Court Opinion

ID: 9777561
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:15:14.993009+00
Date Added: 2024-06-11T07:32:56.224036
License: Public Domain

GRANT, Justice,
concurring.
I fully concur with the majority opinion that a mistake of law is not grounds for avoiding a ratification. As the court held in Davis v. Nueces Valley Irrigation Co., a ratification, made with full knowledge of the material facts, is sufficient, without reference to knowledge or lack of knowledge of the law. 103 Tex. 243, 126 S.W. 4 (1910).2 There are some exceptions to that general rule, but none are applicable here.
As set forth in Restatement (Second) of Agency § 91 (1958):
Knowledge of the legal effect of the affir-mance [ratification] is not material; nor is knowledge of the legal effect of facts material, except where a mistake of law causes a mistake of a material fact, such as a mistake as to ownership.
In the present case, the mistake of law urged is lack of knowledge of possible legal remedies. This happened at a time when Fuller was duly represented by his second counsel and had full opportunity to explore the possible remedies with that attorney.
Certainly, Fuller’s experience with his first attorney had unfortunate consequences — unfortunate for both him and the general confidence of the public in the legal profession. Fraud perpetrated by the first attorney was not only on Fuller, but also on Old Republic Insurance Company as the payor of the settlement check. The company issued the check in good faith, believing the settlement agreement was properly signed. The check was issued to the attorney and Fuller, as payees, thus making it nonnegotiable without both signatures.
It must be remembered that Old Republic did not participate in the fraud that was perpetrated by the attorney selected by Fuller. While the evidence is undisputed that Fuller did not sign the settlement agreement or the check, there is no evidence that Fuller ever objected to Old Republic about the terms of the settlement.
The dissent contends the amount lost by Old Republic could be deducted from another *730settlement or judgment; however, that would depend upon there being another settlement or judgment against the insurance company in an amount in excess of the initial settlement. Otherwise, Old Republic is not in a position to recover. If the settlement is to be set aside, Old Republic has a right to be restored to its position before the settlement.
The dissent takes the position that Old Republic lost nothing by Fuller taking the benefits of the settlement because that was what the company had bargained for in the first place. One of the main factors for settling any lawsuit is to avoid the risk of a higher judgment at trial and avoiding the expense of having to try a ease. This is exactly what Old Republic lost. Under the dissent’s theory, Old Republic should still have to try the case, taking the risk and expense, but at the same time be out all of the funds that it paid to settle the case. This is not equitable.
It would be bad precedent to allow a party being fully represented by an attorney to accept the funds from a settlement and then to say that he should not be bound by the acceptance because he did not understand the legal ramifications.

. 3 Tex.Jur.3d Agency § 98 (1980) cites this case for the proposition that “where the principal knows all the material facts, it is not necessaiy that he know also the legal effect thereof.”