Davis v. Hargett

No. 596

244 N.C. 157 (1956) | Cited 17 times | Supreme Court of North Carolina | May 23, 1956

Plaintiff alleges that, by reason of the oppression, fraud and duress practiced and imposed upon him by defendants, he was induced to compromise for $5,000.00 his original cause of action for damages against the operators and owners of the two taxicabs; that he has affirmed the compromise settlement whereby the original tortfeasors were released from further liability; but that he is entitled to recover from defendants, jointly and severally, on account of their said wrongul conduct, the value of his original cause of action, to wit, $35,000.00 subject to credit for the $5,000.00 received by him incident to said compromise settlement.

Plaintiff's brief so analyzes the complaint. Excerpts therefrom: "When the plaintiff executed the release, he was conscious of what he was doing and knew exactly what was happening to him; but he could not resist the oppression, and was compelled to surrender his will to the will of his oppressors. This is the wrong of which he complains, . . . " Again: "In his complaint, the plaintiff alleges a fraudulent release and elects to affirm it, then alleges a cause of action for personal injury as property and asks the jury to determine its true value under standard rules fixed by law for the admeasurement of damages in negligence cases." Again: "The plaintiff's action is in damages for fraud and oppression. He sues defendants as joint tort-feasors."

Hence, there is no need to point out in detail the facts alleged which show an affirmance or ratification by plaintiff of the compromise settlement and releases. Presnell v. Liner, 218 N.C. 152, 10 S.E.2d 639; Sherrill v. Little, 193 N.C. 736, 138 S.E. 14, and cases cited therein.

At the time thereof, plaintiff was fully aware that he was effecting a compromise settlement and executing full releases as to his original cause of action. Later, after his confidence in Hargett had been alienated and they became adversary litigants, plaintiff recovered from Hargett the balance of the $5,000.00 not theretofore paid to him or for his benefit by Hargett.

For purposes of decision on this appeal, we assume, under the facts alleged, (1) that plaintiff had a cause of action for damages (worth in excess of $5,000.00) against the operators and owners of the two taxicabs, and (2) that he was induced to make the compromise settlement and execute releases by defendants" wrongful acts of oppression, fraud and duress.

In such case, when the duress was removed and plaintiff became a free agent, he could have maintained his original action, avoiding the compromise settlement and releases if they were pleaded in bar of his right to recover. Puckett v. Dyer, 203 N.C. 684, 167 S.E. 43, and {PA}

Page 162} Butler v. Fertilizer Works, 195 N.C. 409, 142 S.E. 483, are typical of such cases. As a prerequisite to such action, plaintiff would have been required to tender or return the portion of the compromise consideration under his control when the duress was removed. Presnell v. Liner, supra; Sherrill v. Little, supra.

In his brief, plaintiff states frankly that he makes no contention that he lost his original cause of action by the alleged wrongful conduct of defendants. Plaintiff had three years from 3 June, 1954, when the collision occurred, within which to bring such action. G.S. 1-52 (5). See Annotation: "Right of action for fraud or deceit causing loss of remedy." L.R.A. 1917F, 719.

Plaintiff's contention is that his original cause of action was property, wrongfully taken from him by the defendants, and that in this situation he had the legal right to elect as between two remedies, that is, (1) to rescind the compromise settlement and prosecute his original cause of action, or (2) to affirm the compromise settlement and recover damages from defendants for the difference in value between the true worth of his original cause of action and the consideration actually received by him in the settlement. Plaintiff cites no authority in support of his position relating to a similar factual situation. He contends that the general principles declared in numerous cases involving fraudulent sales and conveyances should be applied here.

Unquestionably, where a sale is induced by false and fraudulent representations the defrauded purchaser may elect to affirm the contract as executed; and, having done so, by independent action or by counterclaim to an action by the seller, he may sue for damages resulting from the seller's false and fraudulent representations. Ordinarily, the damages recoverable in such case consist of the difference in value between the property as delivered and as represented. Hutchins v. Davis, 230 N.C. 67, 52 S.E.2d 210; Buick Co. v. Rhodes, 215 N.C. 595, 2 S.E.2d 699. Similarly, where the seller, by false and fraudulent representations, is induced to include in his deed to the purchaser additional land, not covered by their contract, the seller may affirm the deed and recover from the purchaser as damages the value of such additional land. Modlin v. R.R., 145 N.C. 218, 58 S.E. 1075. These cases are typical of the many cited by plaintiff, each of which has been examined. The remedies allowed in such cases are coexistent and consistent. Machine Co. v. Owings, 140 N.C. 503, 53 S.E. 345.

The distinction between the factual situations in the decisions cited and the present case is clear. True, in those cases a recovery of damages was allowed notwithstanding affirmance of the contract as executed ; but the basis of decision was the fact that the execution of the contract was not in accordance with the real agreement. The right to

recover damages was laid squarely on the terms of the real agreement ; and the damages recoverable were such as flowed from the breach thereof. Moreover, it is clearly recognized in such cases that the party who elects to affirm the contract and sue for damages is bound by all obligations imposed upon him by the terms of the real agreement. Hutchins v. Davis, supra.

Here plaintiff had a damage claim based on tort, of undetermined merit and for an unliquidated amount. There was no sale or transfer of his claim or cause of action against the original tort-feasors. No other person became entitled to prosecute such claim or cause of action. What he did, and all that he did, was to compromise his original claim or cause of action for $5,000.00; and the $5,000.00 was paid to him as agreed. Admittedly, he is entitled to recover no more under the settlement agreement. There has been no breach thereof. His allegations are to the effect that, while he was fully aware of the terms of the agreement when made, he did not make such agreement of his own free will. When the duress was removed, he had the right to affirm it or to rescind it, one or the other. Under the facts here, these remedies were inconsistent, requiring an election. He made the election and is bound thereby.

While plaintiff alleges that he is entitled to recover from defendants herein as joint tort-feasors on account of their alleged wrongful acts, the recovery he seeks is the amount of damages he alleges he was entitled to recover originally against the operators and owners of the two taxicabs. Thus, he seeks to recover indirectly on his original cause of action against parties who were not involved therein.

In this connection, these facts are noted: (1) Hargett had no liability in connection with plaintiff's original cause of action; and (2) defendant insurance company, by reason of its coverage on the two taxicabs, had a maximum contingent liability of $10,000.00.

The alleged mistreatment of plaintiff by Hargett in respect of bad advice, bad accommodations and inadequate care, set forth by plaintiff in some detail, need not be discussed. It is not the basis of the cause of action alleged herein.

In our view, under the facts alleged, plaintiff has no cause of action against defendants herein; and the judgment sustaining their demurrer ore tenus and dismissing the action is

Affirmed.

Disposition

Affirmed.

Plaintiff alleges that, by reason of the oppression, fraud and duress practiced and imposed upon him by defendants, he was induced to compromise for $5,000.00 his original cause of action for damages against the operators and owners of the two taxicabs; that he has affirmed the compromise settlement whereby the original tortfeasors were released from further liability; but that he is entitled to recover from defendants, jointly and severally, on account of their said wrongul conduct, the value of his original cause of action, to wit, $35,000.00 subject to credit for the $5,000.00 received by him incident to said compromise settlement.

Plaintiff's brief so analyzes the complaint. Excerpts therefrom: "When the plaintiff executed the release, he was conscious of what he was doing and knew exactly what was happening to him; but he could not resist the oppression, and was compelled to surrender his will to the will of his oppressors. This is the wrong of which he complains, . . . " Again: "In his complaint, the plaintiff alleges a fraudulent release and elects to affirm it, then alleges a cause of action for personal injury as property and asks the jury to determine its true value under standard rules fixed by law for the admeasurement of damages in negligence cases." Again: "The plaintiff's action is in damages for fraud and oppression. He sues defendants as joint tort-feasors."

Hence, there is no need to point out in detail the facts alleged which show an affirmance or ratification by plaintiff of the compromise settlement and releases. Presnell v. Liner, 218 N.C. 152, 10 S.E.2d 639; Sherrill v. Little, 193 N.C. 736, 138 S.E. 14, and cases cited therein.

At the time thereof, plaintiff was fully aware that he was effecting a compromise settlement and executing full releases as to his original cause of action. Later, after his confidence in Hargett had been alienated and they became adversary litigants, plaintiff recovered from Hargett the balance of the $5,000.00 not theretofore paid to him or for his benefit by Hargett.

For purposes of decision on this appeal, we assume, under the facts alleged, (1) that plaintiff had a cause of action for damages (worth in excess of $5,000.00) against the operators and owners of the two taxicabs, and (2) that he was induced to make the compromise settlement and execute releases by defendants" wrongful acts of oppression, fraud and duress.

In such case, when the duress was removed and plaintiff became a free agent, he could have maintained his original action, avoiding the compromise settlement and releases if they were pleaded in bar of his right to recover. Puckett v. Dyer, 203 N.C. 684, 167 S.E. 43, and {PA}

Page 162} Butler v. Fertilizer Works, 195 N.C. 409, 142 S.E. 483, are typical of such cases. As a prerequisite to such action, plaintiff would have been required to tender or return the portion of the compromise consideration under his control when the duress was removed. Presnell v. Liner, supra; Sherrill v. Little, supra.

In his brief, plaintiff states frankly that he makes no contention that he lost his original cause of action by the alleged wrongful conduct of defendants. Plaintiff had three years from 3 June, 1954, when the collision occurred, within which to bring such action. G.S. 1-52 (5). See Annotation: "Right of action for fraud or deceit causing loss of remedy." L.R.A. 1917F, 719.

Plaintiff's contention is that his original cause of action was property, wrongfully taken from him by the defendants, and that in this situation he had the legal right to elect as between two remedies, that is, (1) to rescind the compromise settlement and prosecute his original cause of action, or (2) to affirm the compromise settlement and recover damages from defendants for the difference in value between the true worth of his original cause of action and the consideration actually received by him in the settlement. Plaintiff cites no authority in support of his position relating to a similar factual situation. He contends that the general principles declared in numerous cases involving fraudulent sales and conveyances should be applied here.

Unquestionably, where a sale is induced by false and fraudulent representations the defrauded purchaser may elect to affirm the contract as executed; and, having done so, by independent action or by counterclaim to an action by the seller, he may sue for damages resulting from the seller's false and fraudulent representations. Ordinarily, the damages recoverable in such case consist of the difference in value between the property as delivered and as represented. Hutchins v. Davis, 230 N.C. 67, 52 S.E.2d 210; Buick Co. v. Rhodes, 215 N.C. 595, 2 S.E.2d 699. Similarly, where the seller, by false and fraudulent representations, is induced to include in his deed to the purchaser additional land, not covered by their contract, the seller may affirm the deed and recover from the purchaser as damages the value of such additional land. Modlin v. R.R., 145 N.C. 218, 58 S.E. 1075. These cases are typical of the many cited by plaintiff, each of which has been examined. The remedies allowed in such cases are coexistent and consistent. Machine Co. v. Owings, 140 N.C. 503, 53 S.E. 345.

The distinction between the factual situations in the decisions cited and the present case is clear. True, in those cases a recovery of damages was allowed notwithstanding affirmance of the contract as executed ; but the basis of decision was the fact that the execution of the contract was not in accordance with the real agreement. The right to

recover damages was laid squarely on the terms of the real agreement ; and the damages recoverable were such as flowed from the breach thereof. Moreover, it is clearly recognized in such cases that the party who elects to affirm the contract and sue for damages is bound by all obligations imposed upon him by the terms of the real agreement. Hutchins v. Davis, supra.

Here plaintiff had a damage claim based on tort, of undetermined merit and for an unliquidated amount. There was no sale or transfer of his claim or cause of action against the original tort-feasors. No other person became entitled to prosecute such claim or cause of action. What he did, and all that he did, was to compromise his original claim or cause of action for $5,000.00; and the $5,000.00 was paid to him as agreed. Admittedly, he is entitled to recover no more under the settlement agreement. There has been no breach thereof. His allegations are to the effect that, while he was fully aware of the terms of the agreement when made, he did not make such agreement of his own free will. When the duress was removed, he had the right to affirm it or to rescind it, one or the other. Under the facts here, these remedies were inconsistent, requiring an election. He made the election and is bound thereby.

While plaintiff alleges that he is entitled to recover from defendants herein as joint tort-feasors on account of their alleged wrongful acts, the recovery he seeks is the amount of damages he alleges he was entitled to recover originally against the operators and owners of the two taxicabs. Thus, he seeks to recover indirectly on his original cause of action against parties who were not involved therein.

In this connection, these facts are noted: (1) Hargett had no liability in connection with plaintiff's original cause of action; and (2) defendant insurance company, by reason of its coverage on the two taxicabs, had a maximum contingent liability of $10,000.00.

The alleged mistreatment of plaintiff by Hargett in respect of bad advice, bad accommodations and inadequate care, set forth by plaintiff in some detail, need not be discussed. It is not the basis of the cause of action alleged herein.

In our view, under the facts alleged, plaintiff has no cause of action against defendants herein; and the judgment sustaining their demurrer ore tenus and dismissing the action is

Affirmed.

Disposition

Affirmed.

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