No. 90-214 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

MORGAN HARTFIELD, 

Claimant and Appellant, 

-vsCITY OF BILLINGS, 

Employer, 

and 

STATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

APPEAL FROM: Workerst Compensation Court; The Honorable Timothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

James M. Regnier, Esq., Regnier, Lewis & Boland, 

P.C., Great Falls, Montana 

For Respondent: 

William 0. Bronson, Esq. , James, Gray & McCaf ferty, 

Great Falls, Montana 

Submitted on Briefs: August 30, 1990 

Filed: 

Decided: October 25, 1990 0 
Justice John Conway Harrison delivered the Opinion of the Court. 

The claimant, Morgan Hartfield, brought this action in 

Workers1 Compensation Court to reopen his full and final compromise 

settlement with the State Compensation Mutual Insurance Fund, 

approved on March 25, 1982. In its order of March 27, 1990, the 

Workers1 Compensation Court rejected Hartfield's claims that the 

settlement should be set aside because of constructive fraud, lack 

of consideration, or unilateral mistake of law, and found for the 

defendants. From this judgment, Hartfield appeals. We affirm. 

Appellant presents the following issues: 

1. Did the Workers1 Compensation Court err in refusing to set 

aside the settlement agreement between Hartfield and the State Fund 

on the ground of constructive fraud? 

2. Did the Workers1 Compensation Court err in refusing to set 

aside the settlement agreement on the basis of unilateral mistake? 

3. id the Workerst compensation Court err in failing to 

determine the settlement agreement void for lack of consideration? 

4. Did the Workerst Compensation Court err in finding that 

Hartfield's petition to reopen his settlement agreement with the 

State Fund was barred by the applicable statute of limitations? 

On January 14, 1981, Morgan Hartfield injured his neck in the 

course of his employment with the City of ~illings as an assistant 

building maintenance supervisor. Prior to the 1981 injury, 

Hartfield had suffered other neck injuries and had undergone two 

cervical fusions. Hartfield had negotiated an earlier settlement 
agreement with the State Compensation Mutual Insurance Fund (State 

Fund) in the amount of $6,500 for a 1977 injury. 

Because of Hartfield's injury, his physician, Dr. John Dorr, 

an orthopedic surgeon, concluded that Hartfield should not return 

to work. At the request of the State Fund, Dr. Dorr later 

estimated that Hartfield's permanent physical impairment was 20 per 

cent of the whole body, at least 10 percent attributable to his 

1981 accident. 

Hartfield applied for and received social security disability 

benefits. Hartfield, a retired Air Force Chief Master Sergeant 

having served on active duty for 27 years prior to his employment 

with the City of Billings, also received service retirement 

benefits. In November 1981 the State Fund responded to Mr. 

Hartfield's application for benefits by awarding him approximately 

$4,000 in retroactive benefits and informed him that he would 

continue to receive $166.36 per week in temporary total disability 

benefits. Since the weekly benefit was offset by Hartfield's 

social security benefits, he actually received $107.46 per week. 

In February 1982, a field representative of the State Fund, 

Timothy Tindall, met with Hartfield in his home to discuss the 

settlement award. Hartfield, who was not represented by an 

attorney, signed the ''Petition for Full and Final Compromise 

Settlement of Total Disability Benefits," a preprinted form. The 

agreement became final when approved by the Workers1 Compensation 

Court in March 1982. 

The agreement recited that the claimant ''appears to be totally 
disabled from finding regular employment of any kind in the normal 

labor market. Hartf ield agreed to accept $21,000, payable in 

monthly installments of $405.99 for 60 months. As stated in the 

agreement, the $21,000 represented approximately 191 weeks of total 

disability benefits ''after the rate has been reduced as a result 

of the offset taken against the claimant's social security 

benefits." The payments included interest, bringing the total 

settlement amount to approximately $24,300. Hartfield continued 

to receive social security disability benefits until he reached 

retirement age. 

Prior to his injury, Hartfield had read a pamphlet indicating 

that workers' compensation benefits could be paid to the claimant 

until his death. Under the law in effect at the time of 

Hartfield's injury, he could be paid total permanent disability 

benefits 'Ifor the duration1' of his disability. Section 39-71- 

702(1), MCA (1979). Hartfield claimed that he had asked Tindall 

about receiving benefits beyond retirement age and that ~indall 

informed him that benefits ceased at age 65. Hartfield further 

asserted that he did not know that after signing the settlement 

agreement his monthly payments would be less than he was currently 

receiving monthly. 

In December 1986 Hartfield read a news article about a 

workers1 compensation case involving an insured who had terminated 

workers1 compensation benefits when the claimant reached retirement 

age. In the case, this Court held that a totally disabled 

individual was entitled to permanent partial disability benefits 
after reaching the age of 65. See Hunter v. Gibson Products of 

Billings (1986), 224 Mont. 481, 730 P.2d 1139. According to 

Hartfield1s testimony, th& article motivated him in January 1987 

to consult an attorney in regard to his settlement agreement with 

the State Fund. This action was then filed. 

Did the Workers1 Compensation Court err in refusing to set 

aside the settlement agreement between Hartfield and the State Fund 

on the ground of constructive fraud? 

Hartfield argues that the circumstances surrounding his 

signing of the settlement agreement amounted to constructive fraud 

because Tindall misrepresented facts concerning workers1 

compensation benefits. Specifically, Hartfield alleges the 

following: (1) he was told that he would not be entitled to receive 

any benefits after age 65; (2) the settlement sum of $21,000 was 

inadequate for an individual who was totally disabled; (3) the 

monthly sum was less than he had received prior to the settlement; 

(4) the settlement was not negotiated; and (5) Tindall did not 

inform him that he had a right to consult an attorney prior to 

signing the agreement. 

According to 5 28-2-406, MCA, constructive fraud consists in: 

(1) any breach of duty which, without an 

actually fraudulent intent, gains an advantage 

to the person in fault or anyone claiming 

under him by misleading another to his 

prejudice or tc~ the prejudice of anyone 

claiming under him; or (2) any such act or 

omission as the law especially declares to be 

fraudulent, without respect to actual fraud. 
A plaintiff must plead and prove the following elements of fraud: 

1. A representation; 

2. Falsity of the representation; 

3. Materiality of the misrepresentation; 

4. Speaker's knowledge of the falsity of the 

representation or ignorance of its truth; 

5. Speaker's intent that it be relied upon; 

6. The hearer's ignorance of the falsity of 

the representation; 

7. The hearer's reliance on the representation; 

8. The hearer's right to rely on the 

representation; and 

9. Consequent and proximate injury caused by 

the reliance. 

Wiberg v. 17 Bar, Inc. (MoII~. 1990), 788 P.2d 292, 295, 47 St.Rep. 

429, 433. Constructive fraud requires a showing of all these 

elements, except the fifth one, the ''speaker's intent that the 

representation be relied upon." Under the statute, an intent to 

deceive is not necessary to prove constructive fraud. Section 26- 

2-406, MCA; Batten v. Watts Cycle and Marine, Inc. (Mont. 1989), 

783 P.2d 378, 381, 46 St.Rep. 1984, 1987. 

The Workers1 Compensation Court found insufficient evidence 

to support Hartfield's claim that Tindall erroneously informed him 

about receiving workers1 compensation benefits past age 65. This 

Court will not substitute its judgment for that of the Workers' 

Compensation Court concerning the credibility of witnesses or the 

weight given their testimony. Houtchens v. State Employment 
Security Division (1988), 232 Mont. 99, 102, 754 P.2d 824, 826. 

The record shows that Tindall and Hartfield had met twice 

before February 17, 1982, when the settlement agreement was signed. 

The next day Tindall wrote a memorandum noting that the settlement 

agreement had been fully discussed: 

A petition for Full and Final Compromise 

Settlement for total disability was read by 

the claimant. The claimant and I then 

discussed the petition in full. 

In the memorandum Tindall describes the details of the settlement 

agreement, including Hartfield's Air Force retirement benefits, his 

social security disability benefits, and the fact that he is still 

entitled to medical and hospital benefits relating to his injury. 

He then concludes: 

[Tlhis settlement will enable the claimant to 

budget and arrange his livelihood until he can 

receive regular Social Security Retirement. 

Although Hartfield's retirement income was a consideration in 

deciding the terms of the settlement, Tindall testified that Itat 

no time did I mean to imply then, prior to that time or now that 

a person would have their benefits terminated just because they 

reached age 65." Tindall further testified that in discussing the 

agreement with Hartfield, he could not have confused which law 

applied to Hartfield's injury I1because it is cast in stone that the 

statutes that we are to use on an individual claim are the statutes 

that are in effect on the date of injury.'' 

In his testimony, Hartfield claimed that Tindall had been 

llemphaticll that benefits would cease at age 65. However, Hartf ield 

admitted that he had a difficult time remembering the events 
surrounding the signing of the settlement agreement, and could not 

recall his two contacts with Tindall prior to the signing of the 

settlement agreement. 

The trier of fact is the exclusive judge of a witness' 

credibility. Section 26-1-302, MCA; Emick v. Koch (1987), 227 

Mont. 365, 368, 739 P.2d 947, 949. In addition to observing the 

demeanor of the witness, the trier of fact can take into account 

the witness1 capacity to recollect events, his inconsistent 

statements, and other evidence contradicting the witness1 

testimony. Section 26-1-302, MCA. In this case, we find that the 

Workers1 Compensation Court had reason to discredit Hartfield1s 

testimony. 

Furthermore, the plaintiff must present more than his own 

opinion as evidence of fraudulent conduct. Batten, 783 P.2d at 

381, 46 St.Rep. at 1987. Hartfield cites an inadequate settlement 

sum and lower monthly payments as proof that he would not have 

agreed to them unless he believed that he could not receive 

benefits beyond age 65. However, the settlement was advantageous 

to Hartfield in many respects. The fact that Hartfield may not 

have received a maximum lifetime payout is not enough for a finding 

of constructive fraud. 

Hartfield makes much of the fact that monthly payments under 

the settlement agreement were less than the monthly amounts he was 

receiving at the time of the settlement in temporary total 

disability benefits. However, Hartfield knew how much he was 

receiving before the contract was signed, as well as the amount of 
each monthly payment under the settlement agreement. A party is 

presumed to know the contents of a contract and to assent to those 

terms. Quinn v. Briggs (1977), 172 Mont. 468, 476, 565 P.2d 297, 

301. A party asserting fraud "is put on inquiry notice of the 

other party's misdeeds, and must exercise ordinary diligence to 

discover the facts constituting the fraud." Holman v. Hansen 

(1989), 237 Mont. 198, 202, 773 P.2d 1200, 1203; but see Jenkins 

v. Hillard (1982), 199 Mont. 1, 7-8, 647 P.2d 354, 358 (holding 

that opportunity to inspect real estate premises is not a defense 

to plausible misrepresentations). At the time of the agreement 

Hartfield could have discovered the difference in the amount of 

monthly payments. 

Hartfield claims that the State Fund should have advised him 

that he could have an attorney and that he could negotiate the 

settlement amount. The party must show that the circumstances 

concerning the acts of fraud were such that he could not have 

discovered the fraud at the time. Mobley v. Hall (1983) , 202 Mont. 

The record indicates that at the time of the agreement 

Hartfield was at least aware that an issue existed regarding 

benefits continuing past retirement age. The court concluded that 

Hartfield was an "intelligent, articulate man, well aware of the 

significance of a sound economic future for himself and his 

family." Hartfield had served 27 years in the Air Force and had 

negotiated a settlement once before with the State Fund. We 

conclude that in itself failure to inform Hartfield of his right 
to seek an attorney or his right to negotiate the settlement sum 

does not constitute or contribute to constructive fraud. We hold 

that Hartfield did not meet his burden of showing that the State 

Fund had misrepresented facts surrounding the settlement agreement. 

Did the Workers' Compensation Court err in refusing to set 

aside the settlement agreement on the ground of unilateral mistake? 

Hartfield alleges that he entered into the settlement 

agreement under the mistaken belief that the law had changed and 

that he could not receive workers' compensation benefits beyond the 

age of 65. 

Consent to the contract is lacking if the parties enter into 

the contract through mistake. Weldele v. Medley Development 

(1987), 227 Mont. 257, 260, 738 P.2d 1281, 1283. According to 5 

28-2-410(2), MCA, unilateral mistake arises from Ira misapprehension 

of the law by one party of which the others are aware at the time 

of contracting but which they do not rectify." In order for 

unilateral mistake to operate as a rescission of the contract, the 

plaintiff must show that the defendant knew of the other party's 

misapprehension of the law. Quinn, 172 Mont. at 478, 565 P.2d at 

302. As noted above, the Workers1 Compensation Court determined 

that Hartfield failed to prove any misrepresentation of the law by 

Tindall. In addition, Hartfield has not shown that Tindall was 

aware that Hartfield misunderstood the law. Therefore, we find 

that Hartfield's claim of unilateral mistake is unsupported by the 
facts. 

Did the Workers' Compensation Court err in failing to 

determine the settlement agreement void for lack of consideration? 

Hartfield contends that under the terms of the settlement 

contract, he was not afforded any consideration because he received 

$60 less per month than he had been receiving from bi-weekly 

temporary total disability benefits and because he could have 

collected those benefits for the rest of his life. 

Sufficient consideration is essential to the existence of a 

contract. section 28-2-102(4), MCA. Consideration is defined by 

5 28-2-801, MCA, as: 

Any benefit conferred or agreed to be 

conferred upon the promisor by any other 

person, to which the promisor is not lawfully 

entitled, or any prejudice suffered or agreed 

to be suffered by such person, other than such 

as he is at the time of consent lawfully bound 

to suffer, as an inducement to the promisor . 

written contracts are presumptive evidence of consideration. 

Section 28-2-804, MCA. The burden of showing a lack of 

consideration lies with the party seeking to invalidate the 

contract. Section 28-2-805, MCA. 

Hartfield failed to overcome the presumption that the written 

contract was evidence of consideration. Besides the $21,000, in 

reaching the settlement Hartfield avoided the possibility for 

adjustment of his claim and, if necessary, litigation of his 

disability status. Hartfield argues that the settlement agreement 
gave him total disability status. However, the contract only 

states that the claimant "appears to be totally disabled.!! 

Moreover, the settlement agreement states that "a controversy 

exists between the claimant and insurer over the amount and 

duration of compensation benefits." Had Hartfield not signed the 

agreement, litigation of his disability status, which controlled 

the duration and amount he would eventually receive, was a 

possibility. 

The agreement conferred other benefits on Hartfield as well. 

Prior to signing the agreement, in the event of his death, workers1 

compensation payments would have ceased. section 39-71-726, MCA 

(1979). Under the settlement agreement, benefits would have 

continued to be paid to his estate after his death. In addition, 

Hartfield was still entitled to receive medical and hospital 

benefits. We affirm the Workers1 compensation Court's conclusion 

that $21,000 constituted good and valuable consideration even 

though it may not have represented the maximum amount that 

Hartfield could have received. 

When reviewing decisions of the Workers1 Compensation Court, 

our function is confined to determining whether the court's 

judgment is supported by substantial credible evidence. Houtchens, 

232 Mont. at 102, 754 P.2d at 826. We hold that the refusal of 

the court to set aside the settlement agreement on the grounds of 

constructive fraud, unilateral mistake of law, or lack of 

consideration is supported by substantial evidence. 
The Workers1 Compensation Court also found that the claims of 

constructive fraud and mistake were barred by the two-year statute 

of limitations which provides that the statute is tolled until the 

"discovery by the aggrieved party of the facts constituting the 

fraud or mistake." Section 27-2-203, MCA. Hartfield claims that 

he discovered the fraud or mistake in December 1986 when he read 

the newspaper account of the Hunter case, stating that claimants 

could receive benefits after reaching age 65. 

Since we agree with the courtls decision that Hartfield failed 

to establish either constructive fraud or unilateral mistake of 

law, we need not further address whether the statute of limitations 

was tolled. 

The judgment of the Workers1 Compensation Court is affirmed. 

We concur: 

"chief Justice 

Justices 

13 
Justice John C. Sheehy, dissenting: 

I dissent. It is not necessary to discuss such legal quanta 

as constructive fraud, unilateral mistake, consideration or any 

other variant of contract or limitations law. It is only necessary 

to consider here an injured worker who, innocently or not, was 

induced to trade a $54,750 asset for $21,000. The very purpose of 

the Workers' Compensation Act is ignored here by the majority: 

that purpose to restore in some measure to the worker the losses 

he sustains from injuries in industry without requiring litigation, 

all in return for the worker giving up his common law rights of 

action against his employer. That is the consideration we should 

regard, and then insist that the worker be protected in that end. 

It is simple folly to accept that an injured worker, unskilled 

in law, is on an equal contractual footing with an agent of the 

Fund in a discussion of settlement, a settlement initiated by the 

Fund, holding out visions of sugar plums to the worker to give up 

his full rights. This is dirty business, and I will not condone 

it. I would reverse and set aside the - unjust agreement. -. 

Justice William E. Hunt, Sr.: 

I concur in the dissent of Justice Sheehy. 

Justice