Arthur Fels Bond & Mortgage Co. v. Pollock

• Decision Date: 03 April 1941
• Docket Number: 37096
• Parties: Arthur Fels Bond & Mortgage Company, a Corporation, Appellant, v. Samuel Pollock and Rose Pollock
• Court: Missouri Supreme Court

149 S.W.2d 356

347 Mo. 853

Arthur Fels Bond & Mortgage Company, a Corporation, Appellant, v. Samuel Pollock and Rose Pollock

No. 37096

Supreme Court of Missouri

April 3, 1941

Appeal from Circuit Court of City of St. Louis; Hon. Charles B Williams, Judge.

Reversed and remanded (with directions).

Lewis Rice, Tucker, Allen & Chubb, Lyle M. Allen, Joseph W. Lewis Jr., and Robert T. Burch for appellant.

(1) The offer and receipt in evidence of the promissory note upon which the suit was based, and the defendants' admission in their answer of the execution and delivery of the note established a prima facie case in favor of the plaintiff. Secs. 965, 2653, R. S. 1929; Moore v. Dickerson, 137 S.W.2d 495; Waugh v. McCormick, 93 S.W.2d 77; North Side Finance Co. v. Sparr, 78 S.W.2d 892. (a) Neither the facts pleaded in the answer nor those established by the evidence were sufficient to constitute the defense of duress. 17 Am. Jur., p. 904, sec. 26; Chamberlain Mach. Works v. United States, 270 U.S. 347, 70 L.Ed. 619; Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6; 17 Am. Jur., pp. 884, secs. 11; 25; Morgan v. Joy, 121 Mo. 683, 26 S.W. 670; Hartsville Oil Mill v. United States, 271 U.S. 43, 70 L.Ed. 822; Barlow v. Scott, 85 S.W.2d 504; State ex rel. v. Shain, 339 Mo. 903, 98 S.W.2d 597; Morse v. Woodworth, 155 Mass. 250, 27 N.E. 1010; Sheppard v. Protective Assn., 233 Mo.App. 602, 124 S.W.2d 528; Bushnell v. Loomis, 234 Mo. 381, 137 S.W. 257. (b) The alleged defense of failure of consideration was properly withdrawn from the jury. Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6; Hartsville Oil Mill v. United States, 271 U.S. 43, 70 L.Ed. 822; Holland Banking Co. v. Griggs, 323 Mo. 289, 19 S.W.2d 292; State ex rel. v. Trimble, 335 Mo. 213, 72 S.W.2d 111. (c) The judgment below should be reversed and a judgment entered in favor of the plaintiff for twenty-three thousand two hundred fifty dollars ($ 23,250) with interest at 6 per cent per annum from the 23rd day of September, 1938, the date on which the suit was filed, or the cause remanded with directions to enter such judgment in the circuit court. Central States Life Ins. Co. v. Bloom, 137 S.W.2d 517; Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6. (2) The given Instruction 3 given by the court at the request of the defendants was erroneous and prejudicial. (a) The facts submitted by this instruction do not constitute duress or any defense to the plaintiff's cause of action. Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6; Hartsville Oil Mill v. United States, 271 U.S. 43, 70 L.Ed. 822; Barlow v. Scott, 85 S.W.2d 504; International Harvester Co. v. Spires, 223 S.W. 799. (b) This instruction ignored the fact that the defendants did not repudiate the note within a reasonable time after the claimed duress was removed as required to establish the defense of duress. Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6; 17 Am. Jur., p. 902, sec. 25; State ex rel. v. Shain, 339 Mo. 903, 98 S.W.2d 597; Sheppard v. Protective Assn., 233 Mo.App. 602, 124 S.W.2d 528; Bushnell v. Loomis, 234 Mo. 371, 137 S.W. 257. (3) The action of the court in admitting evidence offered by the defendants, over the objection and exception of the plaintiff, relating to matters not in issue was erroneous and prejudicial. 20 Am. Jur., p. 242, sec. 248; Ritter v. First Natl. Bank, 87 Mo. 574. (4) The findings of the jury were conflicting and the verdict was erroneous. Bauer Contracting Co. v. Arctic Ice & Cold Storage Co., 186 Mo.App. 664, 172 S.W. 417; Johnson v. Labarge, 46 Mo.App. 433; Barr & Martin v. Johnson, 170 Mo.App. 398, 155 S.W. 459; East St. Louis Cotton Oil Co. v. Skinner Bros. Mfg. Co., 249 F. 439.

Jones, Hocker, Gladney & Grand and Vincent L. Boisaubin for respondents.

(1) It is a good defense to a suit on a negotiable note that it is obtained by force and fear or other lawful means or that it is negotiated in breach of faith. Sec. 2683, R. S. 1929. (2) "Business compulsion" is a modern species of duress. It is sometimes referred to as "moral duress." If a contract is made or money is paid under circumstances of business necessity or compulsion, the same may be considered to have been done involuntarily and the money may be recovered and the performance of the contract excused. 17 Am. Jur., p. 879; 79 A. L. R. 655; American Bonding Co. v. St. Louis, 187 Mo. 377; Lappin v. Crawford, 186 Mo. 470, Id., 221 Mo. 390; White v. McCoy Land Co., 229 Mo.App. 1040; Wells v. Adams, 88 Mo.App. 225; Fout v. Giraldin, 64 Mo.App. 169; Niedermeyer v. Curators of University of Mo., 61 Mo.App. 661; Westlake & Button v. St. Louis, 77 Mo. 47. (3) Where a contract is signed under the influence of threats and fears and oppression and the apprehension of business loss, there is no "mental freedom" in the making of the contract and it will be set aside. Lappin v. Crawford, 186 Mo. 462, Id., 221 Mo. 380. (4) It is not necessary or even proper to plead conclusions, but only the substantive facts upon which conclusions rest. In pleading duress, it is sufficient and proper to plead the substantive facts from which duress arises, and it is not necessary to specifically allege that the will was overcome as a result of these facts. Miss. Valley Trust Co. v. Begley, 298 Mo. 708; Turley v. Edwards, 18 Mo.App. 690. (5) In order to avail of the defense of ratification or laches, they must be specially pleaded. They are affirmative defenses. Ambruster v. Ambruster, 326 Mo. 75. (6) A note given for the completion of a contract already entered into and based upon an already existing valuable consideration is without consideration. Lappin v. Crawford, 186 Mo. 471. (7) Even if a verdict is inconsistent, where it results in a benefit, the party benefited cannot complain thereof. One cannot complain of an error in a verdict unless prejudiced thereby. A judgment will not be reversed except upon error materially affecting the merits of the action. Sec. 1062, R. S. 1929; Morley v. Prenderville, 316 Mo. 1104; Barnard v. Weaver, 224 S.W. 154; Balderson v. Monaghan, 278 S.W. 784; St. Louis ex rel. Sears v. Southern Surety Co., 62 S.W.2d 436; Thompson v. Moon Buggy Co., 155 Mo.App. 611; Dick v. Puritan Phar. Co., 46 S.W.2d 947; Knight v. Lauer, 253 S.W. 454; Clement v. Wilson, 11 F.2d 363; McNet v. Wolfi, 269 P. 933; Gibson Oil Co. v. Bush, 1 S.W.2d 93; Parmenter v. Douglas Tank Co., 241 P. 474.

OPINION

Bohling, C.

Action by Arthur Fels Bond and Mortgage Company, a corporation, payee, for an alleged balance of $ 23,250 on a $ 25,000 negotiable non-interest bearing joint and several note of Samuel Pollock and Rose Pollock, husband and wife, dated at St. Louis, Missouri, November 4, 1937, and payable at the office of said payee in Kansas City, Missouri, in consecutive monthly installments of $ 250 beginning December 4, 1937, with the option in the payee of declaring the whole unpaid balance due and payable on default in the payment of any monthly installment. Suit followed default of the August, 1938, payment. Defendants filed a joint answer and counterclaim. The answer pleaded failure of consideration and duress; and the counterclaim, on like grounds, sought the recovery of $ 4,000 paid plaintiff at the time of executing the note and $ 1,750 partial payments thereafter made by defendants. The trial court withdrew defendants' plea of want of consideration. The verdict, concurred in by nine jurors, was for defendants on plaintiff's cause of action and for plaintiff on defendants' counterclaim. Plaintiff contends that defendants failed to make a submissible case on the issues of failure of consideration and duress; and, consequently, that plaintiff was entitled to a directed verdict.

Defendants owned the stock in "4605 Lindell Boulevard, Inc.," a corporation, which owned the Park Royal Apartments located at 4605 Lindell Boulevard, St. Louis, Missouri. In May, 1937, this property was subject to an outstanding indebtedness of $ 645,000 of an original $ 650,000 bond issue. Plaintiff had acted as financial agent in marketing the bonds. Plaintiff, and Arthur Fels, its president, and members of his family held $ 275,000 of said bonds. $ 161,000 of said $ 275,000 bonds had been pledged with Irving and Otto Hirsch to secure an indebtedness of $ 140,000 of plaintiff corporation. Defendants conducted negotiations with plaintiff, acting through said president, looking to the refinancing of the property by a new loan of $ 400,000 and the retirement of the original bonds on the basis of 60 cents on the dollar. The pledge of $ 161,000 of the bonds with the Hirschs presented difficulties.

Mr Pollock testified to the following effect: That on May 11, 1937, defendants had a conference with Arthur Fels at his office in Kansas City; that they informed him they had a commitment of $ 400,000; that Fels informed them the Hirschs held a block of the original bonds as collateral and the refinancing could not be consummated without said bonds; that witness had no information concerning the details of the Fels-Hirschs' transactions; that Fels informed them plaintiff could secure no consideration from the Hirschs but he, Pollock, should present the matter to Otto Hirsch on the theory that whatever discount the Hirschs would allow on plaintiff's indebtedness would inure to the benefit of the Pollocks in the refinancing; that he, Pollock, was to represent that he would pay the Hirschs any difference between the discount allowed plaintiff by the Hirschs and the discount to be had on the Park Royal Apartments bonds but, as between plaintiff and defendants, plaintiff would furnish Pollock the necessary funds. On May 11, 1937, the Lindell Boulevard corporation and Mr. Pollock agreed to pay plaintiff $ 10,000, with no other additional charges or expenses, for services in effecting...