Capps v. Georgia Pacific Corporation

453 P.2d 935, 253 Or. 248, 1969 Ore. LEXIS 448

• Court: Oregon Supreme Court
• Decided: April 30, 1969
• Status: Published

Opinions

LANGTRY, J.

(Pro Tempore).

The plaintiff’s complaint alleged that plaintiff and defendant agreed that the plaintiff would attempt to find a lessee for industrial property owned by the defendant, that plaintiff did find a lessee with whom defendant made a 20-year lease of the property at a total rental of $3,040,000, that the defendant therefore owed plaintiff a commission of five per cent plus one half of the first month’s rent, or $157,000, and that the defendant paid $5,000 to plaintiff and owed the remaining $152,000, for which judgment was demanded.

The defendant’s answer consisted of a general denial and an affirmative defense based on an attached release. The instrument recites that for $5,000, acknowledged to be a full commission for all services rendered, a complete release was granted by the plaintiff.

Plaintiff’s reply alleged two defenses to the release: no consideration and duress. Defendant demurred separately to each of these affirmative replies, both demurrers were sustained, and judgment for the defendant was entered on the pleadings. The demurrers should have been overruled. A demurrer to an answer or a reply opens, or searches, the record so that the sufficiency of the preceding pleadings of both parties relating to the same subject are tested. 71 CJS 536-39, Pleadings §262; Clark, Code Pleading 524-26, §83 (2d ed 1947). A party demurring to his opponent’s pleading stakes any of his own pleadings on the same matter on the demurrer and he cannot prevail if his own pleading is defective. 71 CJS, Pleadings at page 536. See Scott v. Hall, 177 Or 403, 163 P2d 517 (1945). Defendant’s answer was deficient in that it failed to allege that the $5,000 was paid in settlement of a claim that was either unliquidated or otherwise in dispute.

“it is necessary * * * to allege the various particular elements of an accord and satisfaction * ** * and that the prior demand was unliquidated or honestly disputed * * *.”

① 1 CJS 553, Accord and Satisfaction § 47.

The fact that defendant’s answer generally denies the complaint is not sufficient to cure the lack of an allegation that the claim was in dispute or unliquidated at the time the alleged release was executed. The affirmative answer must be complete in itself.②

This ease must he remanded to the circuit court, where the pleadings may be amended. In order to save another appeal on matters which have been fully briefed and argued in this one, we think a discussion of the sufficiency of the affirmative reply relating to duress is in order. The reply in question was as follows:

“I

“The Plaintiff, in requesting' payment of the obligation due him from Defendant, which obligation is set forth in the Complaint on file herein, informed Defendant that due to Plaintiff’s adverse financial condition, he was in danger of immediately losing his home by foreclosure of the existing mortgage and was in danger of immediately losing other personal property through repossession and foreclosure unless funds from Defendant were immediately made available for the purpose of paying these creditors. As a result thereof, Defendant at the time of the execution of the pretended release set forth in Defendant’s Answer well knew Plaintiff’s precarious financial condition and knew of the impending immediate loss of Plaintiff’s property unless funds were forthcoming. At that time Defendant was informed by Plaintiff and well knew that the money due Plaintiff from Defendant was the only source of funds then and there available to Plaintiff. Under these circumstances Defendant, through its agent, Harlow Call, advised Plaintiff that though he was entitled to the sums demanded in Plaintiff’s Complaint, unless he signed the purported release set forth in Defendant’s Answer, Plaintiff would receive no part thereof, inasmuch as Defendant had extensive resources and powerful and brilliant attorneys who would and could prevent Plaintiff in any subsequent legal proceeding from obtaining payment of all or any portion of said sums.

“II

“Defendant, through its agents, acted without good faith, without reasonable belief that the demand it was making upon Plaintiff was based upon a good defense or good cause of action, and with knowledge that Defendant had no right to the money it gained by the alleged release.

“HI

“As .a result of the duress imposed upon the plaintiff by Defendant and by third parties, of which Defendant had knowledge Plaintiff was deprived of the free exercise of his will; faced with the choice between the comparative evils of loss of property altogether or compliance with an unconscionable demand, and as a result, was thereby forced to release a valid claim worth $157,000.00 for the grossly inadequate sum of $5,000.00.”

The Restatement, 2 Contracts 938, §492 (1932), defines duress in the following terms:

“Duress in the Restatement of this Subject means

“(a) any wrongful act of one person that compels a manifestation of apparent assent by another to a transaction without his volition, or

“(b) any wrongful threat of one person by words or other conduct that induces another to enter into a transaction under the influence of such fear as precludes him from exercising free will and judgment, if the threat was intended or should reasonably have been expected to operate as an inducement.”

This statement of the rule reflects what the text writer calls the modern or equitable rule in 17 CJS, Contracts § 177 at page 965. The text states that a contract may be unenforceable by reason of “* * * economic duress or business compulsion where undue or unjust advantage has been taken of a person’s economic necessity or distress to coerce him into making the agreement * °

' In early decisions, duress was limited in its scope so that a ease stated like the one at bar did not, if proven, invalidate a contract. Thus, in Hackley v. Headley, 45 Mich 569, 8 NW 511 (1881), where the facts were almost in point with those in the instant ease, the court held that simply because the plaintiff was in dire financial circumstances, which defendant knew and took advantage of, there was no ground for a successful claim Of duress. The holding in Hacldey is typical of other opinions, some old and some recent, which have held that the economic necessity of the claimant, coupled with the debtor’s refusal to pay unless foreed by law to .do so, which together make it possible for the debtor to coerce an advantageous agreement from the claimant, are no basis for avoiding the agreement on a duress defense. See cases cited for the text in 17 CJS 966, 967, Contracts § 177. The decisions are often conflicting in similar fact situations, as Professor John P. Dawson pointed out in Economic Duress — An Essay in Perspective, 45 Mich L Rev 253 (1947). He said at page 289:

. a* * * The direct conflict in decisions, on facts substantially identical, makes it likewise impossible to formulate any general proposition that could now achieve anything like universal acceptanee. Nevertheless;,- it seems clear that many decisions have already shifted a considerable distance beyond the limits defined by conventional statements of doctrine and' that further shifts aré to be expected. The most that can be claimed is ■■that .change has been broadly toward acceptance of' a general conclusion — that in the absence of specific countervailing factors of policy or administrative 'feasibility, restitution is required of any excessive gain that results,-in1 á bargain transaction, from 'impaired bargaining power, whether the impairment consists of economic necessity, mental or physical disability, or a wide disparity in knowledge or experience.”

Among many cases decided since Professor Dawson’s article was published in 1947 are the following:

Ross Systems v. Linden Dari-Delite, Inc., 35 NJ 329, 335, 173 A2d 258 (1961):

“* i! * Payments are made under duress when they are induced by the wrongful pressure of the payee and the payor has no immediate and adequate remedy in the courts to resist them * * (Citing cases, Annotations in 75 ALR 658 (1931); 79 ALR 655 (1932), and Economic Duress — An Essay in Perspective, supra.)

“* ® * [T]he phrase ‘immediate and adequate remedy’ as it is used in the duress doctrine * * * is to be tested by a practical standard which takes into consideration the exigencies of the situation in which the alleged victim finds himself * * * [citing cases].” 35 NJ at 336.

Joyce v. Year Investments, Inc., 45 Ill App2d 310, 314, 196 NE2d 24 (1964):

“ ‘[T]he real and ultimate fact to be determined in every case is whether or not the party really had a choice — whether he had his freedom of exercising his will.’ 5 Williston, Contracts (Rev. Ed. 1937) §1603. The legal conception of economic or compulsory duress is in forcing a person to act against his own will. It does not exist when the person upon whom it has been so charged had an option or choice as to whether he will do the thing or perform the act said to have been done under duress * *

The court held that under the facts of that case, where the plaintiff had disputed and negotiated with defendant for 18 months before signing the questioned release tliat plaintiff had had adequate opportunity to protect himself in an equity court proceeding if he had wanted to do so as an alternative to executing the release.

Manno v. Mutual Ben. Health & Accident Assoc., 187 NYS2d 709, 713 (Sup Ct 1959):

“It may not be amiss to point out some of the elements, presently lacking, which would appear essential to invoke the modern doctrine of economic duress. This doctrine is constantly being extended and expanded and bears slight resemblance to common-law duress (see, generally, Dawson, Economic Duress — An Essay in Perspective, 45 Mich. L. Rev. 253; Dawson, Duress Through Civil Litigation, 45 Mich. L. Rev. 571; Id. 679; Dalzell, Duress by Economic Pressure, 20 N.C.L. Rev. 237; Id. 341; Hale, Bargaining, Duress and Economic Liberty, 43 Col. L. Rev. 603; Prewett, Threat of Litigation as Duress, 6 Ark. L. Rev. 472; 5 Williston, Contracts [Rev. Ed.], ch. XLVII; Restatement, Contracts, ch. 16, and New York Annotations thereon; 17A Am. Jur., Duress and Undue Influence, secs. 1-18; Annotation, 79 A.L.R. 655). As stated by Professor Dawson (45 Mich. L. Rev., at 289): 'The history of generalization in this field offers no great encouragement for those who seek to summarize results in any single formula.’ This is peculiarly a field where each case must stand on its own facts.

“Among the factors and circumstances which seem requisite to a cause of action for economic d,uress are the age and mental ability of the party seeking to avoid the transaction, his financial condition, the absence of good faith and reasonable belief by the other party making the demand that he has a good defense or a good cause of action, the adequacy of the consideration passing between the parties, and the adequacy of the legal remedy afforded by the courts [citing cases].” (Emphasis supplied.)

See also Parmentier v. Pater, 13 Or 121, 9 P 59 (1885); Schoellhamer v. Rometsch, 26 Or 394, 38 P 344 (1894); Mendelson v. Blatz Brewing Co., 9 Wis2d 487, 101 NW2d 805 (1960); and Tri-State Roofing Co. of U. v. Simon, 187 Pa Super 17, 142 A2d 333 (1958).

In Leeper v. Beltrami, 53 Cal2d 195, 1 Cal Rptr 12, 347 P2d 12, 77 ALR2d 803 (1959), the court held that if the plaintiff had a “reasonable alternative” to that of acceding to defendant’s demand that she pay a false claim, and plaintiff did not avail herself of the alternative, the defendant’s action which coerced her into payment is not duress. Deeper is not in point with the case at bar on its fact, but the court clearly held that in cases where economic duress is claimed, it is a question of fact whether the plaintiff acted as a reasonably prudent person in choosing the alternative which was chosen. See also Inman v. Clyde Hall Drilling Company, 369 P2d 498, 500, 4 ALR3d 430 (Alaska 1962).

We have reviewed recent writings and opinions at some length in this opinion. Prom this review, we conclude that the better rule is one which allows the statement of a duress cause or defense such as plaintiff has pleaded here to be tried on its facts. Thus, the quoted allegations from the plaintiff’s reply state a defense.

Reversed and remanded for further proceedings consistent with this opinion.

The rules applicable to accord and satisfaction appear to be applicable to the instant situation.

“* * * An accord is a contract * * * between creditor and debtor for the settlement of the claim by some performance other than that which is due. * * * Satisfaction takes place when accord is performed * * *.” Restatement, Contracts § 417, comment a. at 787-88.

“A receipt or written release * * * does not constitute an accord and satisfaction but may be evidence thereof.” Hickox v. Hickox, 151 SW2d 913, 918 (Tex Civ App 1941).

The difference between compromise and settlement and accord and satisfaction is slight and the terms are often used interchangeably. McGinnis v. Rolf, 239 Mo App 54, 64, 189 SW2d 456 (1945).

Compromise ■ usually carries the idea of a mutual yielding of opposing claims. Barbarich v. Chicago Etc. Ry. Co. et al, 92 Mont 1, 9, 9 P2d 797 (1932).

A compromise settlement performed in accordance with its terms becomes an accord and satisfaction. Fricke v. Forbes, 294 Mich 375, 379, 293 NW 686 (1940).

«* * * Whether the defense of accord and satisfaction [in this case a release taken for wages due and paid to employees] would be sufficient if ultimate facts were pleaded indicating the existence of an honest dispute * * * and * * * the proper compensation therefor is a question which need not be determined. * * * It is enough * * * that * * * the defense is insufficient in the absence of such allegations.” Campbell v. Mandel Auto Parts Corporation, 31 NYS2d 656 (Sup Ct 1941).

Klemp Corporation v. Thompson, 402 SW2d 257 (Tex Civ App 1966), involved a sales commission where defendant corporation claimed $1,000 paid the salesman was fiill settlement of the commission. The court said at page 261:

«* * The party who asserts a liquidated claim was discharged by an accord and satisfaction has the burden of alleging and proving the existence of a bona fide dispute