Baker v. Chicago, Fire & Burglary Detection, Inc.

• Decision Date: 30 November 1973
• Docket Number: No. 72-1983.,72-1983.
• Citation: 489 F.2d 953
• Parties: Albert BAKER, Plaintiff-Appellant, v. CHICAGO, FIRE & BURGLARY DETECTION, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

489 F.2d 953 (1973)

Albert BAKER, Plaintiff-Appellant, v. CHICAGO, FIRE & BURGLARY DETECTION, INC., Defendant-Appellee.

No. 72-1983.

United States Court of Appeals, Seventh Circuit.

Argued October 16, 1973.

Decided November 30, 1973.

Wayne B. Giampietro, Chicago, Ill., for plaintiff-appellant.

George W. Johnson, Glen Ellyn, Ill., for defendant-appellee.

Before SWYGERT, Chief Judge, CASTLE, Senior Circuit Judge and SPRECHER, Circuit Judge.

SPRECHER, Circuit Judge.

This appeal raises the question of whether the instant action commenced under Title VII of the Civil Rights Act of 1964 was properly disposed of on a motion for summary judgment.

I

Plaintiff filed a complaint with the Equal Employment Opportunity Commission on June 3, 1971 alleging that on or about June 1, 1971 he had been discharged from his employment with Chicago Fire & Burglary Detection, Inc. (the "company") by reason of the fact that he was a member of the Jewish religion.

On September 1, 1971, the company issued a check to plaintiff in connection with a proceeding before the State of Illinois Department of Labor, Wage Claim Division (File No. 71-1065) for wages allegedly earned by plaintiff prior to his discharge. The Wage Claim Division forwarded the check to plaintiff stating that the sum was "to cover payment of your Wage Claim filed in this office against your former employer" (Record, 74). The check was made out in the amount of $28.68 ($36 less deductions); the reverse side contained a typewritten legend reciting the following: "Full Payment and Settlement of Any and All Claims Against Chicago Fire and Burglary Detection, Inc." Plaintiff had not communicated with the company concerning this release and had no prior knowledge that it would appear on the check. Plaintiff conversed with an employee of the Wage Claim Division concerning the significance of the legend and was advised that it would have no effect on any other cause of action he might have against his company. Consequently, plaintiff subsequently negotiated the check.

The EEOC issued to plaintiff a Notice of Right to Sue on January 3, 1972 and suit was commenced on January 10, 1972. Counsel for plaintiff was appointed by the district court on February 10, 1972.

The complaint was based on 42 U.S.C. § 2000e et seq. and 42 U.S.C. § 1981. The company's answer denied that the plaintiff had been discharged because of his religion and raised the affirmative defense of not being an employer within the meaning of 42 U.S.C. § 2000e(b). The company then filed a motion for summary judgment with supporting affidavits on the basis that the 42 U.S.C. § 2000e claim failed for lack of jurisdiction and the 42 U.S.C. § 1981 claim had been satisfied and released. Plaintiff's reply to the motion for summary judgment denied that his negotiation of the check was intended to have the effect of releasing his civil rights claim and further raised the procedural irregularity of the company pleading the release for the first time in a motion for summary judgment.¹

In granting summary judgment in favor of the company, the district court found that the Section 2000e claim failed because the company did not employ 25 or more persons. Plaintiff does not appeal this determination. As to the Section 1981 claim, the release was given force and effect on the basis of the following reasoning:

"This language seems clear enough, and allows no exceptions. Plaintiff does not contend that he did not know of his § 1981 claim when he signed. In fact his brief states that he had proceedings pending before the F.E. P.C. at this time. Plaintiff merely contends that the Illinois Department of Labor told him that the release would not affect claims other than the wage claim which he was then settling.

"Plaintiff has no right to rely on the advice of a third party to the prejudice of defendant. If the defendant had misled him or otherwise practiced fraud or duress on him, he might have a case. But absent such circumstances, he cannot be allowed to set aside a general release every time he or his lawyer files a new lawsuit against the released party. Lawrence v. Muter, 171 F.2d 380 (7th Cir. 1948)."

Plaintiff argued that he had a right to rely on the advice of the Wage Claim Division and it was reasonable for him to do so, that the check represented only wages due and was not intended to compensate him for his civil rights claims, and that there was no intention on his part that the release be effective generally. Consequently, under Illinois law the release would not bar the instant action.

II

Federal Rule of Civil Procedure 8(c) provides in pertinent part that "in pleading to a preceding pleading, a party shall set forth affirmatively . . . release . . . and any other matter constituting an avoidance or affirmative defense."²

Here, the company, subsequent to answer, supported a motion for summary judgment by raising the affirmative defense of release by affidavits, which defense was not raised in its answer, In Roe v. Sears, Roebuck & Co., 132 F.2d 829 (7th Cir. 1943), where defendant answered, then subsequently set up the defense of statute of limitations for the first time by way of affidavits in support of a motion for summary judgment, the court set forth the principle applicable in this Court as follows:

"When defendant moved for summary judgment it had filed an answer, the legal effect of which was a waiver of its defense of the statute of limitations. It could not, therefore, unless relieved from its default, revive the defense it had waived. We need not consider when a defendant may be excused from its failure to plead the statute of limitations, and be permitted to amend its answer, because the instant case presents no such question. The defendant herein sought no such relief." 132 F.2d at 832 (emphasis added).³

However, since the plaintiff does not appear to have been unfairly disadvantaged by the company's failure to plead the defense in his answer, we do not reverse the lower court on this ground alone.

III

In determining the operational effect of a release, the Illinois courts have considered a combination of factors:⁴ the intentions of the parties, the adequacy of the consideration, the care and diligence exercised by mistaken parties, and the possibility of injustice to the party seeking to enforce the release. Here, the company has not contended that the payment provided any compensation for the alleged civil rights injury, or that the plaintiff intended to sign a release covering the instant action, or that its belief that the company had become a party to a general release has been detrimental to its interest. At best, the company alleged that the plaintiff unreasonably relied on the advice of a third party which advice caused him to endorse the check.

It is not disputed that the plaintiff received no consideration and the company suffered no detriment. Under such circumstances, the same principles applied to discharge of an existing obligation are appropriate where assertion of a claim is involved. The company did not cite and we can not find an Illinois case upholding a release unsupported by consideration.

"A valid release must be based upon a consideration before it can be efficacious in a court of law. Where the promisor receives no benefit and the promisee suffers no detriment the whole transaction is in its nature a nudum pactum."

Toffenetti v. Mellor, 323 Ill. 143, 148, 153 N.E. 744, 746 (1926); accord, Sullivan v. Elgin, J. & E. R. Co., 331 Ill.App. 613, 73 N.E.2d 632 (1947) (release set aside where the only consideration was for time lost because of the injury).⁵

The absence of consideration is also significant as it relates to the intentions of the parties. Plaintiff argued that he did not intend to agree to a general release; the company did not dispute this argument. We do not believe that under the applicable standard the appellant acted unreasonably.⁶ The Department of Labor is not only empowered to investigate and attempt to adjust wage claims, but also to prosecute such claims if necessary. Ill.Rev.Stat. ch. 48, § 39l. In order to cash checks in amounts such as $28.68, reasonable men, especially those whose resources are limited,⁷ do not normally seek the advice of an attorney. Furthermore, the company could reasonably have surmised that the plaintiff might well be unaware of the effect of the language where it made no attempt to communicate the result it was attempting to achieve.⁸

The company contended that at most the mistake was unilateral (but see note 8, supra) and that a release will not be voided unless the mistake is mutual.

"It is true the Illiniois cases contain dicta that in some cases a release may be set aside because of a unilateral mistake, but no explanation is given of the type of case in which such a principle would be applied."

Thomas v. Hollowell, 20 Ill.App.2d 288, 289, 155 N.E.2d 827, 828 (1959).⁹ From a close reading of the Illinois cases, we have concluded that such a principle would be applied in the instant...