Case Title: Taylor v. Dorough

Citation: 547 So. 2d 536

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1989-06-23T00:00:00Z

Document:
547 So. 2d 536 (1989)
Martha Heath TAYLOR
v.
William Franklin DOROUGH.
87-1060.

Supreme Court of Alabama.
June 23, 1989.
L. Andrew Hollis and Patricia F. Emens of Pittman, Hooks, Marsh, Dutton & Hollis, Birmingham, for appellant.
John D. Herndon of Huie, Fernambucq & Stewart, Birmingham, for appellee.
ALMON, Justice.
This Court's original opinion is withdrawn and the following opinion is substituted therefor.
This appeal is from a summary judgment for the defendant in a personal injury action arising out of an automobile accident. At issue is the validity of a release that the plaintiffs claim they were fraudulently induced to sign.
*537 Summary judgment is appropriate only if the materials submitted to the court "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Rule 56(c), Ala.R.Civ.P. "The court must view the evidence and all reasonable inferences to be drawn from the evidence in the light most favorable to the non-moving party." Sanders v. White, 476 So. 2d 84, 85 (Ala.1985).
The materials submitted on the summary judgment motion, particularly the plaintiffs' depositions, would support a finding of the following facts. On November 19, 1985, Martha Heath Taylor was injured in a collision between the automobile she was driving and one operated by William Franklin Dorough. Mrs. Taylor suffered injuries to her back and her face that required hospitalization. Soon after the accident, Ken Bernard, as agent for Dorough's insurer, wrote a letter to Mrs. Taylor and her husband, Loyd Bedford Taylor, asking them to communicate with him concerning the accident. Mr. Taylor telephoned Bernard and discussed the property damage to the Taylors' automobile. The Taylors' car was a total loss, and Bernard agreed to pay the full value for it. Only Mr. Taylor was involved in this transaction, because the title to the car was in his name. Mr. Taylor stated that, during these negotiations, he told Bernard that the Taylors had retained an attorney regarding the accident. Bernard wrote two checks, one paying off the note due on the car and the other paying Taylor his equity.
The hospital discharged Mrs. Taylor without payment of her bill and sent her collection letters thereafter. The hospital apparently brought an action against the Taylors and obtained a lien on their house to secure the debt. The Taylors stated that Bernard told them that they would have to "sign some papers" in order for Dorough's insurer to pay the hospital and medical bills. The Taylors went to Bernard's office, with Mrs. Taylor going in first while Mr. Taylor parked the car. Mrs. Taylor endorsed a check for $2,534.25, made payable jointly to the Taylors and the hospital, and Bernard told her he would send the check to the hospital. Bernard also gave her a check for $2,965.75 made out to the Taylors, and she endorsed it while in his office. Both checks contained language purporting to release the Taylors' claims against Dorough. Mrs. Taylor stated in her deposition, however, that Bernard presented the checks to her face down for endorsement and that she did not see the release language.
Mrs. Taylor also signed a document styled "Release In Full of All Claims." In her deposition, she stated that Bernard presented the document to her with the entire page covered except for the signature lines, evaded her questions about the document, and told her that she had to sign it for the checks to be released. Mr. Taylor came into the office after his wife had signed and, he said, simply added his signature under hers on the checks and the release. Bernard did not give the Taylors a copy of the release. When the Taylors left Bernard's office, they went immediately to their bank and deposited the check made out to them. They used that money to pay accumulated medical bills. They both stated that they did not read the release language on the front of the check.
The Taylors later sued Dorough, whereupon Dorough interposed the release in support of his motion for summary judgment. The Taylors responded that they had been fraudulently induced to sign the release, but the trial court granted summary judgment. Mr. Taylor has not appealed from the judgment, so it is final as to his claim for loss of consortium.
Mrs. Taylor's affidavit recites this version of the facts:
*538 "On February 3, 1986, my husband and I went to the office of [Bernard]. The purpose of this meeting was to make arrangements for payment of the medical bills my husband and I had incurred for my treatment. Mr. Bernard represented to me that the two checks which totaled Five Thousand Five Hundred and no/100 Dollars ($5,500.00) were for payment of my medical bills only. In fact, he stated `what are we going to do about the liability aspect of this case.' I replied, `I have a lawyer and I'm not going to let you put the screws to me.'
Mrs. Taylor's deposition alleges the following facts pertinent to the Taylors' claim that they were fraudulently induced to sign the release:
*539 "A. No, ma'am.
Mr. Taylor's deposition was consistent with his wife's; for example:
Thus, the Taylors' deposition testimony presents evidence that Bernard told them that they would have to sign some unidentified papers before Dorough's insurer could pay the hospital and medical bills. To the extent that he identified the paper, the Taylors say, he told them that it was an authorization for the doctors or the hospital to release medical records. Mrs. Taylor's evidence could support a finding that he actively concealed the language of the release when he obtained her signature; certainly, the Taylors' testimony is unequivocal that Bernard never explained the effect of their signatures on the release and the checks. Bernard had 20 years' experience as an insurance agent or adjuster, the Taylors were relatively unsophisticated and in desperate need, and Bernard worked with them rather than their lawyer even though, according to the Taylors, they had told him on at least two occasions that they had a lawyer.
A release obtained by fraud is void.
Turnipseed v. McMath, 13 Ala. 44, 48 (1848); Edmondson v. Dressman, 469 So. 2d 571 (Ala.1985). Generally, a party must return the consideration given for a release as a condition precedent to challenging the release as having been fraudulently obtained. Edmondson, supra; Birmingham Railway, Light & Power Co. v. Jordan, 170 Ala. 530, 54 So. 280 (1910). The rule that a party may not disaffirm a voidable contract and at the same time enjoy the benefits thereunder is "not absolute," however, but "must be applied to *541 comport with general equitable principles." Alabama Football, Inc. v. Stabler, 294 Ala. 551, 319 So. 2d 678 (1975) (citations omitted).
Stanard Tilton Milling Co. v. Mixon, 243 Ala. 309, 9 So. 2d 911 (1942) (citations omitted). The materials submitted in opposition to the summary judgment motion in this case indicate that it would be impossible for the Taylors to return the money, because they used it to pay Mrs. Taylor's medical providers, who were threatening to foreclose a lien on the Taylors' house. Under the circumstances of this case, a tender of the amount paid to them, allegedly represented as being only a partial payment on this claim, was not a condition precedent to their maintaining this action. Cf. Gilbert v. Wilson, 237 Ala. 645, 188 So. 260 (1939).
Nor does the fact that they did not read the release or the checks necessarily defeat their attempt to avoid the release, in light of Bernard's alleged misrepresentations and sharp dealing.
Illinois Cent. R.R. v. Johnston, 205 Ala. 1, 5, 87 So. 866, 869 (1920), cert. denied, 254 U.S. 654, 41 S. Ct. 218, 65 L. Ed. 459 (1921), writ of error dismissed, 255 U.S. 564, 41 S. Ct. 375, 65 L. Ed. 788 (1921).
Cooper v. Agee, 222 Ala. 334, 338, 132 So. 173, 176 (1930), overruled on other grounds, Simpson v. Glenn, 264 Ala. 519, 88 So. 2d 326 (1956).
If a release is obtained from one in a weak condition, without advisers, for a sum grossly less than would be a fair and just compensation, a jury question of fraudulent inducement is presented. Louisville & Nashville R.R. v. Huffstutler, 162 Ala. 619, 50 So. 146 (1909). There was evidence that Bernard knew that the Taylors were in desperate needthat he knew about the lien on their house, the collection letters from the various health care providers, and the need for further medical care. Mr. Taylor testified that the two checks did not cover even the bills already accrued. Mrs. Taylor had had her jaw wired shut until earlier in the day when she signed the *542 release, and she was on medication and in pain while she was in Bernard's office. The Taylors allege that Bernard knew that they had employed a lawyer, but that he nevertheless dealt directly with them in obtaining the release. Such conduct by an experienced insurance agent strongly supports an inference of fraud.
Under the principles and the evidence cited above, the trial court erred in entering summary judgment for Dorough. The judgment is therefore reversed and the cause is remanded.
APPLICATION OVERRULED; ORIGINAL OPINION WITHDRAWN; OPINION SUBSTITUTED; REVERSED AND REMANDED.
HORNSBY, C.J., and JONES, SHORES, ADAMS and KENNEDY, JJ., concur.
MADDOX, HOUSTON and STEAGALL, JJ., dissent.
MADDOX, Justice (dissenting from denial of rehearing).
On application for rehearing appellee argues that this Court should require at least a return of the consideration as a condition for invalidating the release.
I joined the majority initially, because I thought the case was controlled by Illinois Cent. R.R. v. Johnston, 205 Ala. 1, 87 So. 866 (1920), cert. dismissed, 254 U.S. 654, 41 S. Ct. 218, 65 L. Ed. 459 (1921), and I am still of that opinion, but I believe that appellee makes a good point on application for rehearing that we should require a return of the consideration as a condition of invalidating the release. I have reviewed Illinois Central on this point, and the following is contained in that opinion:
205 Ala. at 4, 87 So.  at 869.
The implication of that statement is that if the money plaintiff received was not a gift, then it would have to be returned if the release was to be invalidated. I believe that is what the Court meant in Illinois Central, because in Birmingham Ry., Light & Power Co. v. Jordan, 170 Ala. 530, 54 So. 280 (1910), cited in Illinois Central, this Court said the following:
170 Ala. at 537, 54 So.  at 282.
I believe we should grant rehearing and apply this principle to this case; therefore, I must dissent on this basis.
STEAGALL, Justice (dissenting).
I believe, after thoroughly reviewing the record, that there was no evidence of fraud on the part of Dorough's insurance agent in procuring Martha Taylor's signature on either the checks or the release.
But, even assuming, arguendo, that there was some evidence of fraud on the part of Dorough's insurance agent, this Court has frequently held:
*543 Here, the checks endorsed by the Taylors contained the following language:
The Taylors signed a document entitled "RELEASE IN FULL OF ALL CLAIMS," which reads, in pertinent part:
The Taylors admit that neither of them read the release or looked at the front of the checks, although they testified that they were not prevented from doing so.
Because I believe there is no evidence of any fraud in this case, or, even assuming some evidence of fraud, because I believe the Taylors failed to safeguard their interests, I respectfully dissent.
HOUSTON, J., concurs.