ST. LOUIS & S. F. R. CO. v. RICHARDS

ST. LOUIS & S. F. R. CO. v. RICHARDS
1909 OK 40
102 P. 92
23 Okla. 256
Case Number: 2037 OK Ter
Decided: 02/23/1909
Supreme Court of Oklahoma

ST. LOUIS & S. F. R. CO.
v.
RICHARDS.

Syllabus

¶0 1. RELEASE--Right to Contest Invalidity--Restoration of Consideration. Where personal injuries have been suffered, for which a liability exists, and a release therefor has been fraudulently procured for a grossly inadequate sum, an action for damage may be maintained without first obtaining a decree to rescind or to cancel the release; and the plaintiff is not precluded from attacking a release so obtained, when it is set up as a defense, because he has not restored or tendered back the amount received by him at the time the release was obtained.
2. ACTION--Conditions Precedent--Offer of Performance. When in an action at law, the tender of performance of an act is necessary to the establishment of any right against another party, such tender or offer to perform is waived or becomes unnecessary when it is reasonably certain that the offer will be refused.
3. RELEASE--Personal Injuries--Fraud. Plaintiff was injured while traveling on one of defendant's passenger trains. On the following day, while she was in bed at the railway company's hospital, away from friends or acquaintances, and still suffering from the effects of injuries sustained, the extent of which she did not know and apparently not in a position to ascertain, she was visited by a claim agent and physician in the employ of the defendant. The agent desired to effect a settlement and release of the damages and liability, and, in order to induce defendant to sign such release for a grossly inadequate sum, he and the physician represented to her that her injuries were slight and temporary, when in fact they were serious and dangerous, which fact the physician knew, or should have known had he exercised the proper care. Defendant believed the representations, and acted thereon by signing the release, which she would not have done had she been advised of her true condition. Held, that such facts sustained the averments of plaintiff's reply, which alleged that the release was procured by fraud, and a verdict based thereon will not be set aside on the ground that it is not sustained by sufficient evidence.

4. DAMAGES--Personal Injuries--Excessiveness. In an action for damages for personal injuries, where the evidence shows that plaintiff had always theretofore been well and able to make a living for herself and two children by washing, and also by running a boarding house, keeping from 12 to 15 boarders with the same number of rooms, in which she did all the work herself, making thereby on an average of from $ 65 to $ 75 per month, and which shows that since her injury, a period of about 2 1/2 years, she had been unable to earn anything, but had been compelled to pay out a great deal of money for physician's services, suffering intense pains and agony at times as a result of her injuries, which were probably permanent, we are not able to say that a judgment for $ 6,300 is excessive, or shows by its amount to have been rendered as a result of passion or prejudice.

Flynn & Ames, for plaintiff in error.--On tender of return of consideration for release as a prequisite to suit for damages: Wilson's Rev. & Ann. St. 1903, § 827; Hill et al. v. N. P. Ry. Co., 113 F. 914; Harrison v. A. M. R. Co. (Ala.) 40 So. 394; Harkey v. M. & T. Ins. Co. (Ark.) 35 S.W. 230; Westerfield et al. v. Ins. Co. (Cal.) 58 P. 92; East Tenn.. V. & G. Ry. Co. v. Hayes (Ga.) 10 S.E. 350; Hortley v. C. & A. R. Co., 214 Ill. 78; Home Ins. Co. v. Howard (Ind.) 13 N.E. 103; L. & N. R. Co. v. McElroy (Ky.) 37 S.W. 844; Brown et al. v. Ins. Co., 117 Mass. 479; Hancock v. Blackwell (Mo.) 41 S.W. 205; Bank of Barnesville v. Yocum (Neb.) 9 N.W. 84; Evena v. Gale, 17 N.H. 573; Doyle v. N.Y., O. & W. Ry. Co., 72 N.Y.S. 936; State et al. v. Blize et al. (Ore.) 61 P. 735; Levister v. So. Ry. Co. (S. C.) 35 S.E. 207; Mo. P. Ry. Co. v. Braxil (Tex.) 10 S.W. 403; Kelly v. Kershaw (Utah) 14 P. 804.

Stevens & Myers and Horace Speed, for defendant in error.--On same question: Mo. P. R. Co. v. Goodholm (Kan.) 60 P. 1066; Insurance Co. v. Hall, 51 Ohio St.; Sanford v. Ins. Co. (Wash.) 40 P. 609; Wagner v. Ins. Co., 90 F. 395; Hedlum v. Holy Terror Mining Co. (S. Dak.) 92 N.W. 33; Girard v. Car Wheel Co., 123 Mo. 358; Richards v. Frazier (Cal.) 55 P. 246; Railway Co. v. Lewis, 109 Ill. 120; Gibson v. Ry. Co. (Pa.) 30 A. 308; Harris v. Society, 64 N.Y. 196; Light Co. v. Romold (Neb.) 93 N.W. 971; Obrien v. Ry. Co. (Iowa) 57 N.W. 425; Lumley v. Ry. Co., 76 F. 66; Ry. Co. v. Harris, 158 U.S. 326; Anderson v. Chicago Brass Co. (Wis.) 106 N.W. 1076; 24 A. & E. Enc. Law (2d Ed.) 320; Matteson v. Waggoner (Cal.) 82 P. 436; Thomas v. Beals (Mass.) 27 N.E. 1004; Merrill v. Pike (Minn.) 102 N.W. 393.

PER CURIAM.

¶1 The petition filed for a rehearing in this case resulted in further oral argument on the part of both parties and the filing of a number of additional briefs in which many of the authorities pro and con were again collated, considered, and discussed. No proposition was raised, however, that had not previously received the attention and consideration of the court in its original opinion. The primary contention that plaintiff could not maintain her suit without refunding or tendering to defendant the $ 100 received by her, at the time of the executing of the release, is again insisted upon. The matter has again had our careful consideration, and, while we agree with counsel for defendant that there are a number of authorities--perhaps the greater in number--sustaining their claims, yet the procedure adopted in the trial of this cause has received recognition and sanction at the hands of eminent courts, and we believe substantial justice will usually be effected thereby. It would be futile to attempt in this or any other case of similar character to so decide it that it would be in harmony with all the adjudications.

¶2 In the argument on rehearing, counsel for defendant again insisted that the Oklahoma statute on rescission controlled, and cited us to a number of authorities of California where analogous questions had, as we claimed, been before that court under a statute like this one, and been determined in conformity with their contention. Some of the cases cited, to our mind, were not applicable, while the declaration of the court in the case of Hammond v. Wallace et al., 85 Cal. 522, 24 P. 837, 20 Am. St. Rep. 239, met with the dissent of Justice Works and Chief Justice Beatty, and another one of the cases on which counsel relied ( Marten v. Burns Wine Co. et al., 99 Cal. 355, 33 P. 1107) was repudiated and overruled by the highest court of that state, in the case of Matteson et al v. Wagoner et al., 147 Cal. 739, 82 P. 436. No case where the facts were like those in this case was referred to. The case which, in our judgment, most nearly meets defendant's claims of those cited, is that of Westerfeld et al v. New York Life Insurance Company, 129 Cal. 68, 58 P. 92, 61 P. 667. The original opinion in that case was written by Commissioner Britt, and concurred in by one other commissioner. The facts in that case were, briefly, as follows: Plaintiffs were executors of the last will of William Westerfield. The defendant was an insurance company. In 1890 the defendant issued to plaintiffs' testator a policy of insurance upon his life in the sum of $ 10,000. Thereafter negotiations were entered into by the insured with the agent of the company to exchange this policy for another one of the same amount on a cheaper plan. The proposed policy was delivered to the deceased with, it was claimed, the intention of having the earned cash value of the first policy applied on the premiums of the second one. Decedent was in possession of both policies at the time of his death. His executors demanded payment of the amount of the second policy, which was refused on the ground that the same never was in effect, that it had been delivered to the decedent for examination only, that he never accepted it or paid any premium thereon, and that the first policy had become void because of decedent's failure to pay the fifth annual premium, which had an exchange been effected as contemplated, and the new policy legally delivered and accepted, would have been covered by the earned value of such surrendered first policy. The executors were induced to deliver both policies to the company upon the payment of approximately one-fourth of the face value of the one sued on. After receiving this money plaintiff brought suit alleging that they were induced to accept the money and surrender the policy by the false and fraudulent representations of the defendant. Suit was brought on the second policy setting up these facts. Defendant answered admitting making the representations alleged by plaintiffs, denied their falsity, averred that they were true, and relied upon the force and effect of the release secured. It was also contended on the part of defendant, as in the case at bar, that the action could not be maintained without rescinding the contract or compromise, and restoring, or offering to restore, the money they had received as the fruits thereof. Trial was had, and plaintiffs were given judgment. The case was appealed, and under the decision of Commissioner Britt the judgment of the trial court was reversed, with the statement:

"Admitting that there is some conflict of authority, we are yet satisfied that the conclusion we have reached accords with the strong preponderance of adjudication both in this state and elsewhere."

¶3 When the case was heard by the Supreme Court, the rehearing was granted, as stated by Temple, Justice, "solely because it was thought by some members of the court that the complaint stated a cause of action for damages for deceit; it having been held in the department opinion that it did not." The Supreme Court concurred in the conclusion reached by the commissioners that plaintiffs could not maintain their action, except that they first make restitution or tender before suit, but it also found and held that the representations upon which plaintiff relied for recovery, to wit, that the policy in question was never delivered to the decedent, and that it was merely given to him to be finally delivered if he approved it and paid the premium which he did not do, and that the deceased did not accept it, were not fraudulent but true. The defendant also defended on an additional ground, which was likewise sustained by the court, to wit, that the agent who made the contract with the assured was without authority to do so, and that the same had not been ratified by the company. The court found as true both of these defenses, which amounted to a complete refutation of any right or claim in plaintiff, and, it seems to us, rendered unnecessary and superfluous the passing on the question of whether or not it was necessary to make a tender. Indeed, the court says:

"The facts proven do not show fraud, and plaintiffs could not recover in any form of action."

¶4 In the case at bar, under the instructions of the court, it was necessary, to recover, for the jury to find there was fraud in the procurement of the release, and for the court, in overruling the motion for new trial, to confirm this finding, and we have held in this court that the evidence reasonably tended to sustain this conclusion. In this view of the situation, in our judgment the force of the case is to a considerable extent broken. Moreover, in later cases, that court, in dealing with the same statute, has, we believe, properly announced exceptions to it which are so broad and sweeping as to embrace and recognize as proper the procedure adopted in this case. One of the cases of this character is that of California Farm & Fruit Company et al. v. Schiappa-Pietra et al., 151 Cal. 732, 91 P. 593, in which the court, quoting approvingly from the case of Kelley v. Owens, 120 Cal. 502, 47 P. 369, 52 P. 797, said:

"There are exceptional cases where restoration, or an offer to restore, before suit brought, is not necessary: As, for instance, where the thing received by the plaintiff is of no value whatever to either of the parties; or where the plaintiff has merely received the individual promissory note of the defendant; or where the contract is absolutely void; or where it clearly appears that the defendant could not possibly have been injuriously affected by a failure to restore; or where, without any fault of plaintiff, there have been peculiar complications which make it impossible for plaintiff to offer full restoration, although the circumstances are such that a court of chancery may by a final decree fully adjust the equities between the parties--and it will be found that such instances, or others similar to them in principle, are those to which the authorities cited by appellant generally relate."

¶5 The list of authorities cited and quoted in the original opinion could be much extended, but we call attention to the cases of Georgia Home Insurance Company v. Rosenfield, 37 C.C.A. 96, 95 F. 358, The Oriental et al. v. Barclay, 16 Tex. Civ. App. 193, 41 S.W. 117, and Union Pacific R. Co. v. Harris, 158 U.S. 326, 15 S. Ct. 843, 39 L. Ed. 1003. In the case of Union Pacific R. Co. v. Harris, supra, from the Supreme Court of the United States, the practice which was adopted in the case at bar of making an allowance on the recovery of the amount received for the release was sanctioned. It was a matter of debate in that case whether or not the release was deliberately entered into. This question was left to the jury, with the charge that, if they made an allowance to plaintiff, they should deduct from it what he had received. The same question was elaborately treated in the case of The Oriental v. Barclay, supra, in which Justice Finley, for the Court of Civil Appeals of Texas, said:

"The plaintiff's case here is a suit at law for damages flowing from an alleged tort. There are no allegations in her pleadings which invoke the exercise of the equitable powers of the court. She attacks the release pleaded in bar of her right to recover as being without consideration, fraudulent, and void. The truth of these allegations a court of law has jurisdiction to determine, and, when found to be true, will disregard the instrument, as being without legal effect. It is also true that courts with equity powers will protect the equitable rights of the defendant arising upon his answer, regardless of the nature of the relief sought by the plaintiff, and will make all necessary orders to that end, and may require a tender for that purpose. Pom. Eq. Jur. § 388. In a suit for rescission the rule is that the admitted consideration received must be tendered back, to the end that all parties may be protected. Where such tender appears not to be necessary for the protection of all parties, the reason for its requirement ceases, and it will not be enforced by the courts. State v. Snyder, 66 Tex. 687, 688, 18 S.W. 106; Terrill v. De Witt, 20 Tex. 256, 260; McCarty v. Moorer, 50 Tex. 287; Clay v. Hart, 49 Tex. 433, 436. In cases where equitable rights arise out of the defenses urged by the defendants, and where the subject-matter of the litigation is such that the court, by its final judgment, may give full protection without the requirement of a tender, no good reason is perceived for the making of such requirement. In this case, as has already been seen, no money was received and appropriated by the plaintiff. The value of the board, lodging, nursing, medical attention, etc., claimed by defendants as part of the consideration, under the circumstances of this case, were elements of damage arising out of the injuries inflicted; and the court was able in its final judgment to protect the defendants in the expense they had incurred for the benefit of the plaintiff, and did so, by having the amount of such expenditures deducted from the amount of damages found by the jury to have been sustained by the plaintiff. This practice is approved in the following cases: Railroad Co. v. Doyle, 18 Kan. 58; Railroad Co. v. Lewis, 109 Ill. 120; Mateer v. Railway Co. (Mo.) 15 S.W. 970: Railroad Co. v. Harris, 158 U.S. 326, 330-333, 15 S. Ct. 843, 39 L. Ed. 1003. See cases cited. Under plaintiff's theory of the matter, she was never bound by the terms of the release; and as the court could fully protect the rights of the defendants in case it were found that their contention was true in relation to the board, etc., being part of the consideration agreed upon, we think the plaintiff was entitled