Opinion ID: 2406086
Heading Depth: 2
Heading Rank: 1

Heading: the release of charles carte by plaintiff

Text: Knox-Tenn Rental Company was a closely held corporation. Ed Cowan inherited the company and owned ninety-five percent (95%) of the stock. The other five percent (5%) had been transferred years before as a gift to his wife. The relationship between the Cowans and Charles Carte was a close and personal one of many years standing. He had stood in loco parentis to the Cowans' children over a period of years when Mr. Cowan was suffering from severe depression. He had been a trusted employee of Knox-Tenn for more than twenty (20) years. In early 1984 three other employees of Knox-Tenn, alarmed by evidence that Carte had been stealing from the Company, informed Mrs. Cowan of these facts. At the time his defalcation was discovered he was Vice-President and General Manager of the Company and for all practical purposes he had been in complete charge of the business since the early 1970's when Mr. Cowan's illness first manifested itself. The Cowans fired Carte and initiated an audit and an investigation to determine the extent of his embezzlement. This investigation revealed, among other things, a pattern of theft by Carte based on overpayments of insurance premiums to Jenkins Insurance Company. The money was allegedly returned by Jenkins to Carte for the benefit of Cowan. The investigation also revealed that Carte had allowed his unpaid salary to accumulate to nearly $100,000 while at the same time he was taking unauthorized bonuses. There is some evidence that the Cowans also believed that the monies stolen by Carte totaled approximately that amount. Shortly after the discovery, on 20 March 1984, prior to the time that the investigation of the Company accounts was completed, the Cowans entered into a mutual release agreement with Carte which was prepared by plaintiffs' counsel and reads as follows: MUTUAL RELEASE THIS AGREEMENT made this the 20th day of March, 1984 by and between Charles W. Carte, hereinafter referred to as Carte; Knox-Tenn Rental Company, a Tennessee Corporation, hereinafter referred to as Knox-Tenn, and Edward R. Cowan, hereinafter referred to as Cowan, all of Knox County, Tennessee. WITNESSETH: WHEREAS, Carte has for several years prior to February 13, 1984 been an employee and officer of Knox-Tenn, and WHEREAS, on February 13, 1984 Carte was relieved of his duties as an employee, Vice President and General Manager of Knox-Tenn, and WHEREAS, Carte has resigned from Knox-Tenn as an employee and officer effective February 13, 1984, and WHEREAS, as a result of Carte's termination and resignation Knox-Tenn, Carte and Cowan do hereby agree as follows: 1. Carte hereby releases Knox-Tenn and Cowan from any and all claims and waives any accrued salary, employee benefits, income, insurance or other employment benefits due from Knox-Tenn and not received to date. 2. Knox-Tenn hereby releases and waives any claims it has against Carte arising out of the employment of Carte by Knox-Tenn or otherwise, and Cowan hereby releases and waives any claims he has against Carte. The consideration for releases of the parties hereto and the waiver of claims is the mutual release granted to each party by this Agreement. This the day and date first about [sic] written. We find on this issue, as did the Court of Appeals with whom we are in complete accord, that it is clear from the record Mr. Cowan intended the release to be full, final and complete as to Carte. As the Court of Appeals noted it is probably true that Mr. Cowan did not know the full extent of Mr. Carte's perfidy, but he did know that the question of insurance premiums was involved prior to signing the release and had sufficient information to put a reasonably prudent person on notice that further inquiry was dictated. His trial testimony was positive to the effect that he knew what he was signing when he entered into the agreement and did it knowingly and intentionally. There was no question in his mind that the agreement was intended to release Carte from whatever liability there was, whether it was small or large. Intent to release Carte from all claims is further evidenced by the fact that there has been no attempt to rescind the release or bring action against Carte for those claims which the plaintiff now contends were not contemplated. It is argued that when the release to Carte was executed neither the full nature nor the magnitude of the insurance premium scheme was known to the plaintiff nor was the involvement of Carte in the insurance scheme known or even imagined. The evidence is to the contrary. Whether or not it was contemplated that Jenkins had collaborated with Carte to overcharge Knox-Tenn for insurance premiums through fraud and deceit is a matter for later discussion in this opinion.