Shelton v. Trigg , 226 S.W. 761 ( 1920 )

I concur in the disposition of this case as set out in the opinion of Associate Justice HALL.

With the question of the unconscionableness of the contract known as the "partnership contract" this court has nothing to do, as no issue presented calls in question such partnership contract. The only questions before this court are the questions of duress, with the incidental issues — estoppel and ratification — and whether or not the last question is in such form that this court can pass upon it.

Duress of property threatened is the issue here presented. That a party may invoke the threatened duress as a basis for recovery or as a defense, he must have had reasonable belief that the other party had the power to carry his threat into execution.

What constitutes duress invalidating a contract is a question of law for the court, and whether facts sufficient to constitute it exist is for the jury. Kansas, etc., Ry. Co. v. Graham, 145 S.W. 632.

In this case the evidence shows that there was an original partnership contract under which plaintiffs and defendant operated the ranch; that some two years after the signing of the partnership contract there was executed in January, 1914, what is known in the record as the "salary contract." In January, 1916, there was executed by the parties what is known as the "dissolution contract."

The plaintiffs attack the salary contract on the ground of duress of property. If there was duress, as found by the jury, and which I think the evidence sustains, then this duress continued up to the very time of the final division of the property, to wit, December 1, 1916. Consequently there is no bar of limitation to this action.

If the facts which I think constitute the duress in this case, i. e., the threat to close out the business and sell the property upon his own terms and conditions, as made by defendant and as provided for in the original partnership contract, existed, then this state of facts continued until the final partition and distribution of the partnership assets.

I am of the opinion that the threat of the defendant to close the partnership affairs, under the conditions and circumstances in this case, warranted the jury in finding that there was such duress of property as is contemplated by law before a party can successfully interpose same as a defense, or recover upon same as a cause of action.

In the case of Caldwell v. Auto Sales, etc., Co., 158 S.W. 1030, the court holds:

"In an action upon a check given by defendant to pay for repairs to his automobile, where plaintiffs by unlawfully withholding possession of the machine compelled the giving of a check for a larger amount than that which was really due, their good faith in enforcing a claim, in fact improper, will not affect defendant's right to set up duress as a defense."

In the case of Harris v. Cary, 112 Va. 362, 71 S.E. 551, Ann.Cas. 1913A, 1350, it is held by the court that a threat on the part of those in control of a corporation to refrain from paying the debts of such corporation and to permit its property to be sold for the payment of such debts may amount to duress of a minority stockholder who is induced, by such threats, to enter into a contract with those who are in charge of such corporation as a means to save his interest in the corporation.

There being evidence to support plaintiffs' claim of duress, and the jury having found the same as a fact, I am of the opinion that such finding should be affirmed.

It has been held that acts done under duress do not validate an instrument given under duress. St. L. S. F. Ry. Co. v. Gorman,79 Kan. 643, 100 P. 647, 28 L.R.A. (N. S.) 637.

If duress existed at the time of the signing of the salary contract and at the time of the signing of the dissolution contract, then no act of the plaintiffs, as long as those conditions existed, could be urged as a ratification. The act which is relied upon as a ratification must be one which shows unequivocally that the party who was subjected to duress has determined, after he has become a free agent, to treat the transaction as valid. Page on Contracts, § 507, p. 826.

Also, in determining whether the party is guilty of laches in bringing a suit to set aside a conveyance made under duress, the time during which his mind was affected by such threats will not be regarded. Wilson v. Calhoun, 170 Iowa 111, 151 N.W. 1087; Hoag v. Hoag, 210 Mass. 94,96 N.E. 49, 36 L.R.A. (N. S.) 329.

The influence of duress must be removed before there can be ratification, and an intention to confirm a previous contract or agreement which was not binding, and make it a valid and binding contract, must appear.

I take it that the question is not presented to this court of a party accepting the benefits of a contract in so far as it does benefit him and rejecting its onerous provisions. Rather, the question is present whether or not the plaintiffs can insist on the original partnership contract with its benefits and losses, and reject a "rider" afterwards attached under duress.

However, there is one phase of this case which, in my opinion, absolutely eliminates the question of ratification. No issue of ratification was submitted by the court. No such issue was presented to the court by the defendants, and no finding was had upon any such issue.

Article 1985, vol. 2, p. 1552, of Vernon's Sayles' Texas Civil Statutes 1914, is as follows: "Special verdict, requisites of; failure to submitissue not reversible error unless request, etc. — The special verdict must find the facts established by the evidence, and not the evidence by which they are established; and it shall be the duty of the court, when it submits a case to the jury upon special issues, to submit all the issues made by the pleading, but the failure to submit any issue shall not be deemed a ground for reversal of the judgment, upon appeal or a writ of error, unless its submission has been requested in writing by the party complaining of the judgment. Upon appeal or writ of error, an issue not submitted and not requested by a party to the cause, shall be deemed as found by the court in such manner as to support the judgment: Provided, there be evidence to sustain such a finding."

The lower court might well have concluded that duress existed to the 1st of December, 1916, when the final distribution of the partnership assets occurred, and that there could be no ratification while duress continued. Lancaster v. Richardson, 45 S.W. 409; Phoenix Ins. Co. v. Moore, 46 S.W. 1131; Devine v. U.S. Mtg. Co., 48 S.W. 585; Texarkana, etc., Ry. Co. v. Spencer, 28 Tex. Civ. App. 251, 67 S.W. 196; Massie v. Hutchison et al. (Sup.) 222 S.W. 962.

I cannot assent to Judge HUFF's statement that —

"The facts show that there was abundant consideration for the contract of January 5, 1914. D.C. Trigg was released from his obligation to contribute his work and labor in handling the business and caring for the cattle on the ranch, and to relieve him of a charge for a substitute in case he did not furnish an adequate amount of work or labor."

On the contrary, I think the facts show he was denied the right given him by the contract to take part in or exercise any discretion in the conduct of the affairs of the partnership, where his money was invested and his credit involved; nor, in my opinion, do the facts show that he was relieved of a charge for a substitute legally appointed; on the contrary, he is asked to pay to the usurper of his prerogative an exorbitant wage, fixed by such usurper. As stated in the majority opinion, the conditions did not exist when under the contract a substitute could be appointed. Shelton has never asserted D.C. Trigg was not doing "an adequate amount" of work, but he seeks to justify his arbitrary action by claiming that Trigg was not doing it right. In that event, his sole prerogative was to direct him how to do it. The specific complaint made by Shelton was that Trigg did not have sense enough to feed a bunch of cattle. The evidence is uncontradicted that when Shelton told him how he wanted them fed Trigg obeyed him to the letter. Before I can agree with Judge HUFF in this particular, I would have to disregard the findings of the jury, ignore the plain letter and spirit of the partnership contract, and refuse to accept as true uncontradicted testimony. I have found no evidence in the record that Shelton assumed and performed D.C. Trigg's duties with the latter's consent. In fact, the evidence is practically all to the contrary, and the findings of the jury settle that issue against Judge HUFF'S holdings. For that reason, the rule in Hooker v. Williamson, 60 Tex. 524, does not apply.

This record is barren of any reason why Shelton refused to dissolve the partnership and divide the property except the fact that he was drawing a handsome salary for doing what his ousted partner was ready and anxious to do. The evidence is conclusive that the Triggs could get the necessary funds to pay their part of the firm's debts and to relieve Shelton from any further liability therefor; yet he refused to dissolve, and by his threats, as the jury found, coerced them into signing the salary contract and the dissolution contract. I cannot agree that there is any element of consideration in this.

Judge HUFF seems to rest his dissent largely upon the rule that —

"It is never duress to threaten to do what a party has the legal right to do."

This rule has been criticized and modified, and I think the modern and true doctrine is correctly stated in 2 Elliott on Contracts, par. 1384, in this language:

"It is well settled, however, that money extorted or involuntarily paid under duress, or unlawful compulsion, may be recovered. To enable the party making the compulsory payment to recover it, the compulsion must have been illegal, unjust, or oppressive. To constitute the coercion, or duress, which would be regarded as sufficient to make a payment involuntary, there must be some actual threat exercised of power possessed, or believed to be possessed, by the party exacting or receiving the payment, over the person or property of another, from which the latter has no other means of immediate relief than by making the payment."

Under the rule as stated by the eminent author, duress exists when the threat is either illegal, unjust, or oppressive. The extraordinary power given Shelton by the contract authorized him to sell the cattle whenever, wherever, and in such manner as he saw fit. He might have thrown them upon the market at an unfavorable season; he could, without violating the letter of the contract, sell them to any confidential friend, or friends, and for such price and in such numbers as he should determine, or sell them at a time and place when competition in bidding would have resulted in a sacrifice of Trigg's interest. It appears from the record that, in order to procure money to pay Shelton for their interest in the property and to settle debts of the partnership, they had executed a mortgage upon their interest in the cattle. An arbitrary sale by Shelton might have brought their creditor, the bank, down upon them at an unfavorable time, resulting in a forced sale and possibly a great loss. A sale under such conditions might not have been a violation of the letter of the contract and in such sense illegal, but that it would have been unjust and oppressive is obvious. In the event Shelton should exercise his power of sale fairly and justly to his partners, and within the limits of the powers granted him, his conduct could not be called illegal, and a threat to sell under such conditions woud not constitute duress of property. But I think it will not be controverted that a threat to sell unless the Triggs agreed to pay him a sum which he had no right to demand, either under the contract or as a matter of law, would render the threat itself, not only unjust and oppressive, but illegal.

Nor can I assent to Judge HUFF'S conclusion of fact that the Triggs entered into the partnership agreement without compulsion. It is not clear from the oral testimony of the witnesses whether the contract of purchase from the syndicate and the partnership contract were executed simultaneously. It seems to me, however, that the first paragraph of the partnership contract, reciting that the parties "have this day, by written instrument, entered into a contract with the Capital Freehold Land Investment Company, Limited, for the purchase of certain cattle and other personal property, and for the leasing of certain lands therein described, and to which reference is hereby made for a more particular description, and also referring herein to covenants and stipulations therein expressed as to the liability of the parties herein mentioned upon that contract," is almost conclusive that the contract of purchase had been executed. By the terms of that contract the Triggs were equally bound with Shelton to pay an enormous sum of money, which the whole record shows they were not able to pay and for which, according to the partnership contract, Shelton was primarily liable. It requires no argument to prove that a refusal upon their part to sign the partnership contract would have meant their financial ruin.

I therefore concur in the opinion of Judge HALL.