Court Opinion

ID: 9532040
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:17:25.112709+00
Date Added: 2024-06-11T13:28:39.547155
License: Public Domain

CALLISTER, Justice
(dissenting).
Plaintiff was injured in an automobile accident on June 3, 1966. He sustained injuries to his neck and upper back for which he sought medical treatment. His physician in a report dated August 22, 1966, stated that plaintiff was still under care for his condition and that the estimated date of termination and cost of further treatment was undetermined. Nevertheless, on September 26, 1966, plaintiff executed a release for $655.56 for “ * * * all known and unknown, foreseen and unforeseen bodily and personal-injuries and property damage and the consequences thereof resulting or to result from the accident. * * * ” In response to certain interrogatories plaintiff stated that the repair bill for his automobile was-$76.50 and his original physician’s bill was-$98. (There is no indication what proportion of the doctor bill was for services rendered prior to the execution of the release.) It thus appears that plaintiff determined to take a calculated risk that the ultimate cost for the treatment of his injuries would not exceed the sum for which he settled. Subsequent events indicate his miscalculation.
*160Plaintiff’s original physician in his report diagnosed plaintiff’s injuries as 1) traumatic bursitis of the right shoulder, and 2) traumatic myositis of the posterior neck muscles. Subsequent to the date of the release, plaintiff’s condition deteriorated, and he consulted other doctors. In mid-December of 1966, an orthopedic surgeon diagnosed plaintiff’s injury as a herniated disc for which a spinal fusion was performed.
Plaintiff contends that the release he executed is void on the ground that the parties acted under a mutual mistake of fact. Pie reasons that the insurance adjuster had in his possession the physician’s report and that the parties mistakenly believed that he had minor inconsequential injuries, i. e., inflamed neck and shoulder muscles and that the settlement was concluded on this basis.
The essential conflict between the majority opinion and this dissent is primarily a matter of semantics. The majority considers the term “injury” as synonymous with a correct diagnosis of the specific anatomical feature claimed injured. The majority assumes that plaintiff’s “injury” was “unknown,” since plaintiff did not know that he had a herniated disc. This dissent is premised on the consideration that plaintiff knew he had sustained injuries to his neck and upper back for which he had a disputed, unliquidated claim, that he relinquished for a sum certain in a compromise agreement, characterized as a release.
The release agreement specifies that the releasor declares and represents “that the injuries sustained are or may be permanent and progressive and that recovery therefrom is uncertain and indefinite” and that the releasor in making the agreement understands and agrees with the releasee that the releasor relies wholly upon his own “judgment, belief and knowledge of the nature, extent, effect and duration” of his injuries and the release is made without reliance upon any statement or representation of the releasee, representatives of the releasee, or by any physician or surgeon employed by the releasee. (Emphasis added.)
In the light of the language of the release as well as the facts surrounding its execution, it is difficult to entertain plaintiff’s theory that there was a mutual mistake of fact and that the parties intended the release to cover only superficial injuries. The release was executed more than three months after the accident, the releasor was still under his physician’s care, and the sum he received wás for a greater amount than the expenses he had incurred. This suit, in fact, is premised on plaintiff’s error in calculating his projected expenses.
*161The case of Wheeler v. White Rock Bottling Company of Oregon1 is factually similar to the instant action. Plaintiff’s injury, incurred in a motor vehicle collision, was diagnosed by her family physician as back strain. She released defendant from all claims known and unknown resulting from the accident, three months thereafter. The trial court decreed rescission on the ground that plaintiff intended releasing only her claim for sacroiliac and lumbar strain (she had subsequently discovered that she had a herniated disc), and that at the time of execution of the release all parties concerned were mistaken as to the nature and extent of the plaintiff’s injuries. '
On appeal, the court observed that the question was whether an honest release, untainted by unconscionable conduct, can be set aside because it was improvident. The court cited authority and commented that some cases seem to base relief upon real or supposed mutual mistake. In a footnote thereto, it was stated:
True mutuality should permit the insurer to follow up its overpayments and rescind releases in cases where the injuries are less serious than first supposed.
The court continued:
We turn, then to the plaintiff’s major contention, that she should be allowed to rescind the release because of mutual mistake. Since she now has incurred substantial medical expenses, far beyond her contemplation when she signed the release, she understandably says she was mistaken. She also ttrges that the insurance adjuster was mistaken or he would have paid more than $500 for the release. There is little reason to doubt the truth of this assertion.
We assume, therefore, that the plaintiff would have asked and the insurer would have paid more for the release if the parties had known that the plaintiff was suffering from a ruptured disc instead of from supposedly less serious back injuries. The courts which have granted relief from premature releases in such cases have talked in terms of mutual mistake. The decisions recognize that ordinarily mistaken opinions, or bad guesses about future possibilities, do not constitute the kind of mutual mistake that will make a contract voidable at the option of either party. However, the courts following the policy of treating improvident releases as voidable apparently are guided by these 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; and (c) the inequality of the *162bargaining positions of the contracting parties.
Such cases simply hold that it is not fair to an injured tort victim to hold him to a bargain if it turns out later that the bargain was grossly unwise. The reasons mentioned above, while undeniably sound reasons for scrutinizing releases carefully for fraud or over-reaching, may prove too much when applied to bargains made advisedly and with the express purpose of shifting the burden of risk in exchange for prompt payment of cash.
When courts recite, for example, as a matter of more or less common knowledge, that terminal tumors sometimes begin with minor contusions, or otherwise concern themselves with details of tragedy that may stalk those who sign early releases, they are not announcing truths known only to lawyers. These matters are also commonly known by laymen.
The release in this case was signed with a complete understanding, insofar as the document itself and other evidence shows, that for $500 cash in hand the plaintiff was willing to assume whatever risks might lurk in the settlement of her personal injury claim. If the release in this case can be avoided, then no release in Oregon will be final until 'the statutes of limitations have run their course.
Heretofore this court has considered the settlement of claims prior to litigation to be in the public interest. In the redress of wrongs between motorists, we follow adversary procedure in court when settlement is not otherwise made. There is no reason in principle why an improvident settlement made before trial is any more to be set aside than a judgment rendered upon a verdict that hindsight later proves to have been obtained too soon and for too little. No one has suggested that judgments in personal injury cases should be kept open like claims under the Workmen’s Compensation Act for additional awards in the event of aggravation (ORS 656.276).
As noted, there are attractive policy reasons for adopting a rule that would permit perfectly honorable releases to be repudiated in the event of aggravation of an injury or the discovery of undiagnosed injuries. There are less compassionate but equally sound policy reasons for requiring persons of legal age and capacity to contract to stand by their covenants, including bargains containing an element of chance. * * *
Accordingly, while we are mindful of the trend elsewhere toward treating releases as binding only when they do not result in hardship, we believe that our own decisions and previous choices of competing policy considerations require us to reject mere improvidence as a *163plausible ground for setting aside otherwise unimpeachable contracts.2
In Casey v. Proctor 3 the court observed:
* * * the majority of jurisdictions permit a releas[er] under proper circumstances to avoid a release, regardless of its terms, where it appears that unknown injuries existed at the time it was executed. [Citations omitted.] Although most of the decisions are couched in terms of “mutual mistake,” this rationale does not satisfactorily explain the case holdings. Invariably, the release has been drafted by the releasee in terms sufficiently broad to include a discharge of liability for unknown injuries. While the releasee is ignorant of the existence of injuries, he is also indifferent to their existence. He seeks a discharge of liability in any event, and it cannot be said that he would not have entered into the release had he actually, known of them.
There are competing policies involved. On the one hand, the policy of the law is to encourage out-of-court settlements. To further this policy the parties to a dispute should be encouraged to negotiate settlements and to enter into releases. In the absence of unfair conduct on the part of the releasee, the law should extend its protection to the stability of the transaction by holding the parties to the express terms of the release. If later discovered injuries may be asserted, no release would be final and free from attack until the statute of limitations has run. [Citations omitted.] On the other hand, if the releas [er] is bound by the literal terms of the release, it h^s been recognized that he is left to suffer personal injuries without compensation, while the releasee, who usually is an insurer, has received a windfall in avoiding liability for a risk it has been paid to assume. [Citations omitted.] Furthermore, the long-term effects of damage to human tissue are extremely difficult to anticipate and the opportunity for error is great. [Citations omitted.] Finally, stress has been laid upon the fact that as between the releas [er] and the releasee, a large disparity of bargaining power is present; usually the release is a prepared form drafted by experts and presented in a take it or leave it manner, while the releas [er] is ordinarily an individual without any knowledge of legal documents or assistance from legal counsel. [Citations omitted.] The fact that these considerations warrant special treatment of re*164lease for personal injuries has long been recognized. [Citations omitted.]
.The courts have indulged in various legal fictions, such as, characterizing unilateral mistakes or mistakes in prophecy or opinion as bilateral mistakes, in order to grant relief. Rather than juggling contract concepts, it would be preferable to hold on the ground of public policy that all releases for personal injury are voidable. This is an appropriate area for legislative action, and the States of Maine, North Dakota, and Idaho have responded with legislation thereto.4 However, the efficacy of releases would be undermined, since the purpose is to resolve a disputed, un-liquidated claim by compromise. Until the legislature deems action appropriate to alter the effect of releases, the traditional rule appears preferable. The Utah rule as stated in Anderson v. Oregon Short Line R. Co.5 is as follows:
* * * where a party, who has a claim against another for personal injuries, agrees upon a settlement of his claim, and accepts a sum of money or other thing of value in settlement of such claim, he is, in the absence of fraud, or concealment, concluded in the settlement, * * * ’ ”
4» 4» 4" 4* 4»
* * * Of course, a release, however general the language, does not cover anything except the consequential results flowing from the accident in question, but it does include all the consequences of that accident. If such were not the law, a single cause of action could be split up into a number of actions. It is quite elementary that that may not be done. * * *
I cannot agree with the majority opinion that Kirchgestner v. Denver & Rio Grande W. R. Co.6 is the law of Utah, since the entire opinion was carefully qualified by the following statement:
* * * Since the legal effect of a release from liability arising under the Federal Employers’ Liability Act is governed by federal law, we must determine the merit of the defendant’s contention according to that law. * * *
The court then proceeded to cite and discuss federal cases involving mistake and observed:
* * * Under the authority of the cases discussed above, the issue of whether there was a mutual mistake of fact was properly submitted to the jury. * *
There is a temptation to be swept with the tide of numerical judicial authority, but logic impels this dissent. I fully con*165cur with the reasoning of the Oregon court in Wheeler v. White Rock Bottling Company of Oregon.7 There is no valid legal ground to rescind a release, untainted by unconscionable conduct, because subsequent events indicate that it was improvident for the releasor to bargain away his claim and assume the burden of risk in exchange for the prompt payment of cash. The judgment of the trial court should be affirmed.

. 229 Or. 360, 366 P.2d 527, 529-530 (1961).

. Also see Smith v. Loos, 78 N.M. 339, 431 P.2d 72 (1967) ; Beaver v. Harris Estate, 67 Wash.2d 621, 409 P.2d 143 (1965) ; Pepper v. Evanson, 70 Wash.2d 309, 422 P.2d 817 (1967).

. 59 Cal.2d 97, 28 Cal.Rptr. 307, 315, 378 P.2d 579, 587 (1963).

. See footnote 5 of Casey v. Proctor, note 3 supra, at p. 588 of 378 P.2d.

. 47 Utah 614, 618-619, 155 P. 446 (1916).

. 118 Utah 20, 24, 28, 218 P.2d 685, 690 (1950).

. Note 1, supra.