Stewart M. Muller Construction Co. v. New York Telephone Co.

New York Court of Appeals

Stewart M. Muller Construction Co. v. New York Telephone Co.

359 N.E.2d 328, 40 N.Y.2d 955, 390 N.Y.S.2d 817, 1976 N.Y. LEXIS 3160

New York Court of Appeals·Decided November 18, 1976·Published·Cited by 70 cases

Opinion

Memorandum. The order of the Appellate Division should be affirmed. A contract may be voided on the ground of economic duress where the complaining party was compelled to agree to its terms by means of a wrongful threat which precluded the exercise of its free will. (Austin Instrument v Loral Corp., 29 NY2d 124, 130; Oleet v Pennsylvania Exch. Bank, 285 App Div 411.) Here, plaintiff alleged that the settlement agreement was induced by defendant’s threat to terminate their earlier contract. The amended complaint and the affidavit in opposition to the motion to dismiss fail to allege that the defendant was not within its contractual rights in threatening to exercise the termination clause contained in the contract. Rather, it appears that the defendant, in the context of contractual dispute, preserved its rights by following the letter of the termination clause, while at the same time seeking an accommodation with the financially hard-pressed plaintiff. In view of the explicit provisions of the termination clause, which gave defendant the right to cancel the contract upon an architect’s certificate of substantial breach, there is no possibility that the plaintiff could present evidence which would establish that the defendant’s threatened cancellation was in excess of its contractual rights and, hence, was wrongful. The only reasonable inference that can be drawn from the complaint and the affidavits is that the plaintiff is unable to prevail.

[957]*957Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Cooke concur.

Order affirmed, with costs, in a memorandum.

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Memorandum. The order of the Appellate Division should be affirmed. A contract may be voided on the ground of economic duress where the complaining party was compelled to agree to its terms by means of a wrongful threat which precluded the exercise of its free will. (Austin Instrument v Loral Corp., 29 NY2d 124, 130; Oleet v Pennsylvania Exch. Bank, 285 App Div 411.) Here, plaintiff alleged that the settlement agreement was induced by defendant’s threat to terminate their earlier contract. The amended complaint and the affidavit in opposition to the motion to dismiss fail to allege that the defendant was not within its contractual rights in threatening to exercise the termination clause contained in the contract. Rather, it appears that the defendant, in the context of contractual dispute, preserved its rights by following the letter of the termination clause, while at the same time seeking an accommodation with the financially hard-pressed plaintiff. In view of the explicit provisions of the termination clause, which gave defendant the right to cancel the contract upon an architect’s certificate of substantial breach, there is no possibility that the plaintiff could present evidence which would establish that the defendant’s threatened cancellation was in excess of its contractual rights and, hence, was wrongful. The only reasonable inference that can be drawn from the complaint and the affidavits is that the plaintiff is unable to prevail.

[957]*957Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Cooke concur.

Order affirmed, with costs, in a memorandum.

Stewart M. Muller Construction Co. v. New York Telephone Co., 359 N.E.2d 328, 40 N.Y.2d 955, 390 N.Y.S.2d 817, 1976 N.Y. LEXIS 3160 (N.Y. 1976).

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359 N.E.2d 328 (Stewart M. Muller Construction Co. v. New York Telephone Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Opinion

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