
179 S.E.2d 697 (1971)
278 N.C. 181
Blythe M. LINK
v.
James C. LINK.
No. 46.
Supreme Court of North Carolina.
March 10, 1971.
*702 Bradley, Delaney & Millette, by Ernest Delaney, Jr., Charlotte, for plaintiff appellant.
Warren C. Stack, Charlotte, for defendant appellee.
LAKE, Justice.
The Court of Appeals concluded that the Superior Court erred in: (1) Submitting the four issues to the jury instead of a single issue, "Did the defendant procure the plaintiff's endorsement of the stock certificates and the debentures by fraud?"; and (2) in not applying "the facts as contended by the defendant to the first three issues in the charge to the jury." In both of these conclusions, it is our opinion that the Court of Appeals was in error.
It is the duty of the trial judge to submit to the jury such issues as are necessary to settle the material controversies raised in the pleadings. Johnson v. Lamb, 273 N.C. 701, 161 S.E.2d 131; Rural Plumbing & Heating, Inc. v. H. C. Jones Construction Co., 268 N.C. 23, 149 S.E.2d 625; Stanback v. Haywood, 209 N.C. 798, 184 S.E. 831; Tucker v. Satterthwaite, 120 N.C. 118, 27 S.E. 45. Rule 49(b) of the Rules of Civil Procedure provides, "Issues shall be framed in concise and direct terms, and prolixity and confusion must be avoided by not having too many issues." Nevertheless, the form and number of issues to be submitted is matter which rests in the sound discretion of the trial judge, assuming that the issue is raised by the pleadings, *703 liberally construed. General Tire and Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479; Durham Lumber Co. v. Wrenn-Wilson Construction Co., 249 N. C. 680, 107 S.E.2d 538; O'Briant v. O'Briant, 239 N.C. 101, 79 S.E.2d 252; Griffin v. United Services Life Insurance Co., 225 N.C. 684, 36 S.E.2d 225.
The complaint in the present action alleges, and the answer denies, that the defendant induced the plaintiff to transfer to him the securities in question by fraudulent concealment and that he "coerced" and "extracted" her signature to the transfers by threats and abuse. The allegations of the complaint are sufficient to justify the submission to the jury of the questions of fraud, duress and undue influence.
These are related wrongs and, to some degree, overlap. See: Joyner v. Joyner, 264 N.C. 27, 140 S.E.2d 714; In re Will of Franks, 231 N.C. 252, 260, 56 S.E. 2d 668; Little v. Bank of Wadesboro, 187 N.C. 1, 121 S.E. 185. They are, however, not synonomous. Proof of facts sufficient to show one does not necessarily constitute proof of either of the other two. Fraud rests upon deception by misrepresentation or concealment. Duress is the result of coercion. It may exist even though the victim is fully aware of all facts material to his or her decision. Undue influence may exist where there is no misrepresentation or concealment of a fact and the pressure applied to procure the victim's ostensible consent to the transaction falls short of duress. See, Edwards v. Bowden, 107 N.C. 58, 12 S.E. 58.
The plaintiff alleged and offered evidence tending to show that she was inexperienced in matters of corporate securities and finance and that, throughout the marriage, she had relied upon the defendant to handle the family business affairs, habitually signing without question documents, such as tax returns, prepared under his direction and presented to her by him for signature. She alleged and offered evidence tending to show the defendant was an experienced business man and the president of the corporation which issued the stock in question. Her evidence further tends to show that, when the defendant requested her to sign the transfer forms on the reverse of the stock certificates, she knew nothing about the value of the stock and the defendant did not advise her concerning its value or suggest that she procure the advice of an attorney. The defendant offered evidence tending to show that, when the stock was given to them by his father, the defendant explained the transaction and the value of the stock to the plaintiff.
As to the debentures, the defendant's evidence tends to show that the plaintiff's endorsements on the debentures were not intended to transfer them to him but were for the purpose of enabling him, as the plaintiff's agent, to sell them to his uncle. The plaintiff's testimony as to the debentures was that, at the time she signed the separate paper on which, above her signature, she wrote, "I waive all rights to these debentures," she did not understand the nature of debentures or "the workings of this business," and had not had any legal advice with reference to the effect of signing such a document.
The defendant's further testimony in relation to the debentures was to the effect that he explained their significance to the plaintiff when his grandfather gave them to her, eleven years prior to her alleged transfer to him. He testified that when he took these three endorsed debentures back to the plaintiff, following his failure to sell them to his uncle, he informed the plaintiff that the new owners of the issuing company needed to know who owned the debentures, so it was necessary for her to sign a statement, as to each debenture, that she owned it. Thereupon, the plaintiff stated that she did not want anything to do with the debentures and signed the waiver of her right therein. He testified that on that occasion he told the plaintiff the debentures were worth $3,000. At a later date *704 his name was put on the debentures by his father as the transferee thereof.
Where a transferee of property stands in a confidential or fiduciary relationship to the transferor, it is the duty of the transferee to exercise the utmost good faith in the transaction and to disclose to the transferor all material facts relating thereto and his failure to do so constitutes fraud. Vail v. Vail, 233 N.C. 109, 63 S.E. 2d 202. Such a relationship "exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence." Abbitt v. Gregory, 201 N.C. 577, 598, 160 S.E. 896, 906. Intent to deceive is not an essential element of such constructive fraud. Miller v. First Nat. Bank of Catawba County, 234 N.C. 309, 67 S.E.2d 362. Any transaction between persons so situated is "watched with extreme jealousy and solicitude; and if there is found the slightest trace of undue influence or unfair advantage, redress will be given to the injured party." Rhodes v. Jones, 232 N.C. 547, 61 S.E.2d 725.
As Justice Sharp said in Eubanks v. Eubanks, 273 N.C. 189, 159 S.E.2d 562, "The relationship between husband and wife is the most confidential of all relationships, and transactions between them, to be valid, must be fair and reasonable." In that case, the transaction in question was a separation agreement between the parties to a collapsing marriage. Thus, the fact that the transactions here in question occurred after the defendant's departure from the home, following the disclosure by the plaintiff of her misconduct, did not show the previously established confidential relationship between them had terminated so as to free the defendant to deal with the plaintiff as if they were strangers.
In addition to the husband-wife relationship, the defendant was the president or manager of the corporation whose stock was being transferred and so had full information of its value. He knew that the plaintiff had neither such information nor general understanding of corporate securities. For a discussion of authorities in other jurisdiction relating to the existence of a duty of disclosure resting upon a director who purchases, from another stockholder, stock in his corporation, see, "The Use for Personal Profit of Knowledge Gained While a Director," 9 Miss. Law Journal 427, 439-454. In Abbitt v. Gregory, supra, this Court found it unnecessary to decide whether the circumstance that the purchaser was the general manager of the issuing corporation was sufficient, standing alone, to prove the existence of a fiduciary relationship between him and the selling stockholder with respect to a transfer of stock. When, as here, there are added the further circumstances that the transferor is the wife of the transferee, she is inexperienced in business affairs, and is laboring under great emotional strain, the stock is unlisted, is closely held within the family of the transferee and has never paid dividends, the duty of disclosure is clear.
In view of the conflict in the evidence, the jury could have found that the plaintiff knew the value of the stock and understood the nature and value of the debentures issued by the second corporation so that there was no fraudulent concealment of any material fact. Even so, the plaintiff would, nevertheless, be entitled to relief if, as she alleged and testified, the transfer of the securities was the result of duress. Her testimony was to the effect that she signed the documents in question, because the defendant told her that, unless she did so, he would put her out of the house and take the children, but, if she transferred these properties to him, he would permit her to continue to live in the home with the children and would make payments to her for their support.
It has been said, "Duress exists where one, by the unlawful act of another, *705 is induced to make a contract or perform or forego some act under circumstances which deprive him of the exercise of free will." (Emphasis added.) See, Smithwick v. Whitley, 152 N.C. 369, 67 S.E. 913, quoted in Joyner v. Joyner, supra. Unquestionably, an essential element of duress is a wrongful act or threat. Restatement of the Law, Contracts, § 492; Williston on Contracts, 3d Ed. § 1606; 25 Am.Jur.2d, Duress and Undue Influence, §§ 1 and 3. Ordinarily, it is not wrongful and, therefore, not duress for one to procure a transfer of property by stating in the negotiations therefor that, unless the transfer is made, he intends to institute or press legal proceedings to enforce a right which he believes, in good faith, that he has. See: Charlotte Bank & Trust Co. v. Smith, 193 N.C. 141, 136 S.E. 358; Edwards v. Bowden, supra; 25 Am.Jur.2d, Duress and Undue Influence, §§ 14, 16 and 18; Williston on Contracts, 3d Ed. § 1606. To hold otherwise would make it impossible to settle lawsuits. The law with reference to duress has, however, undergone an evolution favorable to the victim of oppressive action or threats. The weight of modern authority supports the rule, which we here adopt, that the act done or threatened may be wrongful even though not unlawful, per se; and that the threat to institute legal proceedings, criminal or civil, which might be justifiable, per se, becomes wrongful, within the meaning of this rule, if made with the corrupt intent to coerce a transaction grossly unfair to the victim and not related to the subject of such proceedings. Fowler v. Mumford, 9 Terry 282, 48 Del. 282, 102 A.2d 535; Coleman v. Crescent Insulated Wire & Cable Co., 350 Mo. 781, 168 S.W.2d 1060; Hochman v. Zigler's, Inc., 139 N.J.Eq. 139, 50 A.2d 97; Miller v. Eisele, 111 N.J.L. 268, 168 A. 426; Adams v. Irving Nat. Bank, 116 N.Y. 606, 23 N.E. 7; Hogan v. Leeper, 37 Okl. 655, 133 P. 190; Fox v. Piercey, 119 Utah 367, 227 P.2d 763; Restatement of the Law, Contracts, § 492(g); Williston on Contracts, 3d Ed., § 1607; 25 Am.Jur.2d, Duress and Undue Influence, §§ 12, 16.
The above cited section of the Restatement says: "[A]cts that involve abuse of legal remedies or that are wrongful in a moral sense, if made use of as a means of causing fear, vitiate a transaction induced by that fear, though they may not in themselves be legal wrongs." Professor Williston says, in section 1607 of his treatise, "[M]eans in themselves lawful, may be used so oppressively as to constitute an abuse of legal remedies. * * * [I]t is not duress to threaten or make good faith use of legal processes available or the remedies prescribed under a contract. But where a threat of civil action or use of an available remedy is made only for the purposes of extortion duress may be found." Thus, where a transaction is brought about by the use of threats to take action, not wrongful per se, the presence or absence of duress depends upon the totality of the circumstances.
An announcement by a husband, to whom the wife has confessed her adultery, that he intends to separate from her and to institute legal proceedings to obtain the sole custody of their children would not, per se, constitute duress when the transaction induced by such statement of intent was the execution of a separation and custody agreement. See, Joyner v. Joyner, supra. The situation is completely different, however, when the threat to take the children from the wife is for the purpose of coercing her into transferring, without consideration, her individual property to the husband, the proposal being to leave the children in her custody if she make such transfer. Thus, in the present case, there was evidence to support a finding of duress, even if the jury had found that there was no concealment of facts justifying a finding of fraud.
Upon the evidence of the defendant, however, the jury could have found there was no threat sufficient to constitute duress. Notwithstanding such a finding, it could also have found the presence of undue influence, which was alleged in the complaint. In Edwards v. Bowden, supra, *706 this Court quoted with approval the following statements from Pollock on Contracts and Pomeroy on Equity Jurisprudence:
"In equity there is no rule defining inflexibly what kind or what amount of compulsion shall be sufficient ground for avoiding a transaction. * * * The question to be decided in each case is whether the party was a free and voluntary agent. Any influence brought to bear upon a person entering into an agreement or consenting to a disposal of property, which, having regard to the age, capacity of the party, the nature of the transaction, and all the circumstances of the case, appears to have been such as to preclude the exercise of free and deliberate judgment, is considered by courts of equity to be undue influence, and is a ground for setting aside the act procured by its employment." Pollock on Contracts, 524.
"Where there is no coercion amounting to duress, but a transaction is the result of a moral, social or domestic force exerted upon a party, controlling the free action of his will and preventing any true consent, equity may relieve against the transaction on the ground of undue influence, even though there may be no invalidity at law. In the vast majority of instances, undue influence naturally has a field to work upon in the conditions or circumstances of the person influenced, which renders him peculiarly susceptible and yieldinghis dependent or fiduciary relation towards the one exerting the influence, his mental or physical weakness, his pecuniary necessities, his ignorance, lack of advice, and the like." Pomeroy, Equity Jurisprudence, 951.
In view of the complex circumstances of this case, to submit to the jury in a single issue these several possibilities of constructive fraud, duress and undue influence would have been confusing and would have necessitated an exceedingly complicated charge. We see no abuse of the trial court's discretion in the submission of the three separate issues on fraud, duress and undue influence. While, upon the evidence in the record, the jury might have answered any, or all of these issues in favor of the defendant, an answer of any of the three in favor of the plaintiff would have entitled her to relief and the jury answered all three in her favor. There is nothing in the record to indicate that the jury was confused by the submission of the three separate issues.
We concur in the conclusion of the Court of Appeals that the trial judge "gave full instruction as to the applicable law" concerning these three bases for granting the plaintiff relief from this alleged gift of her entire separate property to her husband, who had announced his intention of leaving her without providing for her support.
The second ground for the decision of the Court of Appeals is, in our opinion, equally untenable. While it is not entirely clear from the answer that the defendant intended to plead the plaintiff's execution of the gift tax return as a ratification by her of the transaction, as distinguished from a mere pleading of evidence supporting his contention that she intended, at the time of the transaction, to make a gift to him, we interpret the pleading, most favorably to him, as an allegation of such ratification. However, the record does not contain evidence which would support a finding of ratification.
It is elementary that a transaction procured by either fraud, duress or undue influence may be ratified by the victim so as to preclude a subsequent suit to set the transaction aside. May v. Loomis, 140 N.C. 350, 52 S.E. 728; 25 Am.Jur.2d Duress and Undue Influence, §§ 28 and 41. It is equally clear, however, that an act of the victim of any of these wrongs will not constitute a ratification of the transaction thereby induced unless, at the time of such act, the victim had full knowledge of the facts and was then capable of acting freely. *707 25 Am.Jur.2d, Duress and Undue Influence, §§ 28, 29 and 41; Annot., 77 A.L. R.2d 426, 431 and 446.
The only act of the plaintiff, relied upon by the defendant to show ratification of the transfer of the securities to him, was her signing of a gift tax return, prepared without her knowledge by his accountant and brought to her by him for her signature, along with a joint income tax return, similarly prepared. The defendant testified that these returns were presented by him to the plaintiff for her signature shortly before the deadline for filing such returns and less than four months after the transfer of the securities. The defendant further testified that, at the time of the plaintiff's execution of these returns, he told her that if she signed the returns so presented to her, there would be no gift tax due from her, but "if she filed a gift tax return on an individual basis [i. e., if she did not sign the return so presented by him to her], then there would be $669.04 due to be paid by her to the government." In the same conversation, he presented the joint income tax return for her signature, telling her that, if she joined in signing it, there would be a substantial refund, one-half of which he would give to her. She was then represented by counsel but her counsel was out of the city and could not be reached by her, which circumstance the defendant knew. There is nothing in the record to indicate that the defendant's threat to take the children from her custody if she did not acquiesce in the transfer of the securities to him had been modified. The plaintiff testified that when the defendant presented these tax returns to her, he informed her that if she did not sign the gift tax return, she would be liable for a penalty which she could not afford to pay. The defendant denied making this statement. Taking the defendant's evidence at its full face value, it is not sufficient to support a finding of ratification of the transaction in question by the plaintiff. Clearly, she signed the tax return believing she was under compulsion of law to do so and her refusal to sign would be costly to her.
There being no evidence to support a finding of ratification, there was no error prejudicial to the defendant in the failure of the trial court to instruct the jury as to the defendant's contention with respect thereto. The duty of the judge is to declare the law arising on the evidence and to explain the application of the law thereto. Rule 51(a) of the Rules of Civil Procedure; Westmoreland v. Gregory, 255 N.C. 172, 120 S.E.2d 523. The trial court, in the charge to the jury, reviewed with substantial accuracy the evidence of both parties concerning the transactions under attack and the signing of the tax return. On each of the issues of fraud, duress and undue influence, the court instructed the jury correctly as to the law with reference to such wrong and as to the facts which they must find in order to answer such issue "Yes," and that if they did not find such facts, they would answer such issue "No." With reference to the issues of fraud and duress, the judge further instructed the jury that if they found that the plaintiff would have made the transfer of the securities, regardless of their nature and value, they would answer such issue "No." By inadvertence, no doubt, this instruction was not given with reference to the issue of undue influence, but in view of the affirmative answers to the issues of fraud and duress this cannot be deemed an error prejudicial to the defendant, since such answers to those issues entitled the plaintiff to the judgment which was rendered.
The court further instructed the jury correctly as to the law of gifts and that if they answered the issues of fraud, duress and undue influence in the negative, they would then consider the fourth issue, which was whether the plaintiff had made a gift to the defendant of the debentures and the stock certificates, requiring, in that event, a separate answer as to each type of security. In this connection, the court instructed the jury correctly as to the facts *708 which it must find, as to each type of security considered separately, in order to answer the fourth issue "Yes," and that if the jury did not so find, it would answer such issue "No." We do not find in the charge any failure to apply the facts as contended by the defendant to the several issues submitted to the jury.
The judgment of the Court of Appeals is, therefore, reversed and this cause is remanded to that court with direction to enter a judgment affirming the judgment of the Superior Court.
Reversed and remanded.
