McGladrey, Hendrickson & Pullen v. Syntek Finance Corp.

375 S.E.2d 689 (1989)

McGLADREY, HENDRICKSON & PULLEN, a partnership (formerly A.M. Pullen & Co.)
v.
SYNTEK FINANCE CORPORATION (formerly The Washington Group, Incorporated).

No. 8818SC274.

Court of Appeals of North Carolina.

February 7, 1989.

Brooks, Pierce, McLendon, Humphrey & Leonard by Reid L. Phillips and Jeffrey A. Batts, Greensboro, for plaintiff-appellant.

Petree Stockton & Robinson by Norwood Robinson, Robert J. Lawing, and Jane C. Jackson, Winston-Salem, for defendant-appellee.

PHILLIPS, Judge.

The only disputed issue in this case is the effect of the foregoing release upon plaintiff's status and rights as the owner of 42,748 shares of Preferred A stock in defendant corporation—plaintiff contending that it had no effect, defendant that it barred "every right of any kind" plaintiff had against defendant when the release was executed. Those being the contentions the order of summary judgment determining that the case has no genuine issue of material fact is arguably an adjudication that by executing the release plaintiff surrendered all of its rights in its shares. But whether the adjudication is viewed as cancelling all plaintiff's rights in the stock, or just its dividend rights, or just its right to the dividend declared before the release was signed, the adjudication is erroneous and we reverse; for the record does authorize summary judgment, but not for defendant.

Under our law a comprehensively phrased "general release," in the absence of proof of a contrary intent, is usually held to discharge all and sundry claims between the parties. Merrimon v. The Postal Telegraph-Cable Company, 207 N.C. 101, 176 S.E. 246 (1934). Though defendant's brief repeatedly refers to the release in this case as a "general release," and cites many general release cases, it is not a general release, but a release specifically limited in scope. It does not purport to apply to all possible claims between the parties or even all outstanding claims, but expressly limits its application to claims that are "related to or connected with" ... "in any way" the allegations made, or that could have been made in one of the three lawsuits named. That in a lawsuit it is possible to allege anything, however irrelevant or frivolous, does not make this a general release as defendant contends; for such a construction would make the limitation that the release is based upon meaningless, which it is not. And since the release does not even contain the words "shares," "dividends," or "rights" and the stock was not a claim, but property plaintiff had owned for three years, it cannot be construed as a surrender of plaintiff's rights either to the shares or the dividends on them.

Under our law what a release means depends upon the intention of the parties when they executed it, their intention is determined from the language used, the situation they were in, and the objects they sought to accomplish, Moore v. Maryland Casualty Co., 150 N.C. 153, 63 S.E. 675 (1909), and its meaning is for the court to determine when the circumstances concerning its execution are not in dispute and its terms are free of ambiguity. Briggs v. American & Efird Mills, Inc., 251 N.C. 642, 111 S.E.2d 841 (1960). With respect to the meaning of the release in this case, the record indisputably shows that: All the parties to it were defendants in one or more of the three pending cases; the cases containing allegations of market price manipulation and plaintiff's deceptive audit reports were pending and had been for years when defendant settled plaintiff's claim for auditing services by issuing the Preferred A shares involved; the object of all the parties was to resolve all claims between them that were connected with or related "in any way" to those cases, they chose language suitable to accomplish that, and did not consider "re-settling" plaintiff's property rights in the Preferred A shares.

The only possible conflict concerns the discussion of plaintiff's stock and the dividend on it before the release was executed, a matter that was addressed by four affidavits. In two of the affidavits Robert E. Payne, plaintiff's attorney, states upon personal knowledge that: He was present at and actively involved in all the settlement negotiations that led to the release; on one occasion during the negotiations defendant's then lawyer, Howard Manning, proposed that plaintiff return its stock, he immediately rejected the proposal, and during the rest of the negotiations preceding the execution of the agreement neither plaintiff's shares nor any dividends arising from them were mentioned. An affidavit by an executive partner of plaintiff states that the partnership did not learn about the dividend until the fall of 1985, a year after it was issued. The other affidavit, by defendant's vice-president, William S. Friedman, without saying or indicating that anything in it is within his personal knowledge, as Rule 56(e), N.C. Rules of Civil Procedure requires, states that: "During the settlement negotiations leading to the agreement and release, Syntek Finance Corporation discussed with McGladrey, Hendrickson & Pullen the fact that the release would bar any and all claims by McGladrey, Hendrickson & Pullen against Syntek Finance Corporation which existed on the date the mutual release was signed.... It was intended that the release would bar every right of any kind by McGladrey, Hendrickson & Pullen against Syntek Finance Corporation including the Preferred stock and the dividend thereon." This affidavit, even apart from its failure to state that it is based on personal knowledge, does not contradict plaintiff's affidavits and thus raises no conflict. For what it states is that the corporate and partnership entities conversed or discussed, which they could not have done since corporations speak and act only through their officers, partners and other agents; and the affidavit says nothing about any person, in any capacity, saying, doing or hearing anything in regard to either the shares or the dividend. And the declaration that the parties intended "to bar every right of any kind" that plaintiff had against defendant is without effect since any such intent is clearly negated by the unambiguous language of the release, along with the other circumstances, including the fact that plaintiff's rights to the shares had been settled a year earlier, long after the cases settled by the release were filed, and the release does not mention those rights.

What the parties intended by the release, as it clearly states, was to resolve and discharge all claims that were connected with or related to either of the three cases whether the claims had been asserted or not, and to leave undisturbed claims not so connected or related. Since the three cases concerned only the manipulation of the market price of defendant's common stock and the dissipation of its pension and profit sharing funds and plaintiff's rights to its Preferred A stock in defendant and the dividends on it are not connected with or related to either of those matters in any way, the release is no bar to the rights stated and judgment for plaintiff is required.

The order of summary judgment for defendant is therefore vacated and the matter remanded to the Superior Court for the entry of judgment for plaintiff in accord with this opinion. The arguments concerning attorney fees are not addressed since no ruling with respect thereto has been made by the trial court.

VACATED AND REMANDED.

EAGLES and PARKER, JJ., concur.