Winstanley v. Ackerman

The plaintiff in this action is the surviving wife of Joseph Vincent Alexander Winstanley, deceased. She instituted this action for the recovery of damages for his death, alleged to have been caused by the negligent and careless driving of an automobile by defendant. In his answer the defendant denied negligence and pleaded contributory negligence on the part of the plaintiff. After the ease was at issue the defendant, by leave of the court, filed a supplemental answer in which it was alleged that, since the filing of the original answer, plaintiff and defendant had made and entered into an accord and satisfaction, fully and finally settling and satisfying any and all claims of the plaintiff against defendant. A copy of this release is attached to the supplemental answer as an exhibit thereto. In said release it is recited that in consideration of the sum of $1250, plaintiff released and discharged defendant of and from any and all claims on account of, and arising out of, the accident on which the claim for damages is based. The case was tried before the court without a jury, and on the issues of negligence, and contributory negligence, the court found in favor of the plaintiff and against the defendant. On the issue tendered by the allegations in the supplemental answer, the court found that said release had been executed, and that defendant had paid to the plaintiff the said sum of $1250, but that said accord and satisfaction was null and void and of no effect, for the reason that the same was procured by the defendant by fraud and deceit and undue influence practiced upon the plaintiff by the representatives of the defendant.

. The court further found that, at a time prior to the accident which resulted in the death of plaintiff’s husband, an agent of the Pacific Indemnity Company had written a policy of insurance for the protection of the defendant against financial loss in any accident occurring through his negligent driving of an automobile; that on

The court further found that the plaintiff had explained to the agents’ servants, representatives and attorneys of the defendant that she was poor and destitute; that they were well aware of said facts;. that the plaintiff was nervous and neurasthenic, and that they then and there practiced undue influence upon her, in this, that they took an unfair advantage of her weakness of mind; and in that they took a grossly oppressive and unfair advantage of her necessities and distress; that in her reliance upon the truth of these representations plaintiff accepted the sum of $1250 and executed the accord and satisfaction as aforesaid.

The court further found that by reason of the death of her husband plaintiff had been damaged in the sum of $7,500, and crediting that amount with the sum of $1250' which had been paid her on said settlement, entered its judgment for the balance of $6,250. From this judgment defendant appeals upon the judgment-roll alone.

The principal point relied upon by the appellant, and which we think is controlling, is that there is no finding of any offer of payment,- or tender of a return of the said sum of $1250 to the defendant, or any finding of a rescission of said accord and satisfaction. It is true that there is no such finding in the record, nor does the record disclose any offer of rescission or tender of benefits of said contract at the trial of said action. After the filing of the supplemental answer, the plaintiff did not file an affidavit denying the execution of the said agreement as

Section 1691 of the Civil Code prescribes that the rescission of a contract when not effected by consent, can be accomplished only by the use, on the part of the party rescinding, of reasonable diligence to comply with certain specified rules, one of which is that “he must restore to the other party everything of value which he has received from him under the contract; or must offer to restore the same”, etc. The record in this case does not disclose that such tender was made.

In the case of Garcia v. California Truck Co., supra, the facts were similar to the case at bar, and the question before the court was as to the necessity of a tender of the amount of money which had been paid to plaintiff in consideration of the execution of a release. In that case the court quoted with approval from Fox v. Hudson, 150 Ky. 115 [Ann. Cas. 1914A, 832, 150 S. W. 49 ], as follows: “Where the claim is for unliquidated damages or when the settlement is made to adjust a matter in, dispute, or where there is a controversy as to the amount owing, and the parties agree upon a sum that shall be paid in settlement, the amount so paid must be returned if the party settled with seeks to avoid the settlement on the ground of fraud. Where there is no dispute as to the sum due and the creditor is induced by fraud to accept a less amount than his whole

And further in this case, at page 771, the court said: “As stated in the case of Kley v. Healey, 127 N. Y. 551 [ 28 N. E. 593 , 595], cited approvingly in Matteson v. Wagoner, 147 Cal. 739 [ 82 Pac. 436 ], the rule is as follows: ‘A more satisfactory answer, however, may be found in the principle that one who attempts to rescind a transaction on the ground of fraud is not required to restore that which in any event he would be entitled to retain either by virtue of the contract sought to be set aside, or the original liability.’ ”

In the instant case, at the time of the execution of the release, defendant had filed an answer denying his liability, and that issue was wholly undetermined, and the' amount of such liability, if any, was necessarily unliquidated. And while a creditor is not required to restore that which in any event he would be entitled to retain, it cannot be said that the plaintiff in this case had retained only that which, without dispute, belonged to her. The court in the case last cited distinguishes between that case and Meyer v. Haas, 126 Cal. 560 [ 58 Pac. 1042 , 1043], cited by respondent herein, where the plaintiff was induced to execute, for $25, a release of all claims on account of his injuries, having been induced by fraud to believe that he was discharging only such claim as he might have had for loss of time. But the plaintiff, it was said, was “not attempting to avoid a contract which he had made, but is showing that he did not make the contract which he apparently had made”. The written contract was held void db initio, because the release which was actually executed was not the release that the plaintiff intended to execute.

The cases cited - by respondent are not in point. In Rued v. Cooper, 119 Cal. 463 [ 51 Pac. 704 ], the plaintiff, as assignee of an insolvent debtor, sued to recover money which had been paid by said debtor under a void contract for the purchase and sale of stock on margin, and judgment for the defendant was reversed for the reason that there was no proof of any agreement to settle a claim for the money illegally paid, or that the illegality of such claim was even known to or considered by the parties in any manner in executing the release involved in that case.

In her petition for a rehearing, respondent contends that it was sufficient that the findings were to the effect that the release was void and it is suggested that, for the

It is therefore apparent that the plaintiff did avail herself of the right accorded her by law to sustain any legitimate defense as against the agreement of accord and satisfaction and upon the evidence so introduced, the court has made a complete and comprehensive finding from which it appears that the contract was obtained through fraud, deceit and undue influence, but the findings in the case at bar do not disclose the fact that the plaintiff was so devoid of understanding as to render her contract of release a nullity. Section 38 of the Civil Code is as follows: “A person entirely without understanding has no power to make a contract of any kind, but he is liable for the reasonable value of things furnished to him necessary for his support or the support of his family.”

It was found by the court that plaintiff had explained to the defendant, his attorneys and representatives, that she was poor and destitute. The court also found that she was nervous and neurasthenic. Obviously, nervousness and neurasthenia do not constitute mental incompetency to such an extent as to render the transaction void ah initio even though the transaction may be avoided by a timely rescission and tender of benefits received. We think the failure of the record to disclose a tender of the money received by plaintiff will necessitate a reversal of the judgment.

In. her brief, respondent contends that on the day of trial she tendered to the appellant the sum of $1250 which she had received as a consideration for the release she had signed, but since that fact, if it is a fact, does not appear in the judgment-roll, it cannot be considered here. In

However, we feel constrained to say that we have reached the conclusion, herein expressed, with some degree of reluctance, and we do not wish to be understood as placing the stamp of judicial approval upon such practices as are disclosed by the record in this ease. The practice of an insurance adjuster, disregarding and ignoring counsel for the plaintiff, and dealing with the plaintiff herself, and importuning her to effect a settlement which may be wholly inadequate, should meet with severe censure from the bench and bar of this state.

Judgment is reversed and cause remanded for a new trial.

Cary, P. J., and Barnard, J., concurred.

A petition for a rehearing of this cause and the motion for supplemental findings of fact was denied by the District Court of Appeal on January 15, 1931, and a petition by respondent to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on February 19, 1931.