Shallenberger v. Motorists Mut. Ins. Co.

• Decision Date: 30 April 1958
• Docket Number: No. 35256,35256
• Parties: , 5 O.O.2d 173 SHALLENBERGER, Appellee, v. MOTORISTS MUTUAL INS. CO., Appellant.
• Court: Ohio Supreme Court

Page 494

167 Ohio St. 494

150 N.E.2d 295, 5 O.O.2d 173

SHALLENBERGER, Appellee, v. MOTORISTS MUTUAL INS. CO., Appellant.

No. 35256.

Supreme Court of Ohio.

April 30, 1958.

Syllabus by the Court.

1. Where a release of a tort claim has been induced by fraudulent representations of someone acting on behalf of the tortfeasor, the releasor may have equitable relief to set aside the release and thereby be enabled to enforce that tort claim; and hence, where the fraudulent representations did not relate to the value of the consideration paid to or received by the releasor for the release, there will ordinarily be an absence of the damage essential to existence of any cause of action of the releasor for deceit on account of such fraudulent representations.

2. A release of a tort claim represents in effect an agreement by the releasor for a consideration not to enforce his tort claim; and, where such releasor desires to recover on account of his damages from that tort something more than anyone has paid or agreed to pay him for such release, he must disaffirm and set aside that agreement not to enforce the tort claim.

3. An action for deceit, based upon fraudulent representations of an insurer of a tort-feasor inducing execution of a release of a claim for damages against such tort-feasor, cannot be maintained against such insurer in the absence of some special and unusual factual situation indicating that rescission of the release will not fully protect the releasor. Picklesimer v. Baltimore & Ohio Rd. Co., 151 Ohio St. 1, 84 N.E.2d 214, followed.

On January 15, 1957, plaintiff filed her petition in the Common Pleas Court of Union County alleging that on December 8, 1956 she was driving an automobile belonging to one Garee when it collided with an automobile driven by one Hartman, that that collision and damage to Garee's car and personal injuries to plaintiff were proximately caused by certain specified negligence of Hartman and by reason thereof Hartman was liable to plaintiff for damages on account of such injuries, that 'Hartman carried liability insurance with * * * defendant * * * insuring him against loss by reason of any negligent act on his part while driving * * * resulting in damage to the property or injuries to the person of individuals including the plaintiff * * *, that the defendant acknowledged said liability and effected a settlement with * * * Garee for the damage to his car and at the time of concluding said settlement the agent of the defendant falsely and fraudulently represented to the plaintiff that it was necessary for her to sign a paper before the said Garee could receive the amount of the settlement agreed upon for the damage to his car' and 'that the signing of the same was a mere formality and would not affect' plaintiff 'in any way,' that 'defendant's agent then presented her with a paper which he did not read to her or offer to let her read but indicated the line upon which she was to sign * * *, that plaintiff, relying on said representation and believing that the signing of said paper would in no way affect her or her rights and having neither been offered or having received any compensation therefor, signed said paper on the line indicated by defendant's agent * * *, that thereafter she requested the defendant, as insurer of * * * Hartman, to compensate for the personal injuries sustained by her * * * and was then informed that the paper she had signed was a release, by the terms of which she discharged * * * Hartman from any liability for her injuries resulting from said collision * * *, that she executed said release, relying on the representation of defendant's agent * * * and without having read it or having been given the opportunity to read it and without receiving any compensation therefor * * *, that by reason of said fraudulent acts and representations of defendant's agent she has been deprived of her right to recover from * * * Hartman damages for said injuries, and that she has been damaged thereby in the sum of fifteen thousand dollars.'

Plaintiff's prayer is for recovery of judgment against defendant in the sum of $15,000.

Hartman was not made a party defendant to this action.

The Common Pleas Court sustained defendant's demurrer to the petition and, the plaintiff not desiring to plead further, judgment was rendered for defendant.

On appeal to the Court of Appeals that judgment was reversed.

The cause is now before this court on appeal from the judgment of the Court of Appeals, pursuant to allowance of a motion to certify the record.

Clifton L. Caryl, Marysville, for appellant.

Hoopes & Hoopes, Marysville, for appellee.

TAFT, Judge.

This is an action at law to recover from the defendant damages alleged to have resulted from fraudulent representations by the defendant which induced the plaintiff to release a claim. The released claim was for personal injuries to the plaintiff alleged to have been proximately caused by the negligence of a person insured by the defendant against liability for injuries so caused. The person so insured, herein referred to as the insured, has not been made a party to the action.

In Picklesimer v. Baltimore & Ohio R. Co., 84 Ohio App. 11, 84 N.E.2d 767, the Court of Appeals held that an injured party could recover in an action at law damages alleged to have resulted from fraudulent representations by a railroad which induced such injured party to release his claim against such railroad for negligently causing personal injuries. However, that holding was reversed by the decision of this court in Picklesimer v. Baltimore & Ohio R. Co., 151 Ohio St. 1, 84 N.E.2d 214, which holds that any damages resulting from such fraudulent representations will necessarily represent merely damages on account of such personal injuries, and that the injured party in such an instance can maintain no action of any kind to recover damages on account of those personal injuries until the release has been set aside.

Although the instant action is not, as was the Picklesimer case, against the one claimed to have negligently caused the personal injuries but is against his insurer, it is apparent that the damages sought for the defendant's fraud would necessarily represent in substance damages for personal injuries to the same extent that the damages claimed for fraud in the Picklesimer case would have represented damages for personal injuries. Cf. Greenwalt v. Goodyear Tire & Rubber Co., 164 Ohio St. 1, 8, 128 N.E.2d 116. Hence, our decision in the Picklesimer case apparently requires the conclusion that no such action can be maintained as long as the release has not been set aside. If the plaintiff in the instant case was induced by the fraudulent representations of defendant insurer to release her claim for personal injuries, she would have the same right against the insured to have that release set aside as though such fraudulent representations had been made by the insured. In other words, in relying upon that release, the insured could not more escape the consequences of any fraudulent representations, that were made on his behalf by his insurer in securing the release of claims against him and that induced plaintiff to execute and deliver such release, than he could escape the consequences of such fraudulent representations by himself. Therefore, in order to provide protection against any fraud in inducing the execution of a release of a claim for personal injuries, it is no more necessary to permit an action at law for fraud in the instant case than it was in the Picklesimer case.

Apparently the earliest reported case considering the question whether an action for deceit, based upon fraudulent representations inducing execution of a release, can be maintained, without setting aside the release either by mutual agreement or having it set aside by a court decree and in the absence of special circumstances indicating that such rescission of the release would not fully protect the releasor, is Edwards v. Owen, 1946, 15 Ohio 500, where the court was equally divided on that question. In subsequent considerations of that question, the Edwards case has apparently not been noticed except by the Court of Appeals in the Picklesimer case.

In 1881, the Court of Appeals of New York in a dictum approved the maintenance of such an action (Gould v. Cayuga County Nat. Bank, 86 N.Y. 75, 85), and in 1885 it decided that such an action could be maintained. Gould v. Cayuga County Nat. Bank of Auburn, 99 N.Y. 333, 2 N.E. 16. Likewise, in 1887, after referring to the foregoing 1881 New York case, the Supreme Court of Indiana promulgated a similar dictum (Home Ins. Co. v. Howard, 111 Ind. 544, 13 N.E. 103) which was followed by its decision in 1891 that such an action could be maintained. Michigan Mutual Life Ins. Co. v. Naugle, 130 Ind. 79, 29 N.E. 393. Since then, there have been a substantial number of decisions in both states generally approving the maintenance of such an action. Urtz v. New York Central & Hudson River R. Co., 1911, 202 N.Y. 170, 95 N.E. 711; Goldsmith v. National Container Corp., 1942, 287 N.Y. 438, 40 N.E.2d 242; Inman v. Merchants Mutual Casualty Co., 1947, 190 Misc. 720, 74 N.Y.S.2d 87; Russo v. Sofia Bros., Inc., D.C. S.D.N.Y.1942, 44 F.Supp. 779; Wabash Valley Protective Union v. James, 1893, 8 Ind.App. 449, 35 N.E. 919; Travelers' Protective Ass'n of America v. Smith, Ind. 1913, 101 N.E. 817; Sovereign Camp of Woodmen of World v. Latham, 1915, 59 Ind.App. 290, 107 N.E. 749; Bailey v. London Guarantee & Accident Co., 1918, 72 Ind.App. 84, 121 N.E. 128; Rochester Bridge Co. v. McNeill, 1919, 188 Ind. 432, 122 N.E. 662; Southern Ry. Co. v. Jaynes, 1923, 86 Ind.App. 451, 140 N.E. 556; Indiana Ins. Co. v. Handlon, 1940, 216 Ind. 442, 24 N.E.2d 1003; Automobile Underwriters, Inc., v. Rich, 1944, 222 Ind. 384, 53 N.E.2d 775. But cf. Ross v. Preston, 1944, 292 N.Y. 433, 55 N.E.2d 490.

In Lomax v. Southwest Missouri Electric Ry. Co., 1904,...