Solo v. Chrysler Corp.

• Decision Date: 01 May 1979
• Docket Number: Docket No. 61003,No. 3,3
• Citation: 292 N.W.2d 438,408 Mich. 345
• Parties: Josephine SOLO, Plaintiff-Appellant, v. CHRYSLER CORPORATION, a Michigan Corporation, Defendant-Appellee. Calendar408 Mich. 345, 292 N.W.2d 438 . Decided Originally
• Court: Michigan Supreme Court

Page 438

292 N.W.2d 438

Josephine SOLO, Plaintiff-Appellant, v. CHRYSLER CORPORATION, a Michigan Corporation Defendant-Appellee.

Docket No. 61003.

Calendar No. 3.

408 Mich. 345, 292 N.W.2d 438

Supreme Court of Michigan.

Decided Originally May 1, 1979.

Argued on Rehearing Dec. 3, 1979.

Decided May 27, 1980.

James D. Jackson, Detroit, for plaintiff-appellant.

Dickinson, Wright, McKean, Cudlip & Moon by Thomas G. Kienbaum, Thomas A Zimmer, Detroit, for defendant-appellee Chrysler Corp.

Clark, Klein & Beaumont by Dwight H. Vincent, J. Walker Henry, James E. Baiers, Individually and for the Firm, Detroit, for Michigan Mfrs. Ass'n and Emp. Ass'n of Detroit.

Conklin, Benham, McLeod, Ducey & Ottaway, P.C. by Thomas P. Chuhran, Detroit, for amicus curiae Michigan Self-Insurers' Ass'n.

KAVANAGH, Justice.

By per curiam opinion reported at 406 Mich. 240, 277 N.W.2d 629 (1979), we summarily reversed the Court of Appeals' decision in Solo v. Chrysler Corp. (On Rehearing), 77 Mich.App. 354, 258 N.W.2d 224 (1977), which had affirmed the trial court's grant of a summary judgment. We granted rehearing to afford the parties an opportunity to brief and submit oral argument on the issue presented: May a worker's compensation redemption agreement and order be set aside on the basis of a mutual mistake of fact? We conclude that it may, reverse the Court of Appeals and the trial court and remand to the trial court for further proceedings.

The facts giving rise to this controversy are succinctly stated in our per curiam opinion but are repeated here for convenience:

Josephine Solo was injured in a work-related accident on February 18, 1969. Chrysler Corporation voluntarily paid benefits until she returned to work on April 21, 1969. Mrs. Solo stopped working in September 1969 and filed a claim for workers' compensation benefits. The parties reached an agreement to redeem the claim for $10,500, and the hearing referee approved the redemption following a hearing on June 15, 1970.

On November 1, 1971 Mrs. Solo filed a new petition for benefits, claiming that the settlement was not for the complete injury. The hearing referee and the Workmen's Compensation Appeal Board denied the petition on the ground that the agency was without authority to set aside a redemption agreement.

Mrs. Solo commenced this action in the Wayne Circuit Court, seeking to set aside the redemption. The trial judge granted Chrysler's motion for summary judgment on the ground that there was no genuine issue as to the existence of fraud and that the allegations of mutual mistake failed to state a claim for which relief could be granted.

The Court of Appeals initially reversed. Solo v. Chrysler Corp., 76 Mich.App. 63, 255 N.W.2d 770 (1977). However, it granted rehearing and affirmed, with Presiding Judge T. M. Burns dissenting. 77 Mich.App. 354, 258 N.W.2d 224 (1977).

Our per curiam (Solo, supra, 406 Mich. 242, 277 N.W.2d 629) noted:

"Both the trial judge and the Court of Appeals relied heavily on the following language from Johnston's Administrator v. United Airlines, 23 Mich.App. 279, 285, 178 N.W.2d 536, (539) (1970):

" 'A redemption order is a final determination and an award made and accepted cannot be disturbed except upon a showing that it was procured by fraud. Panozzo v. Ford Motor Co., 255 Mich. 149, 237 N.W. 369 (1931); Catina v. Hudson Motor Car Co., 272 Mich. 377, 262 N.W. 266 (1935).' "

and we held:

"Panozzo and Catina should not be read as limiting to fraud the grounds for setting aside a redemption. Those decisions said that fraud could be a basis for setting aside a redemption; they did not say that redemptions may be disturbed only on that basis."

We have not been dissuaded from that view.

In its brief and argument, defendant claims that the workers' compensation statute limits the rescission of redemption agreements to instances of fraud. Observing that redemption agreements must be approved by a hearing referee in order to be valid, M.C.L. § 418.835; M.S.A. § 17.237(835), it maintains that once approved, these agreements become findings of fact which may be impeached only by proof of fraud. M.C.L. § 418.861; M.S.A. § 17.237(861). We do not agree.

The effort to describe the exact nature of a redemption agreement and the order approving it has divided this Court on several occasions. In Jordan v. C. A. Roberts Co., 379 Mich. 235, 150 N.W.2d 792 (1967), and (On Rehearing) 381 Mich. 91, 158 N.W.2d 901 (1968), the issue was whether defendant's status as an employee was res judicata on account of the order approving a redemption agreement between the employer and the widow of the asserted employee. The majority of the court on rehearing treated the order as a fact-finding not subject to review.

In Bugg v. Fairview Farms, Inc., 385 Mich. 338, 189 N.W.2d 291 (1971), however, we pointed out that an employee's status was properly a conclusion of law based on a given state of facts and that the adjudication of the conditions of liability for the limited purpose of approving the agreed payment was all that was involved in an order approving a redemption agreement.

We do not recognize approval of a redemption agreement as a finding of fact nor an admission of liability. White v. Weinberger Builders, Inc., 397 Mich. 23, 34, 242 N.W.2d 427 (1976); M.C.L. § 418.835; M.S.A. § 17.237(835). Accordingly we do not regard the limitations of M.C.L. § 418.861; M.S.A. § 17.237(861) as applicable to an order approving a redemption agreement.

The workers' compensation statute is silent on the matter of setting aside a redemption agreement. While the statute allows for the approval and review of redemption agreements, it neither provides for, nor forbids, rescission.

Amicus curiae Michigan Self-Insurers' Association argues that the absence of statutory provision for remedy prevents the grant of equitable relief here. Amicus quotes our language in Luyk v. Hertel, 242 Mich. 445, 447, 219 N.W. 721, 722 (1928), ¹ and in Tews v. C. F. Hanks Coal Co., 267 Mich. 466, 468-469, 255 N.W. 227, 228 (1934), ² and argues that this Court is not at liberty to fashion equitable relief in the absence of legislative authorization.

These opinions, however, dealt with the instances where the workers' compensation statute spoke to the specific remedy to be applied and hence we were not free to fashion further relief: Luyk (findings of fact could be set aside only for fraud, thereby excluding relief for newly discovered evidence); Tew (election provision precluded an action against both the employer and the third-party, even when done with consent); Wagner v. La Salle Foundry Co., 345 Mich. 185, 197, 75 N.W.2d 866 (1956) (legislative judgment regarding the territorial jurisdiction of the Michigan workers' compensation law controlled).

Where a contract is claimed to have been induced by fraud or mistake, however, plenary relief traditionally rests exclusively in equity, for at law such a contract is enforceable. Walsh, Equity, § 4, p. 26; 1 Pomeroy, Equity Jurisprudence, § 131, p. 180.

Here the statute provides no legal remedy for mistake, nor does it contain any language expressly limiting equitable jurisdiction with regard thereto. Considering the scope of the statute and a reasonable construction of it and its operation, we discern no legislative intent to limit the court's traditional equitable jurisdiction to deal with mistakes. See 1 Pomeroy, Equity Jurisprudence, § 279, p. 620.

Neither defendant nor amici contend that the workers' compensation statute contains express language negating equity's jurisdiction in matters within the statute's scope. Moreover, in view of the protective, income-maintenance function of the statute, Harrington v. Dep't of Labor & Industry, 252 Mich. 87, 89, 233 N.W. 361 (1930), we do not believe that the Legislature meant to foreclose from relief one who enters into a contract assuming his injuries are minimal when in fact they are disabling for life.

This Court has repeatedly invoked its equitable powers to relieve a claimant from a settlement procured by fraud, Panozzo v. Ford Motor Co., 255 Mich. 149, 150, 237 N.W. 369 (1931). We see no reason within the language or the purpose of the workers' compensation statute why we should hesitate to do so in instances of mutual mistakes of fact. Any contract entered into under either circumstance may be held unenforceable. See 3 Corbin, Contracts, § 605, p. 643; 1 Corbin, § 146, p. 636, fn. 32; 13 Williston, Contracts (3d ed.), § 1557, p. 242; 12 Williston, § 1486, p. 321.

Defendant objects to the comparison this Court drew in its first opinion between out-of-court tort settlements and workers' compensation redemption agreements. It observes that we have allowed rescission in tort settlements only when the negotiations had been conducted in haste, the payment made was a nominal sum, the liability of the defendant was clear in the minds of the parties, and no bargaining had occurred on the question which plaintiff alleged was the subject of the mutual mistake. Denton v. Utley, 350 Mich. 332, 86 N.W.2d 537 (1957); Hall v. Strom Construction Co., 368 Mich. 253, 118...