The appellant, George H. Graham, the plaintiff below,, a brakeman in the employ of the appellee, the defendant below, be *821 gan, on August 30, 1946, an action for damages for personal injuries under the Federal Employers’ Liability Act, 45 U.S.C.A, § 51 et seq. The defendant, Atchison, Topeka and Santa Fe Railway Company, is a corporation organized under the laws of the State of Kansas, engaged in the business of a common carrier by railway, in interstate commerce, in the State of California and other states.
I. The Facts in the Case.
The plaintiff was injured on July 6, 1945, at Needles, California. Fie had begun to work at the hour of 10:00 A.M. of that day at Seligman, Arizona. At the time of the accident, he was working as a flagman on a freight train of about 70 cars. He was the flagman at the rear end of the train, in the caboose. He arrived in the yard at Needles at 1:00, the train coming to a final stop inside number 20 track. With the train coming to a stop, the plaintiff’s duties ended. Track 20 was clear of the main line. The plaintiff took down the lanterns from the rear of the caboose, crawled into the cupola of the caboose and sat down, waiting for his train to move farther into the freight yard. While there, he first saw in the window of the caboose the reflection of an approaching train. This having drawn his attention to the approaching train, he turned around and looked back. The approaching train was anywhere from 600 to 1000 feet away, down the track. Thinking that the train was coming a little fast, the plaintiff put his body out of the cupola window and put out his lamp to slow down the' approaching train. But it kept on coming, and gave no response to the signal. So he went back to the platform and put out his lamp to slow it down. However^ the approaching train was too close to enable the plaintiff to reach for the fusee and break it. Being unable to do anything about the matter, the plaintiff went back into the caboose and jumped to the cupola, hoping for a chance to get out of the cupola window. He did not, in fact, do so. For, to one side of him was the river and to the other were piles of ties. He, therefore, took hold of a grabiron and when the train hit the caboose he was pitched up into the air and down on the floor. As he was trying to get up on his feet, a second crash occurred. Fie managed to crawl into a passenger train, which took him to the station. Fie declined to go to the hospital and was driven by another employee to his cottage in Needles. He then drove to his home in Searchlight, Nevada. He stayed in bed for about three days. On July 9, he drove to Boulder City and saw a physician, Dr. Fenlon, who ordered him to bed. No X-rays were taken. On July 17 or 18, he saw Dr. Price, in Needles, who told him that he had “some bad bruises and contusions” and gave him some pills to relieve the pain. Early in August he saw another doctor, Dr. Holz, who ordered him to enter the Santa Fe Hospital at Los Angeles. At the time he was suffering pains mostly “in his hips, back, left shoulder and back of the head.” He entered, the hospital at Los Angeles on August 14. A few days after his admission, they took X-rays. Otherwise, his treatment consisted of “heat treatments and pills.” He left the hospital voluntarily on August 24 and went back first to Needles, then to Searchlight. While in the hospital, he talked, on August 18, to Dr. Morrison, Chief Surgeon of the hospital, who told him to go back to work. The plaintiff gave this version of his conversation with Dr. Morrison:
“Q. And what did he tell you? A. Well, he told me to go back to work if I possibly could, that the company was very short of men and that they needed to keep the trains operating — the war was still on, and to go back and take it easy, that I would be all right in thirty or sixty days. So he gave me a release and I went back, but I didn’t go to work right at that time.
“Q. Dr. Morrison told you that you would be all right within thirty to, sixty days?, A. Thirty to sixty days, to take it easy.
“Q. Did he tell you to go back to work at the same type of work that you had been doing before? A. No, he didn’t.
“Q. What did he tell you? A. Told me to take a passenger job, take it easy.”
Upon reaching the hospital he was handed a document certifying to his discharge *822 from further treatment. Again quoting from the record:
“Q. (Mr. Emmons): Now at the time that you talked to Dr. Morrison, was there any question regarding broken bones? A. No, none at all.
“Q. Did he tell you that there were no broken bones? A. Told me — he didn’t say there was no broken bones, he just said, ‘Go back and take it easy, you will be all right, you can get along.’
“Q. Did you ever see the x-rays? A. No.
“Q. That the Santa Fe Railroad took? A. No, they wouldn’t show them to me.
* * * * *
“Q. (Mr. Emmons): Mr. Graham, did you have any knowledge of any other injuries, other than those which you discussed with the doctor? A. No.
“Q. And what injuries were discussed with the doctor? A. Well, I told him my hip was hurting me, and my back, through the small of my back, and my shoulder. He felt me over. Well, he says, ‘You’ll be all right; take it easy.’ He said, ‘Get back on the job.’ He repeated that several times, to get back on the job, that we needed every man we could get, that war was still on.”
The facts relating to the release, signed by the plaintiff, as told by him from the stand were these:
A Mr. Sims, Assistant Claims Adjuster in Los Angeles, called him while he was at the hospital. He took a taxi and met Sims in his office in the Santa Fe Building, who told him that he wished to discuss the adjustment of the claim. He returned to Needles. Nothing definite came of the meeting. About September 25, he saw a Mr. Evan Lewis, Claim Adjuster, who, at first, offered him $1200 or $1300 in settlement of the claim, stating, however, that “the Los Angeles office” would not accept it. He finally went to the Los Angeles claims office and signed a release on October 1, 1945, receiving at the same time, a check for $1050. The release reads:
“For the sole and only consideration of $1,050, the receipt of which is hereby acknowledged, I hereby release and forever discharge the Atchison, Topeka & Santa Fe Railroad Company, Coast Lines, its agents and employees from any and all claims and demands which I have now or may hereafter have on account of any or all injuries, including any injuries which may hereafter develop as well as those now apparent, sustained by me at or near Needles, California, on or about July 6, 1945, while employed as brakeman; also for loss or damage to personal property. In making this settlement, I am not relying upon any statement made by any agent or official of said Company as to what my injuries are or how serious they are or when or to what extent I may recover therefrom. It is definitely understood that in making this settlement, no promise or representation has been made relative to future employment.
“I have read the above release and understand the same. In Witness Whereof, I hereunto set my hand and seal this first day of October, 1945.
"G. H. Graham.”
The plaintiff worked for a period of forty-five days after his release from the hospital. He was discharged by the defendant in February, 1946, for reasons not connected with the injury. On February 13, 1946, an X-ray of the spine was taken by Dr. Fenlon, who then advised the plaintiff that he had an injury to his spine. Medical testimony at the trial was to the effect that these X-rays showed the identical crushed disc disclosed by X-rays taken at the hospital in August, 1945.
The answer of the defendant filed September 25, 1946, pleaded, in bar, the release executed October 1, 1945. Plaintiff’s present counsel were substituted on November 24, 1947, On November 25, 1947, they wrote a letter to defendant’s attorneys in Los Angeles, which read:
“November 25, 1947.
“Messrs. Sievert and Ewing,
“Attorneys at Law,
“121 East 6th Street,
“Los Angeles, California.
“Re: Graham vs. Santa Fe Railroad. “Gentlemen:
“Enclosed please find file-marked copy of Substitution of Attorneys in the cap *823 tioned case, wherein this office replaces Emmett R. Burns, Esq., as attorney of record.
“Also enclosed, please find a Notice of Rescission of Release and Offer to Restore Consideration executed by Mr. Graham. Kindly advise us of your wishes in this respect.
“Very truly yours,
“Philander Brooks Beadle,
“By.....................”
At the trial, the attorneys for defendant admitted receipt of the letter. Without objection, it was received in evidence and read to the jury. The notice of rescission of release and offer to restore consideration, to which the letter referred, was not offered in evidence and was not read to the jury. The plaintiff testified to his ability actually to tender to the defendant the amount received in settlement. Other testimony will be referred to further on in the opinion.
At the conclusion of plaintiff’s case, the defendant offered as their only witness, Dr. Ralph Soto-Hall, who gave medical testimony as to the nature and extent of the injuries. The defendant then moved for a directed verdict, Federal Rules of Civil Procedure, Rule 50, 28 U.S.C.A., upon the general ground that there was no evidence before the court to impugn the validity of the release; and, more particularly, that there was no evidence to show that the release was obtained by fraud, duress or undu-e influence.
The court granted the motion, stating that “No issue of fact with respect to the second and separate defense raised by the answer (which pleaded the release) requires a decision by the jury.”
One of the jurors was appointed foreman, and the court directed the jury to return a verdict in favor of the defendant, which they did on August 19, 1948. On August 20, 1948, judgment on the verdict was entered in favor of the defendant.
The appeal is from the judgment on the verdict. It challenges the correctness of the action of the trial court in directing a verdict.
II. The Facts Called for Submission to the Jury.
In approaching the matter, we start with the fact that, because of the nature of the Federal Employers’ Liability Act and its aim to aid the employee injured in the course of his employment, courts do not encourage any action which deprives the employee of the right to have determined by a jury the controversy between him and his employer on the merits. Tennant v. Peoria & P. U. Ry. Co., 1944,
Assuming, therefore, for the moment, that the plaintiff was not foreclosed from questioning the release, the evidence given before the court by him — the interpretation of which must be most favorable to him — see, Gunning v. Cooley, 1930,
These ruling;s are consonant with the general tendency to apply Federal law to all cases which call for the interpretation of Federal statutes creating rights. This works for uniformity. A contrary rule would be disastrous to the establishment of a jurisprudence on strictly Federal subjects. And this would be especially true in matters arising under the Federal Employers’ Liability Act, where the employee may resort to the State courts to enforce his rights. If uniformity were not assured through the integrated Federal judicial system, the employee would be subjected to the constant ebb and flow of local judicial opinion in the State where he may bring his action. Hence the logic of the attitude of the courts in this matter.
In applying this principle, courts have held, in very recent years, that the validity of a release, entered into by an employee entitled to the benefits of the Federal Employers’ Liability Act, is also governed by Federal law. While the Supreme Court has not ruled on the question under this particular law, we Have an analogous ruling made under the Merchant Marine Act, 46 U.S.C.A. § 688, that a 'seaman’s attack on the validity of a written release, was governed by Federal, not local law. Garrett v. Moore-McCormack Co., Inc., 1942,
Several courts of appeal — notably those for the second and sixth circuits — have taken their clue from this opinion and applied it to the Federal Employers’ Liability Act. Ricketts v. Pennsylvania R. Co., 1946, 2 Cir.,
But, whether we consider the problem from the standpoint of Federal or State law, the result is the same. Generally, mistake or fraud are recognized grounds for the rescission of agreements of compromise and release of any character, including those made under this Act. Great Northern R. Co. v. Fowler, 9 Cir., 1905,
The California cases accord. 1
Under the teachings of these cases, the statement of a physician as to the condition of a patient is
a■ statement of fact. As
said by the Court in Scheer v. Rockne, supra [
What may be the result if the patient acts upon the physician’s statement was summed up by the Court in Matthews v. Atchison, T. & S. F. Ry. Co., supra,
Similar language is found in Union Pacific R. Co. v. Zimmer, supra, 87 Cal.App.
2d
at page 530,
It is clear from the testimony that the X-rays taken at the hospital in August, 1945, showed the crushed disc. The plaintiff was not informed of that fact; he did not learn of it until February 13, 1946, when so informed by Dr. Fenlon.
In the present state of the record, we cannot say whether Dr. Morrison’s failure to disclose the true condition was willful or whether he did
not
read the
X-rays
correctly. In the last analysis, however, the matter is unimportant. For, if the doctor was mistaken, as was the plaintiff, as to the existence of a permanent injury, we have a case of mutual mistake. If the mistake was only on the part of plaintiff, but was induced by the carelessness of Dr. Morrison, there was the type of mistake for which the cases just cited grant relief. See especially Great Northern R. Co. v. Fowler, supra; Great Northern R. Co. v. Reid, supra. If there was willfulness in the failure to disclose, we have a case of fraud. In any of the three situations, the broad terms of the release
{“including any injuries which may hereafter develop”)
did not stand in the way of rescission. As said by District Judge Wolverton, speaking for this Court, in Great Northern R. Co. v. Reid, supra,
The basis for the reasoning in these cases is that, regardless of the wording of the release, a settlement made without regard to an undisclosed physical condition cannot stand because “the settlement intended by both the parties was for the injuries and damages disclosed and then known by the parties.” Southwest Pump & Machinery Co. v. Jones, supra,
The defendant in this case pleaded the release of October 1, 1945, as a defense. The plaintiff, without further pleading, was entitled to show that the signing of the release was induced by mistake or fraud. The plaintiff testified definitely that he did not, at the time the .release was signed, believe that he had this injury to the spine; that he believed that 'his injuries were not serious and that, as urged by Dr. Morrison, he could and should go back to work as quickly as possible. The jury might well have believed that he would not have entered into this release had he been informed of the true nature of the injury which he had suffered and of its permanency. There is evidence in the record that the injury is traceable to the accident
*826
and that it is of a permanent nature, requiring surgery to correct. The plaintiff had the right to have submitted to the jury, for their determination, these facts. As said by the court in Wilson v. San Francisco Oakland Terminal Railways, supra,
This attitude accords with the views of this court, which considers even “an innocent misrepresentation of the facts of the releasor’s injury, made by the releasee’s physician,” Great Northern R. Co. v. Fowler, 9 Cir.,
In the light of these principles, we conclude that plaintiff’s attack on the release presented a factual situation which called for determination by a jury.
III. The Rescission and Offer of Restitution Were Legally Sufficient and Timely.
The conclusion that the validity of the release presented a question of fact calls for the determination of the final question involved in this appeal, i. e., whether there was adequate and timely rescission and offer of restitution.
Except where fraud enters into, the execution of a release, rescission must .be timely and a tender of the consideration received for the release must be made-Restatement, Restitution, § 65; Restatement, Contracts, §§ 349, 480; 17 C.J.S., Contracts, § 439; Miles v. Lavender, 9 Cir., 1926,
It is argued that there was neither rescission nor offer of restitution. It is true that neither the notice of rescission nor the offer of restitution is before the court. They were enclosed in the letter of November, 25, 1945, the receipt of which was admitted in court by counsel for the defendant. The letter contains the following significant statement at the end of the second paragraph, which referred to the enclosed notice of rescission and offer to restore: “Kindly advise us of your wishes in this respect.” It is quite evident that this statement called for action on the part of the defendant, if they intended to question the legal sufficiency of the notice and offer. In the absence of any objection, the plaintiff is entitled to the presumption that the documents referred to were legally sufficient to achieve the purpose intended. By failing to object, the defendant has waived the right to question the adequacy of the instruments. 17 C.J.S., Contracts, § 439, p. 924; Cal.Code of Civil Procedure, §§ 2074, 2076. 4
The plaintiff testified that he had means of carrying into effect the offer — in other *827 words, ability and willingness to perform. Cal.Civil Code, §§ 1493, 1495. We also have his statement that the offer was made in good faith. He added, under cross-examination : “I believe I could have gotten it together at the time if it had been demanded of me.” He stated that his lawyer would have helped, and that he had property worth more than the amount and ■could have borrowed.
Grant that these statements may lack ■specificity, yet they were not contradicted. And we cannot brush them aside upon the assumption that they are of a character which the jury might not have believed. 5
We are, therefore, of the view that the trial court erred in holding that the evidence showed, as a matter of law, that there was no valid rescission and offer of restitution.
We are also convinced that the question of the timeliness of the rescission should have been submitted to the jury. It is of the essence of rescission that it be timely. Lapse of time may destroy a person’s ability to defend his position. He may have been induced by the belief in the validity of a release, to cease all endeavors to gather testimony to support 'his cause. And 'because equity takes these facts into consideration, it demands that he who rescinds a contract, be not guilty of laches in so doing. But, there is no hard and fast rule as to what lapse of time will amount to laches. Every case must he judged by the facts surrounding it. In re Meiselman, 2 Cir., 1939,
On the whole, courts are very liberal in the matter. In Komer v. Shipley, 5 Cir., 1946,
In that case more than a year elapsed before any attempt to rescind or restore the consideration was made. This Court, in Robert Hind, Ltd., v. Silva, supra, ruled that, in the absence of a showing of detriment, a delay of nearly two years presented ■a question of fact. Judge Wilbur wrote [
There was no showing of change of position or injury resulting from the delay. And, mere delay without injury does not constitute laches which bars recovery. Robert Hind, Ltd., v. Silva, supra ; Allen v. California Mutual Bldg. & Loan Ass’n, 1943,
The plaintiff was entitled to have the facts relating to the timeliness of the rescission submitted to the jury. See Brown v. Pennsylvania Ry. Co., 2 Cir., 1947,
The trial court having erred in granting the motion for a directed verdict, the judgment on the verdict in favor of the defendant is reversed and a new trial is ordered.
Notes
From the many California cases which declare the same principles, we select the following as illustrative: O’Meara v. Haiden, 1928,
The California law on the subject is summed up in Union Pacific R. Co. v. Zimmer, supra, in this manner:
“It is
well settled, however, that the mere fact that the release is extremely comprehensive in terms, and purports to be a complete discharge from all claims arising out of the accident, and is understood as such by the releasor, will not prevent its avoidance where proper grounds therefor exist.”
The Supreme Court of California in Jordan v. Guerra, supra, has adopted the quotation from Kansas City M. & B. Ry. Co. v. Chiles, supra, quoted in the excerpt just given as a proper statement of the law, which bids us scrutinize carefully releases in order to discover whether “the defendant has. dealt fairly with the .plaintiff.” Jordan v. Guerra,
Apposite .are the .words - of .the Supreme Court of California in Backus v. Sessions, 1941,
We are in the same position as the Supreme Court of California was in Backus v. Sessions, supra, when it used the language quoted in note 3 in reaching the conclusion that when the evidence showed that the defendant had certain assets convertible into cash and borrowing facilities, it could not be said that he was “unable or unwilling” to restore the consideration received.