McWilliams v. American Fidelity Co.

• Decision Date: 12 January 1954
• Citation: 140 Conn. 572,102 A.2d 345
• Parties: McWILLIAMS v. AMERICAN FIDELITY CO. Supreme Court of Errors of Connecticut
• Court: Connecticut Supreme Court

Page 345

102 A.2d 345

140 Conn. 572

McWILLIAMS v. AMERICAN FIDELITY CO.

Supreme Court of Errors of Connecticut.

Jan. 12, 1954.

William M. Greenstein, Hartford, with whom was Josiah Greenstein, Norwich, for appellant (plaintiff).

Harry L. Nair, Hartford, with whom was Robert E. Cohn, Hartford, for appellee (defendant).

Before INGLIS, C. J., and BALDWIN, O'SULLIVAN, QUINLAN and WYNNE, JJ.

O'SULLIVAN, Associate Justice.

The plaintiff brought this action to recover money paid to the defendant in satisfaction of a promissory note. Her complaint alleged, in the first count, that the note was obtained from her by the fraud and misrepresentation of the defendant, and, in the second count, that she had executed and paid the note under the mistaken belief that she was indebted to the defendant. The trial court instructed the jury to disregard the second count and submitted the case to them on the first count only. The jury returned a verdict in favor of the defendant, and the plaintiff has appealed from the judgment rendered thereon. She claims error in the denial of her motion to set aside the verdict, in the charge, in rulings on evidence, and in the refusal to correct the finding.

We shall consider first the denial of the motion to set aside the verdict on the first count. It is obvious by their verdict that the jury refused to accept the evidence of the plaintiff as establishing the fraud upon which she relied. It is only in the most unusual circumstances that we will find error in the refusal of the trial court to set aside a verdict for the defendant, since it is almost impossible to determine what evidence the jury accepted or rejected. Furthermore, in reviewing a ruling of the trial court in refusing to set aside a verdict, we are concerned primarily with the question whether the court abused its discretion. Roma v. Thames River Specialties Co., 90 Conn. 18, 20, 96 A. 169. When the decision of the judge concurs with that of the jury, there is a strong argument for sustaining the action of the trial court. Zullo v. Zullo, 138 Conn. 712, 715, 89 A.2d 216. There is nothing in the record before us to indicate any abuse of discretion. The trial court did not err in denying the motion.

In the second count of her complaint the plaintiff sought recovery on the ground of mistake. The court instructed the jury that the state of the evidence was such that she could not recover on this ground and that they were to disregard the second count. The plaintiff has treated this as an error in the charge and has so assigned it. It was, however, in effect a direction to the jury to return a verdict for the defendant on this count, and we shall consider it as such. For the plaintiff to recover on this count, it was necessary for her to establish, by evidence acceptable to the jury, that she had signed and paid the note under a mistake as to her rights and duties, that she was not under any moral or legal obligation to sign or pay it, and that the defendant could not, in good conscience, retain the money received from her in payment. Gilpatric v. City of Hartford, 98 Conn. 471, 480, 120 A. 317; Spencer v. Consumers Oil Co., 115 Conn. 554, 562, 162 A. 23; Monroe Nat. Bank v. Catlin, 82 Conn. 227, 231, 73 A. 3.

The jury could reasonably have found the following facts: John D. McWilliams, a building contractor, was unable to undertake some construction contracts because of an inability to secure the necessary performance bonds. He communicated with Loring E. Miller, who represented the defendant. A conference ensued at which the plaintiff, McWilliams, Miller and Clark B. Bristol, executive vice president of the defendant, were present. The plaintiff, who is the wife of McWilliams, volunteered to put all of her assets behind her husband and to organize a corporation with him. She explained her financial status to the representatives of the defendant and later submitted to them a financial statement which indicated a net worth of $54,500, consisting almost entirely of equity in real estate.

On April 13, 1948, John D. McWilliams & Co., Inc., was organized. We shall hereinafter refer to it as the corporation. McWilliams conveyed to it all the equipment which he had been using in the construction business in payment of the shares of stock to be issued to him. The plaintiff agreed to pay $5000 in cash for the stock to be issued to her. McWilliams was elected president, and the plaintiff secretary and treasurer, of the corporation. Each owned forty-nine shares of the stock. Of the two additional shares issued, one was held by a daughter of McWilliams and the plaintiff and the other by their son-in-law. On April 13, 1948, the corporation applied to the defendant for the issuance of a performance bond on the construction of a school for the town of Hebron. The plaintiff and McWilliams signed an agreement, contained in the application for this bond, to indemnify the defendant against any loss. Relying upon this indemnity, the defendant executed a surety bond in the amount of $149,990 to the town of Hebron. The defendant thereafter wrote bonds for the corporation in connection with two other jobs. In each case, a signed indemnity agreement was obtained from the plaintiff.

In May, 1949, the corporation was the successful bidder for the construction of an armory in Mystic, and the defendant as surety executed a payment bond and a performance bond on the contract, with the corporation as principal. The plaintiff did not sign the indemnity agreement on the application for these bonds. The corporation defaulted in the performance of the contract. On August 1, 1950, Miller and Edward P. Cole, an attorney for the defendant, conferred with the plaintiff and McWilliams in regard to the unpaid claims and the failure to complete the Mystic armory contract. Miller told the plaintiff that the defendant was holding her for the loss, as she had signed an indemnity agreement for the Mystic job. It was suggested that she execute a note, but she declined to do so. She denied any liability on the indemnity agreement because she thought that she had not signed it. Miller asserted that she had. McWilliams assured her that Miller must know whether or not she had done so. At the time of the conference on August 1, Miller believed that the plaintiff had signed the indemnity agreement. In the latter part of August, he learned that she had not.

On or about August 10, 1950, a note, payable six months from date, in the amount of $9290.11, which represented the payments made by the defendant because of the default of the corporation, was sent by Cole to Miller, with the request that he have McWilliams and the plaintiff sign it. Miller delivered it to McWilliams, who asked that he be given time to meet his obligations to the defendant. The plaintiff had no knowledge that her husband had made this request. Prior to August 10, 1950, the equipment of the corporation was engaged in performing contracts at the University of Connecticut and a hospital in Norwich. These had been undertaken by McWilliams under an agreement with one Neiderman, who was to provide the money for the payrolls. McWilliams expected to make a substantial profit on these jobs. He had written to the defendant on July 21, 1950, asking that time be given to him to make good the default on the Mystic job. The note, prepared after this request, was to be taken in lieu of the defendant's proceeding against the assets of the corporation. McWilliams carried the note around with him until October 13, 1950, when he and the plaintiff, after consultation with their attorney, executed it and returned it to the defendant. The plaintiff executed the note under the mistaken belief that she had signed the indemnity agreement, as stated by Miller, and that the note would give her more time to sell her house to raise the money necessary to make good her obligation on the indemnity contract.

In May, 1951, the defendant instituted suit upon the note and attached the plaintiff's property. The attachment was released after the plaintiff had paid $7500 in full satisfaction of the note. The money necessary to make payment was raised by the sale of the plaintiff's house. At the end of October, 1951, the plaintiff learned that she had not signed any indemnity agreement on the Mystic armory contract and demanded back the money paid, but the defendant refused to return it.

Directed verdicts are...