Westfall v. Motors Ins. Corp.

• Decision Date: 03 August 1962
• Docket Number: No. 10355,10355
• Citation: 374 P.2d 96,140 Mont. 564
• Parties: Byron L. WESTFALL, Plaintiff and Respondent, v. MOTORS INSURANCE CORPORATION, a Corporation, Defendant and Appellant.
• Court: Montana Supreme Court

Page 96

374 P.2d 96

140 Mont. 564

Byron L. WESTFALL, Plaintiff and Respondent, v. MOTORS INSURANCE CORPORATION, a Corporation, Defendant and Appellant.

No. 10355.

Supreme Court of Montana.

Aug. 3, 1962.

Rehearing Denied Aug. 31, 1962.

Landoe & Gary, Joseph B. Gary (argued orally), Bozeman, for appellant.

Morrow & Nash, Donald A. Nash, (argued orally), Bozeman, for respondent.

JAMES T. HARRISON, Chief Justice.

Appeal from a judgment of the district court of Gallatin County in favor of the plaintiff and from an order denying a new trial.

The cause was tried before a jury and from the record it appears that on February 13, 1957, plaintiff, Byron L. Westfall, purchased a 1952 used Hillman automobile from Robert F. Dye, Inc., a retail automobile dealer doing business in Bozeman, Montana, for $495. As a down payment, plaintiff was allowed a total of $200 for a 1937 Ford truck and a 1949 Ford automobile. The balance of $295 was financed by a conditional sales contract which the dealer, Robert F. Dye, Inc., assigned to General Motors Acceptance Corporation. As a part of the same transaction, Robert F. Dye, Inc. purchased a dual interest accident insurance policy from the defendant, Motors Insurance Corporation.

Especially relevant to this action is the fact that by the terms of the aforementioned insurance policy, the insured, i. e., the plaintiff and General Motors Acceptance Corporation as their interests may appear, would receive, in the event of ollision or upset, the actual cash value of the insured vehicle at the time of the loss, less $50.

On February 23, 1957, ten days after the purchase, the plaintiff was involved in an accident, which rendered the Hillman automobile a total loss. At the time of the accident $330 was owing to General Motors Acceptance Corporation, the assignee of the conditional sales contract.

On February 28, 1957, the plaintiff related the facts surrounding the accident to W. A. Wood, an adjuster for the defendant insurance company. Based on his investigation of the accident, Wood submitted a report to the defendant company, in which report he ascertained the total loss to the insured to be $330, which amount purportedly represents the actual cash value (designated to be $380) of the insured vehicle at the time of the loss, less $50.

The last page of the aforementioned report contains a Loss or Damage Agreement and a Bill of Sale. Included in the Loss or Damage Agreement is a provision whereby the undersigned plaintiff in consideration of the payment of $330 by the defendant corporation agrees to release and discharged the defendant insurance company from further liability. The Loss or Damage Agreement with the release included therein and the Bill of Sale transferring title of the car to the defendant insurance company were signed by the plaintiff on February 28, 1957. The record indicates that the plaintiff had read and was familiar with the aforementioned agreements before he executed them. However, the plaintiff testified that, at the time he signed these instruments, defendant's adjuster Wood represented to him that the latter 'would either get something out of it [plaintiff's interest in the insurance policy] or have a car,' and, relying on these representations, plaintiff executed the Loss or Damage Agreement and the Bill of Sale.

Subsequently, defendant insurance company paid to General Motors Acceptance Corporation $330, the balance owing on the conditional sales contract. Plaintiff received a check for $9.81, which sum represented the unearned portion of the insurance premium.

Contending that he did not receive the 'something' promised to him at the time he executed the Loss or Damage Agreement with the release contained therein and the Bill of Sale, plaintiff brought this action for compensatory and punitive damages.

Plaintiff asserts that on February 28, 1957, defendant's adjuster Wood fraudulently represented the actual value of the demolished Hillman at the time of the loss to be $380, when he knew the true actual value to be $495; plaintiff further asserts that defendant's adjuster Wood fraudulently represented to him that there would be 'something' left over for plaintiff, Wood knowing this to be untrue. For his cause of action plaintiff alleges that, in reliance upon these fraudulent representations, he executed the Loss or Damage Agreement with the release included therein and the Bill of Sale, thereby suffering the damage for which he now prosecutes this action.

Defendant contended this was an action upon a voidable release and at the trial offered instructions to that effect; however, the district court refused to instruct on the question of release and proceeded on a tort theory based on fraud. The cause was submitted to the jury and their verdict was in favor of plaintiff, in the sum of $115 actual damages, plus $750 punitive damages. Defendant's motion for a new trial was denied.

Two issues must be considered herein: (1) whether the trial court erred in assuming this to be a tort action, and refusing to instruct the jury as regards the law of release; and, (2) whether the trial court erred in submitting the issue of punitive damages to the jury.

Necessary to a disposition of the first issue is an understanding of the law concerning the nature of a release. This court has held a release to be an affirmative defense which must be specially pleaded. Collier v. Field, 2 Mont. 320, 324, (1875); Betor v. Chevalier, 121 Mont. 337, 344, 193 P.2d 374 (1948).

In the present case the defendant Motors Insurance Corporation has specially pleaded the release in its answer. Also, it must be conceded that the fact of release is established in this case by virtue of defendant's adjuster's report which contains a written Loss or Damage Agreement with a release, voluntarily signed by the plaintiff, included therein.

R.C.M.1947, Sec. 58-509, provides: 'An obligation is extinguished by a release therefrom given to the debtor by the creditor, upon a new consideration, or in writing, with or without new consideration.'

From the language of the above-quoted statute, it is seen that a release is a type of contract. Applying contract law to determine the validity of a release,...