Case Name: Michelle Mueller TUCEK, Plaintiff and Appellant, v. Garlan MUELLER, Maynard Hieb, First State Bank, Wayne Kinonen, Crawford & Company and Economy Fire & Casualty Company, Defendants and Appellees
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1994-02-09
Citations: 511 N.W.2d 832
Docket Number: No. 18122
Parties: Michelle Mueller TUCEK, Plaintiff and Appellant, v. Garlan MUELLER, Maynard Hieb, First State Bank, Wayne Kinonen, Crawford & Company and Economy Fire & Casualty Company, Defendants and Appellees.
Judges: MILLER, C.J., and STEELE, Circuit Judge, concur.
Reporter: North Western Reporter 2d
Volume: 511
Pages: 832–841

Head Matter:
Michelle Mueller TUCEK, Plaintiff and Appellant, v. Garlan MUELLER, Maynard Hieb, First State Bank, Wayne Kinonen, Crawford & Company and Economy Fire & Casualty Company, Defendants and Appellees.
No. 18122.
Supreme Court of South Dakota.
Argued April 19, 1993.
Reassigned Sept. 16, 1993.
Decided Feb. 9, 1994.
John E. Burke, Rita Haverly Allen, Hagen, Wilka, Schreier & Archer, Sioux Falls, for plaintiff and appellant.
Michael S. McKnight, Boyce, Murphy, McDowell and Greenfield, Sioux Falls, for appellees Hieb and First State Bank.
Douglas M. Deibert, Cadwell, Sanford and Deibert, Sioux Falls, for appellees Kinonen, Crawford & Co., and Economy Fire & Cas. Co.

Opinion:
HENDERSON, Justice (on reassignment).
PROCEDURAL HISTORY/ISSUES
This is a civil lawsuit. Michelle Mueller Tucek (Tucek) charged her father, Garlan Mueller, with conversion, fraud and deceit concerning an insurance settlement. Maynard Hieb, First State Bank, Wayne Kino-nen, Crawford & Company, and Economy Fire & Casualty Company (collectively referred to as appellees) were also named as defendants for their alleged roles in the fraud and deceit.
Default judgment was entered against Mueller on November 26, 1990 due to his failure to answer the Complaint. The remaining defendants thereafter filed for summary judgment. On July 8, 1992, the trial court informed Tucek that she would have to elect rescission as her remedy or summary judgment would be granted to the defendants. When she declined to elect that remedy, summary judgment was granted. Tu-cek appeals raising the following issues:
I. Did the trial court-err in requiring Tucek to elect either monetary damages or rescission as her remedy?
II. Did the trial court err in granting summary judgment in favor of Hieb and Bank?
III. Did the trial court err in granting summary judgment in favor of Kino-nen, Adjusting Company & Insurer?
We treat each issue seriatim. We reverse and remand for the reasons and authority set forth in each issue.
FACTS
As a result of a one-car accident on July 18, 1987, in which she was a passenger, Tu-cek sustained numerous injuries leaving her in a coma for eight days and hospitalized for six weeks. Renae Hoffman, driver of the car, was covered by $100,000.00 policy with Economy Fire & Casualty Company (Insurer). Insurer retained Crawford & Company (Adjusting Company) to investigate the accident and negotiate the settlement. Adjuster Wayne Kinonen was assigned to the case.
When Kinonen arrived where Tucek was hospitalized, he encountered Garlan Mueller who informed him that he was Tucek's father and would handle the claim. Although Tucek was 19 years old and of legal majority, Kino-nen dealt only with Mueller throughout the settlement process. Despite a policy of up to $100,000.00, plus ongoing medical bills, Mueller and Kinonen reached a quick settlement of $70,000.00. All the while, Tucek was unaware of these events.
To finalize the claim, Kinonen sent a release form to Mueller for Tucek's signature. Mueller took the unsigned release form to Maynard Hieb at First State Bank (Bank) in Tripp, South Dakota, to be notarized. Hieb stated that Tucek needed to sign the form in his presence. Mueller indicated that his daughter was outside in the van. Moments later, Mueller handed a signed copy of the release to Hieb. Although Hieb did not witness Tucek signing the form, he nevertheless notarized it. Tucek claims that the signature is a forgery.
Mueller later took Tucek and the release to Kinonen's office in Sioux Falls where the release was exchanged for two drafts ($70,-000.00 for the settlement and $825.87 for medical expenses) both payable to Tucek. She returned to the Bank, endorsed the checks, and deposited them into individual cheeking and savings accounts in her name but permitted Mueller to transfer money between accounts. Unbeknownst to Tucek, the accounts were set up as joint accounts permitting Mueller to write checks on her account. Although the checks were imprinted with her name only, Mueller, without Tucek's knowledge, repeatedly spent thousands of dollars of her money, via counter checks, which the Bank cashed without question.
After the checks were deposited, Tucek's mother discovered that Mueller had settled the claim for less than the policy limits and Tucek's signature on the release form was a forgery. When confronted with the claim of forgery, Kinonen contacted Hieb who reassured him that the signature was authentic. Kinonen also informed the Insurer of the charge but Insurer instructed Kinonen to do nothing. Thereafter, Tucek brought this suit. Other facts will be developed where necessary.
DECISION
Our standard of review for a grant or denial of summary judgment was established in the seminal case of Wilson v. Great N. Ry. Co., 83 S.D. 207, 157 N.W.2d 19 (1968):
In reviewing a grant or denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to a judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubt should be resolved against the moving party. The non-moving party, however, must present specific facts showing that a genuine material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.
Waddell v. Dewey County Bank, 471 N.W.2d 591, 593 (S.D.1991); Garrett v. BankWest, Inc., 459 N.W.2d 833, 836-37 (S.D.1990). We examine the issues in light of these principles and holdings.
Tucek was an innocent victim in an automobile accident. She suffered severe injuries which include being in a coma for eight days, impaired brain functioning, memory loss, and an inability to conceptualize and verbally communicate. While in this state, her father, Mueller, settled her cause of action for $30,000.00 under the policy limit by forging her name on a release. As a result, he stole his daughter's money. A default judgment was taken against Mueller for fraud and deceit. Although he has not appealed, his name remains on the title of this appeal.
In reviewing this case, it is abundantly clear that Hieb, Bank, Kinonen, Adjusting Company and Insurer either assisted or participated with Mueller in this adjudicated fraud and deceit. Below, the trial court granted a summary judgment in favor of these parties and against the plaintiff, an innocent victim to all of these shenanigans committed by the judgment victors. It is, as it stands now, a legal miscarriage of justice.
We note that summary judgment is an extreme remedy which should be awarded only when truth is clear and all reasonable doubts touching the existence of a material fact should be resolved against the movant. In this case, that would encompass Hieb, Bank, Kinonen, Adjusting Company, and Insurer. Furthermore, the evidence must be viewed most favbrably for the non-moving party. This old edict was not followed in the trial court. These appellees carry the burden of proof to show dearly that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. American Indian Agr. Credit v. Fort Pierre, 379 N.W.2d 318 (S.D.1985). They did not meet said burden. There are genuine issues of material fact regarding the conduct of all five appellees and their liability springing therefrom. Therefore, the summary judgment granted by the trial court is reversed.
1. Trial court erred in restricting Mueller's choice of remedies.
Tucek is entitled to sue for damages for fraud and deceit. Appellees argue that she must rescind under SDCL chap. 53-11. By virtue of our decisions in O'Connor v. King, 479 N.W.2d 162 (S.D.1991), Holmes v. Couturier, 452 N.W.2d 135 (S.D.1990), and Kerr v. Staufer, 59 S.D. 83, 238 N.W. 156 (1931), she has the right to the remedy of her choice. With the trial court's ultimatum— rescind or go home — Tucek was deprived of a choice. Other jurisdictions have held:
One who has executed a release or compromise of a cause of action sometimes feels that he was unduly pushed or fraudulently induced into making the agreement. In this situation there are several courses open to him. He may sue on the original cause of action and, when the release is tendered as a defense, assert its invalidity. He may begin an equity action to set aside or reform the release or compromise agreement. Or he may affirm the agreement and bring an action of deceit to recover the damages he suffered by reason of executing the same.
W.R. Habeeb, Annotation, Release Induced by Third Person, 58 A.L.R.2d 500 (1958) (emphasis added).
Appellees insist she must return the money to now sue for damages. Let us review the justice of that remark in light of these facts:
(a) Of the $70,000.00 paid, over $30,000.00 was spent on medical bills;
(b) Bank obtained money from her father who stole it from her — to pay off her father's delinquent loan on his bowling alley;
(c) Mueller, using the settlement money he alone negotiated, purchased a new van, and with those same stolen funds, took a grand vacation to Florida;
(d) Insurer, Adjusting Company and Kino-nen settled for $30,000.00 less than the policy limits or the "reserves" established to settle the claim. And during, all of this time, Tucek was in a neurology ward, physically and mentally incapacitated, and did not know what was actually transpiring.
Apparently, those who either practiced fraud upon her or participated therein or knowingly received the fruits therefrom, would have Tucek return the proceeds of the settlement. Under this set of facts, such a tenet of thought is outrageous. Consider the following:
[W]e believe no good reason can be suggested for placing upon the injured or defrauded party the burden of undoing or attempting to undo the wrong practiced upon him before he may have the right to sue for the damages resulting therefrom.
58 A.L.R.2d at 504 (citing Bailey v. London Guarantee & Accident Co., 72 Ind.App. 84, 121 N.E. 128 (1918)). Although Tucek did endorse two checks, such does not prove that she accepted the settlement. Recall, she did not sign the release, therefore it cannot be assumed that the two checks constituted final settlement." Appellees, however, had an opportunity to undo this fraud; yet, they camped down on their favorable settlement and thereby ratified the fraud. See Malakul v. Altech Arkansas, Inc., 298 Ark. 246, 766 S.W.2d 433 (1989). Tucek has every right to affirm the contract and seek monetary damages. Garrett, 459 N.W.2d at 847.
2. Trial court erred in granting summary judgment for Hieb and Bank.
Tucek may take comfort in this state law: One who willfully deceives another with intent to induce her to alter her position to her injury or risk is liable for damages. SDCL 20-10-1. She may also rely upon SDCL 20-10-2(2) and (3). Said sections define deceit as the "assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true" or the "suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of fact[.]" For a similar definition of fraud, see SDCL 53-4-5. Questions of fraud and deceit are generally questions of fact and are to be determined, ordinarily, by a jury. Commercial Credit Equipment Corp. v. Johnson, 87 S.D. 411, 209 N.W.2d 548 (1973).
As a Notary Public, acting in a capacity for the Bank, Hieb authenticated a document which highly damaged Tucek. He affixed a Notary Public seal along with his signature expressing Tucek personally appeared before him. She did not. Under South Dakota law, this was a criminal act. SDCL 18-1-11. Her injury was further augmented when Ki-nonen approached Hieb about the claim that the signature was a forgery. Hieb's response confirming the signature's authenticity directly aided Mueller's dishonesty. Hieb committed a criminal act and then lied to cover his deed, thereby ratifying Mueller's fraud. 37 C.J.S. Fraud § 61 (1943). Every participant in a fraud and each one who assists another in the perpetration of the fraud is liable to the injured party. People ex rel. Hartigan v. E & E Hauling, 153 Ill.2d 473, 180 Ill.Dec. 271, 607 N.E.2d 165 (1992); Kaas v. Privette, 12 Wash.App. 142, 529 P.2d 23 (1974); 37 Am.Jur.2d Fraud and Deceit § 305 (1968). A notary public is responsible to all persons who have been defrauded of their money as a consequence of improper execution of his official notary duties. Summers Bros., Inc. v. Brewer, 420 So.2d 197, 204 (La.App.1982). As Mueller defrauded his own daughter, it is up to a jury to determine if Hieb's misinformation constituted or assisted that fraud. O'Connor, 479 N.W.2d at 164.
When Hieb notarized this document, he knew that Tucek had recently been injured in an accident leaving her in a coma. He was also cognizant of Mueller's cash flow problems, including unpaid loans to the Bank. Although irrelevant to Tucek's policy, Bank relayed this information highlighting Tucek's father's economic dire straits to the adjuster. Hieb's actions directly assisted Mueller in obtaining the proceeds of the settlement and in using these proceeds to pay off a delinquent loan to the Bank.
When Tucek opened a cheeking account with the insurance proceeds, she claims she did not open a joint account. Only her name was imprinted on the checks. Nevertheless, Mueller's name appeared on the account in the bank records. Bank accepted numerous counter checks signed by Mueller in varying amounts, including $7,400.00 and $2,000.00. Allegedly, Mueller paid off his loans to the Bank with these funds. Genuine issues of material fact appear to exist as to Hieb's and Bank's participation in Mueller's fraud and deceit.
It is clear that Mueller needed Hieb and the Bank in order to obtain and maintain access to the settlement. Hieb testified he was acting within the scope of the Bank's employment when he provided notarial services. Summary judgment cannot be upheld for either Hieb or the Bank.
3. Trial court erred in granting summary judgment for Kinonen, Adjusting Company and Insurer.
When the release was forged, Tucek was suffering from an organic mental disorder, secondary to a head injury. No guardian ad litem was appointed for her. Medical reports reflecting her condition were made available to Kinonen and Insurer. Undisputed medical evidence reveals that she was in no mental state to execute any settlement papers or cash any checks or conduct business.
Viewing the facts most favorably to the nonmoving party, American Indian Agr. Credit, 379 N.W.2d at 320, we note that Kinonen knew Tueek was of legal age and knew Mueller did not have power of attorney. Notwithstanding, this adjuster, with over ten years of experience, never dealt with the claimant, Tucek (and only met with her once briefly); rather, he conferred only with Mueller, a man without legal authority to settle the matter. Kinonen knew of Mueller's financial difficulties and eagerness to make a quick settlement, expressed concern that Mueller might be taking advantage of Tucek, admitted that a $100,000.00 settlement was not out of the question, and knew Tucek's mental and medical status were in question. In fact, Kinonen, in his deposition, expressed that Tucek's mother advised him that "... no settlement could be made until several years." However, the settlement, per Mueller, was quickly settled, well under the policy limit.
Typically, Kinonen would have a settlement release notarized, but did not do so this time. Thereafter, he learned that Tueek's signature on the release had been forged. Nevertheless, Insurer proceeded with the settlement draft and "asked [Kinonen] to do nothing," full well knowing that it had the power to stop the draft, full well knowing that Tucek's father needed money. This is reflected by notes in Kinonen's file and in his deposition wherein he expressed "there was concern because of [Mueller's] anxiousness [to settle and get the money], which I believe I relayed to the company." Thus, Insurer knew it could reach a settlement favorable to itself albeit unfavorable to Tucek. In other words, strike when the iron was hot.
We reiterate that every participant in a fraud and each one who assists another in the perpetration of the fraud is liable to the injured party. Hartigan, 180 Ill.Dec. at 271, 607 N.E.2d at 179; Kaas, 529 P.2d at 29. Both Kinonen and Insurer expressed they could do nothing and could not stop the draft. Insurer knew it had a good deal and was not going to give its good deal away. Kinonen, his employer, and the insurance company ratified the fraud. Undisputed facts exist that these three parties were aware that Mueller was acting unscrupulously when they undermined the unknowing Tucek's claim. By accepting the fruits of Mueller's fraud and deceit, the appellees also stand liable. Malakul, 766 S.W.2d at 436.
When Tueek was deposed, she stated that she did not know for certain if Hieb or the Bank benefitted from Mueller's actions. This testimony preceded Hieb's deposition. Although one cannot claim a better version of the facts than her own testimony, Lalley v. Safway Steel Scaffolds, Inc. 364 N.W.2d 139 (S.D.1985), Tucek, while not accusing these appellees, never exonerated them.
Hieb, Bank, and Insurer profited from the forgery and fraud. All appellees — as demonstrated by correspondence and telephone calls — knew Mueller needed money and there is a factual issue if they participated in a scheme to settle the claim in a hurry while the father's problems exacerbated. Commercial Credit, 209 N.W.2d at 551. What role, if any, did these appellees have in assisting the father in the fraud committed against his daughter? This burning question presents a genuine issue of material fact which precludes a summary judgment against Tucek on her cause of action for fraud and deceit against these appellees. A jury should sort out the facts. Werner v. Norwest Bank, 499 N.W.2d 138 (S.D.1993).
Reversed and remanded.
MILLER, C.J., and STEELE, Circuit Judge, concur.
SABERS, J., concurs specially.
AMUNDSON, J., dissents.
STEELE, Circuit Judge, for WUEST, J., disqualified.