Safety Casualty Co. v. McGee

Appellee, Joel Robert McGee, Jr., who resided at New Boston, Bowie county, Tex., instituted suit in the district court of Bowie county, Tex., on August 31, 1933, against appellant, Safety Casualty Company, to set aside and hold for naught a compromise settlement agreement and a compromise settlement receipt, both of which were executed on or about the 31st day of May, 1933; that said settlement agreement and settlement receipt was brought about by appellant's agent, Dr. H. W. Mann.

Appellee alleged that he was an employee of the Magnolia Petroleum Company as its agent for the purpose of handling the products of said Magnolia Petroleum Company in and around the town of New Boston, Tex.; that while he was engaged in the usual duties and course of his employment, on or about the 30th day of January, 1933, he received an injury while loading a barrel of oil on his truck, which caused a strain to the sacroiliac joint, resulting in his total and permanent disability.

He alleged that at the time he received his injury, and up until he was visited by the agent of appellant, Dr. H. W. Mann, he did not know he was entitled to any compensation under the Workmen's Compensation Act (Vernon's Ann.Civ.St. art. 8306 et seq.). He alleged further that Dr. H. W. Mann was not only the agent and representative of appellant, but that, at and during the time the compromise settlement and agreement was entered into, Mann was also an employee and working for the Magnolia Petroleum Company.

Appellee further alleged that on April 11, 1933, he received a letter from appellant requesting him to report to Dr. Good at Texarkana for a physical examination. Before he went to see Dr. Good he was visited by Dr. H. W. Mann with reference to being paid for his injuries, under the Workmen's Compensation Law. That after his visit to Dr. Good, on May 31, 1933, Dr. H. W. Mann paid him another visit which resulted in his signing the compromise agreement and compromise settlement receipt, and was paid the sum of $135 in settlement of his claim against appellant.

He alleged further that said Mann practiced fraud upon him in effecting said settlement, in that he represented and told appellee that he (the said Mann) was the agent of appellant, Safety Casualty Company, and represented to appellee that said Safety Casualty Company was a department and part of the Magnolia Petroleum Company that was looking after and caring for all employees of said Magnolia Petroleum Company who received injuries in the course of their employment, and further represented to appellee that said Safety Casualty Company was owned by, and was a part of, said Magnolia Petroleum Company, and that he was, in fact, an agent for appellant directly, and was indirectly an agent of Magnolia Petroleum Company, and that he had come to pay him for the injury received.

Appellee further alleged that the said Mann represented to him that he knew all about, and fully understood, the injury received by appellee, and knew the amount of money he was entitled to under the law; that the amount appellee was entitled to under the Workmen's Compensation Act was $135, which, according to the law, was all that appellee was entitled to receive from such injury as he received; that said representations were false.

Appellee further alleged that the said Mann represented to him that he had made a calculation of the amount of money that appellee was to receive under the Workmen's Compensation Law of Texas, and that, according to such calculation, said sum of money was $135; that said calculation was correct and according to law, which said representations were false.

Appellee further alleged, among other things, that the agent Mann told him that he was not entitled to any pay or sum of money for partial disability. Appellee further alleged that the agent Mann was an experienced adjuster, well versed in all matters pertaining to same, well versed in all matters pertaining to settlement under the Workmen's Compensation Law; that he had adjusted many claims.

Appellee alleged that the representations of the agent Mann were false; that said agent knew they were false when he made them; that he made said representations for the sole purpose of deceiving appellee; that he made said representations for the sole purpose of inducing appellee to sign the agreement and receipt above referred to; that he knew they were false when he so made them; that appellee believed and relied upon said false statements, and was induced to sign said agreement and receipt by virtue of said false and fraudulent representations.

Appellee further alleged that he was unlearned in the law with reference to Workmen's Compensation Act. Appellee alleged, among other things, total and permanent disability on account of said injury. He did not know the fraud perpetrated on him until about July, 1933, when he employed counsel to file suit. Appellant answered by general demurrer, general denial, and a great many special exceptions, except to certain parts of appellee's petition, which were admitted. A trial was had to a jury on special issues, which were answered favorably to appellee, and upon which the court rendered judgment for appellee on the 22d day of November, 1933; the judgment rendered being the cancellation of the compromise settlement and agreement and the compromise settlement receipt; that, except as to the cancellation of the above instruments, the findings of the jury to the issues submitted to them should not be binding on either plaintiff or defendant to any suit that might be hereafter brought by plaintiff against the defendant for compensation by reason of injuries alleged to have been received.

From this judgment appellant has prosecuted an appeal to this court.

Appellant brings forward some 40 assignments of error, which when considered carefully, a great many of them can properly be considered under its assignment of error to the lower court's failure to sustain its general demurrer, and, in considering this case, we are first addressing ourselves to that proposition.

Appellant's general demurrer and a great many of its exceptions which have been brought forward go to the very important question as to whether or not the appellee's petition, when considered as a whole, was sufficient to support a judgment.

It is elementary that, if the petition upon which appellee went to trial in the lower court was insufficient to support a judgment, no valid judgment under any circumstances could be rendered.

It will be noted from what has been said that it was alleged that a confidential relationship existed between the appellee and the agent Mann. It will be further noted that it was specifically alleged that the agent Mann had superior knowledge about the matters under consideration, and that appellee relied upon the statements of the agent Mann. In passing upon appellant's general demurrer, the court was required to consider all the allegations of appellee as true, and we are of the opinion that the court did not err in overruling the general demurrer and special exceptions of appellant.

We have examined carefully most of the authorities cited by appellant in support of its contention and most of the authorities cited by appellee, and we are of the opinion that the authorities of appellee fully sustain the conclusions above reached, which authorities are as follows: Garsee v. Indemnity Ins. Co. of North America (Tex.Civ.App.) 47 S.W.2d 654; 26 Cor.Jur. pp. 1208, 1209; 12 R.C.L. p. 296, § 60; Holt v. Gordon (Tex.Civ.App.) 176 S.W. 902; Moreland v. Atchison, 19 Tex. 303; Schaeffer v. Blanc (Tex.Civ.App.) 87 S.W. 745; Pomeroy's Equity Juris. vol. 2, p. 1814, § 878; Riggins v. Trickey, 46 Tex. Civ. App. 569, 102 S.W. 918; White v. Peters (Tex.Civ.App.) 185 S.W. 659; Stewart v. McAllister (Tex.Civ.App.) 209 S.W. 704; McDonald v. Lastinger (Tex.Civ.App.)214 S.W. 829; Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808; Black on Rescission and Cancellation, vol. 1, p. 72; Black on Rescission and Cancellation, vol. 1, p. 194.

Appellant has brought forward numerous assignments of error, all going to the question of the sufficiency of the evidence to sustain the verdict, and all may be considered under appellant's assignment of error in the refusal of the court to render judgment for appellant in the lower court upon its motion for judgment. We will consider all these assignments of error in one in passing on the question of whether or not the evidence supports the verdict.

The court submitted this case to the jury upon something like fourteen special issues, which were all answered in appellee's favor. From the questions and answers of the jury the following facts are established:

(1) That on or about the 30th day of May, 1933, and just before the signing of the settlement agreement and settlement receipt, Dr. H. W. Mann, as agent of the appellant, Safety Casualty Company, represented to plaintiff that he (plaintiff) was only entitled, under the Workmen's Compensation Law of Texas, to the sum of $135 in full consideration of injuries received January 30, 1933.

(2) That said representations were false.

(3) That Dr. H. W. Mann knew at the time he made such representations that they were false.

(4) That said representations so made by Dr. H. W. Mann were made with the intention of inducing the plaintiff in the court below, Joel Robert McGee, Jr., to sign the compromise settlement agreement and the compromise settlement receipt.

(5) That appellee, Joel Robert McGee, Jr., believed said representations to be true.

(6) That Joel Robert McGee, Jr., relied upon said representations in signing the instruments above referred to.

(7) That appellee was induced to sign said agreement and receipt on account of said representations.

(8) That appellee, Joel Robert McGee, Jr., would not have signed the agreement and receipt except for the representations made by Dr. H. W. Mann.

(9) That appellee, Joel Robert McGee, Jr., received an injury in the usual course of his employment with the Magnolia Petroleum Company on the 30th day of January, 1933.

(10) That said injury resulted in total incapacity.

(11) That said incapacity would not be permanent.

(12) That Dr. H. W. Mann knew at the time appellee signed said agreement and receipt that the appellee, Joel Robert McGee, Jr., was incapacitated.

(13) That the average weekly wages of appellee for one year prior to date of injury was $22.

In holding that the petition of plaintiff in the court below was not subject to demurrer, does not of itself settle the proposition that the evidence is sufficient to support judgment. Plaintiff in the court below alleged confidential relationship between plaintiff in the court below and the appellant. We are not prepared to find that the plaintiff in the court below established that fact, although it was shown that Dr. H. W. Mann represented the appellant and was in a measure in the employment of the Magnolia Petroleum Company, but we doubt whether under facts of that kind a confidential relationship existed, because Dr. H. W. Mann, even if it might be said, was at the time of the settlement and at all times under the employment of appellant and the Magnolia Petroleum Company, it would not necessarily show that a confidential relationship was shown by reason that both appellee and the agent of appellant were working for the same company.

The evidence in the lower court showed that Dr. H. W. Mann, agent of appellant, was an experienced adjuster in claims and matters pertaining to amounts due under the Workmen's Compensation Act, was well versed in the law pertaining to adjustment of claims of this kind, and was well versed in the provisions of the Workmen's Compensation Act, and, according to the findings of the jury, Dr. H. W. Mann knew at the time of the signing of the agreement and receipt that the appellee was incapacitated.

The proof further shows that appellee was a man of more than ordinary high school education, and had had considerable business experience. Appellant contends that the case of McGary v. Campbell et al. (Tex.Civ.App.) 245 S.W. 106, 112, 115, is a case in point, and urges that this court should follow the rulings laid down in that case. Appellee, as earnestly as appellant, insists that the case of Garsee v. Indemnity Ins. Co. of North America (Tex.Civ.App.) 47 S.W.2d 654, 656, is a case similar to the case on appeal, and even referred to the Garsee Case as a "black-eyed pea" case to the case at bar, and should be followed.

We are of the opinion that neither the McGary v. Campbell Case, or the Garsee Case is similar in facts to the instant case. In the McGary v. Campbell Case it seems that a contract was under consideration, and a time limit for the ending or enforcing said contract was not mentioned in same, and Campbell informed McGary, in substance, that a man by the name of League, who was entitled to money payment under the contract, could not be made to wait indefinitely for the payment of the money, but that he was entitled to the payment of his money within a reasonable time, and could go into the courts and compel action. As we understand that case and the rulings therein, the statement of law above referred to was a correct statement of the law under many cases referred to in the decision.

In the next paragraph of the McGary v. Campbell decision it is said: "When Campbell told plaintiff in error in his (Campbell's) judgment the law would read into the contract a time limit, said statement, given its fullest force, was ``but the expression of an opinion as to his view of the law on a state of facts equally known to both, and was not and could not be held to be a representation that could be made the basis of a charge of fraud'" — citing under that proposition National Fire Ins. Co. v. Plummer (Tex.Civ.App.) 228 S.W. 250, and other cases. In the McGary v. Campbell Case it was further found that no confidential relationship existed between the parties thereto.

In the Garsee Case no confidential relationship is shown, but it is dissimilar to the case on appeal, in that the appellee Garsee in that case was a very old man, very unlearned, unable to read and write the English language, or any other language. The representations made to Garsee were almost similar to the representations made by the agent Mann to appellee, stating, among other things, to Garsee the following: That the sum of $149.50 was all that Garsee was entitled to receive under the law, and that said sum was reasonable and it was right and proper for him to have said amount; that said sum of $149.50 was the usual, reasonable, and customary amount to be paid in such cases. The Garsee Case further shows that Garsee was paid only $149.50, when in fact he was entitled to $471.75, and that he was defrauded out of $324.25.

The difference in the case on appeal and the Garsee Case is shown by the difference in the mentality of the parties, ages, and business experience. We quote the following from the Garsee Case: "The general rule is that misrepresentation or concealment as to a matter of law cannot constitute remedial fraud, because everyone is presumed to know the law, and therefore cannot in legal contemplation be deceived by the erroneous statements of law, and such representations are ordinarily regarded as mere expressions of opinion, on which the hearer has no legal right to rely. 12 R.C.L. p. 295, § 59; 26 C.J. p. 1207, § 106(E). But it is equally well settled that misrepresentations involving a point of law will be held actionable misrepresentations of fact if it appears that they were so intended and understood. Likewise, redress may be had if one party possessed superior knowledge and took advantage of the other party's ignorance of the law to mislead him by studied concealment or by misrepresentation, and this is especially true where confidential relations obtained. 26 C.J. p. 1208, 1209; 12 R.C.L. p. 296, § 60; Moreland v. Atchison, 19 Tex. 303; Holt v. Gordon (Tex.Civ.App.) 176 S.W. 902; Schaeffer v. Blanc (Tex.Civ.App.) 87 S.W. 745 (writ refused). We think that appellant's petition alleging fraud on the part of appellee's agent and representative was sufficient to carry the question to the court or jury for determination, and that, if the proof sustained appellant's allegations, he should have had judgment setting aside the compromise settlement."

As we understand the language as used by the court in the above opinion, it assuredly holds that, when representations are made, although the representations involve a point of law, if said representations are made with the purpose and intent to mislead and are acted upon by the parties to whom made, such representations will be considered misrepresentations of facts and constitute actionable fraud. From the above opinion we find this language: "Likewise, redress may be had if one party possessed superior knowledge and took advantage of the other party's ignorance of the law to mislead him by studied concealment or by misrepresentation, and this is especially true where confidential relations obtained."

While we do not desire to have it understood that the proof in this case showed confidential relationship, we do find that the agent Mann, according to the proof, did possess a superior knowledge of the law as applied to the Workmen's Compensation Act, and did take advantage of the other party's ignorance of the law to mislead him. That the agent Mann knew well the law as applied to the compensation due appellee cannot be doubted or contradicted from the evidence and the jury's findings; that appellee did not possess any knowledge of the law with reference to his rights under the Workmen's Compensation Act cannot be doubted or contradicted from the evidence introduced, which is further substantiated by the fact that the proof shows that appellee was in bed five or six weeks with a serious injury and had never inquired of anybody as to his right, or had written to the Company or to any other person respecting his right; in fact, he testified to the fact that he did not know that he was entitled to anything until approached by Mann.

In the Garsee Case we further find the following language: "It is equally well settled that misrepresentations involving a point of law will be held actionable misrepresentations of fact if it appears that they were so intended and understood."

We are of the opinion that the proof in this case and the findings of the jury show beyond question that the statement as to the provisions of the Compensation Law was a misrepresentation, and that same was so intended when made. We are of the opinion that the facts and circumstances and the proof in this case and the findings of the jury take the case out of the general rule; that expression and opinion of the law are not such representation as to constitute fraud. In support of our contention we refer to and quote from the following authorities:

White v. Peters (Tex.Civ.App.) 185 S.W. 659, 660: "The law is that, when a person makes a statement in the form of an opinion and knows of facts which make the opinion a sham and a fraud, he has really made a misrepresentation of fact."

Massirer v. Milam (Tex.Civ.App.) 223 S.W. 302, 305: "Where false representations have been made, with the intention that they should be relied upon, it is not necessary to show that the purchaser might have discovered the falsity of said representations by the exercise of ordinary diligence. The purpose of fraudulent representations is to cause the vendee to forego the use of any diligence to ascertain the facts, and, where such representations have that effect, it does not lie in the mouth of the party making the same to say to the victim of his fraud, You should not have believed my statements, though I made them with the intention that you should believe them and be misled thereby, and obtained the contract from you, knowing that I had misled you."

26 Cor.Jur. pp. 1208, 1209: "But misrepresentations involving a point of law will be held actionable misrepresentations of fact if it appears that they were so intended and understood, as where they amounted to an implied assertion that facts existed which justified the conclusion of law expressed, and where, in addition to misrepresentations of law, there were also actionable misrepresentations of fact or a promise made without intent to perform, recovery may be had. Redress may likewise be had if one party possessed superior knowledge and took advantage of the other party's ignorance of the law to mislead him by studied concealment or by misrepresentation, and this is especially true if confidential relations obtained as in the case of parent and child, or executors and persons beneficially interested in the estate."

While we have not had the opportunity to examine Black on Rescission and Cancellation, which text is quoted both by appellant and appellee, we refer to the following as set out in appellee's brief (volume 1, par. 71): "Attention should be paid to these exceptional cases, in which the general rule does not operate. In the first place, if one of the parties occupies a fiduciary or confidential relation to the other, that other is justified in relying fully, and without injury, upon the representations made to him, whether they relate to matter of fact or matter of law, and the corresponding duty to make a full and frank disclosure embraces the law applicable to the case as well as the facts. Hence if, in such a case, advantage is taken of one's ignorance of the law, or his trust is abused by instilling into his mind an erroneous conception of the law, it is as much a fraud as to deceive him in regard to the facts. And this rule is especially and peculiarly applicable where the party making the representations is the other's own attorney. And again, aside from such a relationship, if one of the parties is ignorant of the law or of his legal position and rights, and the other is aware of this fact, and is also perfectly informed of the legal principles, rules, or statutes applicable to the existing state of affairs, and takes advantage of his superior knowledge and of the other's ignorance, and so misrepresents and misstates the law as to induce him to enter into an inequitable bargain, or to part with rights or property which he might have retained, it is considered such fraud as to justify a court of equity in giving relief."

From the above authorities, and others cited in this judgment, we are of the opinion that the evidence sustains the judgment.

Appellant insists that this case should be reversed for the reason that there was not submitted to the jury for a finding of the jury facts showing substantial damages and that substantial damages were not shown. Article 2190, R.C.S.(1925), amended by Acts 1931, c. 78, § 1 (Vernon's Ann.Civ.St. art. 2190), provides: "An issue not submitted and not requested is deemed as found by the Court in such manner as to support the judgment if there is evidence to sustain such finding."

Appellee was injured in January, 1933, ten weeks preceding the 1st of April, 1933. He was totally disabled on the date the settlement was made; he was paid only up to that date; the testimony is undisputed that he was totally disabled continuously up until and on the date of the trial (November, 1933); he suffered total incapacity for a period of at least 32 weeks, which, at the appellant's figures of $13.26 per week, amount to the sum of $424.32, for which he was not paid, which sum is, of course, a substantial sum and substantial damage. There is no conflict in the evidence about his being totally disabled continuously from the date of his injury up to November, 1933, the date of this trial. There being no conflict, then the question of substantial damage was not a disputed issue and not properly a jury question.

Under all the testimony we are of the opinion that substantial damages were fully shown and same was not a jury question, and we refer to the following authorities: Article 2190, R.C.S.(1925), as amended; Russell v. Industrial Transportation Co., 113 Tex. 441, 258 S.W. 462, 51 A.L.R. 1, affirming opinion of Commission of Appeals in 113 Tex. 441, 251 S.W. 1034, 51 A.L.R. 1; 20 Tex.Jur. pp. 177, 178, § 123; Price v. D'Yarmett (Tex.Civ.App.) 27 S.W.2d 616; North v. Atlas Brick Co. (Tex.Com.App.) 13 S.W.2d 59; McDaniel v. Orr (Tex.Com.App.) 30 S.W.2d 489; Ormsby v. Ratcliffe, 117 Tex. 242,1 S.W.2d 1084; Bulin v. Smith (Tex.Com.App.) 1 S.W.2d 591.

Appellant in its brief, page 186, very aptly said that this case was presented primarily upon the two propositions that the petition does not state a cause of action and that the undisputed evidence is insufficient to sustain the judgment.

We have examined this record of over 500 pages and have considered as far as possible all assignments of error as presented by appellant, and, finding no reversible error therein, we overrule same.

The judgment of the lower court is affirmed.