Court Opinion

ID: 9588683
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:36:53.403991+00
Date Added: 2024-06-11T18:00:59.890056
License: Public Domain

SCHAUER, J.
I dissent.
Plaintiff was paid $2,000 as consideration for the settlement and release of a disputed claim for personal injuries assertedly received while riding as a guest in an automobile owned by one defendant and driven by another. The settlement was made and the release executed about four months after the accident. The sole consideration passing to the defendants for the $2,000 which they paid was the release of the claim against- them. About 18 months after the accident (substantially beyond the one-year limitation period), without rescinding the release as provided by law and without restoring or -offering to restore the consideration she had received, plaintiff filed this action. The majority decision allows it to be maintained.-
It appears to me that for this court, upon no further showing than is made here, to permit plaintiff to entirely avoid the release which she executed, without, first restoring the consideration, received by her, is to implement and encourage the practice of fraud by allegedly injured persons against those whom they claim are liable in damages for such injuries. Here plaintiff does not allege that regardless of the view taken of the evidence to be produced at a trial- of the liability issue; she would be entitled to a judgment in excess of the $2,000 already paid to her, and, hence, that she is in any .event entitled to retain that sum (see Garcia v: California Truck Co. *435(1920), 183 Cal. 767, 769-773 [192 P. 708]; Taylor v. Hopper (1929), 207 Cal. 102 [276 P. 990]; Westerfeld v. New York Life Ins. Co. (1900), 129 Cal. 68, 83 [58 P. 92, 61 P. 667]; Sime v. Malouf (1949), 95 Cal.App.2d 82, 110-111 [212 P.2d 946, 213 P.2d 788]; Bonacci v. Massachusetts Bonding & Ins. Co. (1943), 58 Cal.App.2d 657, 664 [137 P.2d 487]; Winstanley Y. Ackerman (1930), 110 Cal.App. 641, 645-647 [294 P. 449]; McKenzie v. Los Angeles Life Ins. Co. (1929), 97 Cal. App. 659, 663 [275 P. 1003]; De Garmo v. Petitfils Gonfiserie (1928), 93 Cal.App. 261, 275 [269 P. 692]; 22 Cal.Jur. 760, § 9).
There is no showing that this is not a contested lawsuit or that liability in excess of $2,000 is admitted by the defendants, or that such liability follows as a matter of law from facts which are admitted or as to the existence of which there is conclusive evidence. To the contrary, plaintiff’s complaint (second amended) discloses that it is defendants’ position, and so represented to plaintiff, that plaintiff “had no claim at law because she was a guest in his [defendant Robert Fritch’s] car and that if she proceeded to sue she would not be able to recover. That . . . under an insurance policy maintained by said [defendant] Connecticut Indemnity Company for liability of defendants Robert Friteh and Richard Fritch . . . the plaintiff, being a guest, had no right to recover ...” Even if upon trial it develops that defendants are liable and that plaintiff suffered damage exceeding $2,000, nevertheless, was not the claim then disputed and subject to compromise and release ? Is it not good public policy to encourage, rather than to discourage, the compromise and settlement of personal injury claims ?
Upon a trial of the issues it may develop that defendants are not liable at all, or if liable that plaintiff’s damages are less than the $2,000 she has received. I think that under the circumstances shown here plaintiff should be required to have accomplished rescission upon legal grounds and to have restored the consideration received by her, before she should be permitted to maintain this tort action to recover money damages for her claimed injuries. As declared by this court in the Garcia case (p. 772 of 183 Cal.) the money paid to the plaintiff “was not his in any event, but was his only in the event that there had been a valid release of the claim for damages that he was then endeavoring to assert, and which would constitute a complete bar to his action.” And as further set forth in Sime v. Malouf (1949), supra (pp. 110-111 of 95 *436Cal.App.2d), in cases which, “treat of fraudulently procured releases of claims which, both before and after the execution of the release, were disputed as to right and as to amount . . . it is clear that the plaintiff must restore what he has received in settlement of the disputed claim before suing upon it. He cannot retain the benefits of the release and sue, for to sue would violate the terms of his bargain. To hold otherwise would frustrate the very purpose of the release and destroy its effectiveness as a favored device for eliminating litigation. Hence rescission is necessary; and may be effectively accomplished only by returning the entire consideration received, for if plaintiff should fail to establish his cause of action, he would not be entitled to retain anything. The rule in such circumstances appears to be well settled. Equally well established, however, is the exception to the rule: A restoration is not necessary, in order to avoid the bar of a release, where there is no question as to the right of the plaintiff, arising independently of the release itself, to retain what he received. [Citations.] ” As already emphasized plaintiff here does not allege facts which bring her within any recognized exception, or which establish a reasonable basis for a new exception, to the rule requiring rescission and restoration of consideration.
It is further to be noted that plaintiff does not attempt to stand upon the contract of release executed by her and recover the other considerations which she alleges were promised to her; i. e., ‘1 all further and additional medical expenses [in addition to the money already received by plaintiff] and . . . all loss of salary.” Bather, she expressly seeks “to set aside the release secured from her” by the alleged fraud of the defendants, and to recover general damages of $100,000 “less the amount of $2,000,” as well as special damages. On the very face of the majority opinion it appears that plaintiff will be unable to restore the consideration she has received for a release of her claim if she does not prevail in this action. In that event upon whom will the fraud have been perpetrated ?
There is nothing salutary about the decision of the majority in this case. Its reasonable effect will be to encourage and implement fraud, not to discourage it. And furthermore, it must necessarily tend to promote litigation: litigation for both good causes of action and fraudulently asserted causes of action. It will promote litigation on good causes of action because it will tend to discourage the making of settlements *437by defendants in any case. If this opinion stands, what possible benefit can a person receive from the money he expends 1 It would seemingly be an improvident counsellor who would permit his client to settle any such claim. After waiting until the memory of honest witnesses has been dimmed by time, or until such witnesses are wholly unavailable, the unscrupulous can boldly assert fraud, and, with everything to gain and nothing to lose, can prosecute the claim which the honest, generous, or compassionate—and foolish—had laid out his money to settle.
I would uphold the ruling of the trial court that plaintiff has failed to state a cause of action, and would affirm the judgment of dismissal which followed plaintiff’s failure to amend her complaint within the time allotted.
Shenk, J., and Spence, J., concurred.
Respondents’ petition for a rehearing was denied January 11, 1951. Shenk, J., Schauer, J., and Spence, J., voted for a rehearing.