Edwards v. Robinson-Humphrey Co. ( 1982 )

Carley, Judge.

Appellant brought this action against appellee, Robinson-Humphrey Company, Inc. seeking damages she allegedly sustained as a result of the conduct of David Quinn who was an employee of appellee. Appellant relied upon the doctrine of respondeat superior with respect to acts of Quinn committed within the scope of his employment and upon appellee’s alleged negligence in hiring with respect to acts committed outside the scope of Quinn’s employment. After extensive discovery, appellee filed a motion for summary judgment. Concluding that the defense of ratification was meritorious, the trial court granted appellee’s motion for summary judgment and appellant appeals.

In order to resolve the issues in this case, a recitation of the relevant facts is necessary: David Quinn was employed by appellee in 1976 as a registered representative. Before Quinn was hired by appellee, he was required to complete numerous application forms. In addition, a thorough investigation of his background was made by an independent organization, and inquiries were directed to his past employer. It is undisputed that Quinn’s applications contained misrepresentations and inconsistencies concerning his personal and professional histories. However, the applications and investigations revealed absolutely no evidence of a violent or criminal background.

The evidence, construed most strongly in favor of appellant, further shows that in January of 1977, Quinn, by threats of violence, coerced appellant into purchasing, through appellee, 250 units of a tax-free bond trust for their fair market value of $264,377.50. In addition, the following day, Quinn stole several paintings from appellant’s art collection. Appellant fully cooperated with authorities in their investigation of Quinn, and was instrumental in securing Quinn’s indictment for the theft of her paintings which were returned to her. However, at this point, appellant did not inform appellee of Quinn’s threats, and in fact took delivery of the Bond Unit Certificate on February 22,1977, the same day Quinn was indicted for theft. On March 1, 1977, when appellee learned of Quinn’s indictment, Quinn was suspended from the duties of his employment. Three days later, appellant had the bond units returned to appellee to have them re-registered in appellant’s full name, including her middle initial. In April of 1977, Quinn was convicted of theft. It was not until May of 1977 that appellee first learned that appellant had some concerns over her original purchase of the securities. At that time, appellee contacted appellant’s attorney and offered to cancel the purchase and return the full purchase price. Although appellant’s attorney stated that he would “get back to” appellee, there was no further communication in this regard. Appellant retained the securities without complaint to appellee until approximately October of 1979, some 33 months after appellant was allegedly coerced into their purchase by Quinn. Appellant decided to sell the units because they “were not a good investment at that time and [she] could get more interest on [her] money.” At the time of the sale — which was 29 months after appellee offered to repurchase the securities — the fair market value of the bond units had decreased and appellant sold the bond units at a loss of approximately $35,000. However, during the more than two and one-half years appellant held the securities without voicing any objection to appellee, she received more than $40,000 in tax free income. In December of 1980, almost four years after the coerced purchase of the securities and the theft of the paintings, appellant instituted the instant action against appellee.

1. Any claim appellant may have had in respondeat superior for personal injuries (such as for the torts of assault, trespass, infliction of emotional distress, or invasion of privacy) is barred by Georgia’s two year statute of limitations. Code Ann. § 3-1004.

2. With respect to appellant’s respondeat superior claim for damages to property, appellant asserts that the trial court erred in granting summary judgment to appellee based upon appellee’s defense of ratification. In support of her respondeat superior claim, appellant emphasizes that she is not attempting to rescind the purchase of the securities to which the defense of ratification may apply. Instead, appellant asserts that her claim is in tort because she has affirmed the contract and is suing for damages based on Quinn’s duress. Appellee contends that her damage is the loss incurred when she finally sold the bond units along with the amount of interest she could have earned with the money had she not been forced to purchase the bonds.

It is clear that “where a vendee is induced to enter into a contract for the sale of personalty by the fraud of the vendor ... he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud.” Tuttle v. Stovall, 134 Ga. 325, 328 (67 SE 806) (1910). Although Quinn’s alleged actions did not constitute “fraudulent misrepresentations” about the bond units, but were in the form of threats of violence, it is clear that “ ‘ [djuress is considered as a species of fraud in which compulsion in some form takes the place of deception in accomplishing an injury, and, like fraud, constitutes a meritorious ground to set aside a contract executed as a result thereof. [Cits.]’ ” Tidwell v. Critz, 248 Ga. 201, 203 (282 SE2d 104) (1981). It follows that duress also constitutes a meritorious basis upon which to affirm a contract executed as a result thereof and sue for damages for the duress. Thus, after the “forced” purchase, appellant could have elected either to rescind the contract, or to affirm the contract and, based upon respondeat superior, sue appellee for damages arising out of Quinn’s duress.

However, although a defrauded party “may affirm the contract and sue for damages for the fraud, this right of affirmance, with a saving of the right to sue for damages, has its limitations, in that the defrauded party, in order to preserve his right to sue for damages for the fraud, must do no act in affirming the contract, or otherwise, which waives the fraud. If the defrauded party, with knowledge of the fraud, does an act in ratifying or affirming the contract which shows his intention to abide by the contract as made, with the fraud in it, and thus waives the fraud, he can not afterwards set up the fraud and recover damages therefor. ” Tuttle v. Stovall, 134 Ga. at 329, supra. (Emphasis supplied.) Thus, even though appellant’s respondeat superior claim seeks not to rescind the contract, but to affirm the contract and sue for damages, the defenses of ratification and waiver are viable ones.

Based upon the undisputed evidence in the instant case, we find that appellant’s ratification of the contract and waiver of the duress is shown as a matter of law. Appellant accepted every interest payment for the thirty-three months that she held the bond units. She made no attempt to even inform appellee of Quinn’s threats or to complain that they were the cause of her purchase. Furthermore, appellant, after Quinn’s indictment for theft, returned the bond units to appellee to have her middle initial added. Most importantly, when appellee offered to cancel the purchase of the bonds and return the full purchase price, appellant did not do so. While appellant testified that she kept the bonds due to Quinn’s threats, the record shows that she was not so coerced or under such duress as to be unable to testify at Quinn’s trial. In fact, appellant stated that she only decided to sell the bond units as “they were not a good investment at the time.” We therefore hold that “[b]y [appellant’s] conduct in thus dealing with the opposite party she recognized the contract as one that was valid and enforceable against her in its entirety.” Tuttle v. Stovall, 134 Ga. at 332, supra. The evidence of appellant’s actions demonstrates, as a matter of law, that appellant intended to abide by the contract as made notwithstanding Quinn’s duress.

Appellant’s claim in respondeat superior for “injuries to property,” namely the “loss of funds,” inescapably and necessarily is encompassed by the tort of duress since appellant is claiming all loss to her was directly caused by the threats of Quinn. Therefore, appellant’s claim for “injuries to property” must necessarily be considered to be one and the same as appellant’s claim to affirm the contract and sue for damages for the duress. Appellant’s respondeat superior claim for the loss incurred on the bond units is without merit. Compare Touche, Inc. v. Dearborn, 161 Ga. App. 188 (3) (291 SE2d 35) (1982); Atlanta Car Wash v. Schwab, 215 Ga. 319 (2) (110 SE2d 341) (1959).

3. Appellant also asserts that genuine issues of material fact remain with regard to appellant’s claim that appellee was itself negligent in hiring Quinn and that, therefore, the trial court erred in granting appellee’s motion for summary judgment.

While there were inaccuracies and misstatements in Quinn’s applications concerning his private and professional history, it is undisputed that the applications and investigations contained absolutely no evidence of a violent or criminal background. While the evidence might show that Quinn had a propensity for lying and that appellee knew or should have known of this propensity, it is not appellee’s negligence in hiring and retaining a liar as an employee that underlies appellant’s claim. Appellant’s claim of negligence against appellee is based upon Quinn’s tortious acts of violence and his criminal acts of theft of appellant’s art work. For appellee to be negligent in hiring and retaining an employee with violent and criminal propensities, it would be necessary that appellee knew or should have known of those dangerous propensities alleged to have resulted in appellant’s injuries. See generally Henderson v. Nolting First Mtg. Corp., 184 Ga. 724, 733 (2) (193 SE 347) (1937); C. K. Sec. Systems v. Hartford Acc. &c. Co., 137 Ga. App. 159 (223 SE2d 453) (1976); Cunningham v. Hodges, 150 Ga. App. 827,830 (258 SE2d 631) (1979).

The record contains absolutely no evidence which would authorize a finding that appellee knew or should have known that Quinn was violently or criminally prone. “ ‘In determining what is proximate cause the true rule is, that the injury must be the natural and probable consequence of the negligence, such a consequence as under the surrounding circumstances of the case might and ought to have been foreseen by the wrong-doer as likely to flow from his act.’ ” Southern R. Co. v. Webb, 116 Ga. 152, 156 (42 SE 395) (1902). To hold, as appellant argues, that a master may be found liable for the negligent employment of a servant who subsequently commits tortious and criminal acts solely because the employer knew or should have known that the servant had originally lied about his personal and professional qualifications for the position, would be tantamount to holding that there is no longer any proximate causation requirement in negligent employment actions in this state.

Appellant’s argument that appellee would not have hired Quinn had it known or discovered his lies does not demonstrate that the negligence, if any, in hiring a liar was the proximate cause of appellant’s injuries resulting from Quinn’s tortious and criminal acts. This evidence would support only a finding that because of appellee’s failure to discover that Quinn was a liar, Quinn was hired to a position of trust where he was afforded the opportunity to coerce appellant into buying the securities and, presumably, to gain felonious access to her art collection. See General Motors Corp. v. Davis, 141 Ga. App. 495, 496 (1) (233 SE2d 825) (1977). In the instant case, there is no evidence that Quinn’s subsequent tortious and criminal actions against appellant “ ‘could reasonably have been anticipated, apprehended, or foreseen’” by appellee, Medlin v. Bickford, 106 Ga. App. 859, 861 (128 SE2d 531) (1962), as a “probable or natural consequence” of hiring him. Southern R. Co. v. Webb, 116 Ga. at 156, supra. Therefore, the mere fact that Quinn, as a liar, had been negligently employed and was employer’s employee at the time appellant’s claims arose would not constitute the proximate cause of appellant’s damages. See generally Skelton v. Gambrell, 80 Ga. App. 880 (57 SE2d 694) (1950). Therefore, summary judgment was not erroneously granted to appellee as to appellant’s negligent hiring claims.

Decided December 3, 1982 Rehearing denied December 20, 1982. Andrew R. Kirschner, for appellant. Gregg J. Borri, A. Felton Jenkins, Jr., for appellee.

Judgment affirmed.

Quillian, C. J., Deen, P. J., Sognier and Pope, JJ., concur. McMurray, P. J., Shulman, P. J, Banke and Birdsong, JJ., dissent.