Grad v. Roberts
| Decision Date | 26 March 1964 |
| Citation | 248 N.Y.S.2d 633,198 N.E.2d 26,14 N.Y.2d 70 |
| Parties | , 198 N.E.2d 26 Samuel GRAD, Respondent, v. Samuel ROBERTS, Appellant. |
| Court | New York Court of Appeals Court of Appeals |
Paul A. Crouch, K. Richard Marcus and Henry G. McDonough, New York City, for appellant.
Edward L. Shiff, for respondent.
Hudson Boulevard East Land Corporation owed defendant $15,000 for professional engineering services. It had planned to erect a building on a parcel of land which it owned in West New York, New Jersey. As was stated by the trial court:
'The project limped along at a pace unsatisfactory to the stockholders, and it was decided to sell the corporation, it being contemplated that several stockholders would collectively divest their stockholdings to another group of builders or speculators who would erect the planned building utilizing the projected blueprints.
'The plaintiff stockholder was not sympathetic to these decisions, and he secured a written option to purchase the interests of the other stockholders for $250,000. One of the provisions of the option agreement provided: 'that the corporation shall continue to have the obligations to pay to Samuel Roberts the sum of $15,000.00 in consideration of his work, labor and services performed on behalf of the said corporation which sum shall be paid within ten days following the first advance of mortgage funds under the construction loan following commencement of construction."
During the option period, instead of developing this land through the corporation, plaintiff arranged to resell it to another developer for $350,000 and a 49% equity interest in himself, and he thereupon exercised his option which placed him in position to become sole stockholder of the corporation. Upon acquiring the shares of the other stockholders, and taking their general releases to the corporation and himself, plaintiff came into position where he could deal with the property of the corporation as though it were his own, subject to rights of creditors and of the public (Diamond v. Diamond, 307 N.Y. 263, 120 N.E.2d 819; Kent v. Quicksilver Mining Co., 78 N.Y. 159).
He chose to depart from the method of development of this land in New Jersey which had been contemplated by the terms of the option under which the other shareholders including defendant agreed to sell him their stock, by causing the land to be transferred to him and then to the other developer instead of having the Hudson corporation itself build upon the land. This change in plan frustrated the provision made in the option agreement for the payment to defendant by the corporation of its existing indebtedness to him of $15,000 'within ten days following the first advance of mortgage funds under the construction loan following commencement of construction' by Hudson. Plaintiff had the corporation deed this land to himself without consideration, thus denuding it of assets without payment to its debt to defendant except as plaintiff paid it personally by the cash and note which plaintiff now claims were delivered under duress. Plaintiff, in turn, deeded it to the other ceveloper. If defendant had not been paid by plaintiff, this departure from the pattern of the option agreement would have left the corporation without funds to pay its indebtedness to defendant, and would have enabled plaintiff personally to capitalize on the assets of the corporation without being chargeable with payment of its indebtedness.
Defendant foresaw what plaintiff was about to do and prevented it before it occurred. He was himself a shareholder as well as a creditor of the Hudson corporation, and a signer of this option agreement. When his turn came to transfer his shares to plaintiff, and deliver his general release to plaintiff and the corporation, he pointed out that, in view of the conveyance of this land through plaintiff to the other developer, the Hudson corporation would be left without funds to pay its indebtedness to him of $15,000, which the option agreement had provided would be paid within 10 days following the first advance of mortgage funds following commencement of construction by Hudson of a building on the land. He refused to transfer his stock to plaintiff, or to release plaintiff and the corporation in the light of this departure from the program of the option agreement, unless plaintiff personally paid to him this debt of the Hudson corporation. Plaintiff did so by delivering to defendant $10,000 in cash and his note for the balance of $5,000. Defendant thereupon transferred his shares to plaintiff for the price stated in the option, and delivered to plaintiff his general release running to plaintiff and the corporation. Plaintiff now sues defendant for the return of this $10,000 and the cancellation of his note for $5,000 upon the theory that they were exacted from him by the defendant by means of duress, which would, as defendant foresaw, leave him without means of collecting his $15,000 debt from the corporation.
The theory underlying this assertion of duress is that, at the time when defendant insisted upon the payment by plaintiff of this obligation of the Hudson corporation, defendant was already under legal obligation to sell and transfer his stock to plaintiff and to release plaintiff and the Hudson corporation from all claims, except payment by the corporation of the said $15,000 at the time and in the manner specified in the option agreement. It is said that the defendant took strategic advantage of the favorable opportunity which plaintiff had to resell this land for $350,000 and a 49% equity interest, by exacting payment of this corporate debt by plaintiff personally, citing such cases as Harmony v. Bingham, 12 N.Y. 99,...
To continue reading
Request your trial
-
Piccoli a/S v. Calvin Klein Jeanswear Co.
...Cpt. ¶¶ 62-66. 46. Frutico S.A. de C.V. v. Bankers Trust Co., 833 F.Supp. 288, 300 (S.D.N.Y.1993) (citing Grad v. Roberts, 14 N.Y.2d 70, 75, 248 N.Y.S.2d 633, 637, 198 N.E.2d 26 (1964); Lowell v. Twin Disc, Inc., 527 F.2d 767, 770 (2d Cir.1975)). 47. See Four Star Capital Corp. v. Nynex Cor......
-
In re Houbigant, Inc.
...Collard v. Incorporated Village of Flower Hill, 75 A.D.2d 631, 427 N.Y.S.2d 301 (2d Dept.1980) (citing Grad v. Roberts, 14 N.Y.2d 70, 248 N.Y.S.2d 633, 198 N.E.2d 26 (1964)). The only agreement to which Chemical and ACB are parties is an Indemnification Agreement, whereby Chemical agreed to......
-
Porter v. Commissioners of Internal Revenue (In re Estate of Porter)
...that a party may not be excused from performance of a contract because of his own wrongful action is as stated in Grad v. Roberts, 248 N.Y.S.2d 633, 198 N.E.2d 26 (1964), that ‘in every contract there is an implied undertaking on the part of each party that he will not intentionally and pur......
-
Van-Go Transport Co. v. New York City Bd. of Educ.
...for breach because BOE contract urged comptroller to unjustifiably withhold requisite certification); Grad v. Roberts, 14 N.Y.2d 70, 75, 248 N.Y.S.2d 633, 637, 198 N.E.2d 26 (1964) (parties to a contract are under an implied obligation to exercise good faith not to frustrate performance of ......
-
IndeX.
...79 (1933). 436. Kirke LaShelle Co. v. Armstrong, 143 Misc. 707 (Sup. Ct., N.Y. Co. 1932). 437. 46 N.Y.2d 62 (1978). 438. Grad v. Roberts, 14 N.Y.2d 70 (1964). 439. Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293 (1983). 440. Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 47......
-
VI.21. 6. What Is The Implied Duty Of Cooperation?
...expectations and the performance of their agreement. --------Notes:[501] Wieder v. Skala, 80 N.Y.2d 628 (1992); Grad v. Roberts, 14 N.Y.2d 70 (1964); Patterson v. Meyerhofer, 204 N.Y. 96 (1912).[502] See A.7 of this...
-
VI.9. 1. What Has The New York Court Of Appeals Said Concerning The Implied Covenant Of Good Faith And Fair Dealing?
...79 (1933).[436] Kirke LaShelle Co. v. Armstrong, 143 Misc. 707 (Sup. Ct., N.Y. Co. 1932).[437] 46 N.Y.2d 62 (1978).[438] Grad v. Roberts, 14 N.Y.2d 70 (1964).[439] Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293 (1983).[440] Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 47......
-
XI.9. 3. What Is Frustration Of Performance?
...or failures to act impact the counter-party’s performance.[631] Vandegrift v. Cowles Eng’g Co., 161 N.Y. 435 (1900).[632] Grad v. Roberts, 14 N.Y.2d 70, 75 (1964).[633] Wieder v. Skala, 80 N.Y.2d 628 (1992).[634] See supra Chapter VI.C.6.[635] U.C.C. § 2-311.[636] Int’l Firearms Co. v. King......