Court Opinion

ID: 9777562
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:15:14.996139+00
Date Added: 2024-06-11T07:32:56.225835
License: Public Domain

CORNELIUS, Chief Justice,
dissenting.
I cannot agree that we should overturn the trial court’s findings in this case. The insurance company had the burden to prove by competent and sufficient evidence that Fuller ratified the fraudulent settlement of his worker’s compensation claim by accepting benefits from it. The trial court’s finding that Fuller did not ratify the settlement amounts to a failure to find that the insurance company met its burden of proof, and in my opinion Fuller’s actions do not show that the trial court’s failure to find ratification was against the conclusive evidence or against the great weight and preponderance of the evidence.
The evidence is undisputed that the settlement was made against Fuller’s express wishes by the fraud of his attorney and the forgery of his signature, and that Fuller objected to the settlement when the lawyer’s secretary told Fuller that his claim had “been settled already.” There is sufficient evidence, both circumstantial and direct, to support a conclusion that when Fuller sought and recovered the money from the bank that had illegally cashed the check, he believed the fraud against him was a fait accompli that he was powerless to undo, and he was only trying to make the best of a bad situation by getting back the money that had been illegally taken from him. The evidence can also support a conclusion that Fuller was unaware that he could effectively do anything about the fraudulent settlement until he saw his present attorney, and on his advice, filed suit to set it aside.
Acceptance of the benefits of a fraudulent transaction operates as a ratification of the transaction only if the defrauded person, at the time of his allegedly ratifying acts, had full knowledge of all aspects of the fraudulent transaction and intended to give validity to the fraudulent act. Motel Enterprises, Inc. v. Nobani 784 S.W.2d 545 (Tex.App.-Houston [1st Dist.] 1990, no writ); Sawyer v. Pierce, 580 S.W.2d 117, 123 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.). If Fuller thought it was too late to do anything about the fraud and was just trying to salvage what he could from a bad deal, it could not be said that he intended to ratify the fraud by taking the benefits.
Although the general rule is that equity will not grant relief from a mistake of law, that rule applies to the general rules of law and does not apply to a person’s private legal rights or duties. As stated in Pomeroy’s Equity Jurisprudence, quoted with approval by the court in Lusk v. Parmer, 114 S.W.2d 677 (Tex.Civ.App.-Amarillo 1938, writ ref'd):
“Wherever a person is ignorant or mistaken with respect to his own antecedent and existing private legal rights ... either of property or contract or personal status ... equity will grant its relief, defensive or affirmative, treating the mistake as analogous to, if not identical with, a mistake of fact.”
See also Columbian Nat'l Fire Ins. Co. v. Dixie Co-Op. Mail Order House, 276 S.W. 219 (Tex. Comm’n App.1925, judgm’t adopted); Lange v. Binz, 281 S.W. 626 (Tex. *731Civ.App.-San Antonio 1926, no writ); Altgelt v. Gerbic, 149 S.W. 233 (Tex.Civ.App.-San Antonio 1912, writ refd); 14 Tex.Jur.3d Contracts § 97, at 154 (1981); 3 Pomeroy’s Equity Jurisprudence § 849a (5th ed. 1941).
Moreover, even if Fuller could be said to have been acting under a mistake of law rather than fact when he accepted benefits from the “settlement,” his mistake destroyed any intent on his part to voluntarily ratify or approve the fraud, and without the intent to ratify, regardless of what motivates that intent, there is no ratification.
I do not believe we should sanction the fraud that was perpetrated on Fuller, when the law gives him a distinct remedy by which to correct that fraud, and when he has offered to make the insurance company whole if he recovers his rightful benefits. The insurance company will not be mistreated if this settlement is set aside and Fuller later recovers less than the original settlement. If that happens, the insurance company will just be restored to the consequences of the original settlement, which it voluntarily made and is vigorously defending in this suit. The only adverse effect of setting the “settlement” aside would be that the insurance company would be subjected to the risk and expense of defending Fuller’s claim. Equity has never demanded that a person seeking equity offer to reimburse the other party for the consequences of losing the advantage of a favorable judgment, Jackson v. Mares, 802 S.W.2d 48 (Tex.App.-Corpus Christi 1990, writ denied), or for the expenses that may be incurred as the result of a new trial. See United Beef Producers, Inc. v. Lookingbill, 532 S.W.2d 958, 959 (Tex.1976).
Failure to afford a litigant the remedy equity provides in a ease like this brings discredit on the law and causes the public to lose faith in the judicial system’s ability to bring redress to those unfortunate citizens who have been defrauded by the very ones who were supposed to be the guardians of their legal rights. We should not place our imprimatur on such a perversion of justice.
The insurance company did not meet its burden to prove that Fuller had full knowledge of all aspects of the fraud or that, by accepting the money he thought had been forced upon him by a fraudulent settlement, he intended to ratify the fraud. I would defer to the trial court’s findings of fact and affirm the judgment.