Court Opinion

ID: 5775800
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:40:48.286715+00
Date Added: 2024-06-11T08:41:53.021504
License: Public Domain

Steuer,, J. (dissenting).
The facts are virtually undisputed, nor is there any serious question of law. The difficulty lies in the application of the law to these facts.
The defendant in 1965 was awarded a contract by the United States Navy for the manufacture of a number of radar sets. The sets contained almost a thousand different parts, and the defendant subcontracted the manufacture of several of these among various manufacturers. The plaintiff was awarded one of these subcontracts involving 40 different parts. Needless to remark, this was in the period of the Vietnam hostilities, and *393completion of the contract was urgent. Defendant’s contract with the Navy contained rigid time clauses with stiff penalties for late delivery. Defendant’s procedure with regard to subcontracts was to issue invitations to bid to manufacturers in the various fields, and this was followed.
Ten months after the award of the first contract defendant was awarded a second contract, for an additional number of sets. It followed the same procedure, circularizing manufacturers with invitations to bid. Due to the inflationary process, the net prices in defendant’s second contract were substantially higher than those in the first contract, and the prices bid by plaintiff were likewise higher. Upon a review of plaintiff’s performance under the first contract—especially with regard to the timeliness of deliveries — defendant concluded that it would not accept the bid for all of the parts involved but would for 23 of them. Upon receipt of this advice plaintiff presented defendant with an ultimatum to the following effect: unless defendant accepted its bid for all of the items on the second contract, and unless defendant paid for deliveries yet to be made on the first contract at the prices specified in the bid pursuant to the second contract, and unless defendant paid an additional 10% for all items already delivered on the first contract, plaintiff would stop work on that contract and would also refuse to deliver such items as were already manufactured and awaiting delivery.
Faced with this alternative, defendant contacted all the manufacturers whom it believed to be capable of making these parts. There were only a limited number, about 10. Of these all but 2 reported that they were so involved in defense contracts that they could not consider further commitments. As to the remaining 2, the best delivery time estimated for the items undelivered was 16 weeks, which, allowing time for assembly of the sets, would either involve the defendant in a default or subject it to penalties under its first contract with the Navy.
Under the circumstances, defendant agreed to plaintiff’s demand, at the same time advising plaintiff in writing that it was agreeing to the terms under duress. It further appears that the excess cost under the first contract amounted to some $22,000. Defendant withheld some $17,000 under the second contract. Almost simultaneously plaintiff instituted an action for the payments not made and defendant sued for the additional sums. The actions were tried together by stipulation. The learned Special Eeferee gave judgment for the plaintiff.
Concededly the question is whether the established facts amount to economic duress. Not every threatened breach of a contract is to be so designated (Doyle v. Rector, etc., Trinity *394Church, 133 N. Y. 372; Clasen v. Doherty, 242 App. Div. 502). It must in addition be shown that the ordinary remedy of suit for the breach of that contract would be inadequate and that no reasonable avenue to escape the consequences of the breach exists (Lipin v. Salkin, 6 A D 2d 785; Underhill Constr. Corp. v. Ciraldo, 24 Misc 2d 29, affd. 12 A D 2d 945; Gallagher Switchboard Corp. v. Heckler Elec. Co., 34 Misc 2d 256, 262-263). To put it more bluntly, the choice of the lesser of two evils does not always give rise to a claim for economic duress; there must also be the factor that the choice adopted was the only one economically feasible. This was recognized by the learned Referee, who held that the defendant’s proof was defective in this respect. In so finding he relied mainly on the fact that defendant in order to find a new supplier only made a few telephone calls. What was overlooked was the uncontroverted fact that those calls embraced every source known to defendant, and no additional source was suggested by anyone. Nor is the nature of the responses received in any way disputed. Nor is there any dispute as to the defendant being in serious danger of default under its contract, or as to the effect that such a default would have on its business future as a government contractor. All that is advanced is that the Navy might have reacted favorably to a request for an extension of time. Besides being merely an argument, not proof, it is too tenuous to consider. It affirmatively appears that defendant did all it could to find a substitute supplier and it was faced with a situation in which an action for breach of contract would not provide adequate relief.
The majority appears to feel that the defendant’s acquiescence in the demands was motivated by a desire to have plaintiff, rather than some other contractor, as its supplier. To arrive at 'this conclusion, not found by the trier of the facts, it dismisses defendant’s letter of protest as a device of counsel to preserve a claim while getting the advantage of plaintiff’s work. But in addition it must shut its collective eyes to the ineluctable fact that what precipitated plaintiff’s demands was the fact that defendant did not want plaintiff as supplier for a substantial number of items. This is exactly contrary to the theory of the majority’s conclusion and belies it. Moreover, it is difficult to discover a sound basis for the solicitude for an admitted wrongdoer.
The judgment should be vacated and judgment entered for defendant on its claim.
Markswigh and McNally, JJ., concur with Eager, J. P.; Steuer, J., dissents in opinion in which Nunez, J., concurs.
*395Judgment, Supreme Court, New York County, entered on April 14, 1970, affirmed. Respondent shall recover of appellant $50 costs and disbursements of this appeal.