Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Philip L. Sullivan, Judge.
Before MAJOR and KERNER, Circuit Judges, and LINDLEY, District Judge.
The plaintiff, Gladys McVeigh, brought suit in her own proper person and as guardian of the persons and estates of Thomas McConnell and Charles Dewey McConnell, minors, her children, to recover special and general damages suffered in her own behalf and as the mother of the two children and occasoined by false and fraudulent representations made by defendant, in reliance upon which, as plaintiff alleged, she, on March 18, 1935, executed a release, wherein she discharged her former husband Thomas F. McConnell from any and all sums due or accruing to her either for her own support or that of her children under a property agreement settlement made by Thomas F. McConnell and herself as husband and wife at the time of their divorce on April 23, 1928. The jury returned a verdict for $4,000 in favor of plaintiff in her own right and $8,500 in her favor as guardian, and the court entered judgment in favor of plaintiff in her own proper person and as guardian of the two minors, for $12,500.
Inasmuch as defendant insists that the evidence did not sustain the verdict, it becomes essential to examine the record. Plaintiff's evidence tends to support the following facts: Plaintiff was married to Thomas F. McConnell on November 27, 1920. Their son Thomas was born Ausgust 4, 1921 and Charles on August 17, 1923. An interlocutory decree of divorce was granted plaintiff on March 20, 1928 and, at the same time, the parties filed in the divorce proceedings in Los Angeles a property settlement agreement, which provided that McConnell should pay plaintiff $150 per month for her own support until she should remarry and $100 per month for the support of the two boys until they should become of age. The decree of divorce became final May 6, 1929. Plaintiff married one Blake McVeigh in March, 1933, and shortly thereafter, divorced him.
Plaintiff received from McConnell irregular payments before entry of the final decree of divorce. Her total receipts were approximately $800 and credit was reflected therefor in affidavits filed in court at Los Angeles. Other transactions between the parties occurred resulting in credits for $3,554.12. Plaintiff made repeated efforts in the divorce proceedings from 1929 until 1934 to collect from McConnell, crediting him for such small sums as he paid. He had remarried in Houston, Texas, in June, 1929, and become the head of another family. Plaintiff sought by criminal proceedings to force McConnell to support the two children without avail. McConnell was in a precarious financial condition all of this time until March, 1935. He was then on relief and, upon his inheritance of some $208000 from the estate of John Grace, deceased, the probate court made him an allowance in that estate of $100 per month to enable him to get off the relief rolls.
On March 6, 1935, McConnell received distribution of his legacy. Two days later defendant, who was McConnell's attorney, went to Los Angeles, as he said, "to secure a release of the property settlement agreement which had been made at the time of the divorce." Defendant was also executor of the Grace estate and knew what McConnell was receiving therefrom.
The facts thus far related seem undisputed. The real factual controversy is as to the actual occurrences in Los Angeles when defendant arrived there. Plaintiff and her then attorney testified that defendant said that McCjonnell was without financial means to meet his obligations for her own or the children's support; that he had borrowed $1,250 to effect a settlement. Plaintiff testified that she went to see defendant at his hotel, in response to his telegram, where he told her that he desired recall of an outstanding criminal warrant for nonsupport, so that McConnell could go back to work. She told him that approximately $18,000 was then due on the agreement and defendant replied that if she was planning to get any such sum, she might as well forget it, as McConnell did not have any money but was "broke." She responded that she had known of McConnell's earning as much as $600 a month and said that her son Thomas needed eye treatment in a cooler climate. Defendant replied that McConnell had borrowed about $1,000, which he was prepared to pay her, and that he could get a position in Chicago if the warrant was recalled. Defendant finally offered plaintiff $1,250 to sign the release. He said that this money was borrowed from a friend of McConnell's. Plaintiff's then attorney testified that defendant told him that McConnell was "broke" and that when he, the attorney, asked defendant whether McConnell's mother had put up the money for the settlement, defendant replied that the money was "advanced by a friend."
We shall not go into greater detail as to the occurrences at the time of the meeting in Los Angeles. Suffice it to say that what we have related as to the testimony of plaintiff and her attorney, if believed by the jury, constituted clearly a case of fraud and deceit upon which plaintiff testified she relied and in pursuance of which reliance, she executed the release of indebtedness.
Defendant denies making any of the representations, insists that he did not advise plaintiff that McConnell was insolvent and asserts that he acted in the best of good faith, and he is corroborated somewhat, perhaps, by the testimony of other persons present at the conference in the prosecuting attorney's office in Los Angeles. But the most that can be said of his position is that the crucial question, that is, the existence or non-existence of the affirmative misrepresentations of fact, inducing the execution of the release, was to be decided by the jury upon consideration of the evidence presented. Obviously neither the District Court nor this court of review can substitute itself for the jury and assert that substantial evidence offered is not to be believed. We can only examine the record to determine whether there was sufficient evidence to support the verdict. The record being clear in that respect, it is beyond the proper scope of our authority to disturb it. Lynch Enterprise Finance Corp. v. Dulion, 5 Cir., 45 F.2d 6, 10; Kansas City Soughtern Railway v. Martin, 5 Cir., 262 F. 241; Southern Ry. v. Clark, 6 Cir., 233 F. 900.
That the evidence offered by plaintiff, if believed by the jury, was sufficient to sustain the verdict appears from well recognized rules governing actions to recover for fraud and deceit. We find present each of the essential elements, namely, material false representations, knowledge by defendant of falsity, absence of knowledge of the same by plaintiff, reliance upon the representations by plaintiff, and finally, injury to plaintiff. There being evidence of each of these elements there was support for the cause of action framed in the complaint. Chanin v. Chevrolet Motor Co., 7 Cir., 89 F.2d 889, 891, 111 A.L.R. 1235; Equitable Life Ins. Co. v. Halsey, Stuart & Co., 7 Cir., 112 F.2d 302, 308; Johnston v. Shockey, 335 Ill. 363, 167 N.E. 54; Prentice v. Crane, 234 Ill. 302, 84 N.E. 916; In re Syracuse Gardens Co., D.C., 231 F. 284, 291; Boatsmen's Nat. Co. v. Elkins & Co., 8 Cir., 63 F.2d 214.
Defendant insists that plaintiff has failed to establish the amount if any due her either in her own right or as guardian for her children. The court instructed the jury that the measure of damages in a cause of this character is the difference between the fair and reasonable value, at the time and place in question, of the claim or right surrendered and canceled by plaintiff under the terms of the release and the amount actually paid her at the time of the execution of such release. The parties agree that the instruction was correct. In order to determine the fair value of the claim, it was necessary that the jury be advised, first, as to the amount due upon the contract for support and, second, as to the reasonable and proper amount that could have been recovered thereon against McConnell if the release had not been executed and plaintiff had sought to enforce her remedy against him. The evidence discloses that there was due plaintiff for money for hereself and her children approximately $24,000. The jury knew that McConnell had an estate of some $20,000. The jury returned a verdict of approximately one-half of the amount of the claim. We see nothing inconsistent in the verdict and the evidence submitted. Indeed, the amount seems a reasonable allowance, made in pursuance of the court's instruction.
Defendant questions the propriety of recovery by plaintiff for sums due for support of the children.In this respect it is well to remember that plaintiff sued in her own right and also as guardian. She had been appointed by the probate court and was duly qualified to act in the official capacity mentioned. Section 159 of Chapter 3 of Deering's Civil Code of California, reads as follows: "A husband and wife cannot, by any contract with each other, alter their legal relations, except as to property, and except that they may agree, in writing, to an immediate separation, and may make provision for the support of either of them and of their children during such separation."
Defendant argues that the agreement was merged in the decree of the divorce so that when plaintiff executed a release, she in fact, surrendered little or nothing because McConnell was still obliged to support the children. The contract created, however, the direct obligation of McConnelle to pay the sums of money therein mentioned and the release, when executed, released and relieved him from any and all obligations then existing or accruing in the future arising out of the agreement "whether for her support or for the support of the minor children of the parties hereto." The contract was expressly canceled in so far as "it provided for the payment of any sums for the support of the party of the first part" and of the children of the parties. Under the provisions of Section 1598 the approval of the agreement by the divorce court created an obligation upon McConnell for the use and benefit of his children in which they had a definite legal interest. The contract having been made for their ...