proceed with their action on the basis of mutual mistake and leave to the jury as fact issues the questions of whether or not an unknown injury was present at the time they executed the release and, if so, whether or not they intended that it be covered.

The standard of review for the granting or denying of summary judgment has been discussed a number of times by this court and is set out in Rule 56.03, Rules of Civil Procedure. First, the court must determine on the basis of all the pleadings, depositions, answers to interrogatories, and admissions on file, together with the filed affidavits, if any, that there is no genuine issue as to any material fact. Secondly, the court must determine which party, if any, is entitled to judgment as a matter of law. In essence, summary judgment permits a determination by the court that there are no genuine issues of fact by consideration of the pleadings and also of facts not contained in the pleadings. This motion does not resolve issues of fact. 2 Hetland & Adamson, Minnesota Practice, Civil Rules Ann., p. 562. See, also, Whisler v. Findeisen, 280 Minn. 454, 160 N.W.2d 153 (1968); Sauter v. Sauter, 244 Minn. 482, 70 N.W.2d 351 (1955); 10A Dunnell, Dig. (3 ed.) § 4988b.

There are at least two policy considerations that this court must balance in determining when avoidance of personal injury releases should be permitted. One compelling argument in favor of a liberal policy is that the individual who lacks knowledge of his injuries because of fraud, concealment of facts, or mistake may sign a release and thereafter become a public charge. See, Larson v. Stowe, 228 Minn. 216, 219, 36 N.W.2d 601, 603, 8 A.L.R.2d 455, 458 (1949). However, it is also true that the law favors compromises, and there must be a zone of free action within which differences may be terminated by the parties with the complete assurance that the matter is final. 'To permit them (release settlements) to be vacated except for the most compelling reason creates 'uncertainty, chaos, and confusion' with respect to future dispositions, and is a disservice to other litigants whose matters are thereby delayed.' Simons v. Schiek's, Inc., 275 Minn. 132, 139, 145 N.W.2d 548, 553 (1966) (Mr. Justice Otis, dissenting).

The trend in this area has been toward considering personal injury releases as being sui generis and toward a policy of liberality in allowing the avoidance of such releases on grounds of fraud or mistake as to the extent or nature of injuries. Annotation, 71 A.L.R.2d 82, 88.

It is clear that an unknown and unexpected consequence that results from an injury that is known at the time of executing the release is not a sufficient basis for avoiding it. This court said in Richardson v. Chicago, M. & St. P. Ry. Co., 157 Minn. 474, 478, 196 N.W. 643, 644 (1924):

'* * * This was not an unknown injury, but an unknown and unexpected consequence of the injury, and does not bring the case within the rule. To avoid such a release, the rule requires clear and convincing proof that a substantial injury, which was not discovered until after the settlement, had in fact been sustained in the accident and existed at the time of the settlement. That unknown and unexpected consequences resulted from known injuries is not sufficient.'

This language was quoted with approval in Newman v. Fjelstad, 271 Minn. 514, 519, 137 N.W.2d 181, 184 (1965).

If there is to be avoidance of a release on the ground of mistake, it must be based upon a finding of unknown injuries that were in existence and were not within the contemplation of the parties when the settlement was agreed upon. But if the parties did in fact intentionally agree upon a settlement for unknown injuries, the release will be binding. In Serr v. Biwabik Concrete Aggregate Co., 202 Minn. 165, 174, 278 N.W. 355, 361, 117 A.L.R. 1009, 1015 (1938), this court stated:

'It is settled law in this state and elsewhere that, at least in the absence of express provisions to the contrary, a settlement for known injuries does not bar a later action for existing but unknown ones, there being mutual mistake as to the latter. Nygard v. Minneapolis St. Ry. Co., 147 Minn. 109, 179 N.W. 642; Mix v. Downing, 176 Minn. 156, 222 N.W. 913; 48 A.L.R. 1462; 15 Minn.L.Rev. 805. Also, that where the release expressly so provides, subsequently discovered unknown injuries will not support an action for its avoidance. Hanson v. Northern States Power Co., 198 Minn. 24, 268 N.W. 642.'

In Aronovitch v. Levy, 238 Minn. 237, 246, 56 N.W.2d 570, 576, 34 A.L.R.2d 1306, 1313 (1953), this court summarized the law as follows:

'We perceive the rule in this state to be that, where the parties contract for a release of all claims for known injuries, the release is a bar to recovery for unknown consequences of known injuries but is not a bar to recovery for unknown injuries not within the contemplation of the parties at the time of contracting for such release. Further that, even though a release expressly covers unknown injuries, it is not a bar to an action for such unknown injuries if it can be shown that such unknown injuries were not within the contemplation of the parties when the settlement...