Biggs v. First-Citizens Bank & Trust Co. , 249 N.C. 435 ( 1959 )

Bobbitt, J.

The only question presented is whether the evidence, considered in the light most favorable to plaintiff, was sufficient to make out a case for jury determination.

It was stipulated that Davis executed each and all of the documents referred -to in the statement of facts. Obviously, plaintiff is barred by said “AGREEMENT AND RELEASE” of December 10, 1952, unless it is void as to Davis on the ground that his execution thereof was obtained by fraud, duress and undue influence, as alleged.

Plaintiff’s first contention is that, when Davis executed said “AGREEMENT AND RELEASE,” the Bryans’ relationship to Davis was that of a fiduciary; and that the presumption of fraud arising from their fiduciary relationship cast upon defendants the burden of establishing by the greater weight of the evidence that the transaction was fair to Davis. Hence, plaintiff contends, independent of evidence of actual fraud, duress or undue influence, the issue was for determination by the jury.

If such fiduciary relationship existed, decisions such as McNeill v. McNeill, 223 N.C. 178, 25 S.E. 2d 615; Abbitt v. Gregory, 201 N.C. 577, 160 S.E. 896, and others cited by plaintiff, would support plaintiff’s contention as to the legal significance thereof; but none of the cited cases supports his antecedent and basic contention that the evidence herein was sufficient to support a finding that such fiduciary relationship existed.

In his brief, plaintiff asserts: “The fiduciary or confidential relationship was created when the parties executed the agreement of purchase and sale.” But the agreement of April 24, 1952, to which plaintiff refers, simply defined the contractual rights and obligations of the respective parties. Nothing therein may be construed as establishing a fiduciary or confidential relationship between the contracting parties.

Plaintiff’s second contention is that evidence tending to show “the absence of or the gross inadequacy of consideration alone was sufficient to take the case to the jury upon the issues of fraud, undue influence and duress,” citing Knight v. Bridge Co., 172 N.C. 393, 90 S.E. 412; Butler v. Fertilizer Works, 195 N.C. 409, 142 S.E. 483; and Hill v. Insurance Co., 200 N.C. 502, 157 S.E. 599. Conceding the soundness of the rule declared in the cited cases as applied to the factual situations therein, the evidence here does not show either absence or gross inadequacy of consideration for said “AGREEMENT AND RELEASE.”

Neither Davis nor any other partner had made any capital contribution to the partnership. The only capital assets of the partnership were those acquired from the Corporation. The initial payment of $400,000.00 to the Bryans was made therefrom. While the partnership subsisted Davis received a larger salary than he had theretofore received as an employee of the Corporation.

Plaintiff relies largely on testimony of Davis tending to show that from May 1, 1952, to December 10, 1952, the period the business was operated by the partnership, the profits, exclusive of the amount set aside for depreciation of equipment, were $472,330.24, and that the properties and business were of much greater value on December 10, 1952, than on April 24, 1952, or May 1, 1952.

By said “AGREEMENT AND RELEASE,” Davis and his partners were released from their obligations under the contract of April 24, 1952, to pay $2,600,000.00, the deferred portion of the purchase price; and, whether said “AGREEMENT AND RELEASE” was to their advantage or otherwise, it cannot be said that there was an absence or gross inadequacy of consideration therefor. In this connection, it is noted that the agreement oí April 24, 1952, and said “AGREEMENT AND RELEASE,” were between the Bryans, on the one hand, and all seven purchasers or partners, on the other hand.

The circumstances preceding and at the time of the execution of said “AGREEMENT AND RELEASE” are narrated below.

The partners elected these officials, who served during the period of partnership operation, viz.: Bailey, General Manager; Hughes, Office Manager and Purchasing Agent; Davis, Sales Manager; Mac-Nair, Traffic Manager; Lane, General Superintendent. It appears that, pending performance by the seven purchasers of their obligations under the contract of April 24, 1952, the business was carried on substantially as theretofore. Davis testified that Bryan continued to occupy the same office in the suite of six offices in the Raleigh Building; that Bailey made reports to Bryan; and that Bryan “took charge of the business.” He did say that the name on the door to Mr. Bryan’s office was changed to “James E. Bryan.”

“Several days” prior to December 10, 1952, the late Mr. Sam Ruark, a Raleigh attorney, drafted certain notes and deeds of trust bearing date of May 1, 1952, which, if executed by the purchasers and their wives, as provided therein, would have obligated them to pay the deferred portion of the purchase price, to wit, $2,600.000,00, in accordance with the schedule of maturities specified in the contract of April 24, 1952. Until then, so far as the evidence discloses, the purchasers' had done nothing to comply with their obligations in respect of said deferred portion of the purchase price. Whether Mr. Ruark represented the Bryans or the partnership or both is not clear. As to this, Davis’ testimony was indefinite and contradictory.

Prior to December 10, 1952, the partners, at several meetings, discussed whether they would sign the notes and deeds of trust as drafted by Mr. Ruark. On December 7, 1952, at such a meeting, Lane was noncommittal as to whether he would sign. During this period, Davis conferred with an attorney with reference to these documents.

At the conference or meeting on December 10, 1952, the persons present were (1) each of the seven partners, (2) James E. Bryan, (3) Mr. Ruark, and (4) Mr. Stanley Worth, an attorney of Washington; D. C., who represented the Bryan interests. Davis testified: “The papers were brought in and we were asked whether or not we would sign them by Mr. Ruark.” All partners were willing to sign except Lane. Lane “said he wasn’t going to sign them.” Davis testified that, while he didn’t like certain provisions, he agreed to sign the notes and deeds of trust.

When Lane said he would nob sign the notes and deeds of trust, Mr. Worth “said it would have to be taken back as of May 1st to a partnership of Mary Z. Bryan and James E. Bryan.” Mr. Worth then drafted said “AGREEMENT AND RELEASE.” Since Mr. Worth had to go back to Washington, the partners were told to wait; and, after said “AGREEMENT AND RELEASE” had been drafted, were invited “into the back room where Mr. Worth was, and it was presented for signatures and was given to us for signing so Mr. Worth could go back to Washington.” At the time of the actual signing of said “AGREEMENT AND RELEASE,” the only persons present were the seven partners, Mr. Bryan, and Mr. Worth.

When he executed said “AGREEMENT AND RELEASE,” Davis, then 50 years of age, was a college trained man of wide experience in road construction and engineering. There was no suggestion that he could not or did not read and fully understand the provisions of said “AGREEMENT AND RELEASE” or that anybody misrepresented in any way the contents thereof. True, Davis testified that it “was given to us for signing without change,” and that he didn’t sign it “freely and voluntarily,” but there was no testimony that he raised any question or made any protest as to said “AGREEMENT AND RELEASE” as drafted by Mr. Worth or any provision thereof or that he requested or even suggested a delay for the purpose of further study and consideration.

There is merit in plaintiff’s contention that the notes and deeds of trust as drafted by Mr. Ruark contained provisions beyond those required by the contract of April 24, 1952. However, these facts should be noted: (1) So far as the evidence discloses, the only discussion as to specific provisions was by the partners inter se; (2) Davis agreed to sign the notes and deeds of trust as drafted; (3) Lane, whose refusal to sign resulted in the rescission ab initio of the contract of April 24, 1952, did not indicate that his refusal was based on any particular provisions of the notes and deeds of trust. In any event, irrespective of the actions of his co-purchasers and partners, Davis was at liberty to refuse to sign said “AGREEMENT AND RELEASE” and stand on his rights under the contract of April 24, 1952, if he wanted to do so. It is noted that plaintiff did not call Lane, or any of Davis’ former partners, to testify as witnesses herein.

Under date of December 10, 1952, the seven partners, including Davis, executed the “DISSOLUTION OF PARTNERSHIP” agreement. There was no evidence as to the circumstances under which this document was drafted and executed.

Beginning December 10, 1952, and thereafter, the business was operated by a partnership composed of James E. Bryan and Mary Z. Bryan. It appears that, while Davis did some work for the new partnership after December 10, 1952, he was out sick for three or four days. When he came back to the office on or about December 16, 1952, he was discharged by D. T. Bailey, then acting for the Bryan partnership. (Note: Mr. Bailey had 'been General Manager of the seven-member partnership and prior thereto Vice President and Auditor of the Corporation. Davis was an employee of the Corporation from February 15, 1946, to April 24, 1952. He had no written contract of employment and “no term of employment was specified.”)

Davis testified that he “got a check for $2,000 along about the 13th of December” but did not know whether this was for his salary through the month of December. He testified that he received another check dated December 16, 1952, for $1,600.00, drawn on Bryan Rock & Sand Company, not incorporated, which he endorsed and cashed, but did not know whether this was a bonus payment.

We have considered both the admitted and the excluded evidence. Hence, there is no need to discuss plaintiff’s assignments of error based on his exceptions to the court’s exclusion of portions of Davis’ testimony. However, it seems appropriate to say that Davis’ testimony (1) as to property valuations made by a Mr. Wright, who was not a witness, and (2) as to what Mr. Bailey, who was not a witnes», told Davis Mr. Bryan had said and done, was clearly incompetent and properly excluded.

Whether Davis by (1) his execution of said “DISSOLUTION OF PARTNERSHIP,” and (2) his acceptance of said checks, affirmed and ratified said “AGREEMENT AND RELEASE,” is a question we do not reach. See 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.

The judgment of involuntary nonsuit is affirmed on the ground that there was no evidence that Davis’ execution of said “AGREEMENT AND RELEASE” was obtained by fraud, duress and undue influence as alleged, and therefore plaintiff’s right to recover is barred by said “AGREEMENT AND RELEASE.”

Affirmed.