No. 87-360 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

ETHEL HANSON, 

Plaintiff and Appellant, 

-vsMARY OLJAR and STATE FARM MUTUAL 

AUTOMOBILE INSURANCE COMPANY, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas A. Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Allen L. McAlear, Fozeman, Montana 

For Respondent: 

Moore, Rice, O'Connell & Refling; Christopher L. 

Manos, Rozeman, Montana 

Submit.ted on Briefs: Feh. 11, 1988 

Decided: March 25, 1988 

Filed: r 

Clerk 
Mr. Justice 1,. C. Gulbrandson delivered the Opinion of the 

Court. 

Ethel Hanson appeals an Eighteenth Judicial District 

Court judgment in favor of Mary Oljar and State Farm Mutual 

Automobile Insurance Company. The District Court found that 

Ethel Hanson had executed a valid release of all claims 

relating to an automobile accident and that she was bound by 

the settlement terms. We affirm. 

Ethel Hanson (Hanson) and Mary Oljar (Oljar) were 

involved in an automobile accident in Bozeman, Montana, on 

May 8, 1985. Oljar's vehicle struck Hanson's vehicle while 

Hanson was stopped at an intersection. Both parties were 

insured by State Farm Mutual Automobil-e Insurance Company 

(State Farm). An adjuster for State Farm, Richard Brown 

(Brown), investigated the accident and determined that Oljar 

was at fault. Brown also obtained a medical report from 

Hanson's doctor which listed Hanson's permanent disabilities 

from the accident as "undetermined at this time." Brown did 

not discuss the medical report with Hanson. 

After several negotiations with Hanson, State Farm, 

through its adjuster, paid Hanson $4,362.85 for medical 

expenses, lost wages, car rental costs, headaches, and 

inconvenience. In return for the settlement payments, State 

Farm obtained a general liability release from Ethel Hanson 

and her husband, Ben Hanson, on July 9, 1985. On July 15, 

1985, Hanson sent a thank you note to Brown to express that 

she was pleased with Brown's "settlement and prompt service 

Unknown to State Farm at the time of settlement, Hanson 

had retained a Bozeman attorney on May 31, 1985, to represent 

her with regard to two automobile accidents -- the May 1985 
accident and an earlier accident in February of 1985. Hanson 

did not tell the State Farm adjuster about her attorney nor 

did the attorney contact State Farm about the representation. 

On July 18, 1985, Hanson visited her doctor and 

received a copy of the same medical report sent to Brown. 

Hanson took the medical report to her attorney and informed 

him that she had received a settlement and had signed a 

release. That same day, Hansonls attorney deposited 

$1,010.40 in a Bozeman bank payable to State Farm and sent 

State Farm a document entitled "Tender of Payment and 

Recision of Release." State Farm refused to accept the 

tender of payment. On April 14, 1986, Hanson filed this 

lawsuit for recision of the release and damages. 

The District Court held a non-jury trial on April 17, 

1987. Thereafter, the District Court made the following 

findings of fact: 

1. Richard Brown, an adjuster with 

defendant State Farm, investigated 

plaintiff's claim of July 19, 1985. 

2. Both Mrs. Hanson and Mrs. Oljar were 

insured by defendant company. Brown ' s 

investigation revealed that Mrs. 01 jar 

was at fault in the automobile collision. 

3. Mr. Brown was informed of medical 

bills, lost income and property damage 

incurred by plaintiff. 

4. Brown talked with plaintiff about 

medical payments and lost income. He 

authorized an advance payment of $678.23 

on June 13, 1985. Brown paid advances on 

wages and medical bills when presented by 

plaintiff. No other bills were 

presented. 

5. Brown and plaintiff talked about four 

or five times about the matter. 
6. On July 9, 1985, Brown secured from 

plaintiff and her husband a release of 

all claims for the payment of $4,362.85. 

The document was signed at the Hanson 

residence. Brown issued drafts for car 

repair, car rental and a draft to 

plaintiff for $1,010.40. 

7. Brown had seen a medical report on 

plaintiff's condition prior to obtaining 

the release on July 9, 1985. 

8. At this meeting, Brown agreed to pay 

for plaintiff's car rental expenses and 

property damage. There were no 

outstanding medical bills. 

9. Brown did not show the medical report 

to the plaintiff and does not know if he 

discussed it with her. 

10. The parties discussed plaintiff's 

headaches and inconvenience. Brown 

offered $700; plaintiff's counteroffer 

was $1000. Brown claimed that the 

release was "final and complete" except 

for additional medical expenses up to 

$3000 for 180 days from the date of the 

agreement. 

11. Brown gave no itemization as to 

which policy was being assessed for 

plaintiff's damages, but Brown authorized 

all payments to be made under the Oljar 

policy. 

12. Ben Hanson, plaintiff's husband, 

testified that on July 9, 1985, he paid 

no attention to the conversation between 

plaintiff and Mr. Brown. He did hear 

"inconvenience" due to problems renting a 

car. Mr. Hanson suggested $1000 and 

Brown agreed. Mr. Hanson does not 

remember any reference to medical 

problems. Mr. Hanson did not realize 

that the release was "final" and claims 

Brown misrepresented that it was not 

final. 
13. Mr. Hanson claims that he has to do 

most of the driving, and his wife is 

afraid of another collision. 

14. Mr. Hanson admitted that Brown said 

other medical bills could be paid under 

the release. 

15. Plaintiff testified that she had two 

accidents in 1985. The accident in 

question was the second accident. 

16. Plaintiff retained Mr. McAlear for 

personal injuries only on May 18, 1985. 

17. Mr. McAlear also represented 

plaintiff on the first accident and 

recovered a settlement for personal 

injuries. Plaintiff settled her own 

property damage claim. 

18. Plaintiff had not seen any report 

from Dr. Heetderks, her family physician. 

19. Plaintiff denies that the release 

was final. For example, she remembers 

her husband told Brown that the future 

was uncertain about plaintiff's injuries. 

20. Plaintif? received the Heetderks 

report on July 18, 1985, and immediately 

took it to Mr. McAlear. 

21. Mr. McAlear thereafter tendered back 

the sum of $1010.40 and deposited the 

same in an interest-bearing account at 

First Security Bank. 

22. Plaintiff claims that she suffered 

headaches which kept her awake at night. 

She has a fear of having another 

accident. 

23. Plaintiff admits that she told no 

one that Mr. McAlear had been retained by 

her concerning the Oljar accident. 
24. Plaintiff admits to having received 

different drafts from Brown. 

25. Plaintiff has not seen a physician 

for her headaches after signing the 

release form. 

26. Except for the two 1985 accidents, 

plaintiff has had no dealings with the 

insurance adjuster. 

27. After the release was signed, 

plaintiff wrote a "thank you note" to Mr. 

Brown. 

28. Brown had no communication with 

anyone but plaintiff until the Ju1.y 

meeting. 

29. Plaintiff did not express any 

confusion about the form. 

From these findings of fact, the District Court made the 

following conclusions of law: 

1. The release form is clear and 

unambiguous. The parties engaged in 

negotiations as to the final sum. 

Plaintiff is bound by the terms of the 

settlement. Defendant's adiuster was not 

guilty of any impropriety. Plaintiff 

shall take nothinq by her complaint. 

2. Defendant is awarded costs. 

Hanson raises the following issues on appeal: 

(1) Has Montana adopted the modern liberal rule on 

construction of releases on a single party personal injury 

case? 

(2) What factors should a court consider in 

determining whether or not a release should be set aside? 

From Hanson's briefs, we identify the following issue 

on appeal: Can Ethel Hanson's alleged intent that the 

release not be a full and final settlement serve to nullify 
the release? The District Court's findings of fact are 

undisputed on this appeal. We must determine from the record. 

of this case whether there is substantial credible evidence 

to support the District Court's findings and conclusions. In 

re the matter of B.T. (Mont. 1986), 725 P.2d 230, 232, 43 

St.Rep. 1728, 1730. The District Court will not be reversed 

unless the findings are clearly erroneous and represent an 

abuse of discretion. Rule 52(a), M.R.Civ.P.; Walker v. 

Larson (Mont. 1986), 727 P.2d 1321, 1322-23, 43 St.Rep. 1765, 

1767. 

Hanson urges this Court to adopt a "liberal rule of 

construction" regarding releases. She derives this "liberal 

rule" from strained interpretations of several cases 

regarding releases to argue that her intent was not to make a 

final settlement. Hanson requests that we examine her intent 

to conclude that the release should be rescinded. 

It is clear from previous decisions of this Court that 

we must apply the law of contracts to determine the validity 

of a release such as presented in this case. Westfall v. 

Motors Insurance Co. (1962), 140 Mont. 564, 568, 374 ~.2d 96, 

98-99. "[A] release . . . is subject to recession for the 

same reasons as other contracts." Westfall, 374 P.2d at 

98-99. Accordingly, a release obtained through fraud, mutual 

mistake, or with inadequate consideration may be rescinded 

under proper circumstances. Krusemark v. Hansen (Mont. 

1981), 627 P.2d 1202, 1205, 38 St.Rep. 594, 598; Westfall, 

374 P.2d at 99. No evidence exists in the record of this 

case to show that the release was entered into fraudulently, 

through mutual mistake, or without adequate consideration. 

Hanson declines to argue the available contract theories for 

rescinding the release saying only that such theories are 
reversions to outdated principles of law that do not apply to 

this case. 

Hanson's authority regarding the so-called "liberal 

rule" of interpreting releases does not support her position. 

These cases stand for the general proposition that the intent 

of releasor at the time of the release may be considered as a 

factor to determine whether a release by an injured party of 

one tort-feasor thereby releases all concurrent tort-feasors. 

See e.g., Kussler v. Burlington Northern, Inc. (1980), 186 

Mont. 82, 88, 606 P.2d 520, 522-23; McCloskey v. Porter 

(1973), 161 Mont. 307, 315, 506 P.2d 845, 849. This Court is 

not presented with an issue in this case to which the 

above-stated rule might apply. 

Hanson's intent, unknown to Oljar, Brown, or State 

Farm, cannot change the obvious intent of the release in this 

case. Richardson v. Safeco Ins. Co. of America (Mont. 1983), 

669 P.2d 1073, 1075, 40 St.Rep. 1515, 1517. Although the 

record indicates that Hanson may have some problems or 

injuries related to the automobile accident for which she 

might not have been compensated, her "latent discontent with 

the release cannot be grounds for alteration of [an] express" 

agreement to settle with State Farm. McCloskey, 506 P.2d at 

849-50. 

There is substantial credible evidence in the record to 

support the District Court's findings and conclusions. 

Hanson negotiated with State Farm over the terms of the 

settlement and signed an "Agreement and Release" discharging 

Oljar and State Farm "from all claims, demands, damages, 

actions, causes of action or suits of any kind or nature 

whatsoever . . . [for] all injuries, known and unknown 

... " The District Court correctly concluded that the 
terms of the agreement and release were cl-ear and unambiguous 

and that Hanson was bound by those terms. 

Affirmed. 

t 

We concu 

Justices 
Mr. Justice John C. Sheehy, dissenting: 

I dissent from the foregoing Opinion, which is a 

decidedly minority view of the courts which have passed upon 

the question here presented. 

Just as important, we should take this opportunity to 

stop what is apparently a dastardly practice by State Farm, 

that is, procuring from its Montana insureds releases which 

purport to be final in form, but which allow for medical 

bills incurred for the next six months, not exceeding $3,000 

in total, but deny the insureds any further right to recover 

either for pain or suffering or permanent harm as shown by 

the future bills. 

Most pointedly, State Farm acquired this release without 

discussion given to its insured to explain the meaning of the 

release either to the unknown injuries, or to the application 

of the future medical benefits. 

Finally, the majority has overlooked or chosen not to 

discuss the ramifications of the adjuster here obtaining a 

doctor's report concerning the insured from her doctor, and 

never disclosing to the insured what that doctor's report 

contained prior to obtaining her signature on the release. 

When an insurer presents a release to an injured party, 

the insurer has a duty, if the release contains a reference 

to unknown injuries, to explain particularly the significance 

of that clause to the proposed releasee: 

Where a release is given with reference only to 

known injuries, and it subsequently develops that a 

substantial injury then existed which was unknown 

to the parties and not taken into consideration, 

the release may be avoided on the grounds of a 

mutual mistake. This is true even though the 

instrument contains a clause, -- not the subject of 

express bargaining, that the release shall apply to 

all unknown and unanticipated injuries. Where an 
injured person, not knowing that the accident had 

caused a certain injury, signed a release tendered 

by the insurer of the person causing the injury, 

and unknown to the releasor the release contained a 

clause which related to unknown injuries and to 

conditions which might thereafter develop, the 

release was not binding as to the unknown injuries. 

If the person who induced the releasor to sign the 

release did not know of the clause relating to 

unknown injuries, the case presented a mutual 

mistake of fact. And if the person who tendered 

the release for signing knew of the clause and knew 

that the releasor was not aware of the clause, he 

had a duty to inform the releasor of the existence 

of the clause. 

66 Am.Jur.2d 694, 694, 695, Release, 5 20. 

In Kussler v. Burlington Northern, Inc. (1980), 186 

Mont. 82, 606 P.2d 520 and McCloskey v. Porter (1973), 161 

Mont. 307, 506 P.2d 845, we were governed by the intent of 

the parties as to the release in reaching our decisions. In 

every case where a release is obtained by an insurer which 

contains reference to unknown injuries, intent is an issue, 

and one about which the court must specifically make a 

finding. Although a releasee may, if he intends to do so, 

release any rights respecting future injuries, he should not 

be bound by any release which signs away those future rights 

without any discussion or without the intent of the releasee. 

That is the majority view: 

As previously noted, there are essentially two 

lines of authority which have developed around 

similar cases in other jurisdictions. The line 

followed in a small minority of jurisdictions is 

typified by the Oregon case of Wheeler v. White 

Rock Bottling Company, 229 Or. 360, 366 P.2d 527 

(1961). In Wheeler, the court adhered to 

traditional conceptions regarding contract law, and 

held a release binding upon a pregnant woman with 

subsequently discovered back injuries. While this 

case is not directly in point as the plaintiff in 

that case was aware of some back pain which her 

physician may have thought pregnancy originated, it 
does illuminate the inflexible and dogmatic 

approach of some courts. In their considerations 

of the validity of general liability waivers, these 

jurisdictions appear not to differentiate between 

standards applicable to commercial transactions and 

those peculiar to personal injuries. See 

generally, Annot. S 15, 71 A.L.R.2d 82, 167-69 

(1960). 

The better reasoned rule adopted by an overwhelming 

majority of jurisdictions permits the avoidance of 

a release in circumstances where later discovered 

injuries were clearly not contemplated by the 

parties at the time of release. A reasonably 

succinct statement of this line of authority is set 

forth by the California Supreme Court in Casey v. 

Proctor, 59 Cal.2d 97, 112-113, 28 Cal.Rptr. 307, 

378 P. 2d 579 (1963) : 

"Under the majority rule, however, a release may 

not ipso facto be avoided upon the ground of later 

discovered injuries. The essence of the rule is 

that the wording of the release is not conclusive; 

it is a question of fact whether the parties to a 

release actually intended to discharge such 

liability . . ." 

Finch v. Carlton (Wash. 1974), 524 P.2d 898, 900. 

We should look to our sister state of Idaho, which in 

Ranta v. Rake (Idaho 1967), 421 P.2d 747, pointed out that 

the liberal policy of avoiding releases where there are 

unknown injuries is guided by the following factors: 

(a) the peculiar dignity the law accords the human 

person as distinguished from articles of commerce; 

(b) the very real possibility of being mistaken 

about the long range effects of damage to human 

tissue; (c) the inequality of the bargaining 

positions of the contracting parties; and, (d) the 

amount of consideration received compared to the 

risk of the existence of unknown injuries. 

In addition to the foregoing factors, the State of 

Washington added the haste, or lack thereof, with which the 

release was obtained. Finch, 524 P.2d at 901. 
Moreover, we should direct our attention to the kind of 

release that was taken by State Farm in this case. This was 

a case where State Farm represented as an insurer both the 

responsible party, Mary Oljar, and the injured party, Ethel 

Hanson. Each were operating automobiles which were insured 

at the time by State Farm Mutual Automobile Insurance. A 

special duty in that situation devolved upon State Farm to be 

fair and equitable in its handling of the claims as between 

its two insureds. It is not disclosed in the record whether 

the car driven by Ethel Hanson in this case provided 

coverage, separate from the other coverages, for medical 

payments to those persons injured in the operation of the 

Hanson automobile. If it did, the form of release taken by 

State Farm was even more reprehensible. A copy of the 

release taken from Ethel Hanson is shown in the exhibit 1 

attached to this Dissent. It will be seen that in addition 

to the monies paid by State Farm under the term of the 

release, there was in addition a printed schedule of benefits 

in which State Farm agreed to pay an amount not to exceed 

$3,000 for medical, dental or surgical treatment furnished to 

the releasee within six months following the date of the 

agreement, as a result of the accident described, excluding 

expenses paid by any collateral source. In this case, State 

Farm, being in possession of the doctor's report, and Ethel 

Hanson, not being in possession of it, tendered the release 

by including in it what is essentially a health and accident 

insurance form providing for future medical benefits. The 

evil in the form is that though the releasee may have 

recovered up to $3,000 for future medical expenses, the 

release would preclude, and by the holding of the majority 

here, does preclude, any further recovery for permanent 

injuries, pain and suffering or other elements of damages 

that might accrue to the releasee by virtue of the accident. 
Absolutely nothing about this feature of the release was 

discussed or pointed out by the adjuster to Ethel Hanson. If 

procurement of such a release is a practice of State Farm, 

and the printed form indicates it is, this Court should 

condemn that practice right now. 

I would reverse this case under the present state of the 

evidence. I would remand it to the District Court for 

further proceedings to determine the intent of the releasee 

at the time the release was signed, and recognize the release 

only to that extent. 

, Justice 

11 

'-1 

Mr. Justice William E. Hunt, Sr., concurs in the foregoing 

dissent. / 
- - . n?.) , '* , AGREEMENTAND RELEASE 'c-1 . 41 . 

the undersigned hereby relerrpl and ,forper discharges 

yment of the sum of 

accordance with the SCHEDULE OF BENEFITS set forth below, by the Company accepting this Agreement, 

, the Insurance Company accepting 

this Agreement, and any and dl other persona, firms or corporations liable or who might be claimed to be liable, 

from any and dl claims, &nun&, damages, actions, causes of action or suits of my kind or nature whatsoever. ' 

SCHEDULE OF BENEFITS 1 

(1) To pay all reasonable and necessary expenses 2) To pa S for each day withi 

not to exceed 13,000 incurred for medical, dental 180 days rollowng the date of this ~~reemenq 

or surgical treatment, ambulance. hospital, pro- that sa~d beneficiary is continuously and necesfessional nursing services and rosthet~c dev~ces, sarily disabled and confined indoors under the care furnished to the named benehiary within 180 of a licensed physician other than himself, due to 

days following the date d this Agreement, as a the bodily injury incurred because of the accident . result of the accident described herein, provided described herein ayable monthly); provided that 

that such expenses are qot paid or payable by any the total of sai per diem payments shall not 

collatera1 source; and . - exteed S 3,000; 

9 

and provided the total amount payable hereunder for this release, plus said expense payments, plus said per diem payments, shall not exceed the limit of liability for bodily injury to one person provtded by the policy of Insurance applicable to the releasee named herein, 

both to pew m),propy, and particularly on account of dl injuries, &own and unknown, sustained by . . 

(1 

which have resulted or my in futwe dovelop as a result of an .accident which ocnured on or about 

ae~hy ,9~t or near&&-, & - 

This nluce expressly rerenca dl rights of the parties released to pursue their legal remedies, if any, against the 

undemgned, their &in, Gecutora, writs and asigns. 

It fr also agreed and understood that this ~ttkrnent is the compromise of a doubtful and disputed claim, that 

tho payment It not to be construed u m admission of liability on the part of tho persons, fim and corporation, 

hereby releuad, by whom ltabUty is expressly denied. This Agreement and Release contains the entire agreement 

between the parties hereto, and the terms of this instrument are contractual and not a mere recital. It b further 

agreed that dl putiu to this instrument have wefi~lly read the wnknts thoreof and the signttures &low are , . tho voluntary and free act of oach. 

In witness whenof~hrve kreunto sc 

IN PRESENCE OF 

Accepted By: 

. ~~AIE FA): 2'. h LTlJAL AVrOMOBILE INSURANCE COMPANY / 8 SLAT& FARM FUE ArGD CASUALTY COMPANY 

STATE FARM COUNTY MUTUAL INSURANCE COMPANY OF TEXAS 

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