Mandel v. Liebman

100 N.E.2d 149, 303 N.Y. 88
CourtNew York Court of Appeals
DecidedJuly 11, 1951
StatusPublished
Cited by88 cases

This text of 100 N.E.2d 149 (Mandel v. Liebman) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mandel v. Liebman, 100 N.E.2d 149, 303 N.Y. 88 (N.Y. 1951).

Opinion

Conway, J.

The defendant is an author, writer and director in the entertainment world. The plaintiff is an attorney who devotes himself to the business of acting as personal representative, advisor and manager for persons engaged in the entertainment world. On May 8, 1946, they entered into a written contract whereby defendant agreed to employ plaintiff “ as his personal representative and manager ” for a term of five years. Defendant agreed to pay to plaintiff, as compensation, 10% of all his earnings during the term of the contract, and thereafter on earnings from employments commenced during the term of the contract and continued or renewed or resumed beyond the term of the contract.

Shortly thereafter, a dispute arose between the parties as to the possession of specified business papers of defendant which plaintiff refused to return to defendant, despite demand therefor, because of defendant’s failure to pay the percentage of earnings agreed upon in the contract of May 8,1946. Defendant then obtained an order of Special Term, dated February 17, 1947, in a summary turnover proceeding, directing plaintiff to turn over the papers to defendant. A similar dispute with respect to additional papers thereafter arose, and defendant commenced another turnover proceeding against plaintiff which was referred to a referee. While this was pending, plaintiff commenced an action against defendant for the compensation allegedly due him under the contract of May 8, 1946.

On November 11, 1947, the parties, each of whom was then represented by his own attorney, entered into a written settlement agreement wherein they agreed to discontinue the proceeding and action. Defendant further agreed to recognize the validity ” of the contract of May 8,1946, and to release plaintiff from all obligations to render any services thereunder. Plaintiff, on the other hand, agreed to waive the compensation provided for in the original contract in any year in which defendant should earn less than $20,000, and to turn over to defendant all contracts and documents belonging to defendant which he had in his possession.

[92]*92Plaintiff subsequently commenced this action to recover the compensation allegedly due him for the period from May 8,1948, to May 8, 1949, under the contract of May 8, 1946, as modified by the settlement agreement of November 11, 1947. The action was dismissed on the merits at the close of plaintiff’s case upon the ground that the decision of Special Term in the first turnover proceeding constituted a conclusive and binding adjudication that the original contract of May 8, 1946, created the relationship of attorney and client between plaintiff and defendant. The Trial Justice presumably was relying upon the rule that a client who has signed a retainer agreement with respect to some matter in controversy may discharge the attorney at any time, with or without cause, and relegate the attorney to a quantum meruit action for his services to the time of the discharge. We note at this point that the decision of Special Term in the first turnover proceeding was not in any way res judicata here. The most that that determination established was that the specific papers there involved had come into plaintiff’s possession in the course of an attorney-client relationship. The May 8, 1946, contract recited that plaintiff had theretofore been acting for defendant “ as lawyer, manager and advisor

The majority in the Appellate Division affirmed the judgment dismissing the complaint, but on a ground different from that advanced by the trial court. The majority in the Appellate Division went behind the settlement agreement of November 11, 1947, and held that the original contract of May 8, 1946, as modified by the settlement agreement, “ was void, unconscionable and against public policy.” (277 App. Div. 1097, 1098.) In reaching that conclusion, the court pointed out that, under the original contract of May 8, 1946, the plaintiff was not required to render any services to defendant; that plaintiff had introduced no proof of the rendition of any services to defendant ; and yet defendant was required to pay to plaintiff ‘ ‘ what might be called a tribute in perpetuity.” The dissenting Justices in the Appellate Division agreed that under the special circumstances of this case the court was justified in going behind the settlement agreement to determine the meaning, validity and extent of obligation under the original contract, but that, since such determination and the defenses pleaded in the answer raised questions of fact, there should be a new trial.

[93]*93We agree that there must be a new trial at which the court and jury, with adequate proof in the record, may, in the words of the dissenting opinion below, “ scrutinize the entire transaction -from both sides and in respect to both agreements. ’ ’ So many questions depend upon the proof whitih may be adduced at such new trial that we deem it inappropriate to discuss, generally, at this time, the legal relations between the parties under the original contract, as modified by the settlement agreement. Accordingly, we limit ourselves to consideration of the points on which we disagree with the majority in the Appellate Division.

It is apparent that the majority, in holding the contracts to be “unconscionable”, thought that the obligations assumed thereunder by the parties were so shockingly disproportionate that they could not be enforced. It is commonplace, of course, that adult persons, suffering from no disabilities, have complete freedom of contract and that the courts will not inquire into the adequacy of the consideration. “ ‘ If a person chooses to make an extravagant promise for an inadequate consideration it is his own affair ’ (8 Holdsworth, History of English Law, p. 17). It was long ago said that ‘ when a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action 11 (Sturlyn v. Albany, 1587, Cro. Eliz. 67, quoted by Holdsworth, supra; cf. Walton Water Co. v. Village of Walton, 238 N. Y. 46, 51).” (Cardozo, Ch. J., in Allegheny Coll. v. National Chautauqua Co. Bank, 246 N. Y. 369, 377.) “ The slightest consideration is sufficient to support the most onerous obligation; the inadequacy, as has been well said, is for the parties to consider at the time of making the agreement, and not for the court when it is sought to be enforced. It is competent for the parties to make whatever contracts they please, so long-as there is no fraud or deception or infringement of law. Hence, the fact that the bargain is a hard one will not deprive it of validity.” (17 C. J. S., Contracts, § 127, pp. 474-475; see Youssoupof v. Widener, 246 N. Y. 174, 187, 188; Ga Nun v. Palmer, 216 N. Y. 603, 609; Stettheimer v. Killip, 75 N. Y. 282; Earl v. Peck, 64 N. Y. 596, 598-599; Worth v. Case, 42 N. Y. 362, 369-370; Osgood v. Franklin, 2 Johns. Ch. 1, 23, affd. sub nom. Franklin v. Osgood, 14 Johns. 527.)

Despite the general rule, courts sometimes look to the adequacy of the consideration in order to determine whether the [94]*94bargain provided for is so grossly unreasonable or unconscionable in the light of the mores and business practices of the time and place as to be unenforcible according to its literal terms. (See 1 Corbin on Contracts, § 128, p. 400.) It has been suggested that an unconscionable contract is one “

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Bluebook (online)
100 N.E.2d 149, 303 N.Y. 88, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mandel-v-liebman-ny-1951.