Adams v. Irving Nat. Bank — 27 N.Y. St. Rep. 733

Majority

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Helen D. Adams, Resp’t, v. The Irving Nat. Bank of New York, App’lt.^[1]

(Court of Appeals, Second Division,

Filed December 3, 1889.)

Headnote

Dubess—Undue influence.

A payment by a wife of the debt of her husband, induced by the fear

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of his threatened arrest on the eve of their departure for Europe, and the-effect it might have upon his already shattered health, is obtained by undue influence and may be recovered back even though there was a lawful ground for his arrest.

Appeal from a judgment of the general term of the superior court of the city of Mew York, which affirmed a judgment in favor of the plaintiff entered upon a verdict of a jury.

This action was to recover money claimed to have been obtained from the plaintiff by threats, coercion and undue influence. The facts out of which it arose are as follows:

The plaintiff is the wife of Jay L. Adams, who was adjudged a bankrupt in 1878. The defendant was a creditor of Adams to the amount of several thousand dollars.

Adams’ health was broken as a result of his misfortunes, and the plaintiff had been advised to go with him to Europe and their passage had been engaged for June 17, 1879. Shortly prior to this date Adams was examined in the bankrupt court by counsel for the defendant and the fact was developed that an entry on the stub of his check book which read “E. Munoz, taxes and expenses,” did not relate to any “taxes or expenses,” and that Munoz was merely the messenger who received the money from the bank, the check having been payable to bearer; that Adams had received the money and had delivered it to a Mr. Warner, with a request that it be kept for him, and at the time of the examination it was still in Warner’s possession.

Adams claimed that in secreting this money his intention was to pay an indebtedness to the widow of his brother. It had not been applied to that purpose, and he admitted, had it not been discovered, he might have changed his mind and applied it to other purposes. The money was obtained from Warner after this disclosure and delivered to the assignee in bankruptcy.

A few days before the date on which Adams and his wife were to sail for Europe, Adams heard that the defendant and its attorney were threatening to arrest him unless some settlement was made. He immediately went to Mr. Castre, vice-president and a director of the defendant, and a personal friend of Adams and his wife, and talked with him about the arrest and asked him if he would become his bail. Castre consented to do so, but suggested that some settlement be made with the bank, and that the plaintiff had the means to make such settlement and advised him to go to the office of the counsel of the bank and make some adjustment of the claim. Adams informed his wife that he had heard he was to be arrested and she went to see Mr. Castre.

She testified to this interview, in substance, as follows: That she asked Mr. Castre if he had heard anything about the arrest, and he said he had; that he bad heard it was the intention of the attorney of the bank to arrest her husband on board the steamer. She asked if her husband had committed any crime and Castre replied that he had not, but that any man could be arrested, and asked “ how would you like to have your husband arrested on Saturday night too late to obtain bail.” That Castre proposed the settlement, advised her not to consult a lawyer, and told her she

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had nearly money enough in the Irving Savings bank, and that the pursuit would be withdrawn if the money was paid. She further testified that she was excited and was willing to make the payment to save her husband.

Plaintiff paid $2,000 to the bank and agreed to pay $2,000 more in monthly installments of $50 each. She paid $400 and then refused to pay more, and subsequently brought this action to recover back the money that it had obtained from her by undue influence and duress.

John E. Parsons, for app’lt; Austin G. Fox, for resp’t.

The evidence as to the statements and representations made to the plaintiff to induce her to make the settlement with the bank was conflicting. The jury were, however, entitled to, and upon the defendant’s appeal we must assume they did, adopt the view of the transaction properly inferrable from the plaintiff’s evidence. This evidence justified the inference that the payment to the bank was not the free, unrestrained and voluntary-act of the plaintiff, but was induced by the fear of her husband's arrest on the eve of their departure for Europe, and the effect such an act might have upon his health, at that time shattered and feeble from the misfortune that had overtaken him.

It cannot be successfully claimed, in view of the finding of the jury, that Mr. Castre did not act for the bank. Although perhaps not in the first instance a party to any attempt to secure a settlement of the claim from the plaintiff, in all that he did after he was consulted he acted for the bank, and he testified: “ I supposed Mrs. Adams was able to take care of herself. I performed my duty towards the bank in which I was a stockholder, and let her look after herself.” The bank having received the proceeds of the settlement cannot now be heard to deny the agency through which it was obtained. Krumm v. Beach, 96 N. Y., 398 .

It is claimed by the appellant that the plaintiff was not entitled to recover if there was a lawful ground for the arrest of her husband ; in other words that a threat of unlawful arrest and imprisonment is necessary to constitute a duress per minas. This was the strict common law rule applied in cases where the duress was against the person seeking to be relieved from his contract. But in practice the narrowness of this doctrine was much mitigated and money paid under practical compulsion was in many cases allowed to be recovered back, as for example payment made to obtain goods wrongfully detained; excessive charges collected for performance of a duty, etc.

In all such cases there was a moral coercion which destroyed the contract.

The rule cited by the appellant has no application to a case like the present, where money has been obtained from a wife by threats to imprison her husband, and none of the cases cited by the appellant so hold. Metropolitan Ins. Co. v. Meeker, 85 N. Y., 614 , was a case where the defendant was held to be estopped to deny the validity of a mortgage.

In Haynes v. Rudd, 83 N. Y., 251 , and 102 N. Y., 372 ; 2 N. Y.,

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State Rep., 45, the decisions went upon the ground that the note was given to compound a felony and the contract was for that reason illegal. Smith v. Rowley, 66 Barb., 502 , was decided on grounds similar to Haynes v. Rudd.

In Solinger v. Earle, 82 N. Y., 393 , plaintiff gave the note in suit to induce the defendant to sign a composition of debts of a firm of Newman & Bernhard. The note was transferred to a bona fide holder and having been compelled to pay it plaintiff brought the suit to recover from defendants the amount paid.

The court held the contract was illegal and the same rule that would have protected plaintiff in an action on the note by the payees, protected the defendant in resisting an action to recover back the money paid on it. Farmer v. Walter, 2 Edw. Ch., 601 ; Knapp v. Hyde, 60 Barb., 10 ; Dunham v. Griswold, 100 N. Y., 224 ; Quincey v. White, 63 N. Y., 370 , were actions in which the contract was made by the person against whom the duress was claimed to have been exerted.

It is not an accurate use of language to apply the term duress to the facts upon which the plaintiff seeks to recover. The case falls rather within the equitable principle which renders voidable contracts obtained by undue influence.

However we may classify the case, the rule is firmly established that in relation to husband and wife, or parent ana child, each may avoid a contract induced and obtained by threats of imprisonment of the other, and it is of no consequence whether the threat is of a lawful or unlawful imprisonment.

Eadie v. Slimmon, 26 N. Y., 9 , is a leading authority on this question. In that case an assignment of a life insurance policy was obtained by threats to prosecute the plaintiff’s husband criminally for embezzlement. The husband whose life was insured having died, the action was brought to determine the ownership of the money due from the insurance company. Judge Smith, who delivered the opinion of the court, says “ The assignment from the plaintiff to defendant was most clearly exacted by a species of force, terrorism and coercion which overcame free agency, in which fear sought security in concession to threats and to apprehensions of injury. It was made as the only way of escape from a sort of moral duress more distressing than any fear of bodily injury or physical constraint. * * * A deed executed at such a time, under such circumstances, should be •deemed obtained by undue influence and ought not to stand.” Eive judges appear to have concurred in the part of the opinion quoted. Judge Denio concurred on the ground that the policy was not assignable, and Judge Wright dissented.

The case was cited as an example of duress of person in Peyser v. Mayor, 70 N. Y., 501 , and as an authority for avoiding a note-obtained by duress in Osborn v. Robbins, 36 N. Y., 371 .

It has frequently been cited in the supreme court, Fisher v. Bishop, 36 Hun, 114 ; Haynes v. Rudd, 30 id., 237 ; Ingersoll v. Roe, 65 Barb., 357 ; Schoener, v. Lissauer, 36 Hun, 102 , and in other states and in the text books, and has thus become a leading

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authority upon the question under discussion. It is nowhere suggested in that case, either in the facts or in the opinion, that it was necessary to sustain the judgment in favor of the plaintiff that the threat must have "been of an unlawful or illegal arrest. For all that appears the husband was guilty of the charge made, and on that assumption it is peculiarly like the case at bar. Other authorities sustain the same principle. In Haynes v. Rudd, 30 Hun, 237 , it was said, “We think that when threats of a lawful prosecution are purposely resorted to for the purpose of overcoming the will of the party threatened by intimidating or terrifying him, they amount to such duress or pressure as will avoid a contract thereby obtained.” This statement of the law was not disturbed by this court, the reversal being put on other grounds.

The first case cited by Judge Rapallo fully sustains the recovery in the case at bar.

In Schoener v. Lissauer, supra, a bond and mortgage was obtained from the mortgagor by the threat, that unless it was given, his son, who was charged with embezzlement, would go to states prison. The mortgage was set aside, and this court sustained the judgment. After stating the facts it was said by Judge Rapallo, “ on the merits this judgment is sustained by Bayley v. Williams, 4 Giff., 638; aff’d L. R. 1 H. L. Cas., 200, and Davies v. London Ins. Co., L. R., 8 Ch. Div., 469.”

In Harris v. Carmody, 131 Mass., 51 , a mortgage was obtained from a father on the threat that Ms son, who was charged with forging his father’s name to notes held by the plaintiff, would be sent to the states prison. It was held that the father could avoid the mortgage on the ground that it was made to relieve the son from duress. See also Taylor v. Jaques, 106 Mass., 291 .

In none of the cases cited was it suggested that the threat which induced the making of the contract was of an illegal prosecution, or an unlawful arrest, and in most of them it appears that the person charged with an offense was guilty.

The principle which appears to underlie all of this class of cases is, that whenever a party is so situated as to exercise a controlling influence over the will, conduct and interest of another, contracts thus made will be set aside. 1 Story’s Eq. Juris., §§ 239-251; 2 Pomeroy’s Eq. Juris., §§ 942-943; Lomerson v. Johnston, 44 N. J. Eq., 93 ; Ingersoll v. Roe, 65 Barb., 346 ; Fisher v. Bishop, 36 Hun, 112 ; 108 id., 25; 13 N. Y. State Rep., 466; Barry v. Equitable Life Ass. Soc., 59 N. Y., 587 .

In the last case cited it was said “When there exists coercion, threats, compulsion and undue influence, there is no volition. There is no intention or purpose but to yield to moral pressure for relief from it. A case is presented more analogous to a parting with property by robbery. Mo title is made through a possession thus acquired.”

_ It was not error, therefore, for the court to deny the motion to dismiss the complaint on the ground that there was no evidence that the money was paid under duress. Upon the evidence it was á question of fact whether the agreement was executed and the

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money paid in consequence of threats and undue influence. Dunham v. Griswold, 100 N. Y., 224 .

If the money was paid by the plaintiff through fear produced by Mr. Castre’s representations that if the claim was not settled her husband would be arrested and imprisoned, the payment was not a voluntary one and the defendant obtained no title to the-money received. This question was settled in plaintiff’s favor by the verdict of the jury.

The point made by the appellant, that the transaction was a compounding of a felony, does not appear to be raised by any appropriate exception in the case. It was not suggested on the trial either in the motion to dismiss or in the requests to charge. There was no instruction asked or given to the jury on the subject. The question is, therefore, not before this court.

Upon the question of ratification the court instructed the jury as follows: “ Before there can be a ratification to prevent her recovery in this action there must be some distinct act of hers, after knowledge of the facts and knowledge by her that she had a right to rescind the agreement.”

An exception was taken to this part of the charge, and the-claim is now made that this court should hold as a matter of law that plaintiff had waived her claim.

The defendant appears to have acquiesced in the submission of this question to the jury as one of fact for their determination. It was not made one of the grounds of the motion to dismiss. In part, at least, the charge of the court was correct. I do not understand the learned counsel for the appellant to criticise that part of the charge relating to ratification by some act “ after knowledge-of the facts.” If any qualification was proper in the expression as to her “ knowledge * * * that she had a right to rescind,”' it was the duty of the appellant to suggest it. A general exception cannot be sustained. Smedis v. Brooklyn & R. B. R. R. Co., 88 N. Y., 13 ; Doyle y. N.Y. Eye & Ear Infirmary, 80 id., 634.

We have carefully examined the exceptions to the admission of' testimony, and while some of the evidence was immaterial, we think none of the rulings are of a character to call for a reversal of the judgment.

The judgment should be affirmed, with costs.

All concur, except Bradley, J., not voting.