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Threats to take legal action with knowledge of the falsity of the claim can amount to duress. A claim of duress cannot generally be sustained where there is knowledge of the facts and opportunity for investigation, deliberation and reflection. The length of time that elapses between the threat and the transaction attacked is important only in determining if the threat precluded free judgment at the time of the transaction. Fear of threats may continue long after the threats and in determining if it does, time, distance, opportunity to obtain disinterested advice and protection, are all important.
The wife returned home to find her husband discussing unpaid loans he owed to the bank with a loan officer from the bank. The wife had no knowledge of the loans. The loan officer asked defendants to sign a deed of trust on their farm to secure the payment of the debts. When the loan officer could not convince the wife to sign two renewal notes consolidating the loans and the deed of trust he called the bank's president, who then went to defendants' home. The loan officer allegedly told the wife that she was responsible for her husband's debts due to their marriage and that the bank would "foreclose" on the farm if she did not agree to sign the notes. Believing the loan officer, the wife signed the notes a few days later. Subsequently, the bank brought suit against the wife and the husband on two promissory notes. The trial judge, hearing the matter without a jury, entered judgment against defendant husband on both notes but found in favor of his wife, holding that the wife’s signing of the notes was brought about by threats and coercion of the bank’s employee. The bank challenged the decision
Was the wife coerced into signing the notes, thereby warranting the judgment in her favor in the plaintiff bank’s suit to enforce the promissory notes?
The Court noted that duress can avoid a contract if the contract was obtained by threats of the person claiming the benefit of it which caused the victim to be bereft of the quality of mind essential to the making of a contract. In this case, there was evidence of a threat to sue the wife along with her husband and then to levy on the defendants’ farm. The bank officers acknowledged that when they went to the resident of the husband and wife, they had no basis for bringing a suit against the wife nor any basis to levy upon the farm. Threats to take legal action with knowledge of the falsity of the claim can amount to duress. Moreover, evidence suggested that the wife had no knowledge of facts which could negate the finding of duress – there was evidence that she thought that the bank would sue her and could have the farm sold. The Court further found that there was no waiver of the defense of duress or ratification of the notes since the wife was misled into believing that the threats to sue her and take the farm could be carried out and that she had no defense to the threatened action either before or after she signed the notes. As long as she so believed, she could have been under duress. Accordingly, the court affirmed the trial court's judgment.