Old Republic Ins. Co., Inc. v. Fuller

OLD REPUBLIC INSURANCE

COMPANY, INC.,

Appellant, FULLER, Appellee.

Elvirn

No. 06-95-00071-CV. Texas, Appeals

Court of

Texarkana.

Argued Jan. 1996.

Decided Feb. 1996.

Rehearing Overruled March 6, 1993, Burton informed

сlaim. On October of- by Republic that Old had letter Fuller lump-sum the claim for a to settle fered letter, $30,000.00. Burton of In the payment the accept Fuller offer. recommended told to Burton’s office and Fuller then went agree not to the settle- that he would Burton the claim was because he believed ment Paddock, Mеrcy, Christy R. P. Atch- John that in that more. Burton told Fuller worth Hlavinka, Russell, ley, Waldrop & Texar- go to trial and the claim would have to kana, appellant. for any potential to wait for Fuller would have willing to recovery. he was Fuller said that Patton, Patton, Nix, Young, Lynn S. & do so. Longview, appellee. for in mail Fuller received the On December C.J., CORNELIUS, Before and BLEIL agree- copy compromise of a settlement a GRANT, JJ. copy The showed that a of his claim. ment $30,000.00 approved had been settlement OPINION Compensation Com- the Texas Workers’ mission on November settle- BLEIL, Justice. granted years’ also Fuller three unlim- ment Company appeаls Insurance under the direction ited medical treatment judgment setting compromise a set- aside a signature Troyce Burton’s Dr. Williams. agreement compensa- tlement of a worker’s form, space and in marked on the the was tion claim filed Elvim Fuller. claimant,” was “signature of Fuller’s name trial court’s contends that the directly signed, with initials “J.B.” under Fuller conclusion that did Lit- signed form also Sheila it. The was a was incorrect as matter tleton, adjustor Compa- an Crawford alternative, or in the ny, Republic. administrator for Old preponderance great weight and of the evi- inquire telephoned Fuller Littleton dence. Because we conclude that Fuller had Littleton about the form he received. agreement, ratified settlement re- we attorney. his told that he should contact judgment judgment verse the and render attempted Bur- repeatedly to contact Fuller nothing. that Fuller take ton, him. but was unable reach Eventual- injured July Elvim Fuller his back on ly, found that Burton’s officе had he out through when he fell a cover drain January In Fuller learned closed. working employee Pilgrim’s while as an check Republic ‍‌‌​‌​​‌​‌‌‌​​‌​​​​‌​‌​‌‌‌‌​‌‌​​‌‌‌‌​​‌‌​​​‌‌‌‌​‌‍had issued a settlement inju- Corporation. Pride a of his As result jointly to him payable and Burton made ries, work, missed week of for Fuller one that Burton had endorsed cashed which received in worker’s com- $189.00 Tyler. check at NationsBank pensation he returned benefits. When attorney, retaining Fuller After another week, following Pilgrim’s Pride work attempt to ob- NationsBank in an contacted reassigned light duty him to to accommodate paid Burton. proceeds tain the check it n injury. position in this He worked new $22,- аgreed pay Fuller NationsBank years, supervisor for almost three until a 500.00, representing his share of settle- performing asked him to fill more stren- ment, releasing Na- exchange for Fuller job employee an who was absent. uous liability further connec- tionsBank so, reinjured his back. doing Fuller While payment The remain- cheсk. tion with arising second pain Due to the out this $7,500.00 attorney’s Burton’s ing represented incident, report to work Fuller was unable signed May On fee. 16,1993. February after release, completed affidavit requested forged bore attorney, stating T. that the check retained an John then name, Burton, pay- and received comрensation pursue worker’s endorsement ment from spent NationsBank. Fuller compromise then A agree settlement payment, the entire amount of primarily contract, ment is a and its construction is satisfy debts he had leaving incurred since governed by legal principles applicable work. generally. contracts Snyder, Stevens v. 241, (Tex.App 1994, S.W.2d 243 writ . -Dallas 1994, during Sometime began re- denied); J.T.H., 473, re In 630 S.W.2d 476 ceiving medical Republic’s treatment at Old writ). 1982, (Tex.App. Antonio no If a - San under the Troyee direction of Dr. fraudulently who has been made a Williams, provided by as the settlement party to a contract continues to receive bene agreement. time, Prior to that Fuller had fits under the contract after he becomes receiving chiropractor treatment from a ft’aud, aware of the or if he otherwise con physician. rather than a ducts recog himself such a manner as to 30, 1994, September On represent- subsisting nize the contract binding, as attorney, рresent ed a third filed the thereby affirms the contract and waives compromise action to set aside the settle- Goesl, right of rescission. Daniel v. 161 agreement. trial, ment In a bench the court 490, 892, (1960); Tex. 341 S.W.2d 895 Rosen found that Fuller neither consented to nor Co., baum v. Bldg. Mortgage Texas & 140 agreement, ratified the and ordered that it 325, 506, (1943); Tex. Span 167 S.W.2d 508 be set aside. Jones, 125, (Tex. gler v. 797 S.W.2d 131 concedes that Fuller denied). 1990, App. express writ An - Dallas of, to, was not informed and did not consent ratification necessary; any act based Burton’s settlement of his claim. The com upon recognition a of the contract as subsist contends, however, pany that Fuller ratified ing conduct inconsistent an inten his conduct after he be avoiding tion waiving it has the effect came challenges aware Rosenbaum, right of rescission. 167 the trial court’s conclusion of law to the at S.W.2d contrary. in determining critical factor specific findings When of fact and principal whether a has ratified unautho conclusions of law are filed and a statement agent rized act principal’s is the court, of facts is before this we review the knowledge prior of the facts of the transac legal conclusions drawn from the facts found tion and light his actions in of such knowle to determine their correctness. Mercer v. Inc., dge.1 Stigler, Land Title Co. v. F.M. Bludworth, 693, (Tex.App.- 715 S.W.2d 697 (Tex.1980). 754, 609 S.W.2d 756 Ratification 1986, n.r.e.), Houston [1st Dist.] writ ref'd can party, occur at the time of his grounds, Shumway overruled on other v. acts, allegedly ratifying knowledge has of all 890, Corp., Horizon Credit 801 S.W.2d 894 (Tex.1991). pertaining prior material facts fraudu question of ratification of a Garza, lent transactiоn. Rourke may contract v. 530 be determined as a matter of 794, (Tex.1975); pertinent law if S.W.2d 805 An evidence is Vessels v. uncontrovert- (Tex. 762, Pierce, Corp., Sawyer ed or schutz 823 764 uncontrovertible. v. S.W.2d 117, 1992, denied); 580 (Tex.Civ.App. Corpus App. S.W.2d 123 Saw - - Texarkana n.r.e.). 1979, Christi yer, contrast, writ ref'd par 580 at 122. In S.W.2d a 1. Counsel for Fuller avoiding contends that an essential ís inconsistent with an intention of giving element of ratification is the intention of Goesl, 490, prior agreement. Daniel v. 161 Tex. Enters., validity to the earlier act. Motel Inc. v. 892, (1960); 341 S.W.2d 895 v. Rosenbaum Texas Nobani, 545, (Tex.App 784 S.W.2d 547 . -Hous Co., 325, Bldg. Mortgage 140 Tex. 167 S.W.2d 1990, writ). ton [1st Dist.] As formulated in 506, (1943); Pierce, Sawyer 508 Nobani, principle very support has little (Tex.Civ.App. Corpus 122-23 Christi - susсeptible Texas and we believe it to be Mason, n.r.e.); writ refd Bennett v. misinterpretation misapplication. party’s A (Tex.Civ.App. writ ref'd important - Waco determining intent is indeed file n.r.e.); Olney see also Sav. & Loan Ass’n v. Trini ratification, question party but not because Rather, Ass'n, (5th ty Banc Sav. 885 F.2d Cir. possess ratify. must intent to 1989) law). perform voluntary, (applying must intentional act which Texas GRANT, Justice, concurring. knowledge concerning law is ty's lack of ratification, unless irrelevant the issue majority fully opinion I concur with the of law causes a mistake such mistake grounds for ‍‌‌​‌​​‌​‌‌‌​​‌​​​​‌​‌​‌‌‌‌​‌‌​​‌‌‌‌​​‌‌​​​‌‌‌‌​‌‍of law is not that a mistake Valley fact. v. Nueces material See Davis avoiding a As the сourt held ratification. Co., 4, 7 Irrigation 103 Tex. 126 S.W. Co., Valley Irrigation v. Nueces Davis Agency (1910); Restatement (Second) ratification, knowledge of the made with full (1958). § d 91 cmt. sufficient, facts, without reference material knowledge of law. lack of Republic argues appeal, and offered (1910).2 are 126 S.W. 4 There 103 Tex. trial, Puller evidenсe when contacted rule, but exceptions to that some learning that his claim had after applicable are here. none settled, of fact complain he did not the been reached, had but that the settlement (Second) of in Restatement As set forth any money only that he had not received Agenсy (1958): § 91 Republic that from it. Old thus maintains legal Knowledge the effect of the affir- of agreement by the Fuller ratified settlement material; mance is not nor [ratification] Fuller, failing object to it at that time. knowledge legal the of facts mate- effect however, at testified trial and contradicted rial, except сauses where mistake law account, it was as and thus not incorrect fact, a material such as a mistake of against great weight matter of nor the ownership. as mistake evidence, preponderance of the and the for present of law In the the mistake court to conclude that Puller did not possible legal urged knowledge is lack by his the settlement communications with happened at a time when remedies. This Gas, Republic. Raw Inc. Old See Hide Oil represented by duly was his second Fuller Co., Exploration v. Maxus explore full opportunity counsel and had (Tex.App. 275-76 de - Amarillo attorney. possible the remedies with niеd). Certainly, experience with his first Fuller’s Although at trial thus thé evidence attorney had unfortunate —un- conflicting regard to Fuller’s statements for him and the confi- fortunate both once he learned his claim had been legal profession. in public the dence the settled, among par no dispute there was the attorney was рerpetrated Fraud the first concerning ties his conduct thereafter. Full only Republic but on Old not also attorney help er retained an recover his payor as of the set- Company Insurance the completed share of settlement. He then company issued the tlement check. money spent and it. also received He faith, good believing check according began receiving medical treatment properly signed. The check agreement was agreement. to the terms of the settlement Fuller, as attorney was issued to conduct, Throughout this entire course of making nonnegotiable thus it without payees, Fuller was of Burton’s fraudulent exe aware signatures. both By agreement. cution of the settlement electing agree to receive the benefits of the Republic that Old It must remembered ment, with full fraudulent participate the fraud that was did not nature, ratified the settlement attorney by Full- by the selected perpetratеd object right to it. Rosen forfeited See undisputed that evidence is er. While the baum, 508; Sawyer, at sign Fuller did settlement conclu at 122-23. The trial court’s S.W.2d check, that Fuller there is evidence or the contrary was incorrect. sion objected Republic to Old about ever terms settlement. judgment trial We reverse the court’s аmount lost judgment nothing by dissent contends the that Fuller take render from another Republic could be deducted Old virtue of this suit. facts, necessaiy (1980) Agency § all material it cites this case knows 2. 3 Tex.Jur.3d legal principal also the effect thereof.” proposition that “where the that he know for the however, judgment; evidenсe, settlement or direct, that would both circumstantial and depend upon being there another settlement support sought a conclusion that when Fuller judgment against company money and recovered the from the bank that in an amount excess of the initial settle- illegally check, had cashed the he beliеved Otherwise, ment. Republic is not in a the fraud accompli was a fait position to recover. If the settlement is to undo, powerless that he was and he was aside, Republic be set right has a to be only trying to make the best of a bad situa- position restored to its before the settlement. by getting tion money back the that had been illegally taken from him. The can evidence position The dissent takes the that Old support also a conclusion that Fuller was Republic nothing by lost taking effectively unaware that he anything could do benefits of the settlement because that was about the fraudulent settlement until he saw what bargained present attorney, advice, and on his filed place. first One of the main factors for suit to set it aside. settling any lawsuit is to avoid the risk of a higher judgment at avoiding trial and Acceptance of the benefits of a fraudulent having try a ease. This is operates transaction aas ratification of the exactly what Old lоst. Under the only transaction person, the defrauded theory, dissent’s should still acts, allegedly ratifying the time of his try have to taking the risk and full aspects of all of the fraudulent expense, but at the same time ‍‌‌​‌​​‌​‌‌‌​​‌​​​​‌​‌​‌‌‌‌​‌‌​​‌‌‌‌​​‌‌​​​‌‌‌‌​‌‍be out all of transaction give validity and intended to paid the funds that it to settle the case. This Enterprises, the fraudulent aсt. Motel Inc. equitable. v. (Tex.App 784 S.W.2d 545 Nobani . -Hous precedent It would bad allow writ); ton Sawyer [1st no Dist.] v. being fully represented by attorney to Pierce, (Tex.Civ.App.- 123 accept the funds from a settlement and then n.r.e.). Corpus Christi writ If ref'd say that by he should not be bound thought anything it was too late to do acceptance because he did not understand just about the trying fraud and was to sal legal ramifications. vage deal, what he could from a bad it could not be said that ratify he intended to CORNELIUS, Justice, dissenting. Chief by taking fraud the benefits. agree I cannot that we should overturn the Although general equity rule is that findings trial court’s in this case. The insur- grant will not relief from a mistake of company ance prove by had the burden to applies that rule rules of law competent and sufficient evidence that Fuller apply person’s private legal and does not to a ratified the fraudulent settlement of his rights or duties. As stated in Pomeroy’s compensation by accepting worker’s claim quoted approval Equity Jurisprudence, finding benefits from it. The trial court’s Parmer, the court Lusk v. that Fuller did not (Tex.Civ.App. 677 writ - Amarillo to a amounts failure to find that the insur- ref'd): company proof, ance itsmet burden of and in ignorant “Wherever a is or mistak- my opinion Fuller’s actions do not show that respect en with to his own antecеdent and the trial court’s failure to find ratification existing private legal rights ... either of against the conclusive evidence or property or personal contract or ... status against great weight preponderance relief, equity grant will defensive of the evidence. affirmative, treating the mistake as аnalo- undisputed The evidence is that the settle- to, with, gous if not identical mistake express ment was made Fuller’s fact.” attorney wishes the fraud of his and the forgery signature, of his and that Fuller ob- See also Columbian Nat'l Fire Ins. Co. v. jected House, lawyer’s to the settlement when the Co-Op. Dixie Mail Order 276 S.W. (Tex. secretary told Fuller thаt his claim had 219 App.1925, judgm’t Comm’n Binz, (Tex. already.” “been settled adopted); Lange There is sufficient v. 626 S.W. settlement, 1926, writ); him a fraudulent upon no Alt forced Civ.App. Antonio - San Gerbic, ratify the fraud. I would (Tex.Civ.App.- gelt S.W. 233 he intended v. refd); findings 14 Tex.Jur.3d of fact San Antonio to the trial court’s defer (1981); 3 judgment. § at 154 Contracts affirm the Pomeroy’s (5th 1941). § 849a ed. Jurisprudencе Equity Moreover, could even if Fuller be said acting of law under a mistake

have been accepted fact than when he benefits

rather “settlement,” destroyed

from the his mistake part voluntarily ratify intent on fraud,

approve the and without the intent in-

ratify, regardless that of what motivates tent, there is ratification. Jr., MORGANFIELD, Appellant, Ellis I we should sanction do believe perpetrated that was when fraud Texas, Appellee. The STATE of gives remedy by which law a distinct fraud, and when he has of correct ‍‌‌​‌​​‌​‌‌‌​​‌​​​​‌​‌​‌‌‌‌​‌‌​​‌‌‌‌​​‌‌​​​‌‌‌‌​‌‍No. 04-94-00678-CR. company make the whole fered to insurance Texas, Appeals of Court of rightful if in he recovers benefits. The Antonio. San company surance not be mistreated will later this settlement set aside Feb. If less than recovers settlement. happens, will

just be restored to the settlemеnt, voluntarily which it made vigorously defending in

and is this suit. The

only setting adverse effect of the “settle

ment” aside would be that subjected

company would be risk and defending Equity Fuller’s claim. seeking

has that a never demanded

equity offer reimburse the other ‍‌‌​‌​​‌​‌‌‌​​‌​​​​‌​‌​‌‌‌‌​‌‌​​‌‌‌‌​​‌‌​​​‌‌‌‌​‌‍losing advantage Mares, judgment,

favorable Jackson v. (Tex.App. Corpus S.W.2d 48 Christi - denied), expenses may for the

incurred as the of a new trial. See result Producers, Lookingbill, Inc. v.

United Beef (Tex.1976). remedy litigant

Failure to afford a brings

equity provides in like a ease public causes

discredit on law and ability judicial system’s in the

lose faith

bring to those unfortunate citizens redress very ones

who have defrauded guardians supposed

who were to be legal rights. place our

their should not We justice.

imprimatur perversion on such a company did insurance not meet prove Fuller had full knowl-

burden to that, by aspects fraud

edge of all thought money had been

accepting

Case Details

Case Name: Old Republic Ins. Co., Inc. v. Fuller

Court Name: Court of Appeals of Texas

Date Published: Mar 26, 1996

Citation: 919 S.W.2d 726

Docket Number: 06-95-00071-CV

Court Abbreviation: Tex. App.