Miller v. Eisele

• Decision Date: 27 September 1933
• Docket Number: No. 136.,136.
• Citation: 168 A. 426
• Parties: MILLER v. EISELE et al.
• Court: New Jersey Supreme Court

168 A. 426

MILLER

v. EISELE et al.

No. 136.

Court of Errors and Appeals of New Jersey.

Sept. 27, 1933.

Syllabus by the Court.

1. Where fair-minded men might honestly differ as to the conclusion to be drawn from facts, whether controverted or uncontroverted, the question at issue should go to the jury.

2. "Duress" means any wrongful act of one person that compels a manifestation of apparent assent by another to a transaction without his volition, or any wrongful threat of one person by words or other conduct that induces another to enter into a transaction under the influence of such fear as precludes him from exercising free will and judgment, if the threat was intended or should reasonably have been intended to operate as an inducement.

3. The test of what act or threat produces the required degree of fear is not objective. The threat need not be such as would put a brave man, or even a man of ordinary firmness, in fear. The question is rather did it put one entering into the transaction in such fear as to preclude the exercise by him of free will and judgment.

4. Acts or threats cannot constitute duress unless they are wrongful, even though they exert such pressure as to preclude the exercise of free judgment. But acts may be wrongful within the meaning of this rule though they are not criminal or tortious or in violation of a contractual duty. Just as acts contracted for may be against public policy and the contract vitiated for that reason, though the law imposes no penalty for doing them, so acts that involve abuse of legal remedies or that are wrongful in a moral sense, if made use of as a means of causing fear, vitiate a transaction Induced by that fear, though they may not in themselves be legal wrongs.

5. Duress may be either of the person or of his property.

6. The rule of the early common law was that a payment is not to be regarded as compulsory unless made to emancipate the person or property from an actual and existing duress imposed on it by the one to whom the money is paid, or to prevent a seizure by a person having apparent authority to that end. The rule of the common law worked hardship and injustice in many instances, and this ancient doctrine of duress of person, and later of goods, has been much relaxed through the influence of equity, and extended so as to admit of compulsion of business and circumstances. Money paid under practical compulsion has in many cases been allowed to be recovered as, for example, payment made to obtain goods wrongfully detained; excessive fees when taken under color of office; excessive charges collected for performance of a duty, etc. In all such cases there was a moral coercion which destroyed the contract.

7. Where a person is compelled by duress of his person or goods, or the evidence of. title thereto, to pay money for which he is not liable, and from which he has no immediate or adequate relief, it is not voluntary but compulsory, and he may rescue himself from such distress by payment of the money under protest and afterwards on proof of the fact recover it back.

8. A payment is not rendered involuntary merely because the payor at the time makes a protest against the payment and that if money is paid under compulsion no protest is necessary to lay the foundation of an action to recover it, but if there be doubt as to whether the payment was voluntary, the protest may be taken into account in determining that question. This is clearly the law.

Appeal from Circuit Court, Essex County.

Action by Bernard Miller against John L Eisele and others, copartners trading as Eisele & King. From a judgment of nonsuit, plaintiff appeals.

Judgment reversed.

Schotland & Schotland, of Newark, for appellant.

Lum, Tamblyn & Colyer, of Newark, for respondents.

PERSKIE, Justice.

This appeal brings up for review a Judgment on nonsuit granted by the court below. The evidence presented at the conclusion of the plaintiff-appellant's case disclosed the following situation: The plaintiff-appellant (a customer), who for sake of brevity shall hereafter be referred to as Miller, brought suit against the defendants-respondents, who shall also for sake of brevity be hereafter referred to as brokers, for moneys alleged to be due him from the brokers. The suit was based on two counts. The first count was for the sum of $15,527.40, which, in substance, Miller (customer) claimed was improperly charged to his account, because he was in nowise liable therefor, and which he paid, under protest, and without prejudice, as a result of being threatened that unless he paid the sum of $40,050.52 (the item of $15,527.40 being a part thereof) the brokers would sell his stock on the open market and apply the proceeds thereof towards the liquidation of his alleged indebtedness to them. The second count was for the sum of $54,251.28 and was based, in substance, on the claim that the brokers by reason of an unauthorized sale and conversion of one-half of his securities on November 13, 1929, in order to satisfy an unanswered demand for additional margin, which demand, it is alleged, would have been unnecessary had the brokers not improperly charged his account with this item of $15,527.40.

Miller had been a customer of the brokers for some time prior to 1928. William Lehman was what is termed in the stock brokerage business as a confidential or customer's man, and was employed by the brokers. On September 19, 1928, Miller and Lehman entered into a partnership arrangement, in writing, to deal in stock, excepting a few stocks which were not included and which belonged to Miller, personally; the former agreeing to supply the funds, and the latter the experience. As a matter of fact they had some dealings under the same terms beginning with June, 1928. On September 6, 1928, they divided some of their profits. Miller testified that the brokers knew of his arrangements with their Mr. Lehman. He told them so on two occasions; once to their Mr. Gold, and once to their Mr. King, both members of the brokerage firm. The account under which Miller and Lehman operated with the brokers, under the arrangements above set forth, was designated as account No. 366. This arrangement continued up and until July 12, 1929. Miller, desiring to go to Europe, says that he insisted upon a dissolution of his arrangement with Lehman. He so advised Mr. Gold. The latter told him to go to see Bill, meaning Lehman, and he did so, and said to him: "I intend to go abroad, and before I leave I would like to wind up my affairs because if anything happens to me abroad I don't want my family to be tangled up in the stock market." Whereupon Miller and Lehman went to the bookkeeping department of the brokers and straightened out their account. As a result of a request for a writing to verify this adjustment Lehman gave Miller the following writing:

"(Letter head)

"Eisele & King

"Union Building

"Clinton Street

"Newark, N. J.

"July 12/29.

"Dear Barney: I understand you are leaving for Europe Monday. Let it be understood that all securities namely 144 Con. Gas 230 Texas Corp $6000 in cash 300 Houston and 200 Lambert are held in your account.

"In the event that we sell 300 HO and 200 Lambert the profit or loss assuming is to be divided equally between you and myself. I have no interest in your holding 144 Con. Gas 230 Texas Corp or 6000 cash.

"I am responsible for interest charges on HO and Lambert 50% and also interest in dividends 5% of Lambert. I will take care of note held at Vailsburg Trust Co. to the amount of $4000 which you are 50% responsible to me.

"Bon Voyage, Yours,

"Wm. L. Lehman."

On July 16, 1929, Miller sailed for Europe. On or about July 18, 1929, William Lehman opened a new account with the brokers, under the name of "Barney Miller, Special, Acct. #1053," and the said Lehman continued to trade thereunder until October 23, 1929. There was no trading during the interval between July and October, 1929, under the account No. 366. Miller denied the right on the part of Lehman to open this special account No. 1053, or to trade thereunder for his benefit. Miller returned from Europe in September, 1929. He received a call for margin. He called on the brokers for an explanation, saying that since he had not himself done any trading on this account, or as he claimed, authorized any one to do so, he could not understand the reason for the call for additional margin. He was told his account was short. He asked leave to have his personal accountant go over this account This was granted. Thus his accountant, Mr. Victor Beckreck, audited his account and it was ascertained that there had been transferred to his account, No. 366, a debt arising in special account No. 1053, in the sum of $15,527.40. Lehman admitted that the latter item was his, and was not chargeable to Miller. Despite this Miller was told that he would either put up additional margin or he would be sold out. He put up some additional collateral and caused an account with a broker, Ira Haupt, to be transferred over to the brokers-respondents, as a result of which they received $4,000 above what they paid for it on the transfer. The market kept going down and shortly thereafter, October 30, 1929, and on November 12, 1929, more margin was demanded, and, because of his inability to supply same, one-half of all his holdings, with the exception of 40 shares of one stock, were sold on November 13, 1929, resulting in an alleged loss to him in the sum of $54,251.88. This despite the protests of Miller and his threat that he would hold the brokers accountable for any loss that might result by reason of the sale of these securities. The evidence of Miller's accountant tended to justify the conclusion that if the item of $15,527.40 had not been included in account No. 366, there might probably have been no necessity for the sale of the securities.

Miller's debit balance on November 13, 1929, was $86,325.74. and the market value of the securities as of the...