Facts
- In 1949, George J. Gallon (plaintiff) was hired by The Lloyd-Thomas Company (defendant) as a salesman on a commission plan that included a weekly draw against commissions.
- Gallon was originally promised a 15% commission and permitted to take weekly advances, which were charged against earned commissions.
- In 1952, Lloyd-Thomas transferred Gallon to a different sales territory where he was less successful, and the company reduced his draw.
- On October 12, 1954, Gallon met with Lloyd-Thomas’s president and vice president at a hotel.
- During the meeting, the executives told Gallon that the federal government was investigating him for bigamy and that he could be deported to his native England; Gallon had been married four times and had never become a U.S. citizen.
- Gallon claimed the executives made accusatory and abusive statements that caused him severe anxiety and that they led him to believe they would stop the government investigation if he signed a new employment contract.
- Gallon signed a new employment agreement containing harsher terms than his prior arrangement.
- After signing, Gallon continued to work for Lloyd-Thomas under the new contract and accepted compensation provided under it.
- Between signing the new contract and leaving the company, Gallon did not complain to company officers or seek to void the agreement, even though he was represented by an attorney during that period.
- In the summer of 1955, Lloyd-Thomas again reduced Gallon’s weekly draw, and Gallon thereafter resigned.
- In September 1955, Gallon sued to rescind or cancel the October 1954 agreement on the ground of duress.
- The jury found for Gallon, but the trial court entered judgment notwithstanding the verdict (JNOV) for Lloyd-Thomas, reasoning that Gallon had ratified the contract after any duress ended. Gallon appealed.
Issues
- Whether Gallon’s continued employment under the new contract, acceptance of its benefits, and failure to promptly repudiate—despite having counsel—constituted ratification as a matter of law, making JNOV proper even if the contract was originally procured by duress.
Decision
- The appellate court affirmed the JNOV for Lloyd-Thomas.
- Assuming the October 1954 agreement was obtained through duress, Gallon’s post-signing conduct showed ratification as a matter of law because he continued working under the new terms, accepted the benefits of the agreement, and did not seek rescission until months later and only after a later reduction in his draw.
Legal Principles
- A contract procured by duress is generally voidable, not void; the aggrieved party may avoid it only by timely disaffirmance after the coercion ends.
- Ratification occurs when a party, after the claimed duress has ceased and with an opportunity to reject the agreement, affirms the contract by words or conduct.
- Continued performance under the agreement, acceptance of compensation or other benefits, and prolonged silence or inaction may constitute ratification.
- Where the relevant post-duress conduct is not genuinely disputed and is inconsistent with rescission, ratification may be determined as a matter of law, permitting entry of JNOV despite a jury verdict.
Conclusion
The court held that even if Lloyd-Thomas induced Gallon to sign the October 1954 contract through duress, Gallon later ratified the agreement by continuing to work under it, accepting its benefits, and waiting for months—while represented by counsel—before seeking to rescind, so judgment for the employer notwithstanding the jury’s verdict was properly affirmed.