Court: Supreme Court of the United States; December 23, 1935; Federal Supreme Court; Federal Appellate Court
In *Radio Corporation of America v. Raytheon Mfg. Co.*, the Supreme Court addressed whether the validity of a release could be determined in equity. Raytheon, a Massachusetts corporation, sought treble damages under antitrust laws for damages over $3 million, claiming that its business had been harmed by the defendant's monopoly. The defendant contended that Raytheon had signed a general release after the cause of action arose, which should bar the lawsuit.
Raytheon's complaint alleged that the release was signed under illegal duress from the defendant's monopoly, rendering it void, and emphasized that there was an agreement regarding the release's exceptions based on the defendant’s pecuniary recognition of other claims. The defendant moved to transfer the case to equity for a preliminary hearing on the release's validity, which was granted despite Raytheon's opposition. Subsequent motions by Raytheon to vacate the transfer and seek a final decree were denied, resulting in a decree that declared the release valid and binding, thus returning the case to law.
Raytheon appealed to the Circuit Court of Appeals for the First Circuit, which reversed the lower court's decree. The appellate opinion explored the nuances of fraud affecting the ability to nullify a release and discussed the legal significance of the presence or absence of a seal on instruments. Ultimately, it concluded that the release was inoperative at law due to its association with the unlawful monopoly, independent of its potential avoidance in equity.
A writ of certiorari was issued to address a conflict with prior court decisions. The defendant's answer lacks an equitable defense, as a sealed release is generally a valid legal defense unless countered by new evidence that could render it void, particularly if linked to an illegal transaction. The court assumes it has the authority to nullify such a release if tainted by illegality. It notes that while a legally sound release can be voidable in equity, the plaintiff does not seek relief on that basis. Instead, the plaintiff argues that the release is invalid either because it was not properly sealed or because it is connected to an illegal combination. The plaintiff acknowledges that if unable to succeed in law, they cannot succeed in equity either. Historically, a refusal to pursue equitable relief would only forfeit that specific remedy, with no further penalties. The defendant is attempting to impose an equitable defense that the plaintiff has explicitly rejected. As a result, the court will not adjudicate the release's validity at this stage but will leave that to legal proceedings. The court affirms the Circuit Court of Appeals' decision, stating that there are triable issues at law, specifically regarding whether the release was obtained under duress related to unlawful trade practices, and whether a court of law would recognize such a release as valid despite that duress.
