Gillikin v. Whitley

HEDRICK, Judge. Because of our disposition of this case, set out below, we treat both appeals together. The record discloses that plaintiffs executed the instruments in question after receiving the following certified letter from an attorney who represented defendant Ellis Jones, Jr.: Dear Mr. Gillikin: I am writing this letter on behalf of Ellis Jones, Jr. and in regard to his business’s Profit Sharing Plan. As you know, we have evidence that you have misapplied funds in the amount of $90,916.57. I have prepared a Promissory Note in the principal amount of $90,916.57, with interest at 16%. I have also prepared a Deed of Trust securing this Note on all of the tracts of real property which you presently own in Lenoir County. The Note is payable upon demand and provides for interest at the rate of 16% per an-num. The Note has been prepared for your signature and the Deed of Trust has been prepared for your’s and your wife’s signature. [T]he Note will remain in my office and you and your wife may come in to sign the Note and Deed of Trust during any of our office hours. We shall be open from 8:30 a.m. to 5:30 p.m. on Tuesday, December 23, 1980 and will be closed until Monday, December 29, 1980, at 8:30 a.m. Please be advised that in the event the Note and Deed of Trust have not been signed by you and your wife by 10:00 *697 a.m. on Tuesday, December 30, 1980, I will take the following action: 1.1 will institute a civil procedure against you for the entire balance and will seek to attach all real property in which you have an interest in Lenoir County. 2. I will request the District Attorney of our Judicial District to investigate the facts and to bring the appropriate criminal action against you. In addition to possible Federal criminal violations and perhaps additional State violations, it is my opinion that you have clearly violated N.C.G.S. 14-90, a copy of which I have attached to this letter. This alone is a ten year felony. If you have any questions regarding this letter or its contents, please direct your communications to me and not to Ellis Jones, Jr. As you know, this whole matter has greatly upset Ellis and he is having to take action which he does not desire but which I have advised him to take in view of the great seriousness of this matter. Sincerely, si Robert E. Whitley Cc: Mr. Ellis Jones, Jr. Attachment. Enclosed with this letter was a copy of N.C. Gen. Stat. Sec. 14-90, with the word “Embezzlement” underlined in red. On 2 January 1981, after receiving this letter, plaintiffs went to the attorney’s office and signed the deed of trust. Mr. Gillikin also signed a promissory note. The findings made by the trial judge clearly establish that plaintiffs would not have signed either instrument had Gillikin not been threatened with criminal prosecution. “It is well-settled law that executory agreements . . . made in consideration of preventing, refraining, or suppressing prosecution for a crime are void as against public policy.” Frye v. Sovine, 58 N.C. App. 731, 733, 294 S.E. 2d 748, 750 (1982). We think the rule is well stated in 17 Am. Jur. 2d, Contracts Sec. 206 (1964): There appears to be no doubt that an agreement to make restitution of property stolen or funds embezzled is valid, so *698 long as the agreement does not contemplate that a criminal prosecution therefor shall be suppressed or stayed. ... On the other hand, it is generally held . . . that if a threat to prosecute criminally induced the execution of a contract for the repayment of embezzled money, the agreement is invalid. In the instant case, it is clear that plaintiffs signed the note and deed of trust in exchange for defendant’s implicit agreement not to take the action, threatened in Mr. Whitley’s letter, of requesting the District Attorney to investigate and “bring the appropriate criminal action” against Mr. Gillikin. We hold that the promissory note and the deed of trust, both dated 2 January 1981, are void as against public policy. Because of our disposition as above set out, we find it unnecessary to discuss the several questions raised by plaintiff and defendants in their briefs. The result is: the judgment with respect to plaintiff Jo Anne J. Gillikin is affirmed; the judgment with respect to plaintiff William Gillikin is reversed, and the cause is remanded to the Superior Court for entry of an order declaring the note and deed of trust as it relates to Mr. Gillikin null and void and to be cancelled from the record; with respect to proceeding #81SP300, the cause is remanded to the Superior Court with directions that it remand proceeding #81SP300 to the Clerk of Superior Court for entry of an order dismissing the foreclosure proceeding. Affirmed in part, reversed in part, and remanded. Judges Hill and Eagles concur.