This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Where a contract is induced by duress, the question of the relation of the party guilty of duress to the contract thus induced is often decisive of the rights of the party subjected to such duress. (1) If the adversary party to the contract is guilty of such duress, the party subjected thereto may, of course, avoid the contract induced thereby.1 (2) If the party guilty of duress is the agent of the adversary party to the contract, the party subjected to duress may avoid such contract, even if the agent had no authority to commit such duress.2 This rule rests on the principle that if the principal accepts the benefit of the contract made by the agent on his behalf, he takes it subject to all defenses. (3) If the person guilty of duress acts in collusion with the adversary party to the contract, the party subjected to duress may avoid such contract.3 (4) If the person who is guilty of duress is acting on behalf of the adversary party,4 duress may be interposed as a defense against such adversary party. (5) If the person guilty of duress is not the adversary party or his agent, and is acting neither in collusion with such adversary party nor on behalf of him, but is acting entirely for his own benefit, a different question arises as to the right of the party subject to such duress to avoid the contract as against an adversary party who took no part in such duress. (a) If the facts constituting duress, and inducing the contract are known to the adversary party to the contract, the party subjected thereto may avoid the contract.5 Thus where A is coerced by threats of violence from a mob of his employes to execute a deed of assignment to B for the benefit of A's creditors, and B, through his agent C, who knows the facts, accepts the deed, duress exists whereby the contract and deed may be avoided.6 So where defendant had been arrested with his sons on a charge of murder, and he had been released and his sons remanded, and strong popular feeling and excitement existed, it was held that duress existed where by reason of such facts the attorney for the accused sons compelled defendant to give a note and mortgage for three thousand dollars as an attorney's fee.7 (b) If the facts constituting duress and inducing the contract are not known to the. adversary party, the weight of authority is that the party subject to the duress can not avoid such contract.8 Thus duress exercised by a husband to compel his wife to sign a mortgage9 or note,10 does not avoid such instrument as to an adversary party who did not know of such duress, nor is it duress when the wife's fear of criminal prosecution of her husband is induced by information received from him and not by the threats of his creditor.11 A can not avoid a contract of settlement which he has made with his wife B, for threats of bodily violence made to A by his brother C, unless B is in some way connected with such threats.12 The fact that a friend of the debtor told the debtor's wife that her husband would suffer financial loss unless she signed as surety and thus obtained an extension of time, is not duress for which she may avoid such contract.13
4 Francis v. Hurd, 113 Mich. 250, 71 N. W. 582.
5 Mascolo v. Montesanto, 61 Conn. 60, 29 Am. St. Rep. 170, 23 Atl. 714. (Even where the son has been arrested in the civil action.)
6 Hargreaves v. Menken, 45 Neb. 666,
63 N. W. 951.
7Kester v. Kester, 38 Or. 10, 62 Pac. 635. (A threat by a husband to "heap coals of fire on his wife's head as long as she lived" if she did not destroy a certain note.)
8Benedict v. Roome, 106 Mich. 378,
64 N. W. 193.
1 Morrill v. Nightingale, 93 Cal. 452, 27 Am. St. Rep. 207, 28 Pac. 1068; James v. Roberts, 18 Ohio 548; Bueter v. Bueter, 1 S. D. 94, 8 L. R. A. 562, 45 N. W. 208; Galusha v. Sherman, 105
Wis. 263, 47 L. R. A. 417, 81 N. W. 495. If a threat of criminal prosecution by A, together with the advice of the friends of the threatened man, B, actually overpowered B's mind, the combination will be regarded as duress for which a conveyance made by B may be set aside. Wilson v. Calhoun, 170 la. 111, 151 N. W. 1087.
2 Winfield National Bank v. Croco, 46 Kan. 620, 26 Pac. 939; Miller v. Lumber Co., 98 Mich. 163, 39 Am. St. Rep. 524, 57 N. W. 101; Springfield, etc., Ins. Co. v. Hull, 51 O. S. 270, 46 Am. St. Rep. 571, 25 L. R. A. 37, 37 N. E. 1116; McCormick Harvesting Machine Co. v. Hamilton, 73 Wis. 486, 41 N. W. 727; Neumann v. La Crosse, 94 Wis. 103, 68 N. W. 654.
3Gilley v. Denman, 18,5 Ala. 561, 64 So. 97; Dimmltt v. Robbins, 74 Tex. 441, 12 S. W. 94.
4 Even if collusion in advance is not shown. Brown v. Peck, 2 Wis. 261; Magoon v. Reber, 76 Wis. 392, 45 N. W. 112. (In these last two cases the consideration was grossly inadequate or wanting.)
5 Arkansas. Pindall v. Waterman, 84 Ark. 575, 120 Am. St. Rep. 87, 106 S. W. 946.
Indiana. Line v. Blizzard, 70 Ind. 23.
Kansas. Helm v. Helm, 11 Kan. 19.
Nebraska. Goodrich v. Cushman, 34 Neb. 460, 51 N. W. 1041.
Ohio. Doolittle v. McCullough, 7 O. S. 299.
Contra, Talley v. Robinson, 63 Va. (22 Gratt.) 888.
6 Doolittle v. McCullough, 7 O. S. 299. For similar facts see Brown v. Peck, 2 Wis. 261.
7 Shirk v. Neible, 156 Ind. 66, 59 N. E. 281. For a stronger case, see Pindall v. Waterman, 84 Ark. 575, 120 Am. St. Rep. 87, 106 S. W. 946.
8United States. Beals v. Neddo, 2 Fed. 41, 1 McCrary 206; Mutual, etc., Life Association v. Mills, 82 Fed. 508, 27 C. C. A. 212.
Alabama. Moog v. Strang, 69 Ala. 98.
An exception to this general rule exists in some states by whose laws a homestead can be conveyed only by the free and unconstrained act of husband and wife acting together. In such states, if the husband by duress compels the wife to mortgage the homestead, such mortgage is void, even though the mortgagee is ignorant of such duress.14
Some courts, however, hold the general rule to be that the party subject to duress may avoid the contract even if the adversary
District of Columbia. Baltimore & O. R. Co. v. Morgan, 35 D. C. App. 195.
Georgia. Hinkle v. Hinkle, - Ga. - , 96 S. E. 340.
Illinois. Compton v. Bank, 96 111. 301, 36 Am. Rep. 147.
Kentucky. Frasure v. McGuire, 66 S. W. 1015; Ely v. Hartford Life Ins. Co., 128 Ky. 799, 110 S. W. 265, 33 Ky. Law Rep. 272; Fears v. United Loan & Deposit Bank, 172 Ky. 255, 189 S. W. 226; Brady v. Equitable Trust Co., 178 Ky. 693, 199 S. W. 1082.
Missouri Springfield, etc., Co. v. Donovan, 147 Mo. 622, 49 S. W. 500.
New Jersey. Colonial Building & Loan Association v. Griffin, 85 N. J. Eq. 455, 96 Atl. 901; Koewing v. West Orange, 89 N. J. L. 539, 99 Atl. 203; Travis v. Unkart, 89 N. J. L. 571, 99 Atl. 320.
Oregon. Guinn v. Sumpter Valley Ry. Co., 63 Or. 368, 127 Pac. 987.
9Alabama. Rogers v. Adams, 66 Ala. 600.
Indiana. Line v. Blizzard, 70 Ind. 23.
Iowa. Green v. Scravage, 19 la. 461, 87 Am. Dec. 447.
Missouri. Springfield, etc., Co. v. Donovan, 147 Mo. 622, 49 S. W. 500.
New Jersey. Colonial Building & Loan Association v. Griffin, 85 N. J. Eq. 456, 96 Atl. 901.
10Fairbanks v. Snow, 145 Mass. 153, 1 Am. St. Rep. 446, 13 N. E. .196.
11 Life Association v. Mills, 82 Fed. 508, 27 C. C. A. 212; Crompton v. Bank, 96 111. 301, 36 Am. Rep. 147; Brady v. Equitable Trust Co., 178 Ky. 693, 190 S. W. 1082.
12 Hinkle v. Hinkle, - Ga. - , 96 S. E. 340.
13 United States Banking Co. v. Veale, 84 Kan. 385, 37 L. R. A. (N.S.) 540, 114 Pac. 229.
14 First National Bank v. Bryan, 62 la. 42, 17 N. W. 165; Berry v. Berry, 57 Kan. 691, 57 Am. St. Rep. 351, 47 Pac. 837. (In the latter case the court said that such mortgage is "absolutely void and not even binding on the one who does consent.") party is ignorant of such duress.15 Thus where A compelled his wife B, by threats to assign to C a policy on A's life, payable to B, C, who took it as collateral to secure A's debt, was not allowed to hold the policy as against B.16 So where a husband by threats compelled his wife to sign a mortgage, she was allowed to avoid such mortgage even though the mortgagee was ignorant of such duress.17
If the transaction induced by duress is collateral to that in litigation and to which duress is pleaded as a defense, such defense is insufficient.18 Thus where A was attacked by robbers who threatened to kill him unless he paid them a large amount of money, and A borrowed such amount from B and paid the robbers under duress, it was held that B could recover such loan from A if free from collusion with the robbers.19