Maynard v. DURHAM AND SOUTHERN RAILWAY COMPANY

112 S.E.2d 249 (1960)

251 N.C. 783

Eugene E. MAYNARD v. DURHAM AND SOUTHERN RAILWAY COMPANY.

No. 453.

Supreme Court of North Carolina.

January 29, 1960.

*251 William T. Hatch, Samuel H. Johnson, Wiley F. Mitchell, Jr., Raleigh, for plaintiff.

Charles B. Nye, Durham, Clem B. Holding, Raleigh, for defendant.

DENNY, Justice.

The defendant concedes that probably the evidence offered by the plaintiff in the trial below was sufficient to take the case to the jury had the plaintiff not signed the release set out herein, which the defendant pleaded in bar of his right to recover. Therefore, the question for determination is whether or not the plaintiff's evidence in support of his allegations that the release was without consideration and wrongfully procured by means of fraud and duress, was sufficient to warrant its submission to the jury.

It was admitted in the trial below that the defendant was engaged in interstate commerce at the time of the alleged injury. Likewise, it is conceded that this case is governed by the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., and by applicable principles of common law as interpreted and applied by the federal courts. Chesapeake & O. R. Co. v. Kuhn, 284 U.S. 44, 52 S. Ct. 45, 76 L. Ed. 157; Ricketts v. Pennsylvania R. Co., 2 Cir., 153 F.2d 757, 164 A.L.R. 387.

The appellee contends that the release under consideration cannot be set aside except by evidence which is clear, strong, and convincing, citing Clements v. Life Ins. Co. *252 of Virginia, 155 N.C. 57, 70 S.E. 1076; Callen v. Pennsylvania R. Co., 3 Cir., 162 F.2d 832, affirmed 332 U.S. 625, 68 S. Ct. 296, 92 L. Ed. 242, while the appellant contends that only the preponderance or greater weight of the evidence is required, citing Dice v. Akron, C. & Y. R. Co., 342 U.S. 359, 72 S. Ct. 312, 96 L. Ed. 398.

We have found nothing in the federal decisions at variance in this respect with our own decisions.

In this jurisdiction, if the action is to set aside an instrument allegedly procured by fraud or undue influence, the burden of proof to establish such allegation is by the preponderance or greater weight of the evidence. On the other hand, if the action is to reform an instrument, the evidence must be clear, strong, cogent, and convincing. Walters v. Bridgers, 251 N.C. 289, 111 S.E.2d 176; Henley v. Holt, 221 N.C. 274, 20 S.E.2d 62; Ricks v. Brooks, 179 N.C. 204, 102 S.E. 207; Bolich v. Prudential Insurance Co., 206 N.C. 144, 173 S.E. 320.

In Ricks v. Brooks, supra [179 N.C. 204, 102 S.E. 209], it is said: "In an action for reformation it must be alleged and shown by evidence clear, strong, and convincing, that the instrument sought to be corrected failed to express the true agreement of the parties, because of a mistake common to both parties, or because of the mistake of one party induced by the fraud or inequitable conduct of the other party, and that by reason of ignorance, mistake, fraud, or undue advantage something material has been inserted, or omitted, contrary to such agreement and the intention of the parties. Ray v. Patterson, 170 N.C. 226, 87 S.E. 212; Newton v. Clark, 174 N.C. 393, 93 S.E. 951. But this rule does not apply where the purpose is not to reform, but to set aside the instrument for fraud, undue influence, or upon other equitable ground."

The plaintiff alleges lack of consideration in the procurement of the release involved herein. It is generally held in this and other jurisdictions that the mere inadequacy of consideration alone is insufficient to set aside a release. Ledford v. Ledford, 229 N.C. 373, 49 S.E.2d 794; Watkins v. Grier, 224 N.C. 339, 30 S.E.2d 223; Ward v. Heath, 222 N.C. 470, 24 S.E.2d 5; McInturff v. St. Louis Union Trust Co., 201 N.C. 16, 158 S.E. 547; Aderholt v. Seaboard Air Line Ry., 152 N.C. 411, 67 S.E. 978; Williams v. East St. Louis Junction R. Co., 349 Ill.App. 296, 110 N.E.2d 700; Kavadas v. St. Louis Southwestern Ry. Co., Mo.App., 263 S.W.2d 736.

In Williams v. East St. Louis Junction R. Co., supra, the case was brought pursuant to the Federal Employers' Liability Act and the evidence raised questions similar to those in the instant case. There, as here, the plaintiff testified he was injured at a particular time, place and manner, but he was the only one who so testified. All other employees who were present at the time and place testified no such injury occurred. The consideration for the release was wages in the sum of $57.38 for six days the plaintiff did not work on account of his alleged injuries. The case was submitted to the jury and the plaintiff obtained a substantial verdict. The court, however, allowed a motion for judgment in favor of the defendant notwithstanding the verdict. There, as here, the plaintiff testified in the trial below that he signed the release but did not know what he was signing and did not know its contents. The Appellate Court said: "Plaintiff very strenuously insists that the validity and effect of this release should be adjudged under federal procedure and that under federal procedure it is required that the question of the validity of a release be submitted to and acted upon by the jury and that the jury's verdict is binding. He relies upon the case of Dice v. Akron, C. & Y. R. Co., 342 U.S. 359, 72 S. Ct. 312, 96 L. Ed. 398. It is unquestionably true that federal law controls actions under the Federal Employers' Liability Act in federal as well as state courts. The Dice case, supra, however, is authority only for the proposition that where there is competent *253 evidence to support the claim of fraud in securing a release the question must be submitted to a jury for a determination. It furnishes no authority that the courts may not direct a verdict or grant judgment notwithstanding the verdict where there is no evidence to sustain the allegation of fraud. Furthermore, federal law is settled that in order to avoid the effect of a release the burden is on the one attacking the settlement to show that the contract is tainted with invalidity either by fraud or mutual mistake of fact. Callen v. Pennsylvania R. Co., 332 U.S. 625, 68 S. Ct. 296, 92 L. Ed. 242, 247. Therefore the burden rested upon the plaintiff to produce evidence to show fraud as alleged in his reply to the affirmative matter in defendant's answer." [349 Ill.App. 296, 110 N.E.2d 702.] The judgment in favor of the defendant was affirmed.

Likewise, in Kavadas v. St. Louis Southwestern Ry. Co., supra, the action was brought under the Federal Employers' Liability Act and the release was based on one day's wages in the sum of $12.18. The plaintiff alleged the release was procured by fraud and false representations. The case was submitted to the jury and the jury returned a verdict in favor of the plaintiff. On appeal, the Court said: "As we have already indicated it is our view that the evidence was not sufficient to make an issue for the jury upon the question of fraud in procuring the release. * * * There is some evidence in the record to indicate that plaintiff sustained substantial injuries and we must therefore confess that we are reluctant to hold that he is barred from recovery because he signed a release upon receipt of $12.18. However, this court cannot relieve the plaintiff of the consequences of his bargain without a valid legal reason for doing so. Mere inadequacy of consideration alone is not enough. Vondera v. Chapman, 352 Mo. 1034, 180 S.W.2d 704. To hold otherwise would establish a precedent which would make it difficult to settle controversies and would be contrary to the established policy of the law to encourage peaceful settlements. * * *" [263 S.W.2d 739.] The judgment was reversed.

There is no evidence in the record before us to support the contention of plaintiff that he was entitled, as a matter of right, to the $144.60 as wages for the time he did not work because of his alleged injuries. Therefore, unless the release was procured by fraud and duress, as alleged in plaintiff's reply to the affirmative matter pleaded in defendant's answer, the judgment as of nonsuit entered in the court below must be upheld.

As we construe the plaintiff's evidence, he does not show any fraud or duress on the part of the defendant or its agents, but, on the contrary, his own testimony negatives his allegation in that respect.

In our opinion, the plaintiff and the defendant entered into the release in good faith. Neither party at the time of the execution of the release had any idea that the plaintiff had sustained an injury that might or would develop into any permanent disability. There may have been mutual mistake on the part of the plaintiff and the defendant in this respect, as was alleged and relied on in Callen v. Pennsylvania R. Co., supra; however, in the instant case, the plaintiff's cause of action is not bottomed on mistake but on fraud and duress.

In light of the record before us and applicable decisions bearing thereon, we are constrained to hold that the ruling of the court below must be upheld.

Affirmed.

PARKER, J., dissents.