Meyer v. Barde , 112 Or. 197 ( 1924 )

RAND, J.

The court found that the sole consideration for the surrender of -the house and lot and insurance policy by Mrs. Levitt was the assurance by Latourette that the delivery of the deed and assignment would mark the end of the prosecution of Levitt, and that these transfers were not made by her freely and voluntarily, but were induced by -fear and apprehension upon her part of the consequences that would result to her husband upon the prosecution of the criminal charge then pending, and that the application of the amount agreed upon as the consideration for said transfers in partial payment of the notes was not a voluntary payment upon the part of the makers, and that the payment was not made by them or under their direction.

The statute declares that in an action at law, when tried by the court without the intervention of a jury, the findings of the court upon the facts shall be deemed a verdict. The findings of the court, therefore, are conclusive upon this appeal if there is any competent evidence to sustain them, and cannot be disturbed unless it appears that the evidence from which they were made was not sufficient, as a matter of law, to support them: Good v. Smith, 44 Or. 578 (76 Pac. 354); Gormand v. McGowan, 44 Or. 597 (76 Pac. 769); McClung v. McPherson, 47 Or. 73 (81 Pac: 567; 82 Pac. 13); Wolf v. Eppenstein, 71 Or. 1 (140 Pac. 751).

It appears from the testimony that at the time of the delivery of the deed and assignment, Levitt had been arrested and was under indictment, charged with the commission of a criminal offense; that he had just passed through bankruptcy proceedings; that the only property possessed by the Levitts consisted of the house and lot in question; that the title to this property stood in the name of Mrs. Levitt; that at the time of the bankruptcy proceeding's the Levitts occupied it as their place of residence. It was therefore exempt property and, for that reason,. if the legal title had been vested in Levitt, it would not have passed to the trustee in bankruptcy. Mrs. Levitt was not in any way responsible for the payment of the notes and she received no consideration for her deed. The sole inducement for her execution and delivery of the deed and assignment was the fear and apprehension she entertained for her husband’s safety if prosecuted upon the charge for which he had been indicted. She had been induced to make the conveyance by the importunities of her husband and by the advice of her counsel after a consultation by him with Latourette. What took place at that conference is not disclosed, but the evidence clearly indicates that there was at least an implied, if not an express, agreement upon Latourette’s part that if the conveyance was made and the policy assigned, the holders of the notes would take no active part in the prosecution of Levitt, which inference is strengthened by the testimony of Mrs. Levitt, although disputed by Latourette, that Latourette stated in her presence at the time the deed and assignment were delivered that that transaction would end the criminal proceedings against Levitt. Under these facts and circumstances, the transaction was clearly illegal, as the object of it was to stifle a criminal prosecution.

It is essential to public order and to individual security that the laws against offenses injurious to the public should be fairly administered and enforced, and that the course of public justice should not be obstructed by any private combination or agreement, the object of which is to prevent a fair investigation of an alleged offense. The particular interest of an individual who has received a special injury from the commission of a criminal offense, says Mr. Green-hood, “is one of the securities on which the public relies and has a right to rely for the enforcement of the laws and its own safety”; Greenhood on Public Policy, 451.

As the consideration for which these transfers were made was illegal and contrary to public policy, the entire contract was illegal and void, and as long as it was unexecuted neither party could enforce it. The contract is itself no longer executory but has been completely performed, and neither the plaintiff nor the defendants are seeking to enforce any undertaking or agreement entered into under said unlawful contract. The illegal and void contract having been fully executed, neither party to it can recover back money paid or property transferred in execution of the illegal and void contract unless the money or property was obtained from such party by fraud, mistake or duress: Greenkood on Public Policy, 76, and authorities there cited.

That Mrs. Levitt was induced to convey her property by duress clearly appears from the testimony. She w;as under no obligation to pay the notes and her sole inducement for conveying the property was to shield her husband from the consequences of his own criminal act, and this she hoped to accomplish by the transfer of her property. The holders of the notes had no legal right to demand security from her for the payment of her husband's debts or the transfer of property in satisfaction of his debts on condition that if she paid or secured the debt her husband would escape a prosecution. Such a demand upon their part and compliance with it upon her part amounted to duress and entitled her to avoid any undertaking entered into by her or promise made or security given, and to recover back moneys paid or property conveyed under said illegal contract: Bostad v. Thorsen, 83 Or. 489 (163 Pac. 987, L. R. A. 1917D, 1170); Kohler & Chase v. Savage, 86 Or. 639 (167 Pac. 789).

Mrs. Levitt was herself a party to this illegal contract. It is not because of the illegality of the contract, but because of the duress that caused her to become a party to it, that entitles her, as a matter of law, to avoid her deed and recover back what she has parted with. But for the duress she would be remediless, because, together with all the other parties to the contract, she would be in pari delicto, but, having been caused by duress to become a party to the contract, she is only in delicto. As the law gave her the remedy of avoiding her deed because of. the duress only and not because the contract was illegal and void, her conveyance, when fully executed, was voidable and not void. She could, at her option, either avoid the deed or ratify it. “A deed made by one by duress is not void, but voidable.” 2 Co. Ins. 482.

“Where a deed has been executed under duress, and an unreasonable length of time has elapsed after the execution of the deed before steps are taken to set the same aside, the transaction is ratified. Eberstein v. Willets, 134 Ill. 101 (24 N. E. 967); Myers v. Grey (Sup.), 122 N. Y. Supp. 1079. Where a deed is alleged to have been executed under duress and is attempted to be set aside on that ground, the party so attempting to set aside the same must act promptly. If he remain silent for an unreasonable length of time, or recognize the validity of the contract, he will be held to have elected to waive the duress and ratify the contract. 10 Am. & Eng. Ency. Law (2 ed.), 337; Myers v. Grey, 122 N. Y. Supp. 1079; Royal v. Goss, 154 Ala. 117 (45 South. 231). Where there has been delay in bringing an action to set aside a deed on the ground of duress on the part of the party pleading duress, clear convincing evidence will be required to explain the failure to proceed. Lyon v. Waldo, 36 Mich. 345; Eberstein v. Willets, 134 Ill. 101 (24 N. E. 967).” Guinn v. Sumpter Valley Ry. Co., 63 Or. 368 (127 Pac. 987).

Mrs. Levitt is not a party to this action nor is she herself asking for redress. She has never taken any steps to avoid her deed, and until she became a witness in this cause, by no act of hers has she ever questioned its validity. She was at perfect liberty to ratify the deed, and after ratification, the defect was cured. Whether she has ratified the deed is a question personal to herself, which no one else can raise for her; for “duress, which will avoid a contract, must be offered to the party who seeks to take advantage of it.” Robinson v. Gould, 11 Cush. (Mass). 55. The defense that Mrs. Levitt, by duress, joined in conveying her property and assigning an insurance policy is, therefore, not available to the defendants as a defense to this action.

The trial court made no finding that the acts proved constituted duress as to the defendant Levitt. Hence that question is not here for decision and we shall give no consideration to it further than to quote, with approval, from 1 Page on Contracts (2 ed.), 495, as follows:

“If the person subjected to duress is thereby compelled to perform or agree to perform what he could have been compelled to do legally, such transaction or contract cannot be avoided for duress. Thus, if one who has injured another is compelled by duress to compensate to no greater extent than the law would have compelled him for such injury, as by giving to the person from whom he has embezzled a note to cover such embezzlement, no duress exists. * * But if the contract caused by threats of prosecution is not one of restitution, but is on some different subject matter, duress exists though the promisor is guilty.”

The trial court found both as a fact and as a conclusion of law that the payments distributed among and credited upon the notes of the amount stipulated by Levitt and Latourette as the consideration to be allowed to Levitt for the transfer of tho property by Levitt and his wife were in no sense voluntarily made by the defendants, nor made by or under their direction, and that because thereof the court concluded that these payments did not in any way affect the running of the statute against the notes. There was no evidence that these payments were not made under an agreement that they should be applied in part payment of the notes. On the contrary, the evidence is uncontradicted, and the whole evidence shows, that the agreement was that they should be applied as partial payments upon the notes. Levitt himself testified to that effect. There was, therefore, no evidence to sustain the finding, and the conclusion drawn by the court from the findings was erroneous. Levitt himself was a party to the deed, and his name appears upon the assignment of the policy. By his own act he procured the payment and the ’ indorsement of it as a payment upon the notes. The payment was, therefore, made by him, and the indorsement was made under his direction. The finding of the court and the conclusion drawn therefrom were, therefore, both erroneous.

This action is not one for the enforcement of a contract entered into by duress. If it was, the plaintiffs could not recover. The notes sued on are entirely separate and distinct from the transaction complained of by the defendants. The amount represented by the notes is justly due from the defendants, and the validity of the notes and the indebtedness represented by them are not in any way affected by the invalidity of some other transaction between the parties, even though the proceeds of that transaction have been applied, by agreement of the parties, in partial payment of the notes. If the holders of the notes, after receiving this partial payment, had sued the defendants to recover for the full amount-then due, without deducting the amount paid, the defendants would have had a perfect defense as to the amount so paid and not credited by proving the facts established by the evidence in this cause. The transaction being voidable and not void as to the wife of the defendant Levitt and she never having exercised her option to avoid the deed and assignment, the transaction is a completed one, and the consideration for the transaction having been paid to the holders of the notes, it constituted payment as much so as if the transaction had been one against which no objection could be urged.

For these reasons the judgment of the lower court will be reversed and the cause remanded for further proceedings not inconsistent herewith.

Reversed and Remanded.

Burnett, Bean and Coshow, JJ., concur.