Wilson v. Aetna Casualty & Surety Company
1969 La. App. LEXIS 5846, 228 So. 2d 229 (1969)
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Rule of Law:
Economic hardship and pressure from third parties, absent any threats or force by the opposing party, do not constitute legal duress sufficient to invalidate a compromise agreement.
Facts:
- On May 22, 1967, Curley Wilson was struck by a motorist insured by Aetna Casualty & Surety Company, resulting in serious injuries.
- Wilson, a 66-year-old illiterate laborer, was hospitalized for 140 days and immobilized in casts.
- While hospitalized, Wilson's doctor, Dr. Shirley, informed him that his medicare benefits were exhausted, his hospital bill was substantial and growing, and he needed to be discharged.
- Dr. Shirley advised Wilson that settling his claim was the only way to get money promptly for post-hospital care, as a lawsuit would be lengthy and costly.
- Wilson had no family to care for him and his only source of income was a small social security payment, making him unable to afford necessary nursing care upon his discharge without the settlement funds.
- An adjuster for Aetna offered Wilson $5,000 to settle the claim, which was significantly more than his accrued medical bills but likely less than the full value of the claim.
- Facing imminent discharge from the hospital with no other financial resources or place to go, Wilson accepted the $5,000 offer and signed a release on October 6, 1967, discharging the insurer from all claims.
Procedural Posture:
- Curley Wilson sued Aetna Casualty & Surety Company in a Louisiana trial court to recover damages for personal injuries.
- Aetna filed an exception of res judicata, arguing the suit was barred by a release Wilson had previously signed.
- The trial court overruled Aetna's exception, found the release to be invalid due to error, and proceeded to trial on the merits.
- Following the trial, the court rendered judgment in favor of Wilson for $16,658.50, subject to a credit for the $5,000 already paid.
- Aetna, as the defendant-appellant, appealed the trial court's judgment to the Court of Appeal of Louisiana, Third Circuit.
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Issue:
Does severe economic duress resulting from a plaintiff's personal circumstances, combined with unfortunate advice from a third party, constitute a legally sufficient ground to rescind a compromise agreement?
Opinions:
Majority - Tate, Judge
No. Severe economic duress arising from a party's personal circumstances is not a ground recognized by Louisiana law for the rescission of a compromise. To invalidate a contract for duress, the pressure must proceed from a fear of force or violence that eliminates freedom of consent, originating from an external act by an actor, not merely from the entire set of objective circumstances facing the victim. The court reasoned that while Wilson's situation was unfortunate, the pressure he felt was due to his financial and physical condition, not from any threats or coercion by Aetna's adjuster. The court also held that bad advice from a third party, such as Wilson's doctor, is not a basis for rescinding a compromise. Because Wilson understood the nature of the release and there was no evidence of fraud or legal error, the valid compromise has the 'authority of things adjudged' and must be enforced.
Analysis:
This decision narrowly construes the doctrine of duress in contract law, particularly regarding settlement agreements. It reinforces the principle that for duress to be legally cognizable, it must involve an external threat or coercion, rather than internal pressures stemming from a party's own dire circumstances. The ruling prioritizes the finality of compromise agreements, making it significantly more difficult for a party to invalidate a settlement based on a claim of unequal bargaining power due to financial hardship. This precedent solidifies the distinction between unfortunate circumstances and unlawful coercion, impacting future cases where parties might seek to escape agreements they made while under severe personal or economic stress.
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