Gecy v. Prudential Ins. Co. of Amer. , 273 S.C. 437 ( 1979 )

Gregory, Justice:

Respondent Kathy Gecy brought this action against appellants The Prudential Insurance Company of America (Prudential), Carolyn Rebecca Harper, and H. Lamar Harper to rescind a release on the ground of mutual mistake of a material fact. The lower court granted Mrs. Gecy’s motion for summary judgment and set aside the release. We reverse.

On July 26, 1975, the automobile in which Mrs. Gecy was riding was struck in the rear by an automobile owned by Mr. Harper and driven by his daughter Carolyn. As a result of the collision Mrs. Gecy sustained personal injuries to her neck and back.

Mrs. Gecy was treated by Dr. H. L. Laffitte of Allendale who told her she had suffered neck and back strain that would clear up with time. Dr. Laffitte referred Mrs. Gecy to Dr. H. Sherman Blalock, an orthopedist, of Augusta, Georgia. Dr. Blalock confirmed Dr. Laffitte’s diagnosis and told Mrs. Gecy that she had no permanent injuries and that the pain in her neck and back would eventually go away.

Mrs. Gecy, acting through her attorney Doyet A. Early, III, negotiated a settlement with Prudential, the Harpers’ insurer. The settlement was negotiated by letter and by telephone. Prudential did not require an independent medical examination but was furnished with copies of Mrs. Gecy’s medical reports. Prudential mailed Mrs. Gecy a release which she and her husband Robert Gecy executed on January 24, 1976. Prudential paid Mr. and Mrs. Gecy twenty-five hundred ($2,500.00) dollars in settlement of their claims against the Harpers. The release reads in part as follows:

RELEASE OF ALL CLAIMS

Know all men by these presents, that the Undersigned does hereby acknowledge receipt of two thousand five hundred dollars $2,500.00 which sum is accepted in full compromise settlement of, and as sole consideration for the final release and discharge of all actions, claims' and demands whatsoever, that now exist or may hereafter accrue, against Lamar Harper.

* * * * *

The Undersigned Agrees, as a further consideration and inducement for this compromise settlement, that it shall apply to unknown and unanticipated injuries and damages resulting from said accident, casualty or event, as well as to those now disclosed.

* * * *

Mrs. Gecy’s problems with her neck and back continued after she executed the release and in March 1977 she consulted Dr. Kenneth W. Carrington, a neurosurgeon, of Augusta, Georgia. Dr. Carrington performed a myelogram examination of her spine and diagnosed a ruptured lumbar disc. Dr. Carrington testified that this was a permanent injury that would possibly require surgical treatment.

Mrs. Gecy initiated this action in June 1977 to set the release aside on the ground of mutual mistake of a material fact.

Both parties moved before the lower court for summary judgment under Circuit Court Rule 44. The trial judge granted summary judgment for Mrs. Gecy and this appeal by Prudential and the Harpers followed.

On appeal from an order of the lower court granting or denying a motion for summary judgment, this court will review the evidence and all reasonable inferences 'therefrom in the light most favorable to the party opposing the motion. Summary judgment should be granted only when it is clear there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Hyder v. Jones, 271 S. C. 85, 245 S. E. (2d) 123 (1978).

An action to set aside a release on the ground of mutual mistake is a proceeding in equity. Turner v. Washington Realty Co., 128 S. C. 271, 122 S. E. 768 (1924). As this case was heard by the trial judge without a reference, we may find the facts in accordance with our own view of the preponderance of the evidence. Townes Assoc. Ltd. v. City of Greenville, 266 S. C. 81, 221 S. E. (2d) 773 (1976).

This appeal may be resolved without determining whether the parties negotiated a settlement while laboring under a mutual mistake of fact regarding the nature and extent of Mrs. Gecy’s injuries. Thus, for the purposes of this appeal we will assume that the damage to Mrs. Gecy’s lumbar disc was an unknown injury and that both parties mistakenly believed Mrs. Gecy had suffered only non-permanent neck and back strain.

A clear and correct statement of the law applicable to the avoidance of a release for personal injuries on the ground of mistake was summarized by the Supreme Court of Minnesota in Schmidt v. Smith, 216 N. W. (2d) 669 (1974) as follows:

If there is to be avoidance of a release on the ground of mistake, it must be based upon a finding of unknown injuries that were in existence and were not within the contemplation of the parties when the settlement was agreed upon. But if the parties did in fact intentionally agree upon a settlement for unknown injuries, the release will be binding. 216 N. W. (2d) at 672.

See also: Myers v. Fecker Co., 252 N. W. (2d) 595 (Minn. 1977); Marshall v. Cundiff, 211 Va. 673, 180 S. E. (2d) 229 (1971); Sloan v. Standard Oil Co., 177 Ohio St. 149, 203 N. E. (2d) 237 (1964); Anno. 71 A. L. R. (2d) 82; 76 C. J. S. Release § 25; 66 Am. Jur. (2d) Release § 32.

We agree with this statement of the law and adopt it as the rule in this State.

Here, the parties agreed upon a settlement after deliberate negotiations. Mrs. Gecy was represented by counsel and she executed the release at her own convenience outside the presence and without the influence of Prudential’s agent. The release is contained wholly on the face of one piece of paper and plainly states that subsequently discovered unknown injuries are covered by the release. While we recognize that equity may look beyond the wording of the release to determine whether the parties actually intended the release to cover subsequently discovered unknown injuries, Sloan v. Standard Oil Co., supra; 30 C. J. S. Equity § 47; 27 Am. Jur. (2d) Equity § 35, Mrs. Gecy did not ask the lower court to exercise its equity power in this fashion. Mrs. Gecy neither alleged in her complaint nor offered evidence to establish that the release was not intended to cover unknown injuries. On this record we can only conclude that the parties intended that all claims for injuries would be relinquished.

In view of the parties’ agreement that the release would cover unknown injuries, the lower court erred by granting respondent’s motion for summary judgment and by denying appellants’ motions for summary judgment.

Accordingly, the order of the lower court granting respondent’s motion for summary judgment is reversed and the case is remanded for entry of summary judgment for appellants.

Reversed and remanded.

Lewis, C. J., and Littlejohn and Rhodes, JJ., concur. Ness, J., dissents.