Gallon v. Lloyd – Thomas Co.

Brief Fact Summary. An employee of a company was coerced under duress into signing a contract significantly decreasing his compensation.  The employees' actions after the signing of the contract, however, evidenced his acceptance of the contract's provisions.

Synopsis of Rule of Law. A contract can be ratified "if the party who executed the contract under duress accepts the benefits flowing from it or remains silent or acquiesces in the contract for any considerable length of time after opportunity is afforded to annul or void it."

Facts. The Plaintiff, Gallon (the "Plaintiff"), was employed by the Defendant, Lloyd Thomas (the "Defendant"), in November, 1949.  While working for the Defendant, the Plaintiff consistently overdrew a drawing account provided by the Defendant.  An employee of the Defendant was notified by the United States Justice Department that an ongoing investigation into the Plaintiff's alleged bigamy was being conducted.  The Plaintiff met with various of the Defendant's corporate officers to discuss the ramifications of the investigation, and the fact that he may be deported.  The Plaintiff was severely shaken up after these meetings because the corporate officers were blunt, direct and imposing.  The corporate officers, however, told the Plaintiff that they would do everything in their power (someone knew someone in state government) to delay the investigation.  Shortly thereafter, the Plaintiff signed a new employment contract materially changing his compensation. The circumstances surrounding the signing of the new agreement included the Plaintiff's job being threatened.  The Plaintiff then quit and sued for actual and punitive dam¬ages.  The Defendant was granted judgment n.o.v., and P appealed.

Issue. Although the contract was entered into under duress, did the Plaintiff subsequently ratify it?

Held. Yes.  The court first observes the principle of law that says a contract entered into under duress is not necessarily void, but voidable.  A contract can be ratified "if the party who executed the contract under duress accepts the benefits flowing from it or remains silent or acquiesces in the contract for any considerable length of time after opportunity is afforded to annul or void it."  The intent of the individual whose alleged ratification is being analyzed is critical.  The court concluded that the Plaintiff's intent evidenced ratification.  The Plaintiff never complained to any of the Defendant's employees that he was forced to sign the contract from the time the contract was signed to the time when he left his job.  Instead, the Plaintiff abided by the contracts terms to the letter.  The Plaintiff also testified to the fact that he never asked anyone in the Defendant's employ to set aside the contract. 

Discussion. This case demonstrates that ratification is a question of fact and that the individual arguing a contract was not ratified must demonstrate that some sort of complaint was lodged with the employer for ratification not to be found.