Link v. Link

• Decision Date: 10 March 1971
• Docket Number: No. 46,46
• Citation: Link v. Link, 278 N.C. 181, 179 S.E.2d 697 (N.C. 1971)
• Parties: Blythe M. LINK v. James C. LINK.
• Court: North Carolina Supreme Court

Page 697

179 S.E.2d 697

278 N.C. 181

Blythe M. LINK v.James C. LINK.

No. 46.

Supreme Court of North Carolina.

March 10, 1971.

Bradley, Delaney & Millette, by Ernest Delaney, Jr., Charlotte, for plaintiffappellant.

Warren C. Stack, Charlotte, for defendantappellee.

LAKE, Justice.

The Court of Appeals concluded that the Superior Court erred in: (1) Submitting the four issues to the jury instead of a single issue, 'Did the defendant procure the plaintiff's endorsement of the stock certificates and the debentures by fraud?'; and (2) in not applying 'the facts as contended by the defendant to the first three issues in the charge to the jury.'In both of these conclusions, it is our opinion that the Court of Appeals was in error.

It is the duty of the trial judge to submit to the jury such issues as are necessary to settle the material controversies raised in the pleadings.Johnson v. Lamb, 273 N.C. 701, 161 S.E.2d 131;Rural Plumbing & Heating, Inc. v. H.C. Jones Construction Co., 268 N.C. 23, 149 S.E.2d 625;Stanback v. Haywood, 209 N.C. 798, 184 S.E. 831;Tucker v. Satterthwaite, 120 N.C. 118, 27 S.E. 45.Rule 49(b) of the Rules of Civil Procedure provides, 'Issues shall be framed in concise and direct terms, and prolixity and confusion must be avoided by not having too many issues.'Nevertheless, the form and number of issues to be submitted is matter which rests in the sound discretion of the trial judge, assuming that the issue is raised by the pleadings liberally construed.General Tire and Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479;Durham Lumber Co. v. Wrenn-Wilson Construction Co., 249 N.C. 680, 107 S.E.2d 538;O'Briant v. O'Briant, 239 N.C. 101, 79 S.E.2d 252;Griffin v. United Services Life Insurance Co., 225 N.C. 684, 36 S.E.2d 225.

The complaint in the present action alleges, and the answer denies, that the defendant induced the plaintiff to transfer to him the securities in question by fraudulent concealment and that he'coerced' and 'extracted' her signature to the transfers by threats and abuse.The allegations of the complaint are sufficient to justify the submission to the jury of the questions of fraud, duress and undue influence.

These are related wrongs and, to some degree, overlap.See: Joyner v. Joyner, 264 N.C. 27, 140 S.E.2d 714;In re Will of Franks, 231 N.C. 252, 260, 56 S.E.2d 668;Little v. Bank of Wadesboro, 187 N.C. 1, 121 S.E. 185.They are, however, not synonomous.Proof of facts sufficient to show one does not necessarily constitute proof of either of the other two.Fraud rests upon deception by misrepresentation or concealment.Duress is the result of coercion.It may exist even though the victim is fully aware of all facts material to his or her decision.Undue influence may exist where there is no misrepresentation or concealment of a fact and the pressure applied to procure the victim's ostensible consent to the transaction falls short of duress.See, Edwards v. Bowden, 107 N.C. 58, 12 S.E. 58.

The plaintiff alleged and offered evidence tending to show that she was inexperienced in matters of corporate securities and finance and that, throughout the marriage, she had relied upon the defendant to handle the family business affairs, habitually signing without question documents, such as tax returns, prepared under his direction and presented to her by him for signature.She alleged and offered evidence tending to show the defendant was an experienced business man and the president of the corporation which issued the stock in question.Her evidence further tends to show that, when the defendant requested her to sign the transfer forms on the reverse of the stock certificates, she knew nothing about the value of the stock and the defendant did not advise her concerning its value or suggest that she procure the advice of an attorney.The defendant offered evidence tending to show that, when the stock was given to them by his father, the defendant explained the transaction and the value of the stock to the plaintiff.

As to the debentures, the defendant's evidence tends to show that the plaintiff's endorsements on the debentures were not intended to transfer them to him but were for the purpose of enabling him, as the plaintiff's agent, to sell them to his uncle.The plaintiff's testimony as to the debentures was that, at the time she signed the separate paper on which, above her signature, she wrote, 'I waive all rights to these debentures,'she did not understand the nature of debentures or 'the workings of this business,' and had not had any legal advice with reference to the effect of signing such a document.

The defendant's further testimony in relation to the debentures was to the effect that he explained their significance to the plaintiff when his grandfather gave them to her, eleven years prior to her alleged transfer to him.He testified that when he took these three endorsed debentures back to the plaintiff, following his failure to sell them to his uncle, he informed the plaintiff that the new owners of the issuing company needed to know who owned the debentures, so it was necessary for her to sign a statement, as to each debenture, that she owned it.Thereupon, the plaintiff stated that she did not want anything to do with the debentures and signed the waiver of her right therein.He testified that on that occasion he told the plaintiff the debentures were worth $3,000.At a later date his name was put on the debentures by his father as the transferee thereof.

Where a transferee of property stands in a confidential or fiduciary relationship to the transferor, it is the duty of the transferee to exercise the utmost good faith in the transaction and to disclose to the transferor all material facts relating thereto and his failure to do so constitutes fraud.Vail v. Vail, 233 N.C. 109, 63 S.E.2d 202.Such a relationship 'exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.'Abbitt v. Gregory, 201 N.C. 577, 598, 160 S.E. 896, 906.Intent to deceive is not an essential element of such constructive fraud.Miller v. First Nat. Bank of Catawba County, 234 N.C. 309, 67 S.E.2d 362.Any transaction between persons so situated is 'watched with extreme jealousy and solicitude; and if there is found the slightest trace of undue influence or unfair advantage, redress will be given to the injured party.'Rhodes v. Jones, 232 N.C. 547, 61 S.E.2d 725.

As Justice Sharp said in Eubanks v. Eubanks, 273 N.C. 189, 159 S.E.2d 562, 'The relationship between husband and wife is the most confidential of all relationships, and transactions between them, to be valid, must be fair and reasonable.'In that case, the transaction in question was a separation agreement between the parties to a collapsing marriage.Thus, the fact that the transactions here in question occurred after the defendant's departure from the home, following the disclosure by the plaintiff of her misconduct, did not show the previously established confidential relationship between them had terminated so as to free the defendant to deal with the plaintiff as if they were strangers.

In addition to the husband-wife relationship, the defendant was the president or manager of the corporation whose stock was being transferred and so had full information formation of its value.He knew that the plaintiff had neither such information nor general understanding of corporate securities.For a discussion of authorities in other jurisdiction relating to the existence of a duty of disclosure resting upon a director who purchases, from another stockholder, stock in his corporation, see, 'The Use for Personal Profit of Knowledge Gained While a Director,'9 Miss. Law Journal 427, 439--454.In Abbitt v. Gregory, supra, this Court found it unnecessary to decide whether the circumstance that the purchaser was the general manager of the issuing corporation was sufficient, standing alone, to prove the existence of a fiduciary relationship between him and the selling stockholder with respect to a transfer of stock.When, as here, there are added the further circumstances that the transferor is the wife of the transferee, she is inexperienced in business affairs, and is laboring under great emotional strain, the stock is unlisted, is closely held within the family of the transferee and has never paid dividends, the duty of disclosure is clear.

In view of the conflict in the evidence, the jury could have found that the plaintiff knew the value of the stock and understood the nature and value of the debentures issued by the second corporation so that there was no fraudulent concealment of any material fact.Even so, the plaintiff would, nevertheless, be entitled to relief if, as she alleged and testified, the transfer of the securities was the result of duress.Her testimony was to the effect that she signed the documents in question, because the defendant told her that, unless she did so, he would put her out of the house and take the children, but, if she transferred these properties to him, he would permit her to continue to live in the home with the children and would make payments to her for their support.

It has been said, 'Duress exists where one, by the Unlawful act of another is induced to make a contract or perform or forego some act under circumstances which deprive him of the exercise of free will.'(Emphasis added.)See, Smithwick v. Whitley, 152 N.C. 369, 67 S.E. 913, quoted inJoyner v. Joyner, supra.Unquestionably, an essential element of duress is a Wrongful act or threat.Restatement of the Law, Contracts, § 492;Williston on Contracts, 3d Ed. § 1606;25 Am.Jur.2d, Duress and Undue Influence, §§ 1 and 3.Ordinarily, it is not wrongful and, therefore, not duress for one to procure a transfer of property by stating in the...