Dominicis v. United States Casualty Co.

Headnote

Insurance — release — mistake mutual mistake as to condition of insured.

To have a release of claims under an insurance policy rescinded for mistake it must be shown that it was executed under a mutual mistake as to an existing fact.

Where the complaint in an action on a policy of accident insurance alleges that plaintiff’s arm was injured- that he was advised by his physicians that the

injury would not be permanent; that in reliance thereon he accepted payment for loss of time only and signed a release; that at the time undiscovered conditions existed in plaintiff’s arm which eventually necessitated its amputation, but that neither party knew of the existence of these conditions, and that the release was signed in good 'faith but under a mutual mistake of fact, it states a cause of action to rescind the. release for mutual mistake of fact.

Appeal by the defendant, the United Statés Casualty Company, from an interlocutory judgment of the Supreme Court ih favor of the plaintiff, entered in the office of the clerk of the county of Albany on the 16th day of January, 1909, upon the decision of the court rendered after a trial at the Albany Special Term overruling the defendant’s demurrer to the complaint, and also (as stated in the notice of appeal) from an order entered in said clerk’s office on the same day directing the entry of the said interlocutory judgment.

The demurrer was on the ground that the complaint did not state facts sufficient to constitute a cause of action. A brief summary of the facts stated in the complaint outside of the formal parts shows that the defendant issued a policy of accident insurance to the plaintiff, whereby it agreed to pay him $2,500 for the loss of an arm caused by accident during the life of the policy, and also insured him against loss of time caused by accident or injury ) that the plaintiff was injured in his right arm during the life of thei policy by an accidental explosion causing, among other injuries, the bones in the elbow thereof to be fractured ; that he submitted to prompt competent medical and surgical treatment; that he was advised by his physicians that he would not lose his arm; that the injury thereto would not be permanent, and that he would eventually have the use thereof in substantially as good condition as it formerly was; that he so informed the defendant, believing what his. physicians told him, and in good faith filed a claim against the defendant for loss of time only under said policy; that at the time he filed such claim the defendant believed that plaintiff would not lose his arm because of the injury thereto, and that the injury thereto was not permanent, and also in common with plaintiff the defendant did not know, nor did plaintiff know, that conditions.existed in plaintiff’s arm, as was the fact, and which his doctors had not then discoveredj, which would eventually necessitate the loss thereof by amputation, and both plaintiff and defendant came to an-agreement

as to the amount of compénsation for loss of time only, which was due and payable to plaintiff by defendant under said policy by reason of the injury aforesaid, acting under a common but mistaken belief that plaintiff would not lose his arm by reason of such injury, and without knowledge of the facts, and in ignorance of the true condition of said arm, and that under said mutual mistake of the fact defendant on April 16, 1907, paid to plaintiff, and plaintiff accepted in payment of his claim for loss of time only, the sum of $500, and for which plaintiff signed and delivered to the defendant a release and discharge of all claims under the policy, which he would not have signed had lie known the facts and the ultimate result of his injury; that thereafter his right arm, which at no time since said injury had been in use or in a usable condition; did not yield to constant medical treatment, and was eventually on the 8th day of August, 1907, in order to save the plaintiff’s life, amputated near the shoulder, and that the said injury which he received was the exclusive cause thereof ; that the .plaintiff gave - due notice to the defendant of the loss of his arm, but that the defendant refused to furnish him blanks for making proofs of such loss and refused to recognize or pay plaintiff’s claim for loss of arm; that the said payment of $500 was made and the said claim for loss of time only was paid, and said release was executed under a mutual mistake of fact, and that neither party thereto intended to pay plaintiff’s claim under said policy for the loss of his arm, and neither of them knew or believed, nor had reason to know or believe, that any such claim could or would arise from said injury, nor would plaintiff have accepted said, payment, and signed said release had he known the facts as to the condition of his arm.

Plaintiff asks judgment that the release be rescinded and declared null and void by reason of the mutual mistake of fact under which it was executed' and delivered, and that lie recover judgment of the defendant for the sum of $2,500, with interest, less the $500, and interest, besides costs.

The court at Special Term overruled the demurrer and the defendant has appealed.