Court Opinion

ID: 6353827
Source: CourtListenerOpinion
Date Created: 2022-06-24 18:31:17.728712+00
Date Added: 2024-06-11T15:49:37.220966
License: Public Domain

DE LA CUESTA V. INSURANCE CO.
Opinion,
Mr. Chiee Justice Paxson :
I do not understand that there is any dispute as to what took place at the office of the defendant company on January 28, 1881, when the plaintiff called there to pay the subscription to the new stock. The following account of what then occurred is taken from the plaintiff’s offer of proof:
*76“ That Mr. De la Cuesta,- January 28, 1881, went with Mr. Keefe to the clerk’s desk in the office of the company, and the clerk refused to take Mr. De la Cuesta’s subscription without the bonus, when he took the pen and commenced to write, ‘ this is paid under protest,’ and had formed part of the word ‘ this,’ and then Mr. Platt, the president of the company, standing beside them, said to Mr. De la Cuesta: ‘ Don’t write that protest; your verbal one is just as good, and you shall have whatever advantage any party or parties shall receive under a written protest; ’ and that he, Mr. Platt, would, as president of the company, for the company, guarantee that Mr. De la Cuesta should receive, under his verbal protest, any benefit any one should receive under a written protest by any suit; and in consequence of that Mr. De la Cuesta did not complete his written protest, or have his name added to Cunningham’s bill, but waited the termination of those proceedings and then demanded the return of his bonus.”
The effect of these facts, thus stated by the plaintiff himself, is to place him in the precise position he would have occupied had no conversation occurred between Mr. Platt and himself, and he had gone on and completed his written protest. The defendant company does not deny the facts as stated by plaintiff, nor seek to avoid the legal effect thereof. There was nothing in the transaction but a waiver of protest; that is to say, the protest was to be as effectual as if it had been written out in the most formal manner. It furnishes no evidence of a contract between the plaintiff and the corporation that, as a consideration for the plaintiff not putting his protest in writing, he should be entitled to recover, if any one, in any suit, past, present, or to come, should be capable of recovering. On the contrary, he was to have the advantage only of what any other person should receive in any suit by virtue of a written protest. There was no consideration for anything else. The company did not receive the bonus because of the waiver. The plaintiff went to the office for the purpose of paying the money, and would have paid it under a written protest had not Mr. Platt, as an act of courtesy, merely, accepted the verbal waiver. In this connection, I am unable to see what Cunningham’s App., 108 Pa. 546, has to do with the case. There was no question of the effect of a protest in that case; it was *77not alleged that the decree was obtained on any snch ground. The bill was filed to restrain the scheme proposed by the company, or to limit the new stock to ten dollars per share, its par value; to compel the company to issue the stock to complainants upon the payment of ten dollars per share, and to restrain it from selling the allotments to which the plaintiffs were entitled. This left the company an option. They could advance or recede. As they had gone on to a large extent, upon terms offered and accepted by nearly all the stockholders, this bill did not interfere with the scheme further than was necessary to sustain the right of the particular claimants therein to have their shares of the new stock issued to them at par, if the company concluded to issue the shares. The present plaintiff gives the company no option, but is seeking the same advantage as though he had put 'the company to an election ; that is to saj^, by protesting under the contract, or against being required to contract, he can obtain the right under the contract without being bound to comply with its terms.
Undue importance has been attached to the following language in the decree in Cunningham’s Appeal: “ And if they or any of them have, under protest, paid such bonus or charges for the said stock shares, that the same be refunded to them, with interest.” This must be understood to apply only to the litigants in that case. This court did not intend to decide the rights of parties not before it, who were not and could not have been heard. It has never, since its foundation, attempted to exercise such an arbitrary power. Moreover, there was neither protest nor payment in that case; there was nothing, therefore, to which the language referred to could apply, and the expression was doubtless used inadvertently. The decree is broader than the case.
The only important question presented by this record is the legal effect of payment under protest. The plaintiff was entitled, under Cunningham’s Appeal, supra, to subscribe for the new stock at par. The company required him to agree to pay an additional sum at a future time for the privilege of subscribing. This bonus, as it was called, was to be added to the surplus fund. This, however, is not material. He signed the contract to pay the additional sum,under protest, and paid under protest. This suit was brought to recover back the money thus demanded. This is the whole case.
*78It will be observed there was nothing to interfere with the plaintiff’s right to stock which he already held. It was a contract for the delivery, not of his proportion of the new stock, but of the certificates or evidence of his ownership of such stock. The stock was already his, and no action of the company could deprive him of it. He could have tendered the par of the stock and demanded a certificate. If the company had refused to issue it, he could have brought suit and recovered its market value. If he wanted the shares, he could have bought them in the market and recovered from the company what he paid in excess of par. One share of the stock of a business or trading-corporation is the precise equivalent of every other share; hence it is that equity does not concern itself about particular shares, and a bill will not lie to compel specific performance for the sale of specific shares: Foll’s App., 91 Pa. 484.
There is no principle of law better settled than that money voluntarily paid with a knowledge of the facts cannot be recovered back. It is unnecessary, in referring to a settled rule of law, always to state the reasons of the rule in a judicial opinion. It is sufficient to say here that I know of no legal principle which is sustained by better reasons of public policy. If, in every instance, in which a man is in doubt as to which is the safe course to pursue, he can pay under protest, and then sue to recover it back, it is difficult to see where litigation is to end. The law, therefore, wisely holds that a voluntary payment cannot be recovered back. In the recent case of Harvey v. Girard N. Bank, 119 Pa. 212, the law is thus stated: “A voluntary payment of money under a claim of right cannot in general be recovered back. There must be compulsion, actual, present, and potential, in indiicing the payment by force of process available for instant seizure of person or property, when the party so paying must give notice of the illegality of the demand, and of his involuntary payment. The element of coercion being essential, a mere protest or notice will not change the character of the payment, or confer of itself a right of recovery; ” citing Peebles v. Pittsburgh, 101 Pa.304. In Harvey v. the Bank there was a loss of credit, a very serious matter to a business man, by permitting a draft to go to protest. The party paid to protect his commercial honor, but we said it was not duress. In Neely’s App., 124 Pa. 406, there was an attempt to set aside an ante-*79nuptial contract on the ground of duress. After the marriage day had been fixed, the guests invited, and the caterer engaged, the husband produced an ante-nuptial contract which he required his intended wife to sign. She protested by her tears; his reply was, “No contract, no wedding.” We held there was no duress. Many other cases of a like nature could be cited were it necessary. Those above mentioned are referred to as showing that mere embarrassment, or loss of credit, as in the bank case, or mortification, as in the Neely case, do not amount to the kind of duress which the law recognizes as justifying a payment under protest. And just here it is proper to remark that the only effect of a protest, in a case in which it may be legitimately applied, is to show that the payment was not voluntarily made, and that the party protesting intends to claim it back.
The law in regard to voluntary payments was well and concisely stated by Chief Justice Lewis in Hospital v. Philadelphia Co., 24 Pa. 229: “ A voluntary payment of money under a claim of right cannot, in general, be recovered back; but it has been held that when a party is compelled by duress of his person or goods to pay money for which he is not liable, it is not voluntary, but compulsory; and he may rescue himself from such duress by payment of the money, and afterwards, on proof of the fact, recover it back: Astley v. Reynolds, 2 Str. 916; 12 Pick. 13. But the threat of a distress for rent is not such duress, because the party may replevy the goods distrained, and try the question of liability at law: Knibbs v. Hall, 1 Esp. Rep. 84. The threat of legal process is not such duress, for the party may plead and make proof, and show that he is not liable. Brown v. McKinally, 1 Esp. Rep. 279. But the warrant to a collector under a statute for the collection of taxes, is in the nature of an execution running against the person and property of the party, upon which he has no day in court, no opportunity to pleaid and offer proof and have a judicial decision of the question of his liability. Where, therefore, a party not liable to taxation is called on peremptorily to pay upon such a warrant, and he can save himself and his property in no other way than by paying the illegal demand, he may give notice that he so pays it by duress, and not voluntarily, and maintain an action to recover it back; ” citing 17 Mass. 461; 12 Pick. 13. We *80have here, succinctly stated, the principle upon which the doctrine rests in its application to a warrant for the collection of taxes. If the demand is illegal, and the party can save himself and his property in no other way, he may pay under protest and recover it back. But if other means are open to him by which he may prevent the sale of his property; if a day in court is accorded to him, he must resort to such means. Thus, the seizure of' a man’s goods under a landlord’s warrant for rent that is not due, or for more than is due, would seem to be duress as much as the seizure of property for taxes; yet, if the unlawful demand for rent be paid under protest, it cannot be recovered back for the reason above stated, that the tenant can replevy the goods, and try the issue of no rent in arrear before a jury.
In Taylor v. Board of Health, 31 Pa. 73, it was held that a payment of taxes imposed by an act of assembly which was afterwards held to be unconstitutional, was not compulsory because made under a threat, express or implied, that the legal remedies to collect it would be resorted to. In McCrickart v. Pittsburgh, 88 Pa. 133, it Avas ruled that where a party would recover back taxes he is under no legal obligation to pay, he must protest, or give notice of his intention to reclaim them. Motz v. Mitchell, 91 Pa. 114, much relied upon by the plaintiff, was the case of an unrecorded deed for certain real estate which the party having obtained the possession of, used for extorting money from the. owner of the premises. The destruction of the deed, in such case, might be the loss of title, and a suit brought to recover it might not avail as it would not necessarily prevent its destruction. This case came fairly within the doctrine of White v. Heylman, 34 Pa. 142, where a promissory note Avas given by a principal to his fraudulent agent to secure certain rights to which he Avas entitled, and out of which he had been defrauded by the agent, and it Avas held that in a suit by the equitable transferee of the note, the equities between the original parties could have been in quired into. Union Ins. Co. v. Allegheny, 101 Pa. 250, Avas the case of the payment of executions issued to sell lands for taxes, Avhere the lien of the taxes had previously been discharged by a sheriff’s sale; held, that the payment Avas voluntary. Two reasons were given. One Avas that the execution could not take from *81the company the possession of the land, and the other was that there might have been an application to a court of equity before the sale. It was said by Mr. Justice Mercur : “No immediate and urgent necessity existed for the payment of the taxes to protect the property of the plaintiffs. Its goods were not about to be seized.” In Peebles v. Pittsburgh, there was a street assessment against plaintiffs’ real estate, under an act of assembly which this court subsequently held to be unconstitutional. The plaintiff paid his assessment under protest after notice that a scire facias would be issued to collect it; held, (a) that his payments, having been voluntary, could not be recovered back, and (6) that his notice and protest at the time of his payments gave him no higher right.
In Shaw v. Allegheny, 115 Pa. 46, it was held that a tax-payer who has invoked the aid of a court of equity in vain to restrain, the collection of a tax by a sheriff’s sale of the real estate taxed,, the lien of which has been divested by a prior sheriff’s sale,, does not become a volunteer in the payment of said tax. It, was said by Mr. Justice Sterrett, in delivering the opinion of the coui't: “ Plaintiff’s property having been levied on and advertised by the sheriff, he appealed to the equity side of the-court for relief, but it was denied, and he was thus compelled either to submit to a sale of his property, by which his title thereto might be imperiled, or pay the taxes and costs. On the eve of the sale, lie chose the latter alternative, and paid the city’s unjust demand under protest. In a legal sense was this a voluntary payment? We think not. In Union Ins. Co. v. Allegheny, 101 Pa. 250, it was said of the insurance company, which was similarly circumstanced, except that it did not apply to the court for redress, that ‘ by application to the equitable powers of the court, or by bill in equity, execution might have been stayed, and the claim removed from the record.’ That is just what plaintiff in this case endeavored to do, but without success; and therein is the distinction between that case and this. Relief in the form suggested in that case was asked, but it was refused, as we think erroneously; • and plaintiff was compelled to choose one of the two alternatives above mem tioned. If there is anything against which equity should relieve, it is an act of injustice and oppression, such as the city was proceeding to commit by exposing plaintiff’s property to *82sale on liens which had been previously divested by sheriff’s sale.”
It would exceed the reasonable limits of a judicial opinion, and serve no useful purpose, were I to attempt to review the vast mass of authorities cited upon either side. Nor is it necessary to go outside of our own state for authority. We have abundant cases of our own which rule the question.
Applying the law as we find it to the facts of this case we are of opinion there was no duress. It is a duress either of person or goods that constitutes the coercion. It is not pretended there was a duress of person, nor was there anything to show duress of goods. There was nothing but the denial of a right, and a declared intention not to recognize a right is not duress. It is true, the denial of the right placed the plaintiff in a “ dilemma,” to use the expression of Judge Hare in Dawson’s case. But if we adopt the principle that whenever a man is placed in a position in which the law is doubtful, and he is compelled to choose between two paths, in other words, to decide between conflicting views of the law, he is to be considered as under duress, we shall certainly multiply litigation, even if no other end is accomplished.
It is fair to test this question by supposing the company to have done what it is alleged they threatened to do. Suppose the plaintiff had tendered the company the par of the new shares to which he claims he was entitled; that the company had declined to accept it, and had sold the right to subscribe for a corresponding number of shares. How would this have affected the rights of the plaintiff ? The company could no more have sold his stock than they could have sold his house. If he had a right to certain shares by paying ten dollars each therefor, that right could not have been divested by a sale of them by the company, nor bjr any other action on its part. His rights as a stockholder were fixed by the law: a certificate would have added nothing to them; it would have been evidence, nothing more, that he owned stock, but that already appeared upon the books of the company. The duress, if any, was not of a thing, of goods or chattels, but of an incorporeal right. Had the stock been sold he would have had no contest with the purchaser, as he would have necessarily had if a corporeal thing, or the title to a corporeal thing, had been sold *83accompanied by delivery of possession. He had to do only with the company; and, after tender of the par, could have brought his suit and recovered, as before stated, the market value of the stock, and if he wanted shares, with the money thus recovered could have bought a corresponding amount of other shares.
It was urged, however, that this case is upon all fours with Motz v. Mitchell, supra, where there was duress of an unrecorded deed, while in the ease in hand there was duress of stock. This argument involves the assumption that a certificate had been issued for the new shares, which certificate the company unlawfully withheld from the plaintiff. In point of fact, the plaintiff never had a certificate for the new shares, for none had been issued. The plaintiff had a right to demand a certificate for them upon payment of tlie par, and to sue them for a refusal, as before stated. That there could not be duress of this right is too plain for argument. There was not duress of person or goods : there was simply the denial of a right; a refusal to issue shares of stock to which the plaintiff was entitled, and for which refusal lie had a full, complete, and convenient remedy at law. We may concede that the action of the company placed him in a “ dilemma; ” he had to choose between two roads, neither of which he may have regarded as safe. In other words, he was uncertain as to his legal rights under the scheme proposed by the company. The “ dilemma ” was the uncertainty of the law. There was no other pressure or duress that caused the payment. However great the uncertainty of the law may be in particular cases, it has never been supposed to amount to duress of either person or goods. It was nothing more than is experienced by every lawyer in the course of his practice. He is often called upon to advise, where the law is uncertain; and, in all such cases, the client must take the risk.
We attach little importance to the suggestion that the company was acting in a fiduciary capacity. This was a matter really between the stockholders, and they were evidently dealing at arms’ length. The corporate organization was the means by which their scheme was carried through.
Fortunately, the plaintiff suffers no injury by the affirmance of this judgment. He receives his proportion of the new shares at the same price at which they were issued to the other *84stockholders. It is true he does not get shares at ten dollars for which others paid twenty, but his equity in this respect is not strong.
We find no error in this record.
Judgment affirmed.
Mr. Justice Sterrett and Mr. Justice Clark dissented.
DAWSON v. INSURANCE CO.
Opinion,
Mr. Chiee Justice Paxson:
This case is ruled by De la Cuesta v. Insurance Company of North America. It is unnecessary to add anything to what was said in that case.
Judgment reversed.
HUEEINGTON V. INSURANCE CO.
Opinion,
Mr. Chiee Justice Paxson :
This case is ruled by De la Cuesta v. Insurance Company of North America, just decided. The first three assignments of error present a question which was not involved in that case; but in the view we take of it they are unimportant, and do not require comment.
Judgment affirmed.
CUNNINGHAMS AND HULME V. INSURANCE CO.
Opinion,
Mr. Chiee Justice Paxson :
These cases are ruled by De la Cuesta v. Insurance Company of North America, just decided. In each of them the
Judgment is affirmed.