Scheinberg v. Scheinberg

• Decision Date: 20 November 1928
• Citation: 249 N.Y. 277,164 N.E. 98
• Parties: SCHEINBERG et al. v. SCHEINBERG et al.
• Court: New York Court of Appeals Court of Appeals

249 N.Y. 277

164 N.E. 98

SCHEINBERG et al.

v.SCHEINBERG et al. ^*

Court of Appeals of New York.

Nov. 20, 1928.

Action by Isidore Scheinberg and others against Beatrice Scheinberg and another. Judgment in favor of plaintiff was modified, and as modified affirmed, by the Appellate Division (224 App. Div. 731, 230 N. Y. S. 904), and defendant named appeals.

Reversed, and new trial granted.

See, also, 221 App. Div. 839, 224 N. Y. S. 385.

Appeal from Supreme Court, Appellate Division, First Department.

Jay Leo Rothschild and Louis Rivkin, both of New York City, for appellant.

Hyman Grill, of New York City, and Maurice Z. Bungard, of Brooklyn, for respondents.

POUND, J.

Plaintiff Louis Scheinberg is the husband of defendant Beatrice Scheinberg. The other plaintiffs are brother and sisters of Louis. In March, 1923, Beatrice Scheinberg obtained a judgment of separation from her husband for cruel and inhuman treatment. At that time she was the owner of the real estate involved in this action. Her equity therein is now of the value of $84,000. She had received title thereto from her husband in 1913 as a gift.

Prior to the judgment of separation, an action had been brought by the mother of Louis Scheinberg to impress a trust upon the real property. She died and the action was continued by her heirs at law. On the trial Louis Scheinberg was a witness for the plaintiffs. The complaint was dismissed. Judgment of the Trial Term was affirmed by the Appellate Division, and an appeal was taken to the Court of Appeals, which was pending at the time the compromise agreement which is the subject of this litigation was entered into.

Soon after the commencement of the litigation last above mentioned, an action was brought against Beatrice Scheinberg by a man named Lipset to foreclose a mortgage for $8,000 on a portion of her real property involved herein. It was defended on the ground that the mortgage was given for record purposes for the convenience of the husband and that Lipset was conspiring with him to enforce the mortgage. The complaint was dismissed on plaintiff's default.

In December, 1921, a petition in bankruptcy was filed against Beatrice Scheinberg. The proceedings were resisted on the ground that the claims of creditors were fictitious and were controlled by her husband. The trial judge in this action said in his opinion that many if not all of the alleged loans were inventions of the husband and those under his control, but held that the question was not directly before him. That the husband did control all these proceedings is evident from the settlement agreement that followed.

On and before July 9, 1924, Beatrice Scheinberg was in danger of losing her property in one or all of these proceedings. The income therefrom was in the hands of receivers in the foreclosure proceedings and in the bankruptcy proceedings. Although she had thus far been successful in the legal battle, the end was not in sight. She was without funds to support herself and pay lawyers. Her husband had proved himself to be a relentless and formidable antagonist. Overtures had been made to her for a settlement. Her own lawyers were advising her that the risk was serious. Under these circumstances, she entered into a contract of settlement with plaintiffs. The agreement recites the pending appeal in the action to impress a trust on the real property and an agreement to settle and discontinue that action. It provides for the payment of $40,000 to Beatrice Scheinberg, $10,000 on the execution of the agreement and $30,000 on or before September 2, 1924 (but the funds in the hands of the receiver were to be applied to this payment). Beatrice Scheinberg agrees to convey the real property in suit to the plaintiffs herein, or to their nominees, and the agreement recites that the deed thereof is deposited in escrow with defendant Max Monfried to be delivered by him when the plaintiffs perform the agreementon their part. Plaintiffs agree to obtain releases from the creditors or alleged creditors of Beatrice Scheinberg and to cause the bankruptcy proceedings to be discontinued. Beatrice Scheinberg agrees to surrender her claim for alimony under the decree of separation and to assign to the plaintiffs or their nominees all money in the hands of the receiver upon compliance by the plaintiffs with the terms of the compromise agreement.

Some delay in performance followed. Beatrice Scheinberg had meanwhile become satisfied that she had been coerced into an inequitable contract and refused to proceed with the settlement. This action for specific performance was then begun. Defendant answered the complaint alleging duress and undue influence and counterclaimed for rescission. The theory of the trial justice was that as Beatrice Scheinberg knew what she was doing when she entered into the settlement agreement and was represented by experienced counsel, she was not ‘in a legalistic sense’ overreached, and on this theory he made his findings in favor of plaintiffs without passing on the requests of counsel to find in substance that the agreement was, by reason of the background of duress by circumstances, in fact unfair, unconscionable, and inequitable, and not to be specifically enforced. The court reached the conclusion that the settlement was proper as matter of law.

The Appellate Division modified the judgment by striking out the provision of the settlement agreement waiving...