Appeal from the Circuit Court of Whiteside County; the Hon.
John E. Cunningham, Judge, presiding.
JUSTICE ALLOY DELIVERED THE OPINION OF THE COURT:
Rehearing denied October 21, 1982.
Plaintiff Henry Gutierrez, Jr., appeals from the dismissal of his negligence complaint against defendant Ronald E. Schultz. Gutierrez had filed his action against Schultz as a result of injuries he had sustained when struck by a truck driven by Schultz in December 1978. After filing of the complaint, Schultz responded with a section 48 motion to dismiss (Ill. Rev. Stat. 1979, ch. 110, par. 48), asserting as an affirmative defense that the claim by Gutierrez had been released. Attached to the motion to dismiss was a copy of a draft, in the amount of $6,000, payable to Gutierrez from Allstate Insurance, and endorsed by Gutierrez. A hearing on the motion to dismiss was held, and at the conclusion of the hearing the court entered its order dismissing the complaint, with prejudice. On this appeal, plaintiff Gutierrez argues (1) that the court erred in not permitting parol evidence on the question of the intent of the parties with respect to the draft; (2) that the court erred in not permitting parol evidence on the question of the issues of fraud, misrepresentation, and mutual mistake in connection with the draft; and (3) that the court erred in concluding that the draft was, in fact, a release of the claims.
The record reveals that Gutierrez was injured in December 1978, while walking across a Sterling, Illinois, street. He was struck by a truck, driven by defendant Ronald Schultz. He later filed a negligence action against Schultz, alleging severe and permanent injuries and asking for damages of $15,000. Schultz responded with the filing of a section 48 motion to dismiss, alleging that Gutierrez had, on or about November 15, 1979, accepted a draft from his insurer, Allstate Insurance Company, in the amount of $6,000, as a release of any and all claims arising from the prior accident. Attached to the motion was a copy of the draft, which stated on its face that it was "In payment of any and all claims including bodily injury arising from accident of 12-12-78 in Sterling, Illinois."
At the hearing on the motion to dismiss, plaintiff's counsel sought to introduce certain evidence relating to the circumstances surrounding the acceptance and negotiation of the Allstate draft. The court sustained the motion of defense counsel to exclude such evidence, premising its ruling upon the parol evidence rule and the failure of plaintiff to plead in avoidance of the affirmative defense prior to the hearing. An offer of proof was made. Plaintiff testified that while he was still in the hospital, after the accident, an Allstate adjuster visited him. The adjuster informed him that the company was concerned about the extent of his injuries and that he needn't worry, because they would take care of everything, including medical and hospital expenses, lost wages, and other damages, including replacement of glasses and clothing. The adjuster, according to the offer of proof, also told the plaintiff not to worry, that if he needed money, Allstate would advance it to him. When specifically asked if the adjuster offered to pay lost wages, Gutierrez indicated that he had. Gutierrez testified that the total lost wages as a result of the accident was $14,000. The medical bills, in total, amounted to about $2,500. Gutierrez continued the offer of proof, testifying that about two weeks before he received the draft, alleged to be a full and complete release, he had another conversation with the insurance adjuster. Gutierrez told the adjuster that he would settle for a fair deal, meaning lost wages, bills, and medical expenses. No agreement for a $6,000 settlement was arrived at during that visit, according to Gutierrez. Some two or three weeks after this conversation, Allstate sent Gutierrez a draft check for $6,000, which contained on its face, in normal size print, the following: "In payment of any and all claims including bodily injury arising from accident of 12-12-78 in Sterling, Illinois." Gutierrez testified that when he received the check and cashed it he did not believe that he was settling his claims. He indicated that he had informed the adjuster previously that he was not satisfied with their offer. Gutierrez testified that he felt the check was in partial payment only. Gutierrez also testified, on the offer of proof, that some two or three weeks after he got the draft check, he received a release form from Allstate for him to sign. He testified that he did not sign the release, but threw it in the garbage.
Immediately upon conclusion of the offer of proof, the court stated its opinion that the check was a release of all claims, including bodily injury, and that the plaintiff's endorsement of it estopped him from pursuing the negligence action. Although the court had sustained objections to the evidence concerning the circumstances surrounding the endorsement of the Allstate draft, it nevertheless stated its opinion that Allstate did not intend to perpetrate any fraud or advance any misrepresentation. The court also concluded that there was no mutual mistake of fact. The court then dismissed the complaint with prejudice. From that dismissal, Gutierrez appeals, arguing that the draft was not a release, and that the court erred in not permitting evidence relating to the circumstances surrounding its receipt and endorsement. We reverse and remand.
The rules with respect to releases and covenants not to sue have been repeatedly stated:
"A release or a covenant not to sue, in essence, is the abandoning of a claim to the person against whom the claim exists, and where the release or covenant is executed with knowledge of its meaning, causes of action covered by the release or covenant are barred. (See Ogren v. Graves (1976), 39 Ill. App.3d 620, 622, 350 N.E.2d 249.) Defenses which may be asserted to vitiate a release or covenant not to sue include fraud in the execution, fraud in the inducement, mutual mistake and mental incompetence. (Blaylock v. Toledo, Peoria & Western R.R. Co. (1976), 43 Ill. App.3d 35, 37, 356 N.E.2d 639.) Once the defendant establishes the existence of the document, legal and binding on its face, the burden shifts to the plaintiff to prove it invalid by clear and convincing evidence. Meyer v. Murray (1979), 70 Ill. App.3d 106, 111, 387 N.E.2d 878." (McComb v. Seestadt (1981), 93 Ill. App.3d 705, 706, 417 N.E.2d 705.)
The court in Meyer v. Murray (1979), 70 Ill. App.3d 106, 111, also noted:
"The wording or form of the document, no matter how all-encompassing the language appears to be, will not preclude it from being set aside."
In Willis v. Reum (1978), 64 Ill. App.3d 146, 147, 381 N.E.2d 46, the court noted:
"In Illinois the words of a release will not prevent inquiry into the circumstances to ascertain whether the release was fairly made and accurately reflected the intentions of the parties [citations] and releases of personal injury claims may be set aside when there is a mutual mistake of fact and the circumstances, when finally known, present unconscionable results."
See Newborn v. Hood (1980), 86 Ill. App.3d 784, 408 N.E.2d 275.
On the other hand, caution must be used when setting aside releases. As the First District reiterated in McComb v. Seestadt ...