Court Opinion

ID: 9694966
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:02:07.356392+00
Date Added: 2024-06-11T18:20:07.268406
License: Public Domain

ABRAHAMSON, J.
This is a review of an unpublished decision of the court of appeals filed on January 20, 1993, affirming a judgment of the circuit court for Barron County, Edward R. Brunner, Circuit Judge. The circuit court granted summary judgment to Monkem Company, the defendant, dismissing the complaint with prejudice. It held that the form signed by Jerilyn Richards, the plaintiff, was an exculpatory contract that was not void or unenforceable as contrary to public policy. It further held that the plaintiffs claim for injuries suffered while riding as a passenger in a truck operated by Leo Richards, her husband, and owned by Monkem Company, her husband's employer, was clearly within the contemplation of the parties at the time the exculpatory contract was executed. The circuit court thus foreclosed the plaintiffs claim as a matter of law. The court of appeals affirmed the judgment of the circuit court. We reverse and remand for further proceedings.
The issue before this court is whether the form the plaintiff executed constitutes a valid exculpatory contract releasing the plaintiffs claims against Monkem Company, thereby barring this lawsuit. This issue arose in a motion for summary judgment, and this *1011court is reviewing a decision affirming the summary judgment. Therefore the standard of review is the same as the standard used by the circuit court to determine whether to grant the motion for summary judgment. Dobratz v. Thomson, 161 Wis. 2d 502, 513, 468 N.W.2d 654 (1991). If an exculpatory contract is found to be invalid on its face, the defendant's motion for summary judgment will be denied. Dobratz v. Thomson, 161 Wis. 2d at 526. Thus, this court must determine whether, as a matter of law, the form was a valid exculpatory contract that bars the plaintiffs claim.
We conclude that the form at issue here is an exculpatory contract void as against public policy. As is often the case, neither a prior decision of the court nor the facts of a prior case is directly on point. An examination of the principles underlying the determination of the validity of exculpatory contracts leads us to the conclusion that the form is an unenforceable exculpatory contract due to a combination of three factors. None of these factors alone would necessarily invalidate the release; however, taken together they demand the conclusion that the contract is void as against public policy. First, the contract serves two purposes, not clearly identified or distinguished. Second, the release is extremely broad and all-inclusive. Third, the release is in a standardized agreement printed on the Company's form, offering little or no opportunity for negotiation or free and voluntary bargaining.
The facts relevant to our determination of the validity of the form as an exculpatory contract are not in dispute. In February of 1990, Leo Richards was hired by Monkem Company as an over-the-road truck driver. Shortly thereafter, the plaintiff and her husband discussed the possibility of her riding as a *1012passenger with him. Before the plaintiff could accompany her husband, however, Monkem Company required that she sign a form entitled "Passenger Authorization," and she did so on or about May 22, 1990.
The "Passenger Authorization" form used by Monkem Company appears to have two purposes. First, it served as Monkem Company's authorization to the passenger to ride in a company truck. Second, it serves as a passenger's general release of all claims against the Company. The language of release attempts to transform the "Passenger Authorization" form into an exculpatory contract relieving Monkem Company and all of its affiliated companies, partnerships, individuals and corporations (as well as others) from any and all liability for harm to the person signing the form. See Merten v. Nathan, 108 Wis. 2d 205, 210, 321 N.W.2d 173 (1982). The form reads as follows:
*1013f~~Monkem Company, Inc. ^ ^ A nunuNOloH moiob CAnmcn PASSENGER AUTHORIZATION HATE: 5/22/9Q FULE AND FINAL RELEASE COVERING ALL CLAIMS OR RIGHTS OF ACTION OF EVERT DESCRIPTION PAST, PRESENT OR FUTURE. I/HE BEING OF LAWFUL AGE, FOR MTSELF/OURSELVES, HT/GUR HEIRS, ADMINISTRATORS,EXECUTORS, SUCCESSORS, AND ASSIGNS, HERERT FULLY AND FOREVER RELEASE AN DISCHARGE THE SAID MONKEM COMPANY,INC., AND ALL AFFILIATED, ASSOCIATED, OR SUBSIDIARY COMPANIES, PARTNERSHIPS, INDIVIDUALS OR CORPORATIONS AND ALL OTHER PERSON, FIRMS, AND CORPORATIONS, AND THEIR HEIRS, ADMINISTRATORS, EXECUTORS, SUCCESSORS, AND ASSIGNS FROM ANY AND ALL ACTIONS, CAUSES OF ACTIONS, CLAIM AND ' DEMANDS OF WHATSOEVER KIND OR NATURE ON ACCOUNT OF ANY AND ALL KNOWN AND UN KNOW! INJURIES, LOSSES, AND DAMAGES RY ME/US OR HY/OUR PROPERTY SUSTAINED OR RECEIVED WHILE A PASSENGER IN ANY AND ALL EQUIPMENT, VEHICLES, OR WHILE LOCATED ON ANY/ALL MONKEM COMPANY. INC.,/JOPLIN HIWAY, INC. PROPERTY IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THIS RELEASE IS INTENDED TO COVER AND DOES COVER NOT ONLY ALL HOW KNOWN INJURIES, LOSSES AND DAMAGES, BUT ANY FUTURE INJURIES, LOSSES AND DAMAGES NOT NOW KNOWN OR ANTICIPATED, BUT WHICH MAY LATER DEVELOP OR BE DISCOVERED, INCLUDING ALL THE EFFECTS AND CONSEQUENCES THEREOF. PERMISSION IS GRANTED BY MONKEM COMPANY, INC. FOR JERILYN RICHARDS jo BE A PASSENGER ¡N MONKEM COMPANY, INC./JOPUN HIWAY TNC./BURLINGTON MOTOR-CARRIER LEASING VEHICLE UNIT NUMBER 42A24 FOR A PERIOD STARTING 6/1/SO ANO ENDING 3/1/30 . THIS PERMISSIONS GIVEN ONLY UPON FULL UNDERSTANDDHTOF-THE ABOVE RELEASE ANO IS ACCEPTED ANO EXECUTED AND ACKNOWLEDGED BY SIGNATURE OF THE PERSON BELOW: ABSOLUTELY NO DRIVING PRIVILEGES SIGHED Í SrS/FZ . ^ Simaros TIRTVEjf PASSENGER INFORMATION E°Tíí51wí;lu' SCíhatSET^-' J&iLW rTc f WIFE RICHARDS - t.(. mc-CaJL-t C.L. HU CARLEY. DI - CARLEY, UIRLCIOR OF RISK HflT OR OAVE BROWN. DIRECTOR OF SAFETY HEIGHT: WEIGHT: HAIR C0OIH: EYE. COLOR: „A„ ~ OR. LIC. *,w„„ eJ'a/ «V ss ’ ?*{-'■?-q'tf'f A SIGNED COPY HOST BE RETURNED TO MONKEM WITHIN 10 DAYS OF ISSUANCE. V. P.O.Box 1196 • Joplin,Missouri64802 * (417)624-5634
*1014In addition, the form contains an insert asking for the passenger's height, weight, hair color, eye color, driver's license number, and social security number. The appropriate information about the plaintiff was inserted on the form. The release was signed by Leo Richards as driver, Jerilyn Richards as passenger, and C.L. McCarley, Director of Risk Management for Monkem Company.
On June 14, 1990, the plaintiff accompanied her husband on one of his scheduled trips. When the truck, negotiating a left curve, overturned, the plaintiff was pinned inside the vehicle. The injuries she sustained as a result of this accident are the basis for the current lawsuit.
The principles applicable to the determination of the validity of exculpatory contracts were recently set forth by the court in Dobratz v. Thomson, 161 Wis. 2d 502, 514-20, 468 N.W.2d 654 (1991), which incorporated, explained, and elaborated on the principles set forth in several earlier cases. See, e.g., Discount Fabric House v. Wisconsin Telephone Co., 117 Wis. 2d 587, 345 N.W.2d 417 (1984) (contract releasing liability of telephone company for negligent omission of ad from yellow pages); Arnold v. Shawano Co. Agr. Socy, 111 Wis. 2d 203, 330 N.W.2d 773 (1983) (contract releasing liability of race track to driver), overruled on other grounds, Green Spring Farms v. Kersten, 136 Wis. 2d 304, 314, 401 N.W.2d 816 (1987); Merten v. Nathan, 108 Wis. 2d 205, 321 N.W.2d 173 (1982) (contract releasing liability of horseback riding school to pupil); and College Mobile Home Park & Sales v. Hoffmann, 72 Wis. 2d 514, 241 N.W.2d 174 (1976) (contract releasing liability of landlord to tenant).
*1015We now reiterate several of the principles from these cases which are relevant to the case at bar. Exculpatory contracts are not favored by the law because they tend to allow conduct below the acceptable standard of care applicable to the activity. Exculpatory contracts are not, however, automatically void and unenforceable as contrary to public policy. Arnold v. Shawano Co. Agr. Socy, 111 Wis. 2d 203, 209, 330 N.W.2d 773 (1983), overruled on other grounds, Green Spring Farms v. Kersten, 136 Wis. 2d 304, 314, 401 N.W.2d 816 (1987); Dobratz v. Thomson, 161 Wis. 2d 502, 514, 468 N.W.2d 654 (1991). Rather, a court closely examines whether such agreements violate public policy and construes them strictly against the party seeking to rely on them. Merten v. Nathan, 108 Wis. 2d 205, 211, 321 N.W.2d 173 (1982).
In determining whether an exculpatory agreement violates public policy and is therefore void, courts recognize that public policy is not an easily defined concept. The concept embodies the common sense and common conscience of the community. Public policy is that principle of law under which "freedom of contract is restricted by law for the good of the community." Merten v. Nathan, 108 Wis. 2d 205, 213, 321 N.W.2d 173 (1982) (quoting Higgins v. McFarland, 86 S.E.2d 168, 172 (Va. 1955). An exculpatory agreement will be held to contravene public policy if it is so broad "that it would absolve [the defendant] from any injury to the [plaintiff] for any reason." College Mobile Home Park & Sales v. Hoffmann, 72 Wis. 2d 514, 521-22, 241 N.W.2d 174 (1976). See also Arnold v. Shawano Co. Agr. Socy, 111 Wis. 2d 203, 210, 330 N.W.2d 773 (1983), citing College Mobile Home Park with approval. In Dobratz v. *1016Thomson, 161 Wis. 2d 502, 520, 468 N.W.2d 654 (1991), a unanimous court, striking down an overly broad release, stated that "this court will not favor an exculpatory contract that is broad and general in its terms."
In reviewing an exculpatory agreement for violation of public policy, a court attempts to accommodate the tension between the principles of contract and tort law that are inherent in such an agreement. The law of contract is based on the principle of freedom of contract; people should be able to manage their own affairs without government interference. Freedom of contract is premised on a bargain freely and voluntarily made through a bargaining process that has integrity. Contract law protects justifiable expectations and the security of transactions. The law of torts is directed toward compensation of individuals for injuries resulting from the unreasonable conduct of another. Tort law also serves the "prophylactic" purpose of preventing future harm; tort law seeks to deter certain conduct by imposing liability for conduct below the acceptable standard of care. Merten v. Nathan, 108 Wis. 2d 205, 211-212, 214, 321 N.W.2d 173 (1982).
Applying these principles to this case we conclude that the exculpatory contract at issue is void as against public policy. In this case, the public policy "of imposing liability on persons whose conduct creates an unreasonable risk of harm" outweighs the public policy of "freedom of contract." Merten v. Nathan, 108 Wis. 2d 205, 215, 321 N.W.2d 173 (1982). Accordingly we conclude that it would be contrary to public policy to enforce the exculpatory language in Monkem Company's "Passenger Authorization" form. A combination of three factors in this case leads us to this conclusion.
*1017First, the contract serves two purposes, not clearly identified or distinguished. As we stated previously, those purposes appear to be: (1) the Company authorizes the passenger to ride in a Company truck, and (2) the passenger releases the Company and others from liability. This dual function, however, is not made clear in the title of the contract; the form is designated merely as a "Passenger Authorization." The written terms clearly state that the document is a release of liability. A person signing a document has a duty to read it and know the contents of the writing. State Farm Fire & Casualty Co. v. Home Ins. Co., 88 Wis. 2d 124, 129, 276 N.W.2d 349 (Ct. App. 1979). Nevertheless it is not reasonably clear to the signer of a form entitled "Passenger Authorization" that the document would in reality be the passenger's agreement to release the Company (and others) from liability. Rather the title "Passenger Authorization" implies that only the Company is making the concessions and only the Company is bound. We conclude that in this case the release should have been conspicuously labelled as such to put the person signing the form on notice. Moreover, to prevent confusion under these circumstances, the passenger's release of the Company from liability should have been carefully identified and distinguished from the Company's authorization for a passenger to ride along. Identifying and distinguishing clearly between those two contractual arrangements could have provided important protection against a signatory's inadvertent agreement to the release.
Second, the release is extremely broad and all-inclusive. It purports to excuse intentional, reckless, and negligent conduct not only by the Company but by *1018another entity (Joplin Hiway, Inc.) and by all affiliated, associated, or subsidiary companies, partnerships, individuals, or corporations, and all other persons, firms or corporations. Further, although the passenger's release is combined with the Company's authorization to the plaintiff to ride in a specified Company vehicle during a specified period, the release does not refer to an injury the plaintiff may sustain while riding as a passenger in the specified Company vehicle during the specified time period. It purports to release the Company from liability for any and all injury to the plaintiff while the plaintiff is a passenger in any vehicle (not necessarily one owned by the Company) at any time and while the plaintiff is on any and all Company property at any time. The release, unlike the authorization, is not limited to a specified vehicle or to a specified time period. Had the Company intended that it be released from liability to the plaintiff while she was riding with her husband in the Company truck during the period the Company authorized, that is not what the release says. The very breadth of the release raises questions about its meaning and demonstrates its one-sidedness; it is unreasonably favorable to the Company, the drafter of the contract.
With respect to overly broad releases, three lines of cases have developed. In College Mobile Home Park & Sales v. Hoffmann, 72 Wis. 2d 514, 241 N.W.2d 174 (1976), the court concluded that an exculpatory contract contravenes public policy when it would absolve the tortfeasor from any injury to the victim for any reason. In Arnold v. Shawano Co. Agr. Socy, 111 Wis. 2d 203, 330 N.W.2d 773 (1983), the court remanded the summary judgment case to the circuit court to determine at trial whether the accident was within the contemplation of the parties to a release which the *1019court characterized as broad and ambiguous. In contrast, in Dobratz v. Thomson, 161 Wis. 2d 502, 468 N.W.2d 654 (1991), the court struck down on summary-judgment a broad release on the ground that it was ambiguous and unclear, and that, as a matter of law, no contract was formed. The facts of the three cases are different and determined the outcomes. In regard to the issue of overly broad releases, however, the court's resolution of the effect of the overly broad releases in College Mobile Home Park & Sales and Dobratz is more pertinent to the very broad and inclusive release in the case at bar than is the court's treatment of the more limited release in the Arnold case.
Third, this contract is a standardized agreement on the Company's printed form which offers little or no opportunity for negotiation or free and voluntary bargaining. According to the record, when the Company forwarded the form to the plaintiff its cover letter did not advise her that the document was a release of all claims and did not advise her of the legal significance attached to her signing of the document. The employee handbook advised employees that Company authorization was needed for a passenger to ride along but did not advise employees that the passenger would have to release all claims against the Company.
The fact that a release is printed in a standardized form is not, by itself, enough to invalidate it. However, the plaintiffs lack of an opportunity for discussing and negotiating the contract is significant when considered with the breadth of the release. If her plans to ride with her husband were to go forward, the plaintiff simply had to adhere to the terms of the written form. While the Company had the time and resources to draft the provisions and plan their effect, the plaintiff did not. *1020Had the plaintiff been afforded the opportunity to negotiate a release, she might have declined to release the Company from liability for intentional or reckless actions or the driver's negligence, or from liability for its defective equipment. Because the Company probably derives some benefit from allowing family members to join drivers on the road, such as improving employee morale, the Company might not necessarily have rejected such proposals out of hand.
As we have said, none of these factors alone would necessarily have warranted invalidation of the exculpatory contract. Under the circumstances in the case at bar, a combination of these factors demonstrate that adherence to the principle of freedom of contract is not heavily favored. The principle of tort law, to compensate persons for injuries resulting from unreasonable conduct of another, prevails. Accordingly, we conclude that the document contravenes public policy and is void and unenforceable. The decision of the court of appeals is reversed and the cause remanded for proceedings not inconsistent with this opinion.
By the Court. — The decision of the court of appeals is reversed and the cause remanded to the circuit court.