Williams v. Glash, C-8786

CourtSupreme Court of Texas
Citation789 S.W.2d 261
Docket NumberNo. C-8786,C-8786
PartiesMargaret U. WILLIAMS and David E. Williams, Petitioners, v. Stephen GLASH, Respondent.
Decision Date02 May 1990

Page 261

789 S.W.2d 261
Margaret U. WILLIAMS and David E. Williams, Petitioners,
Stephen GLASH, Respondent.
No. C-8786.
Supreme Court of Texas.
May 2, 1990.
Rehearing Overruled May 30, 1990.

Page 262

Timothy A. Beeton, Laurette T. Williams, Texas City, for petitioners.

David E. Leuders, Michael W. Cooper, Houston, for respondent.


DOGGETT, Justice.

The question presented is whether execution of the release for personal injuries in this cause bars a subsequent suit for an injury unknown at the time of signing. The trial court granted summary judgment against Petitioners Margaret and David Williams based on execution of a release. The court of appeals affirmed. 769 S.W.2d 684. We reverse the judgment of the court of appeals and remand this cause to the trial court for further proceedings.

Page 263

Margaret Williams ("Williams") was a passenger in her family car when it was struck from behind by a car driven by the respondent Stephen Glash. While damage to the Petitioners' car was apparent at the time of the accident, there were no observable injuries. Williams immediately contacted State Farm Mutual Automobile Insurance Company, Glash's insurer, who advised Williams to bring the car to its local office for an appraisal of the property damage claims. State Farm estimated the cost of repairs at $889.46 and provided Williams a check payable for that precise amount.

At the State Farm office, Williams was asked to complete a claim form containing a question as to whether anyone had been injured by the accident. She checked "No" in response. There was no negotiating or bargaining for release of a personal injury claim; only property damage to the car was discussed. Nonetheless, the back of the check contained language purporting to release personal injury claims, providing that:

The undersigned payee accepts the amount of this payment in full settlement of all claims for damages to property and for bodily injury whether known or unknown which payee claims against any insured under the policy shown on the face hereof, or their respective successors in interest, arising out of an accident which occurred on or about the date shown. This release reserves all rights of the parties released to pursue their legal remedies, if any, against such payee.

This release language was never explained to nor discussed with Williams or her husband. The face of the check contained a State Farm code, "200-1", denoting the settlement of a property claim, rather than a separate code used by the insurer for personal injury claims. Petitioners subsequently endorsed the check over to the garage that repaired their car.

Williams was later diagnosed as having temporomandibular joint syndrome ("TMJ"), causing head and neck pain, as a result of the accident. Both the trial court and the court of appeals found that suit for this injury was barred by execution of the release.

Petitioners seek to avoid the effect of the release, imploring this court to follow the "modern trend" of setting aside releases when the injury later sued for was unknown at the time of signing. See generally, Annot., 13 A.L.R. 4 th 686 (1982 and Supp.1989). It is true that a majority of our sister states would, under a variety of theories, permit invalidation of the release under the circumstances presented in this case. Id. 1 The most common basis for invalidation is the doctrine of mutual mistake, which mandates that a contract be avoided "[w]here a mistake of both parties at the time the contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances." Restatement (Second) of Contracts § 152

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(1981). Following the modern trend, the Restatement expressly recognizes avoidance of personal injury releases when, in view of the parties' knowledge and negotiations, the release language "flies in the face of what would otherwise be regarded as a basic assumption of the parties." Id. comment f.

Under Texas law, a release is a contract and is subject to avoidance, on grounds such as fraud or mistake, just like any other contract. Cf. Loy v. Kuykendall, 347 S.W.2d 726, 728 (Tex.Civ.App.--San Antonio 1961, writ ref'd n.r.e.) (treating release as a contract subject to rules governing construction thereof). Pursuant to the doctrine of mutual mistake, when parties to an agreement have contracted under a misconception or ignorance of a material fact, the agreement will be avoided. See, e.g., ALG Enterprises v. Huffman, 660 S.W.2d 603, 606 (Tex.App.--Corpus Christi 1983), aff'd as reformed per curiam, 672 S.W.2d 230 (Tex.1984). The parol evidence rule does not bar extrinsic proof of mutual mistake. Santos v. Mid-Continent Refrigerator Co., 471 S.W.2d 568, 569 (Tex.1971) (per curiam). The law of mutual mistake does not, of course, preclude a person from intentionally assuming the risk of unknown injuries in a valid release.

However, whether the parties to a release intended to cover an unknown injury cannot always be determined exclusively by reference to the language of the release itself. It may require consideration of the conduct of the parties and the information available to them at the time of signing. In a subsequent suit for an unknown injury, once the affirmative defense of release has been pleaded and proved, the burden of proof is on the party seeking to avoid the release to establish mutual mistake. The question of mutual mistake is determined not by self-serving subjective statements of the parties' intent, which would necessitate trial to a jury in all such cases, but rather solely by objective circumstances surrounding execution of the release, such as the knowledge of the parties at the time of signing concerning the injury, the amount of consideration paid, the extent of negotiations and discussions as to personal injuries, and the haste or lack thereof in obtaining the release. See Restatement (Second) of Torts § 152 comment f (1981).

We then turn to an application of the mutual mistake factors in this case. As this is a summary judgment case, the issue on appeal is whether State Farm met its burden of establishing that there exists no genuine issue of material fact, thereby entitling it to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979). All doubts as to the existence of a genuine issue of material fact are resolved against the movant, and we must view the evidence in the light most favorable to the Petitioners. Great American Reserve Insurance Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). Summary judgment evidence manifesting Williams' objective intent shows that she had no knowledge of the TMJ injury at the time of signing the release. She neither discussed nor bargained for settlement of a personal injury claim, and the amount of consideration received was the exact amount of the property damage to her car. State Farm similarly had no knowledge of the TMJ injury and, in fact, used a code on the check indicating the settlement of property damage claims only. The only evidence that these parties intended to release a claim for unknown personal injuries is the language of the release itself. This summary judgment evidence is sufficient to establish the existence of a genuine issue of fact as to whether the parties intended the release to cover the injury for which suit was later brought.

The one case cited by State Farm as controlling precedent misapplies the Texas law of mutual mistake and is, therefore, unpersuasive. McClellan v. Boehmer, 700 S.W.2d 687 (Tex.App.--Corpus Christi 1985, no writ). In McClellan and in Houston & T.C.R. Co. v. McCarty, 94 Tex. 298, 60 S.W. 429 (1901), the courts were willing to look to the intent of the parties for the purpose of interpreting and applying the release but not to alter the unambiguous

Page 265

language of the contract. McClellan, 700 S.W.2d at 692; McCarty, 94 Tex. at 303, 60 S.W. at 432. When mutual mistake is alleged, the task of the court is not to interpret the language contained in the release, but to determine whether or not the release itself is valid. We overrule McCarty and disapprove McClellan to the extent that they give controlling weight to the language of the release to defeat a claim of mutual mistake. 2

We do not today, as the dissent claims, release an injured tort victim from an unfair bargain. Rather, we hold only that the law of mutual mistake applies to personal injury releases the same as to other...

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