Opinion ID: 2615306
Heading Depth: 1
Heading Rank: 1

Heading: nature of the defendants' wrongful conduct

Text: Against these defendants the complaint attempts to state a cause of action for wrongful acts in the nature of duress which resulted in the payment of an already paid debt by plaintiffs to these defendants as representatives of the estate of Weber, and which collaterally resulted in the transfer of real property from plaintiffs to Scheidel. [3] Under modern law duress is not limited to threats against the person. It may also consist of threats to business or property interests. ( Sistrom v. Anderson, 51 Cal. App.2d 213, 220-221 [124 P.2d 372]; 5 Williston on Contracts, 4517-4518, § 1617; 40 Cal.L.Rev. 425; Rest., Contracts, § 493.) The modern doctrine has been recognized in California. ( Young v. Hoagland, 212 Cal. 426, 430-431 [208 P. 996, 75 A.L.R. 654]; Thompson Crane & Trucking Co. v. Eyman, 123 Cal. App.2d 904, 910-911 [967 P.2d 1043].) [4] It has been held that one who falsely clouds the title to real property and then seeks some consideration to remove the cloud is guilty of a wrongful act and may be compelled to restore the consideration recovered by him. ( Wake Development Co. v. O'Leary, 118 Cal. App. 131 [4 P.2d 802]; Ezmirilian v. Otto, 139 Cal. App. 486 [34 P.2d 774]; McNichols v. Nelson Valley Bldg. Co., 97 Cal. App.2d 721 [218 P.2d 789].) [5] Plaintiffs in the instant case have brought themselves within the doctrine enunciated by the cases. It is alleged in the complaint that the defendants wrongfully, with knowledge of the falsity of the claim, attempted to foreclose on a mortgage which had already been satisfied. Beltrami and Scarlett filed a suit to foreclose the mortgage. A lis pendens filed in connection with that suit clouded the title of the property owned by Abbie so that, because of her situation, she was not able to sell the property without paying the allegedly false claim and conveying other property to Scheidel. Thus plaintiffs have alleged sufficient facts to show that the defendants Beltrami and Scarlett were guilty of duress as against the plaintiff Abbie. Respondents argue that no duress was involved because they were merely seeking to foreclose a mortgage, a legal remedy. [6] It is contended that the taking of legal action or the threat to take such action cannot constitute duress. This is generally true. ( Hanford Gas etc. Co. v. Hanford, 163 Cal. 108, 112 [124 P. 727]; Burke v. Gould, 105 Cal. 277, 283 [38 P. 733]; Sistrom v. Anderson, 51 Cal. App.2d 213, 221 [124 P.2d 372].) But the complaint here alleges something more than the threat to take legal action. It alleges that Beltrami and Scarlett, in making such threats, knew the claim asserted was false. This amounts to duress. (Rest., Restitution, § 71; McNichols v. Nelson Valley Bldg. Co., 97 Cal. App.2d 721, 724 [218 P.2d 789].) [7] These respondents also urge that, even if wrongful, their acts were not the proximate cause of plaintiffs' injuries. They correctly point out that some of the circumstances that made the pressing of the claim particularly onerous were not created by them. Thus, the threat of execution of the bond judgment against Abbie's separate home property was the result of Abbie's executing the bond with another. Beltrami and Scarlett had nothing to do with this. But this does not mean that proximate cause has not been sufficiently alleged. Obviously, whenever a defendant presses a false claim against a plaintiff, and the plaintiff is forced to pay it, the primary cause of the payment is that defendant pressed the claim. The other factors relating to the existence of the bond judgment merely created the situation that made the pressing of the false claim successful. [8] It is also contended that if the plaintiffs had a reasonable alternative to the parting with the consideration to satisfy the false claim, the payment was not made under duress. This is undoubtedly the law. ( Western etc. Oil Co. v. Title Ins. & Trust Co., 92 Cal. App.2d 257, 265 [206 P.2d 643]; Texas Co. v. Todd, 19 Cal. App.2d 174, 188 [64 P.2d 1180]; Myers v. City of Calipatria, 140 Cal. App. 295, 299 [35 P.2d 377].) In attempting to bring themselves within this rule, respondents assert that Abbie should have allowed her home property to be sold to satisfy the sheriff's judgment. Then she could have contested the foreclosure action. The conclusion is unsound. To allow one's home to be sold at a foreclosure sale is not a reasonable alternative. A reasonably prudent person would not take such a course. This is the test. ( Young v. Hoagland, 212 Cal. 426, 431 [208 P. 996, 75 A.L.R. 654].) [9] Whether Abbie acted as a reasonably prudent person is a question of fact. ( Kolias v. Colligan, 172 Cal. App.2d 384, 386-387 [342 P.2d 265]; Steffen v. Refrigeration Discount Corp., 91 Cal. App.2d 494, 498 [205 P.2d 727].) Under the allegations of the complaint, because of the circumstances in which she found herself, Abbie had no reasonable alternative except to pay the false claim. [10] Respondents also argue that since the complaint shows that a suit was filed and money paid by Abbie in settlement of that suit, the doctrine of res judicata is applicable as a matter of law. But a party may attack any judgment by showing that it was secured by the extrinsic fraud of the other party. ( Westphal v. Westphal, 20 Cal.2d 393, 397 [126 P.2d 105]; Estate of Bialy, 169 Cal. App.2d 479, 490 [337 P.2d 511]; 29 Cal.Jur.2d 109, § 160.) [11] Duress is a species of fraud. ( Tanforan v. Tanforan, 173 Cal. 270, 275 [159 P. 709].) [12] Plaintiffs have pleaded duress against Beltrami and Scarlett. That being so any consent judgment or judgment of dismissal that may have been entered pursuant to a settlement agreement would not act as a bar to the present action. ( Harper v. Murray, 184 Cal. 290 [193 P. 576].) Thus the complaint states a good cause of action against Beltrami and Scarlett. Does it do so against Scheidel?
It is alleged in the complaint that plaintiff Abbie was compelled to convey the Sacramento ranch property for a third of its actual market value to defendant Scheidel. The conveyance is alleged to have been made as a result of the extortionary claim of Beltrami and Scarlett and from fear that Abbie would lose her Sacramento home property. Scheidel is alleged to have had knowledge of the duress which was being exercised by Beltrami and Scarlett. Plaintiffs seek to have the conveyance of the Sacramento ranch property to Scheidel set aside, and the property restored to plaintiffs. Does this allege a good cause of action against Scheidel? It is to be noted that no active wrongdoing has been alleged against this defendant. The actual duress was that of Beltrami and Scarlett. Scheidel, however, is alleged to have had knowledge of the situation in which Abbie found herself. Thus, the question is whether the wrongful acts of a third party constituting duress may be sufficient to allow rescission of a contract with a party, who, although not participating in those wrongful acts, had knowledge of the innocent party's position. [13] The Restatement of Contracts gives an affirmative answer to this question. Section 496 states that the duress of a third party renders a transaction voidable by a party induced thereby to enter into it under the same circumstances as the rule stated in section 477 relating to fraud. Section 477 reads: Fraud or material misrepresentation [or duress] by a third person renders a transaction voidable by a party induced thereby to enter into it if the other party thereto (a) has reason to know of the fraud or misrepresentation [or duress] before he has given or promised in good faith something of value in the transaction or changed his position materially by reason of the transaction, ... (See also 62 A.L.R. 1477, 1478; 4 A.L.R. 864; Bumgardner v. Corey, 124 W. Va. 373 [21 S.E.2d 360, 364]; Wells Fargo Nevada Nat. Bank v. Barnett, 298 F. 689, 691; McDonald v. Pend Oreille Mines & Metals Co., 189 Wash. 389 [65 P.2d 1250, 1257].) This is also the rule in California. ( Harper v. Murray, 184 Cal. 290, 294 [193 P. 576]; Carroll v. Carroll, 16 Cal.2d 761, 770-771 [108 P.2d 420].) [14] Under the rule of these cases the allegations that Scheidel had knowledge of Abbie's predicament are sufficient to give rise to the right of rescission. Scheidel had no legal right to take advantage, knowingly, of the wrongdoing of third parties. When he did, he connived with the wrongdoers as that term is used in the statute relating to rescission. (Civ. Code, § 1689.) [15] The very fact that the conveyance was for an allegedly inadequate consideration, under the cases, is of some importance in determining whether or not it was made under duress. ( Pipes v. Webb, ___ Miss. ___ [111 So.2d 641, 643].) For the foregoing reasons, it must be held that the complaint, so far as the substantive law is concerned, states a cause of action against the three defendants. This brings us to the real question presented and that is whether the statute of limitations is applicable to any of the causes of action stated.