Laurel Zuckerman, as Ancillary Administratrix of the Estate of Alice Leffmann, Plaintiff, v. The Metropolitan Museum of Art, Defendant.

16 Civ. 7665 (LAP).

Signed February 7, 2018.

Howard Neil Spiegler, Ross Lawrence Hirsch, Yael Miriam Weitz, Lawrence Michael Kaye, Herrick, Feinstein LLP, New York, NY, for Plaintiff.

David William Bowker, Wilmer Cutler Pickering Hale & Dorr LLP, New York, NY, for Defendant.

OPINION

LORETTA A. PRESKA, Senior United States District Judge:

This is an action by Laurel Zuckerman, the Ancillary Administratrix of the estate of Alice Leffmann (the sole heir of Paul Friedrich Leffmann) (the "Leffmann estate"), to recover from New York's Metropolitan Museum of Art (the "Museum") a monumental work by Pablo Picasso entitled "The Actor," 1904-1905, oil on canvas, 77 1/4 × 45 3/8 in., signed lower right Picasso ("The Actor")(the "Painting"), which was owned by Paul Friedrich Leffmann ("Leffmann"), a German Jew, from approximately 1912 until 1938.

In 1937, Alice and Paul Leffmann (the "Leffmanns") fled from Germany to Italy in fear for their lives, after losing their business, livelihood, home, and most of their possessions due to Nazi persecution. In 1938, while living in Italy, the Leffmanns sold the Painting at a price well below its actual value in an effort to gather enough money to pay for passage out of Italy, which itself had become a perilous place for the Leffmanns to remain. The Museum received the Painting as a donation in 1952 and has possessed it since that time.

Plaintiff, the great-grandniece of Paul and Alice Leffmann, received Ancillary Letters of Administration CTA for the estate of Alice Leffmann from the Surrogate's Court of the State of New York, New York County, on October 18, 2010. Pursuant to 28 U.S.C. § 1332(c)(2), because Alice Leffmann was a Swiss domiciliary, the Ancillary Administratrix is deemed to be a citizen of Switzerland as well.

In this diversity suit, Plaintiff seeks replevin of the Painting, $100 million in damages for conversion, and a declaratory judgment pursuant to 28 U.S.C. §§ 2201-2202 declaring the Leffmann estate as the sole owner of the Painting on the grounds that good title never passed to the Museum, inter alia, because the 1938 sale of the Painting was void for duress under Italian law. (See Amended Compl. ("Am. Compl."), dated Nov. 2, 2016 [dkt. no. 8], ¶¶ 68-82.)

Defendants move to dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) on the following grounds: (1) lack of standing; (2) failure to allege duress under New York or Italian law; (3) ratification of the transaction; (4) the Museum received good title from a good-faith purchaser; (5) Plaintiff's claims are time-barred under the statute of limitation and laches. (See Mem. of Law in Supp. of Def. Mot. to Dismiss, ("Def. Mot."), dated Nov. 30, 2016 [dkt. no. 12].) For failure to allege duress under New York law, the motion to dismiss is granted.

I. BACKGROUND

The following facts are accepted as true for the purposes of this motion. In 1912, the Leffmanns purchased the Painting, which was one of their most valuable acquisitions. (See Am. Compl. ¶ 9.) From 1912 until at least 1929, the Leffmanns presented the Painting at a variety of exhibitions in Germany, where they were identified as the owners of the Painting. The Painting was also featured in newspaper articles, magazines, and monographs. (See id.)

During this time and until the start of the Nazi period, Paul and Alice, German Jews, lived in Cologne, Germany. They had sizeable assets, including Atlantic Gummiwerk, a rubber manufacturing company that was one of the leading concerns of its kind in Europe, which Paul co-owned with Herbert Steinberg; real estate investment properties in Cologne (Hohenzollernring 74 and Friesenwall 77); and their home located at Haydnstrasse 13, Koln-Lindenthal. The Leffmanns' home included a collection of Chinese and Japanese artifacts and other artworks, including the masterwork by Pablo Picasso that is the subject of this action. (See id. ¶ 10.)

Beginning in 1933, the world the Leffmanns knew in Germany began to change dramatically. Adolf Hitler came to power, and racist laws directed against Jews were quickly enacted and enforced, leading to the adoption of the Nuremberg Laws ("The Laws for the Protection of German Blood and German Honor") on September 15, 1935. The Nuremberg Laws deprived all German Jews, including Paul and Alice, of the rights and privileges of German citizenship, ended any normal life or existence for Jews in Germany, and relegated all Jews to a marginalized existence. (See id. ¶ 11.)

The Nuremberg Laws formalized a process of exclusion of Jews from Germany's economic and social life. It ushered in a process of eventual total dispossession through what became known as "Aryanization" or "Arisierung," first through takeovers by "Aryans" of Jewish-owned businesses and then by forcing Jews to surrender virtually all of their assets. Through this process all Jewish workers and managers were dismissed, and businesses and corporations belonging to Jewish owners were forcibly transferred to non-Jewish Germans, who "bought" them at prices officially fixed and well below market value. As a result, the number of Jewish-owned businesses in Germany was reduced by approximately two-thirds from April 1933 to April 1938. By that time, the Nazi regime moved to the final phase of dispossession, first requiring Jews to register all of their domestic and foreign assets and then moving to possess itself of all such assets. (See id. ¶ 12.)

On September 16, 1935, the Leffmanns were forced to sell their home to an Aryan German corporation, Rheinsiche Braunkohlensyndikats GmbH Köln. On December 19, 1935, Leffmann and his Jewish partner, Herbert Steinberg, were forced to transfer ownership of Atlantic Gummiwerk to Aloys Weyers (their non-Jewish minority business partner). On July 27, 1936, the Leffmanns were forced to sell all of their real estate investments to Feuerversicherungsgessellschaft Rheinland AG, another Aryan German corporation. In return, the Leffmanns had no choice but to accept only nominal compensation. Indeed, these were not real sales at all but essentially thefts by Nazi designees of substantially everything the Leffmanns ever owned. (See id. ¶ 12.) Some time prior to their departure from Germany, Paul and Alice had arranged for The Actor to be held in Switzerland by a non-Jewish German acquaintance, Professor Heribert Reiners. Reiners kept The Actor in his family home in Fribourg, where it remained for its entire stay in Switzerland. For this reason only, The Actor was saved from Nazi confiscation. (See id. ¶ 13.)

Paul and Alice, like so many other German Jews, found themselves faced with the threat of growing violence, the risk of imprisonment, and possibly deportation and death. Thus, to avoid the loss of the property they had left—and potentially their lives—they began planning their flight from Germany, liquidating their remaining assets in Germany to enable them to survive and escape. (See id. ¶ 15.) The Leffmanns fled Germany in the spring of 1937. By that time, the Nazi regime had already put in place its ever-tightening network of taxes, charges, and foreign exchange regulations designed to arrogate Jewish-owned assets to itself. Emigrants were only able to leave with a tiny fraction of their assets. Consequently, upon their escape from the Reich, the Leffmanns had been dispossessed of most of what they once owned. (See id. ¶ 16.)

One measure by which the Reich seized assets from fleeing Jews was the flight tax. Flight tax assessments were based on wealth tax declarations, which referred to wealth in the previous year and which were calculated at 25 percent of the value of the reported assets. Payment of the flight tax did not give the emigrant any right whatsoever to transfer abroad any of the remaining assets after payment of the tax. In fact, the flight tax amount typically would have been considerably higher than 25 percent of the assets actually owned at the time of emigration, as those who were persecuted by the Nazis-such as the Leffmanns—suffered dramatic financial losses in the period leading up to their emigration, so that their assets at the time of emigration would have been considerably smaller than those on which their flight tax was assessed. The payment of the flight tax was necessary to obtain the no-objection certification of the tax authorities, which in turn was necessary to obtain an exit permit. In the case of the Leffmanns, the flight tax was thus calculated at 25 percent of the assets they reported on their 1937 tax form, which would have included their total assets held in 1936. The Leffmanns paid this flight tax in the amount of 120,000 to 125,000 Reichsmark ("RM") in cash. (See id. ¶ 19.)

The Leffmanns would have preferred neutral Switzerland to Italy, as Italian Fascists were already in power and close relations with Nazi Germany had begun to develop. However, a long-term stay in Switzerland would have been virtually impossible. Italy, as opposed to Switzerland, was one of the few European countries still allowing the immigration of German Jews. So that is where the Leffmanns went, hoping that Italy's significant Jewish population would provide a safe haven from the Nazi onslaught. (See id. ¶ 20.) In light of the ever-tightening regulations governing the transfer of assets, emigrants sought alternative means of moving their funds abroad. One major avenue involved creating a triangular agreement whereby individuals who owned property outside the Reich and were in need of RM would agree to exchange the currency for property, which they would then immediately liquidate upon arrival in the new country. This is exactly the type of transaction the Leffmanns took part in when, in December 1936, they purchased a house and factory in Italy for an inflated price of RM 180,000 from the heirs of Eugenio Usenbenz from Stuttgart. The Leffmanns pre-agreed to sell the property back to a designated Italian purchaser for lire at a considerable loss upon their arrival in Italy a few months later. (See id. ¶ 21.)

In April 1937 the Leffmanns crossed the border into Italy, going first to Milan and then to Florence, where their newly acquired house and factory were located. (See id. ¶ 22.) Shortly after their arrival in Italy, as pre-agreed, the Leffmanns sold their newly-acquired properties to an Italian businessman named Gerolamo Valli, who was a business partner of the family from Stuttgart from whom they had originally purchased the house and factory. They sold the properties at a considerable loss—for 456,500 Lira (or about 61,622 RM)—and rented a home in Florence at Via Terme 29 and later at Via di San Vito 10. (See id. ¶ 23.)

The Leffmanns' time in Italy was short-lived. It soon became clear that the persecution from which they had fled in Germany was encroaching upon them in Italy as well. Moving once more meant yet again losing a significant part of their remaining financial assets. The Leffmanns had already lost two-thirds of their initial RM investment in transfer costs, and they now stood to lose much of their remaining cash proceeds as the tight Italian foreign exchange restrictions forced them to seek conversion in "unofficial" ways. Paul was in his late sixties when they arrived in Italy; Alice was six years younger. They were living as refugees, unable to work in Italy, their prior lives destroyed by Nazi persecution, and on the run. (See id. ¶ 24.)

In April 1936, Italy and Germany had secretly adopted the Italo-German Police Agreement. The agreement provided for the exchange of information, documents, evidence, and identification materials by the police with regard to all emigrants characterized as "subversives," which by definition included German Jews residing in Italy. Pursuant to this agreement, the German State Secret Police (the "Gestapo") could compel the Italian police to interrogate, arrest and expel any German Jewish refugee. (See id. ¶ 25.) On November 1, 1936, Mussolini publicly announced the ratification of the Rome-Berlin Axis. During the summer and fall of 1937, the head of the Italian Police, Arturo Bocchini, and Mussolini accepted a proposal from the notorious General Reinhard Heydrich, the chief of the Security Service of the Reichsführer (the "SS") and the Gestapo, to assign a member of the German police to police headquarters in various cities including Florence, where the Leffmanns resided. This facilitated the Nazi efforts to check on "subversives." (See id. ¶ 26.).

By the fall of 1937, anti-Semitism in Italy dashed any illusions about a longer stay in Italy for the Leffmanns. That fall, Germany and Italy began to prepare for Hitler's visit to Italy. In October, the Ministry of the Interior created lists of all German refugees residing in Italy's various provinces. The lists were intended to draw clear distinctions between "those who supported the Nazi regime" and "anti-Nazi refugees" or Jews. This was the first time that the Italian Government had explicitly associated all German Jews with anti-Nazi Germans. This marked a turning point in the 1936 Italo-German Police Agreement, with the Gestapo requesting these lists so that it could monitor "subversives" in anticipation of Hitler's visit. From the beginning of January 1938 until Hitler's visit in May, the Gestapo received a total of 599 lists from the police throughout Italy's provinces. (See id. ¶ 27.)

As the situation grew increasingly desperate for Jews living in Italy, it became clear that it would only be a matter of time before the Fascist regime's treatment of Jews would mimic that of Hitler's Nazis. Paul and Alice had to make plans to leave, and this would require money. They wanted to go to Switzerland to escape the horrors of Nazism and Fascism and find a truly safe haven. But, as was well known at the time, passage into Switzerland did not come easily or cheaply. Given the urgency of their situation, Paul began to explore the possibility of selling his masterpiece, The Actor, with dealers in Paris. The events following the Austrian Anschluss and Hitler's visit to Italy in May 1938 confirmed that they would have had no choice but to turn whatever assets they still controlled into cash. (See id. ¶ 28.)

Meanwhile, conditions for Jews in Italy grew worse. On February 17, 1938, every newspaper in Italy published a Government announcement ("Diplomatic Notice Number 18," issued on February 16), which stated that "[t]he Fascist Government reserves to itself the right to keep under close observation the activity of Jews newly arrived in our country." (See id. ¶ 29.) In March 1938, SS General Heydrich traveled to Rome to meet with the head of the Italian Police, Bocchini, in order to plan for Hitler's visit. Nazi police officials were posted at thirteen Police Headquarters in border towns, ports, and large cities to conduct interrogations and house searches. These officials, dressed in Nazi uniforms, arrived on April 10-11, 1938. Id. Meanwhile, on March 18, 1938, the Italian Ministry of the Interior informed prefects in border provinces that "ex-Austrian Jewish subjects" should be denied entry into Italy. (See id. ¶ 30.)

In April 1938, in the face of the growing Nazi persecution spreading across Europe and into Italy, Paul escalated his efforts to liquidate The Actor. (See id. ¶ 32.) In September 1936, after they had been forced by the Nazis to part with nearly everything they owned, the Leffmanns had rejected an offer to sell The Actor from the notorious art dealer, C.M. de Hauke of Jacques Seligmann & Co. (whom the U.S. State Department later identified as a trafficker in Nazi-looted art). (See id. ¶ 32.) Nearly two years later, on April 12, 1938, the Leffmanns, in an even more desperate state, reached out to de Hauke asking him if he would be interested in purchasing the Painting. (See id.)

Just days after writing to de Hauke, the situation in Italy grew even worse. From April 24-26, General Heydrich, SS Reichsführer Heinrich Himmler (whom Hitler later entrusted with the planning and implementation of the "Final Solution") and SS General Josef "Sepp" Dietrich, the commander of Hitler's personal army, went to Rome to complete preparations for Hitler's visit. For three weeks in April and May 1938, there were over 120 Gestapo and SS officers in Italy—primarily in Florence, Rome, and Naples. The Gestapo officials and Italian police continued investigations and surveillance of "suspicious persons" until the end of Hitler's visit, arresting at least 80 people in Florence. The Italian police carried out the arrests. Many German Jewish residents fled in anticipation of and as a result of these arrests. (See id. ¶ 34.)

On May 3, Adolf Hitler arrived in Italy for his official state visit. The Italian people turned out in the tens of thousands to greet the German leader. From May 3 through May 9, 1938, Hitler traveled to Rome, Naples, and Florence. The streets of these Italian cities were covered in thousands of Nazi swastika flags, which flew alongside Italy's tricolor. Flowerbeds were decorated in the shape of swastikas and photographs of Mussolini and Hitler were made into postcards and displayed in shop windows. Parades and military displays in honor of Hitler, attended by thousands of Italians, young and old, took place in every city he visited. In Florence, the last city visited by Hitler on May 9th, city officials made an official postmark that commemorated Hitler's visit. Mail sent during that time was stamped "1938 II Führer a Firenze" and decorated with swastikas. (See id. ¶ 35.)

For the Leffmanns, the time to flee Italy was quickly approaching, so they continued to try to sell the Painting through de Hauke. Trying to raise as much cash as possible for the flight, the Leffmanns responded to a letter from de Hauke, telling him that they had already rejected an offer obtained through another Paris dealer, Käte Perls, for U.S. $12,000 (net of commission). It is clear from the letter that the Leffmanns were desperately trying to improve their leverage to maximize the amount of hard currency they could raise. (See id. ¶ 36.)

Violence was increasing, and the persecution of Jews was on the rise. Foreign Jews in Italy risked arrest and had reason to fear possible deportation and death. The Leffmanns were in fear of their liberty and their lives. Just days after telling de Hauke that they had rejected Mrs. Perls' low offer, in late June 1938, the Leffmanns sold the Painting at the very price they told Perls and de Hauke they would not consider. They finally accepted Kate Perls' offer of U.S. $13,200 (U.S. $12,000 after a standard ten percent selling commission), who was acting on behalf of her ex-husband, Hugo Perls, also an art dealer, and art dealer Paul Rosenberg, with whom Perls was buying the Painting. (See id. ¶ 37.)

On July 26, 1938, Frank Perls, Kate's son (who was also a dealer) wrote to automobile titan Walter P. Chrysler Jr., asking if he would be interested in purchasing The Actor. Having just acquired a Picasso masterpiece from a German Jew on the run from Nazi Germany living in Fascist Italy for a low price that reflected the seller's desperate circumstances and the extraordinary prevailing conditions, Frank Perls misrepresented to Chrysler that the Painting was purchased by Mrs. Perls from "an Italian collector." (See id. ¶ 38.)

In July 1938, the Leffmanns submitted their "Directory of Jewish Assets" forms detailing all of their assets, which the Reich required all Jews (even those living abroad) to complete. The penalties for failing to comply with this requirement included fines, incarceration, prison, and seizure of assets. (See id. ¶ 39.) Meanwhile, the plight of the Jews in Italy worsened. In August 1938, enrollment of foreign Jews in Italian schools was prohibited. A Jewish census, in which the Leffmanns were forced to participate, was conducted in preparation for the Italian racial laws, which were soon to follow. A legal definition of what constituted a "Jew" was considered, and discriminatory legislation was drafted. The Italian government increased surveillance of Jews because of the fear that Jews would transfer their assets out of Italy or emigrate and take their assets with them. A series of anti-Semitic publications was released, among them the infamous "Manifesto degli scienziati razzisti" ("Manifesto of the Racial Scientists"), which attempted to provide a scientific justification for the coming racial laws, and the venomous magazine, "La difesa della razza" ("The Defense of the Race"). In addition, a number of regional newspapers published lists of many of the names of Jewish families residing in Florence. (See id. ¶ 40.)

On September 7, 1938, the first anti-Semitic racial laws were introduced in Italy, including "Royal Enforceable Decree Number 1381," which was approved by the Council of Ministers on September 1st and was published in daily newspapers on September 2nd. With this Enforceable Decree, all "alien Jews" were forbidden from residing in Italy. All Jews who arrived in Italy after January 1, 1919 had to leave Italy within six months (i.e., by March 12, 1939) or face forcible expulsion. Bank accounts opened in Italy by foreign Jews were immediately blocked. (See id. ¶ 41.)

The Leffmanns were desperate and prepared for immediate departure. Switzerland, which already had strict border controls, became even more difficult to enter beginning in 1938. Following the incorporation of Austria into the Reich, Switzerland imposed visa requirements on holders of Austrian passports on March 28, 1938. In April, the Swiss government began negotiations with the Germans regarding the introduction of the notorious "J" stamp. On August 18-19, 1938 the Swiss decided to reject all refugees without a visa. On October 4, 1938, with an agreement reached on the adoption of the "J" stamp, they imposed visa requirements on German "non-Aryans." Receiving asylum was virtually impossible, and German and Austrian Jews could only enter Switzerland with a temporary residence permit. Given the strict controls and asset requirements imposed by the Swiss government, these permits were not easy to obtain. (See id. ¶ 42.)

Sometime before September 10, 1938, however, the Leffmanns managed to obtain a Toleranzbewilligung (a tolerance or temporary residence visa) from Switzerland, valid from September 10, 1938 to September 10, 1941. In October 1938, just days after the enactment of the racial laws expelling them from Italy, the Leffmanns fled yet again, this time to Switzerland, where they were allowed to stay only temporarily. (See id. ¶ 43.) By the time the Leffmanns arrived in Switzerland, the Anschluss and other persecutory events had triggered a rising wave of flight from the Reich. Consequently, Swiss authorities required emigrants to pay substantial sums through a complex system of taxes and "deposits" (of which the emigrant had no expectation of recovery). (See id. ¶ 44.)

In October 1938, all German Jews were required to obtain a new passport issued by the German government stamped with the letter "J" for Jude, which definitively identified them as being Jewish. As German citizens who required a passport to continue their flight, the Leffmanns had no choice but to comply. (See id. ¶ 45.) The Leffmanns temporarily resided in Bern, Switzerland, but, unable to stay, prepared to flee yet again, this time to Brazil. In addition to bribes that were typically required to obtain necessary documentation, Brazil would only provide visas for Jews who could transfer more than 400 contos (USD $20,000) to the Banco do Brasil. On May 7, 1941, the Leffmanns, still on the run, immigrated to Rio de Janeiro, Brazil, where they lived for the next six years. But even in Brazil, they could not escape the effects of the ongoing war. All German residents living there, including the Leffmanns, were forced to pay a levy imposed by the Brazilian government of 20,000 Swiss Francs ("SF") (or about U.S. $4,641). (See id. ¶ 46.)

Given the various payments required by Switzerland, as well as those that the Leffmanns would need to enter Brazil, the Leffmanns depended on the $12,000 (or approximately SF 52,440 in 1938) they received from the sale of The Actor, as it constituted the majority of the Leffmanns' available resources in June 1938. Had the Leffmanns not fled for Brazil when they did, they likely would have suffered a much more tragic fate at the hands of the Nazi regime and its allies. (See id. ¶ 47.)

The Leffmanns were not able to return to Europe until after the War had ended. In 1947, they settled in Zurich, Switzerland. (See id. ¶ 48.) Paul Leffmann died on May 4, 1956 in Zurich, Switzerland at the age of 86. (See id. ¶ 49.) He left his entire estate to his wife, Alice Brandenstein Leffmann. (See id. ¶ 49.) Alice Leffmann died on June 25, 1966 in Zurich, Switzerland at the age of 88. She left her entire estate to 12 heirs (all relatives or friends). (See id. ¶ 50.)

The immediate history of the Painting after Perls and Rosenberg purchased it in June of 1938 is unclear, but it is known that after the purchase, art dealer Paul Rosenberg loaned the Painting to the Museum of Modern Art ("MoMA") in New York in 1939. In the paperwork documenting the loan, Rosenberg requested that MoMA insure the Painting for $18,000 (a difference of $6,000, or a 50 percent increase over what had been paid to the Leffmanns less than a year earlier). (See id. ¶ 52.) Sometime prior to October 28, 1940, the Painting was consigned for sale by Rosenberg to the well-known M. Knoedler & Co. Gallery in New York, New York. On November 14, 1941, M. Knoedler & Co. sold the Painting to Thelma Chrysler Foy ("Foy") for $22,500 (a difference of U.S. $9,300, or a 70 percent increase from the price paid to the Leffmanns). (See id. ¶ 53.) Thelma Chrysler Foy donated the Painting to the Museum in 1952, where it remains today. The Museum accepted this donation. (See id. ¶ 54.)

The Museum's published provenance for the Painting was manifestly erroneous when it first appeared in the Museum's catalogue of French Paintings in 1967. Instead of saying that the Leffmanns owned the Painting from 1912 until 1938, it read as follows: "P. Leffmann, Cologne (in 1912); a German private collection (until 1938). . .," thus indicating that the Leffmanns no longer owned the Painting in the years leading up to its sale in 1938. (See id. ¶ 57.) This remained the official Museum provenance for the Painting for the next forty-five years, including when it was included on the Museum's website as part of the "Provenance Research Project," which is a section of the website that includes all artworks in the Museum's collection that have an incomplete Nazi-era provenance. (See id. ¶ 58.) From 1967 to 2010, the provenance listing was changed numerous times. It continued to state, however, that the Painting was part of a German private collection and not that the Leffmanns owned it continuously from 1912 until 1938. (See id. ¶ 59.)

In connection with a major exhibition of the Museum's Picasso holdings in 2010 entitled, "Picasso in the Metropolitan Museum of Art," the Museum changed the provenance yet again. (See id. ¶ 60.) Despite purported careful examination, as of 2010, the provenance of the Painting continued erroneously to list the "private collection" subsequent to the Leffmanns' listing. In October 2011, only after extensive correspondence with Plaintiff, the Museum revised its provenance yet again. The revised provenance omitted the reference to the private German collector who had purportedly owned The Actor from 1913-1938 and finally acknowledged the Leffmanns' ownership through 1938 and their transfer of it during the Nazi era. (See id. ¶ 63.)

On or about August 26, 2010, Nicholas John Day, the Executor named in the will of Alice Anna Berta Brandenstein, a legatee named in the will of Alice Leffmann, submitted a Petition for Ancillary Probate for the estate of Alice Leffmann in the Surrogate's Court of the State of New York, New York County ("Surrogate's Court"), authorizing Laurel Zuckerman to receive Ancillary Letters of Administration CTA of the estate. On October 18, 2010, Laurel Zuckerman received Ancillary Letters of Administration CTA and was named Ancillary Administratrix by the Surrogate's Court of the State of New York, New York County. (See id. ¶ 51.)

On September 8, 2010, Plaintiff's attorneys, Herrick Feinstein LLP, wrote to the General Counsel of the Museum, demanding the return of the Painting. The Museum refused to deliver the Painting to Plaintiff. The Painting remains in the possession of the Museum. (See id. ¶ 66.) On February 7, 2011, the parties entered into a standstill agreement tolling any statute of limitations as of February 7, 2011. Such agreement was thereafter amended several times to terminate on September 30, 2016. The final amendment of the standstill agreement terminated on September 30, 2016. (See id. ¶ 67.)

II. LEGAL STANDARD

In considering a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), a court must "accept the material facts alleged in the complaint as true and construe all reasonable inferences in the plaintiff's favor." Phelps v. Kapnolas, 308 F.3d 180, 184 (2d Cir. 2002)(citation and internal quotation marks omitted). Though a court must accept all factual allegations as true, it gives no effect to "legal conclusions couched as factual allegations." Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35 (2d Cir. 2017) (quoting Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. This "plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citations omitted). Deciding whether a complaint states a claim upon which relief can be granted is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Rahman v. Schriro, 22 F.Supp.3d 305, 310 (S.D.N.Y. 2014)(quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937).

III. DISCUSSION

Plaintiff asserts claims for replevin and conversion and seeks a declaration that the Leffmann estate is the rightful owner of the Painting and that, as Ancillary Administratrix of the Leffmann estate, she is entitled to immediate possession of the Painting. (Am. Compl. ¶¶ 68-82.) In doing so she relies on the Italian law principles of (1) duress and (2) public order and public morals. (See Pl. Mem. of Law in Opp. to Def. Mot. to Dismiss, ("Pl. Opp."), dated Jan. 20, 2017 [dkt. No. 17].)

The Museum moves to dismiss, arguing that under either Italian law or New York law, Plaintiff has not adequately alleged duress and that, even under Italian law, the Leffmanns' sale of the Painting did not violate public order or public morals. (See Reply Br. in Further Supp. of Def. Mot. to Dismiss, ("Def. Rep."), dated Feb. 27, 2016 [docketed Feb. 27, 2017] [dkt. no. 21].) The Museum also argues other bases for dismissal, including ratification, statute of limitations, and latches. (Def. Mot. at 13-19.)

A. Standing

In its moving papers, the Museum argued that Plaintiff lacks standing to bring this suit on the grounds that the New York County Surrogate's Court Decree that appointed Plaintiff as Ancillary Administratrix of the Leffmann estate was defective and should be vacated. (See Def. Mot. at 7-9.) At oral argument, however, after additional developments in the Surrogate's Court, the Museum conceded that Plaintiff has standing. Accordingly, that portion of the Museum's motion based on lack of standing is denied as moot.

B. Choice-of-Law

Jurisdiction in this case is predicated on diversity of citizenship, and therefore New York's choice-of-law rules apply. Bakalar v. Vavra, 619 F.3d 136, 139 (2d Cir. 2010)(citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). "Under New York choice-of-law rules, the first inquiry in a case presenting a potential choice-of-law issue is whether there is an actual conflict of laws on the issues presented." Fed. Ins. Co. v. Am. Home Assurance Co., 639 F.3d 557, 566 (2d Cir. 2011) (citation omitted). The court will not engage in the choice-of-law analysis if there is no actual conflict. See id. However, where an actual conflict exists, New York courts give controlling effect to the law of the jurisdiction having "the greatest concern with the specific issue raised." Loebig v. Larucci, 572 F.2d 81, 84 (2d Cir. 1978).

Here, the Court turns to the threshold question of whether there is a difference between the laws of Italy and New York upon which the outcome of the case is dependent. Bakalar, 619 F.3d at 139. In determining the law of a foreign country:

Rule 44.1 of the Federal Rules of Civil Procedure allows a court to determine the content of foreign law based on `any relevant material or source . . . whether or not submitted by a party.' However, it does not require a court `to undertake its own analysis to determine' the content of foreign law.

SHLD, LLC v. Hall, No. 15 CIV. 6225 (LLS), 2017 WL 1428864, at *4 (S.D.N.Y. Apr. 20, 2017) (quoting In re Nigeria Charter Flights Contract Litig., 520 F.Supp.2d 447, 458 (E.D.N.Y. 2007). Additionally, "[t]he Court's determination must be treated as a ruling on a question of law." Ennio Morricone Music Inc. v. Bixio Music Grp. Ltd., No. 16-CV-8475 (KBF), 2017 WL 5990130, at *3 (S.D.N.Y. Oct. 6, 2017).

Rule 44.1 therefore "has two purposes: (1) to make a court's determination of foreign law a matter of law rather than fact, and (2) to relax the evidentiary standard and to create a uniform procedure for interpreting foreign law." In re Vitamin C Antitrust Litig., 837 F.3d 175, 187 (2d Cir. 2016); see also Rationis Enters. Inc. v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 585 (2d Cir. 2005).

In support of their respective positions, both parties submitted expert reports regarding Italian law. Plaintiff's expert is Professor Marco Frigessi. (See Decl. of Prof. Marco Frigessi Di Rattalma ("Frig.")[dkt. no. 18].) Defendant's expert is Professor Pietro Trimarchi. (See Decl. of David W. Bowker Ex. 1, "Decl. of Prof. Pietro Trimarchi," ("Tri.") [dkt. no. 22-1].) After examining both parties' declarations, the Court concludes that insofar as It impacts the outcome of this case, New York and Italian law do not differ on the issue of duress. Because Plaintiff argues that there is an outcome-determinative difference between New York and Italian law, the Court will also undertake a choice-of-law analysis.

i. Italian Law

The Court credits the expert opinion of Professor Trimarchi in finding that Italian law, like New York law, requires a party alleging duress to plead and prove "a specific and concrete threat of harm" that "induced the victim to enter into a contract that would not otherwise have been concluded." (See Tri. ¶¶ 13, 26.) Both Plaintiff's and Defendant's experts rely on the 1865 Italian Civil Code ("Code") as the legal authority for duress under Italian law, which was in force at the time of the 1938 transaction and was replaced in 1942 by a new Civil Code with "[s]imilar provisions." (See Frig. ¶¶ 6-8, 15-18, 41; See Tri. ¶¶ 8, 10.) In defining duress, Article 1108 of the Code provides that "consent is not valid if it was given by mistake, extorted by duress (`violenza'), or obtained by fraud." (Tri. ¶ 11; See Frig. ¶ 41.) "In this provision the word Violenza (i.e. `duress') means the threat of unjust harm made in order to force a person to enter into a contract, which otherwise would not have been concluded." (Tri. ¶ 12.) The "threat of unjust harm" includes "the fear induced by a specific and concrete threat of harm, purposefully presented by its author to extort the victim's consent." (Tri. ¶ 13) (emphasis added). A general state of fear arising from political circumstances is not sufficient to allege duress:

For duress to have legal significance as a vitiation of consent that invalidates a legal transaction, it must be a determinative cause of the transaction.

The generic indiscriminate persecutions of fascism . . . do not constitute legally significant duress pursuant to Art. 1108 of the 1865 Civil Code . . . when there is no specific, direct relationship between these persecutions and the legal transaction alleged to have been carried out under this act of duress.

(Tri. Ex. 3) (translating Corte di Appello, 9 aprile-31 agosto 1953, Rassegna Mensile Dell'Avvocatura Dello Stato 1954, IV, sez. I civ., 25 et seq. (It.)).

Here, Plaintiff's allegation that Leffmann "was forced by the circumstances in Fascist Italy to sell" the Painting in 1938 is insufficient to plead duress. (See Am. Compl. ¶ 9) (emphasis added). Plaintiff's allegation does not demonstrate a "specific and concrete threat of harm" beyond the "generic indiscriminate persecutions of fascism" and thus fails to meet the pleading standard for duress under Italian law. (Tri. Ex. 3.)

Plaintiff further alleges that the 1938 transaction is void under Italian principles of "public order" and "public morals." (See Pl. Opp. 22; see Frig. ¶¶ 15-38.) The Court disagrees and credits Professor Trimarchi's definition: "Public order and public morals are subsidiary rules aimed at completing the legal system with rules to be applied to prevent illicitness in situations not expressly regulated by code or statute." (See Tri. ¶ 62(c).)

Specifically, contracts violate public morals or public order "when the performance that is bargained for is illicit (e.g. hiring someone to commit a crime)." (See Tri. ¶ 52.) Here, the performance bargained for was the sale of a painting in exchange for U.S. $12,000 (net of commission). (See Am. Compl. ¶ 36.) The contract did not seek an illicit objective and therefore is not akin to a contract deemed void on the grounds of public morals or public order such as one where "spouses agreed to release themselves from the civil obligation of fidelity." (See Tri. ¶ 52 n.30.)

Plaintiff further argues, citing principles of public morals and public order, that the Italian legal system "would not recognize the validity of a contract" where, as here, the "circumstances involve the Holocaust—a context not lost on the Italian legal system which developed a specific set of post-War rules providing for particularly strong protections of Jewish individuals persecuted by the anti-Semitic laws." (Pl. Opp. 22-23.) Plaintiff's expert cites to one such "post-War rule," Article 19 ("Article 19") of legislative decree lieutenant April 12, 1945, no. 222. (See Frig. ¶ 35 n.14) (citing Decreto Legge 12 aprile 1945, n.222, G.U. May 22, 1945, n.61 (It.)). Article 19 states that "rescission is allowed" for "sales contracts stipulated by people affected by the racial provisions after October 6, 1938—the date when the directives on racial matters issued by the former regime were announced" and only where the claimant could prove a certain level of damages. (See id.) (emphasis added); (see also Tri. ¶ 47.) The transaction at issue took place in June, 1938, failing to meet the "after October 6, 1938" criteria established under Article 19. (See Am. Compl. ¶ 62.) Therefore, under Article 19, Plaintiff's claim for "rescission" would fail.

Even Plaintiff's expert acknowledges that under the Italian legal system, "[t]he principle of the voidness of contracts which are immoral or contrary to public order performs the role of a subsidiary rule with respect to the prohibitions established by the Civil Code." (Frig. ¶ 19) (citing Francesco Ferrara, Teoria del negozio illecito nel diritto civile italiano, 1902, Milano page 296) (emphasis added). Professor Frigessi, like Professor Trimarchi, states that the passage of Article 19 "shows that the Italian legal system developed a specific policy and specific rules protecting Jewish individuals affected by anti-Semitic laws who sold goods under such dire circumstances." (Frig. ¶ 35; Tri. ¶¶ 57-62.) Therefore, by admission of Plaintiff's expert, the Italian legal system considered the issue of Jewish individuals as weak contracting parties during the Holocaust and declined to extend the protections of Article 19 to transactions prior to October 6, 1938. Id. Because "public order performs the role of a subsidiary rule," this Court declines to extend its boundaries under Italian law to encompass a transaction that the Italian legal system opted not to include under Article 19. (Frig. ¶ 19; Tri. ¶¶ 57-59) (emphasis added). Accordingly, the 1938 transaction would not be subject to rescission under Italian law.

ii. New York Law

Under New York law, "to void a contract on the ground of economic duress," Plaintiff must plead and show that the 1938 transaction "was procured by means of (1) a wrongful threat that (2) precluded the exercise of its free will." Interpharm, Inc. v. Wells Fargo Bank, Nat. Ass'n, 655 F.3d 136, 142 (2d Cir. 2011); see Stewart M. Muller Constr. Co. v. N.Y. Tel. Co., 40 N.Y.2d 955, 956, 390 N.Y.S.2d 817, 359 N.E.2d 328 (1976); see also Kramer v. Vendome Group LLC, 11 Civ. 5245, 2012 WL 4841310, at *6 (S.D.N.Y. Oct. 4, 2012) ("To prove economic duress, a party seeking to void a contract must plausibly plead that the release in question was procured by (1) a threat, (2) which was unlawfully made, and (3) caused involuntary acceptance of contract terms, (4) because the circumstances permitted no other alternative.").

In characterizing a "wrongful threat," New York "law demands threatening conduct that is wrongful, i.e., outside a party's legal rights." Interpharm, 655 F.3d at 142(internal quotation marks and citation omitted). "Critically," under New York law, the defendant must have caused the duress. See Mandavia v. Columbia Univ., 912 F.Supp.2d 119, 127-28 (S.D.N.Y. 2012), aff'd, 556 Fed.Appx. 56 (2d Cir. 2014)(quoting Kramer, 2012 WL 4841310, at *6) (stating that "to prove duress, a plaintiff must demonstrate that the difficult circumstances" or wrongful threat "she faces are a result of the defendant's actions . . . to constitute duress, a defendant's actions must have amounted to threats that preclude[d] the exercise of [a plaintiff's] free will").

Moreover, courts have noted that "an element of economic duress is. . . present when many contracts are formed." VKK Corp. v. Nat'l Football League, 244 F.3d 114, 123 (2d Cir. 2001). For that reason, a party seeking to void a contract on the basis of economic duress bears a heavy burden. Davis & Assocs., Inc. v. Health Mgmt. Serv., Inc., 168 F.Supp.2d 109, 114 (S.D.N.Y. 2001); Bus. Incentives Co. v. Sony Corp. of Am., 397 F.Supp. 63, 69 (S.D.N.Y. 1975)("Mere hard bargaining positions, if lawful, and the press of financial circumstances, not caused by the defendant, will not be deemed duress.") (emphasis added). Additionally, pressure exerted from general economic conditions is not enough to allege duress. See Mfrs. Hanover Tr. Co. v. Jayhawk Assocs., 766 F.Supp. 124, 128 (S.D.N.Y. 1991) (rejecting a defense of economic duress in connection with a refinancing agreement where defendants claimed to be under "economic pressure in general" but failed to show any duress at the hands of plaintiff).

Here, first, Plaintiff is unable to plead "a wrongful threat" by the Defendant Museum or the counterparties to the 1938 transaction. Specifically, Plaintiff does not plead that Kate Perls, Hugo Perls or Paul Rosenberg, respectively the negotiator and purchasers on the other side of the Leffmann transaction, or the Museum used "wrongful" or "threatening conduct . . . outside [their] legal rights" in effectuating the 1938 sale. Rather, Plaintiff states that "but for the Nazi and Fascist persecution to which [the Leffmanns] had been. . . subjected," they "would not have disposed of this seminal work at that time." (Am. Compl. ¶ 3.) Effectively, Plaintiff claims that the "circumstances in Fascist Italy," not the counterparties to the 1938 transaction or the Museum, forced the Leffmanns to sell the Painting under duress. (Am. Compl. ¶¶ 3, 9.) However, the 1938 transaction occurred between private individuals, not at the command of the Fascist or Nazi governments. As in Bakalar, "there is no . . . evidence that the Nazis ever possessed the [Painting], and therefore . . . this Court cannot infer duress based on Nazi seizure." Bakalar v. Vavra, 819 F.Supp.2d 293, 300 (S.D.N.Y. 2011), aff'd, 500 Fed.Appx. 6 (2d Cir. 2012), cert. denied sub nom. Vavra v. Bakalar, 569 U.S. 968, 133 S.Ct. 2038, 185 L.Ed.2d 905 (2013). Thus, although the Leffmanns felt economic pressure during the undeniably horrific circumstances of the Nazi and Fascist regimes, that pressure, when not caused by the counterparties to the transaction (or the Defendant) where the duress is alleged, is insufficient to prove duress with respect to the transaction. Id.

Second, Plaintiff fails to plead that the Leffmanns entered into the 1938 transaction by force that "preclude[ed] the exercise of [their] free will." Orix Credit All., Inc. v. Bell Realty, Inc., No. 93 CIV. 4949, 1995 WL 505891, at *4 (S.D.N.Y. Aug. 23, 1995) (quoting Austin Instrument v. Loral Corp., 29 N.Y.2d 124, 324 N.Y.S.2d 22, 25, 272 N.E.2d 533 (N.Y. Ct. of App. 1971)). Rather, Paul Leffmann exercised his free will in "explor[ing] the possibility of selling his masterpiece, The Actor, with dealers in Paris." (See Am. Compl. ¶ 28.) The Leffmanns took nearly two years from the time they received an initial offer to sell the Painting in September, 1936, until they negotiated for its sale in June, 1938. (See Am. Compl. ¶¶ 28, 32-33, 36.) In the interim, the Painting was in Switzerland for safekeeping. (See Am. Compl. ¶ 14.)

Additionally, the Leffmanns negotiated with several parties prior to the 1938 transaction, rejected offers from other dealers, and attempted to "improve [their] leverage to maximize" the sale price before ultimately accepting an offer from Perls and Rosenberg, the proceeds of which the Leffmanns retained and used in later years. (See Am. Compl. ¶¶ 28, 32-33, 36-37, 47.) Each transaction occurred between private individuals, not at the behest of Nazi or Fascist officials. (See Am. Compl. ¶¶ 28, 32, 33, 36.) Accordingly, these allegations are fatal to a claim of duress as Plaintiff is unable to show "a wrongful threat by the other party which precluded the exercise of [Paul's] free will in making the contract at issue." Mfrs. Hanover Tr. Co. v. Jayhawk Assocs., 766 F.Supp. 124, 128 (S.D.N.Y. 1991)(quoting 805 Third Ave. Co. v. M.W. Realty Assoc., 58 N.Y.2d 447, 451, 461 N.Y.S.2d 778, 448 N.E.2d 445 (N.Y. 1983)) (internal quotation marks omitted) (emphasis added).

Third, Plaintiff fails to plead facts demonstrating that the Leffmanns had "no other alternative" than to engage in the 1938 transaction. Kramer v. Vendome Grp. LLC, No. 11 CIV. 5245, 2012 WL 4841310, at *6 (S.D.N.Y. Oct. 4, 2012). Plaintiff's assertion that the Leffmanns were "forced by the circumstances in Fascist Italy to sell [the Painting] under duress in 1938" conflates the Leffmanns' need "to raise as much cash as possible" with the Leffmanns having "no other alternative." (See Am. Compl. ¶¶ 9, 36.) The fact that the Leffmanns spent several years looking to sell the Painting, rejected other offers, and had additional assets including properties in Italy that they sold to an Italian businessman in 1937, suggests that they had other financial alternatives. (See Am. Compl. ¶¶ 9, 28, 32-33, 36.) Accordingly, the Court finds that there is no outcome-determinative difference between Italian law and New York law; Plaintiff's claims fail under both.

iii. New York Choice-of-Law

Plaintiff argues that there is an outcome-determinative difference between New York law and Italian law. As explained above, the Court disagrees. In the alternative, to the extent Plaintiff might be correct, the Court will undertake a choice-of-law analysis. If a court has established that the outcome of the case is dependent upon a difference in the law of two jurisdictions, a federal district court in the Southern District of New York sitting in diversity must apply New York's choice-of-law rules. Bakalar v. Vavra, 619 F.3d 136, 139 (2d Cir. 2010); Schoeps v. Museum of Modern Art & the Solomon R. Guggenheim Museum, 594 F.Supp.2d 461, 465 (S.D.N.Y. 2009). Plaintiff and Defendant agree that New York applies an "interest analysis" to choice-of-law questions. (See Pl. Opp. at 20; Def. Rep. at 4.)

Under New York conflict principles, "[t]he New York Court of Appeals has explicitly held that the New York interest analysis is not rigid, but rather is determined by `an evaluation of the facts or contacts which related to the purpose of the particular law in conflict.'" Abu Dhabi Inv. Auth. v. Citigroup, Inc., No. 12 CIV. 283 (GBD), 2013 WL 789642, at *6 (S.D.N.Y. Mar. 4, 2013), aff'd, 557 Fed. Appx. 66 (2d Cir. 2014)(quoting Padula v. Lilarn Props. Corp., 84 N.Y.2d 519, 521, 620 N.Y.S.2d 310, 644 N.E.2d 1001 (1994)). Interest analysis is a fact intensive "`flexible approach intended to give controlling effect to the law of the jurisdiction, which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.'" Fin. One Pub. Co. v. Lehman Bros. Special Fin., 414 F.3d 325, 337 (2d Cir. 2005) (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 612 N.E.2d 277 (1993); see Bakalar, 619 F.3d at 144 ("New York choice of law rules require the application of an `interest analysis,' in which `the law of the jurisdiction having the greatest interest in the litigation [is] applied. . .'".)(quoting Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70, 85 (2d Cir. 2002)); see John v. Sotheby's, Inc., 858 F.Supp. 1283, 1289 (S.D.N.Y. 1994), aff'd, 52 F.3d 312 (2d Cir. 1995) (citing J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220, 226-27, 371 N.Y.S.2d 892, 333 N.E.2d 168 (1975))("The Court will apply the laws of the jurisdiction that has the greatest interest in, and is most intimately concerned with, the outcome of a given litigation." (emphasis added)).

In applying an interest analysis to the instant case, the Court of Appeals' analysis in Bakalar is instructive. Bakalar centered on a dispute over the ownership of a drawing ("Drawing") by Egon Schiele. 619 F.3d at 137. Originally owned by Franz Friedrich Grunbaum ("Grunbaum") in Vienna in 1938, heirs to the Grunbaum estate alleged that he was deprived of his possession and dominium over the Drawing after being arrested by the Nazis and signing a power of attorney to his wife, while imprisoned at Dachau. Id. Grunbaum died in Dachau in 1941; his wife died in a concentration camp in 1942. Id. at 138-39. The Drawing was purchased along with forty-five other Schieles by Galerie Gutekunst, a Swiss art gallery, in February and May of 1956. Id. at 139. Several months later, on September 18, 1956, the Drawing was purchased by the Galerie St. Etienne and was shipped to it in New York. Id. On November 12, 1963, the Galerie sold the drawing to David Bakalar. Id. The way in which the Drawing traveled from Vienna to Switzerland to Galerie St. Etienne, the New York art gallery from which Bakalar purchased it, is unclear, as there are no records of what became of the art collection after Grunbaum's arrest. Id. at 138.

As in the instant action, multiple jurisdictions had a logical claim for providing the relevant law in Bakalar: Austria, the situs of the initial alleged theft; Switzerland, where title was transferred in the 1950s; and New York, where the drawing was sold to a gallery and ultimately purchased by Bakalar in 1963. Id. at 146. Although the District Court and the Court of Appeals agreed that New York's choice-of-law rules governed, they came to differing conclusions. The District Court, relying on the traditional "situs rule," held that "[u]nder New York's choice of law rules, questions relating to the validity of a transfer of personal property are governed by the law of the state where the property is located at the time of the alleged transfer," which was Switzerland. Bakalar v. Vavra, 550 F.Supp.2d 548, 550 (S.D.N.Y. 2008) (quoting Greek Orthodox Patriarchate of Jerusalem v. Christie's, Inc., 1999 WL 673347, at *4-5 (S.D.N.Y. Aug. 30, 1999)). Following a 2008 bench trial, judgement was entered for Bakalar. See Bakalar v. Vavra, 2008 WL 4067335, at *9 (S.D.N.Y. 2008). Applying Swiss law, the District Court found that the Swiss Galerie Gutekunst had purchased the drawing in 1956 in "good faith" from Mathilde Lukacs, the sister-in-law of Grunbaum, and therefore Galerie Gutekunst had acquired good title to the Drawing. Id. As a subsequent purchaser from the Swiss Galerie, the Court concluded that Bakalar had also acquired good title to the Drawing. Id.

The Court of Appeals disagreed, finding that New York's choice-of-law rules demanded the application of New York substantive law, not Swiss law. The Court stated that choice-of-law disputes regarding the validity of a transfer of personal property are not governed by the "situs rule," which relies on the location of the disputed property, or parties, at a given point in time. Bakalar, 619 F.3d at 143. Rather, New York's choice-of-law analysis is driven by the "interests" of affected jurisdictions, not the location of events. The Court of Appeals explained New York's choice-of-law approach this way:

The problem with the traditional situs rule . . . is that it no longer accurately reflects the current choice of law rule in New York regarding personal property. This is demonstrated by our decision in Karaha Bodas Co., LLC v. Perusahaan Pertambangan Dan Gas Bumi Negara, 313 F.3d 70, 85 n.15 (2d Cir. 2002). The plaintiff there argued that "the law of the situs of the disputed property generally controls." Id. We declined to apply this rule because "the New York Court of Appeals explicitly rejected the `traditional situs rule' in favor of interest analysis in Istim." Id. (citing Istim, Inc. v. Chemical Bank, 78 N.Y.2d 342, 346-47, 575 N.Y.S.2d 796, 581 N.E.2d 1042 (1991). . . . "In property disputes, if a conflict is identified, New York choice of law rules require the application of an `interests analysis,' in which `the law of the jurisdiction having the greatest interest in the litigation [is] applied and. . . the facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict.'" Karaha Bodas, 313 F.3d at 85.

Bakalar, 619 F.3d at 143-44.

The Court concluded that it was New York, not Switzerland, that had the "greatest interest in the litigation" over the Drawing. Id. The "locus of the [alleged] theft was simply not relevant." Id. (citing Kunstsammlungen Zu Weimar v. Elicofon, 536 F.Supp. 829, 846 (E.D.N.Y. 1981)). Rather, New York had an interest in "preserv[ing] the integrity of transactions and, by having its substantive law applied, prevent[ing] the state from becoming a marketplace for stolen goods". Bakalar, 619 F.3d at 144 (emphasis omitted). Indeed, "if the claim of [Grunbaum's heirs] is credited, a stolen piece of artwork was delivered in New York to a New York art gallery, which sold it in New York to Bakalar." Id. The Court reasoned that these events "made New York a marketplace for stolen goods and, more particularly, for stolen artwork." Id. (internal quotation marks and citations omitted). Moreover, the Court stated that "[t]he application of New York law may cause New York purchasers of artwork to take greater care in assuring themselves of the legitimate provenance of their purchase." Id. Therefore, "[h]owever the Drawing came into the possession of the Swiss art gallery, New York has a compelling interest in the application of its law." Id. In this way, New York had the "greatest interest in," and "is most intimately concerned with, the outcome" of, this litigation. See John v. Sotheby's, Inc., 858 F.Supp. 1283, 1289 (S.D.N.Y. 1994), aff'd, 52 F.3d 312 (2d Cir. 1995) (internal citations omitted).

By contrast, the Court found that Switzerland, where a portion of the Schiele collection had surfaced in the mid-1950s before being sold to a New York gallery, had only a "tenuous interest" in the litigation. Bakalar, 619 F.3d at 144. "The resolution of an ownership dispute in the Drawing between parties who otherwise have no connection to Switzerland does not implicate any Swiss interest simply because the Drawing passed through there." Id. Although "the Drawing was purchased in Switzerland by a Swiss art gallery," it was "resold [] within five months to a New York art gallery" where it remained for years. Id.

The facts of Bakalar are analogous to those in the present case. Here, as in Bakalar, New York has "the greatest interest in," and "is most intimately concerned with, the outcome" of, this litigation. Id.; Sotheby's, 858 F.Supp. at 1289 (emphasis added). Although the immediate history of the Painting after Perls and Rosenberg purchased it in June 1938 is unclear, the Painting has remained in New York since at least 1939, within one year of the disputed 1938 transaction, when art dealer Paul Rosenberg loaned it to MoMA located in New York. (See Am. Compl. ¶ 52.) By October 1940, a well-known New York Gallery consigned the Painting for sale and sold it on November 14, 1941, to Foy, a New York collector. (See Am. Compl. ¶ 53.) In 1952, Foy donated the Painting to the Museum, "a New York not-for-profit corporation operating as a public museum located in New York County, New York." (See Am. Compl. ¶ 5.) The Defendant Museum, a major New York cultural institution, possessed and exhibited the Painting for the past 66 years, all in New York. (See Am. Compl. ¶ 54.)

Just as the Court of Appeals in Bakalar held that Swiss interests were not implicated by the mere fact of the painting's passing through Switzerland before relocating to New York in less than one year, this Court similarly finds the interests of Italy "tenuous" when compared to those of New York. Although the Leffmanns were in Italy during the 1938 sale, they were not Italian citizens and resided in Italy for only four months after the sale, which took place in France, through a Parisian dealer to French counter-parties, (See Am. Compl. ¶ 2, 13-14, 36-37.) Additionally, the Painting was never located in Italy, rather the Leffmanns moved it "[s]ome time prior to their departure from Germany" to Switzerland, where it "was saved from Nazi confiscation or worse." (See Am. Compl. ¶ 14.)

Here, as in Bakalar, "the application of New York law may cause New York purchasers of artwork to take greater care in assuring themselves of the legitimate provenance of their purchase." Bakalar, 619 F.3d at 145. Therefore, "[t]he tenuous interest of [Italy] created by these circumstances, however, must yield to the significantly greater interest of New York, as articulated in [Solomon R. Guggenheim Foundation v.] Lubell [77 N.Y.2d 311, 567 N.Y.S.2d 623, 569 N.E.2d 426 (1991)] and Elicofon, in preventing the state from becoming a marketplace for stolen goods." Id. (citing Elicofon, 536 F.Supp. at 846 (holding that "[u]nder New York law, in an action to recover converted property from a bona fide purchaser an owner must prove that the purchaser refused, upon demand, to return the property" and therefore, the statute of limitations did not begin to run until demand and refusal)).

Plaintiff's reliance on Schoeps v. Museum of Modern Art, 594 F.Supp.2d 461 (S.D.N.Y. 2009), to support the position that Italian law should govern the 1938 transaction is misplaced. (See Pl. Opp. at 5, 15-16, 19-21.) Schoeps involved claims by Julius Schoeps and other heirs of Paul von Mendelssohn-Bartholdy ("Paul M.") and/or of his second wife, Elsa, that two Picasso paintings (collectively "the Picassos")—"Boy Leading a Horse" (1905-1906) ("Boy") and "Le Moulin de la Galette" (1900)—once owned by Paul M. and held by, respectively, MoMA and the Solomon R. Foundation, were transferred from Paul M. and/or Elsa as a result of Nazi duress and rightfully belonged to one or more of the Claimants. Schoeps, 594 F.Supp.2d at 463. In 1933, Paul M. shipped five Picasso paintings to Switzerland where he sold them approximately one year later, allegedly under duress, for an unknown price. (See Compl. for Declaratory Relief at 11-12, Schoeps, 594 F.Supp.2d 461 (S.D.N.Y. 2009) (No. 07-11074) [dkt. no. 1].) The purchaser of the Picassos, Justin Thannhauser, a Swiss art dealer, sold Boy to American collector William Paley, who ultimately donated it to MoMA in 1964. (Id. at 1-2.) Thannhauser held onto Le Moulin de la Galette before donating it to the Guggenheim Museum in New York in 1963, following his relocation to the United States. Id. The District Court held that under New York's choice-of-law rules, German law governed whether the transfer of the Paintings to Thannhauser was the product of duress. Schoeps, 594 F.Supp.2d at 465.

Plaintiff relies on the Court's holding in Schoeps stating, "[t]he Court determined that the law of Germany—where the transferors were located—governed this question even though there were other jurisdictions involved, including Switzerland, where, as here, the paintings may have been located." (Pl. Opp. at 21.) In reaching this conclusion, the District Court stated that "New York applies interest analysis to choice-of-law questions" but then described interest analysis using the "five factors" which govern "contract dispute[s]." Schoeps, 594 F.Supp.2d at 465 (emphasis added). However, these five factors, "including the place of contracting, the place of negotiation, the place of performance, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties" are the five factors of the "center of gravity" test, not an "interest analysis." Id.; see Md. Cas. Co. v. Cont'l Cas. Co., 332 F.3d 145, 151-52 (2d Cir. 2003) (listing the five factors of the "center of gravity" test). Therefore, by conflating the "center of gravity" test with an "interest analysis," the District Court effectively created what both Plaintiff and Defendant have called "a hybrid test." (See Pl. Opp. at 21; Def. Rep. at 5.)

In the instant case, the application of a "hybrid test" is inappropriate, as the Court of Appeals has stated that an "interest analysis," not an "interest analysis" combined with the factors of a "center of gravity test," is what governs in choice-of-law disputes regarding the transfer of personal property. See GlobalNet Financial.com, Inc. v. Frank Crystal & Co., 449 F.3d 377, 384 (2d Cir. 2006). "Under New York law there are two different `choice-of-law analyses, one for contract claims, another for tort claims.'" Id.; See Granite Ridge Energy, LLC v. Allianz Glob. Risk U.S. Ins. Co., 979 F.Supp.2d 385, 392 (S.D.N.Y. 2013) (citations omitted); see, e.g., Fin. One Pub. Co., 414 F.3d at 336. The Court of Appeals has established a clear distinction between the "center of gravity" approach and the "interest analysis" approach. GlobalNet Financial.com, 449 F.3d at 384 ("[T]he relevant analytical approach to choice of law in tort actions in New York is the `[i]nterest analysis.'") (citation omitted); Benefield v. Pfizer Inc., 103 F.Supp.3d 449, 457 (S.D.N.Y. 2015) ("For contract claims, New York courts apply the `center of gravity' or `grouping of contacts' choice of law theory.") (citation omitted); Winter v. Am. Inst. of Med. Scis. & Educ., 242 F.Supp.3d 206, 218 (S.D.N.Y. 2017) ("New York maintains two choice-of-law tests—one for contract claims and one for tort claims.").

For contract claims in New York, the "center of gravity" test, traditionally known as the "situs" rule, makes use of five factors to determine which of two or more jurisdictions has the "most significant relationship" or "contacts" to a given contract dispute. Md. Cas. Co., 332 F.3d at 151-52. Under this test, a court considers five factors: (1) the place of contracting, (2) the place of negotiation of the contract, (3) the place of performance, (4) the location of the subject matter of the contract, and (5) the domicile or place of business of the contracting parties. Id. The five factors comprising the "center of gravity" test are thus the same five factors the District Court used in Schoeps to conduct what it called an "interest analysis." The Court concluded without elaborating that "[a]ll five of these factors plainly support the application of German law to the issue of whether the transfer of these German-held Paintings in 1935 was a product of Nazi duress or the like." Schoeps, 594 F.Supp.2d at 465.

Plaintiff's reliance on the "hybrid test" in Schoeps is misguided as the Court of Appeals explicitly stated that "the conflation of the two tests is improper." Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1539 n.5 (2d Cir. 1997). Based on this "hybrid test," Plaintiff maintains that "[t]he circumstances as to the [1938] sale are Italian-centric," and therefore, Italian law should govern the issue of duress in this case. (Pl. Opp. at 21.) However, even examining the facts of the 1938 transaction under the "center of gravity" factors does not conclusively point to the application of Italian law here. Parties in Italy and France negotiated and performed the contract via letters, while the Painting remained in Switzerland, not Italy. (See Am. Compl. ¶¶ 13, 14, 36.) Once sold, the Painting traveled to France, purchased through a Parisian dealer on behalf of French counter-parties. Id. Although the Leffmanns resided in Italy at the time of the 1938 sale, New York courts have stated that the locus of the alleged injury is not dispositive in an "interest analysis." See Abu Dhabi Inv. Auth. v. Citigroup, Inc., No. 12-283, 2013 WL 789642, at *6, 2013 U.S. Dist. LEXIS 30214, at *23 (S.D.N.Y. Mar. 4, 2013)(stating that "[w]hile the place where the injury was felt is an important factor, it is not conclusive"); see Cummins v. Suntrust Capital Mkts., Inc., 649 F.Supp.2d 224, 237 (S.D.N.Y. 2009). Thus, even under Plaintiff's "hybrid test" from Schoeps, French law, not Italian law, might well be applicable. In any event, the Court rejects this analysis as incorrect under New York choice-of-law rules.

Here, as in Bakalar, the interests of a European jurisdiction where one party to the transaction was temporarily passing through are "tenuous" when compared to those of New York. Bakalar, 619 F.3d at 144-45. New York's interests surpass those of Italy, where, as here, the artwork was transferred to New York shortly after the 1938 transaction, was ultimately sold to a New York resident, and donated to a New York institution where it has remained, mostly on display to the public, since 1952. Moreover and consistent with Bakalar, New York has an interest in "preserv[ing] the integrity of transactions and prevent[ing] the state from becoming a marketplace for stolen goods" by having its substantive law applied. Id. For these reasons, under an "interest analysis," New York has the greatest interest in, and is most intimately concerned with, the out-come of this litigation. Accordingly, under New York choice-of-law analysis, New York substantive law is applicable to the 1938 transaction.

iv. The Amended Complaint Fails to State a Claim

As set out in Part III.B.i and Part III. B.ii above, the Court finds no outcome-determinative difference between Italian and New York law and that under either law, Plaintiff fails to state a claim for relief. Accordingly, dismissal is required under Fed. R. Civ. P. 12(b)(6).

In the alternative, as set out in Part III.B.iii above, to the extent that a difference is perceived between Italian and New York law, New York's choice-of-law analysis prescribes that New York law is applicable to the 1938 transaction. As noted in Part III.B.ii above, Plaintiff fails to state a claim for relief under New York law.

IV. CONCLUSION

For the reasons discussed above, Defendant's Motion to Dismiss the Amended Complaint [dkt. no. 11] is granted.

The Clerk of Court shall mark this action closed and all pending motions denied as moot.

SO ORDERED.

Alvin A. Simon and Joseph Sachter for appellant.

Herbert L. Ortner and Joel Salon for respondent.

Judges BURKE, SCILEPPI and GIBSON concur with Chief Judge FULD; Judge BERGAN dissents and votes to affirm in a separate opinion in which Judges BREITEL and JASEN concur.

Chief Judge FULD.

The defendant, Loral Corporation, seeks to recover payment for goods delivered under a contract which it had with plaintiff Austin Instrument, Inc., on the ground that the evidence establishes, as a matter of law, that it was forced to agree to an increase in price on the items in question under circumstances amounting to economic duress.

In July of 1965, Loral was awarded a $6,000,000 contract by the Navy for the production of radar sets. The contract contained a schedule of deliveries, a liquidated damages clause applying to late deliveries and a cancellation clause in case of default by Loral. The latter thereupon solicited bids for some 40 precision gear components needed to produce the radar sets, and awarded Austin a subcontract to supply 23 such parts. That party commenced delivery in early 1966.

In May, 1966, Loral was awarded a second Navy contract for the production of more radar sets and again went about soliciting bids. Austin bid on all 40 gear components but, on July 15, a representative from Loral informed Austin's president, Mr. Krauss, that his company would be awarded the subcontract only for those items on which it was low bidder. The Austin officer refused to accept an order for less than all 40 of the gear parts and on the next day he told Loral that Austin would cease deliveries of the parts due under the existing subcontract unless Loral consented to substantial increases in the prices provided for by that agreement — both retroactively for parts already delivered and prospectively on those not yet shipped — and placed with Austin the order for all 40 parts needed under Loral's second Navy contract. Shortly thereafter, Austin did, indeed, stop delivery. After contacting 10 manufacturers of precision gears and finding none who could produce the parts in time to meet its commitments to the Navy,^[1] Loral acceded to Austin's demands; in a letter dated July 22, Loral wrote to Austin that "We have feverishly surveyed other sources of supply and find that because of the prevailing military exigencies, were they to start from scratch as would have to be the case, they could not even remotely begin to deliver on time to meet the delivery requirements established by the Government. * * * Accordingly, we are left with no choice or alternative but to meet your conditions."

Loral thereupon consented to the price increases insisted upon by Austin under the first subcontract and the latter was awarded a second subcontract making it the supplier of all 40 gear parts for Loral's second contract with the Navy.^[2] Although Austin was granted until September to resume deliveries, Loral did, in fact, receive parts in August and was able to produce the radar sets in time to meet its commitments to the Navy on both contracts. After Austin's last delivery under the second subcontract in July, 1967, Loral notified it of its intention to seek recovery of the price increases.

On September 15, 1967, Austin instituted this action against Loral to recover an amount in excess of $17,750 which was still due on the second subcontract. On the same day, Loral commenced an action against Austin claiming damages of some $22,250 — the aggregate of the price increases under the first subcontract — on the ground of economic duress. The two actions were consolidated and, following a trial, Austin was awarded the sum it requested and Loral's complaint against Austin was dismissed on the ground that it was not shown that "it could not have obtained the items in question from other sources in time to meet its commitment to the Navy under the first contract." A closely divided Appellate Division affirmed (35 A D 2d 387). There was no material disagreement concerning the facts; as Justice STEUER stated in the course of his dissent below, "[t]he facts are virtually undisputed, nor is there any serious question of law. The difficulty lies in the application of the law to these facts." (35 A D 2d 392.)

The applicable law is clear and, indeed, is not disputed by the parties. A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of his free will. (See Allstate Med. Labs. v. Blaivas, 20 N Y 2d 654; Kazaras v. Manufacturers Trust Co., 4 N Y 2d 930; Adams v. Irving Nat. Bank, 116 N.Y. 606, 611; see, also, 13 Williston, Contracts [3d ed., 1970], § 1603, p. 658.) The existence of economic duress or business compulsion is demonstrated by proof that "immediate possession of needful goods is threatened" (Mercury Mach. Importing Corp. v. City of New York, 3 N Y 2d 418, 425) or, more particularly, in cases such as the one before us, by proof that one party to a contract has threatened to breach the agreement by withholding goods unless the other party agrees to some further demand. (See, e.g., du Pont de Nemours & Co. v. Hass Co., 303 N.Y. 785; Gallagher Switchboard Corp. v. Heckler Elec. Co., 36 Misc 2d 225; see, also, 13 Williston, Contracts [3d ed., 1970], § 1617, p. 705.) However, a mere threat by one party to breach the contract by not delivering the required items, though wrongful, does not in itself constitute economic duress. It must also appear that the threatened party could not obtain the goods from another source of supply^[3] and that the ordinary remedy of an action for breach of contract would not be adequate.^[4]

We find without any support in the record the conclusion reached by the courts below that Loral failed to establish that it was the victim of economic duress. On the contrary, the evidence makes out a classic case, as a matter of law, of such duress.^[5]

It is manifest that Austin's threat — to stop deliveries unless the prices were increased — deprived Loral of its free will. As bearing on this, Loral's relationship with the Government is most significant. As mentioned above, its contract called for staggered monthly deliveries of the radar sets, with clauses calling for liquidated damages and possible cancellation on default. Because of its production schedule, Loral was, in July, 1966, concerned with meeting its delivery requirements in September, October and November, and it was for the sets to be delivered in those months that the withheld gears were needed. Loral had to plan ahead, and the substantial liquidated damages for which it would be liable, plus the threat of default, were genuine possibilities. Moreover, Loral did a substantial portion of its business with the Government, and it feared that a failure to deliver as agreed upon would jeopardize its chances for future contracts. These genuine concerns do not merit the label "`self-imposed, undisclosed and subjective'" which the Appellate Division majority placed upon them. It was perfectly reasonable for Loral, or any other party similarly placed, to consider itself in an emergency, duress situation.

Austin, however, claims that the fact that Loral extended its time to resume deliveries until September negates its alleged dire need for the parts. A Loral official testified on this point that Austin's president told him he could deliver some parts in August and that the extension of deliveries was a formality. In any event, the parts necessary for production of the radar sets to be delivered in September were delivered to Loral on September 1, and the parts needed for the October schedule were delivered in late August and early September. Even so, Loral had to "work * * * around the clock" to meet its commitments. Considering that the best offer Loral received from the other vendors it contacted was commencement of delivery sometime in October, which, as the record shows, would have made it late in its deliveries to the Navy in both September and October, Loral's claim that it had no choice but to accede to Austin's demands is conclusively demonstrated.

We find unconvincing Austin's contention that Loral, in order to meet its burden, should have contacted the Government and asked for an extension of its delivery dates so as to enable it to purchase the parts from another vendor. Aside from the consideration that Loral was anxious to perform well in the Government's eyes, it could not be sure when it would obtain enough parts from a substitute vendor to meet its commitments. The only promise which it received from the companies it contacted was for commencement of deliveries, not full supply, and, with vendor delay common in this field, it would have been nearly impossible to know the length of the extension it should request. It must be remembered that Loral was producing a needed item of military hardware. Moreover, there is authority for Loral's position that nonperformance by a subcontractor is not an excuse for default in the main contract. (See, e.g., McBride & Wachtel, Government Contracts, § 35.10, [11].) In light of all this, Loral's claim should not be held insufficiently supported because it did not request an extension from the Government.

Loral, as indicated above, also had the burden of demonstrating that it could not obtain the parts elsewhere within a reasonable time, and there can be no doubt that it met this burden. The 10 manufacturers whom Loral contacted comprised its entire list of "approved vendors" for precision gears, and none was able to commence delivery soon enough.^[6] As Loral was producing a highly sophisticated item of military machinery requiring parts made to the strictest engineering standards, it would be unreasonable to hold that Loral should have gone to other vendors, with whom it was either unfamiliar or dissatisfied, to procure the needed parts. As Justice STEUER noted in his dissent, Loral "contacted all the manufacturers whom it believed capable of making these parts" (35 A D 2d, at p. 393), and this was all the law requires.

It is hardly necessary to add that Loral's normal legal remedy of accepting Austin's breach of the contract and then suing for damages would have been inadequate under the circumstances, as Loral would still have had to obtain the gears elsewhere with all the concomitant consequences mentioned above. In other words, Loral actually had no choice, when the prices were raised by Austin, except to take the gears at the "coerced" prices and then sue to get the excess back.

Austin's final argument is that Loral, even if it did enter into the contract under duress, lost any rights it had to a refund of money by waiting until July, 1967, long after the termination date of the contract, to disaffirm it. It is true that one who would recover moneys allegedly paid under duress must act promptly to make his claim known. (See Oregon Pacific R. R. Co. v. Forrest, 128 N.Y. 83, 93; Port Chester Elec. Constr. Corp. v. Hastings Terraces, 284 App. Div. 966, 967.) In this case, Loral delayed making its demand for a refund until three days after Austin's last delivery on the second subcontract. Loral's reason — for waiting until that time — is that it feared another stoppage of deliveries which would again put it in an untenable situation. Considering Austin's conduct in the past, this was perfectly reasonable, as the possibility of an application by Austin of further business compulsion still existed until all of the parts were delivered.

In sum, the record before us demonstrates that Loral agreed to the price increases in consequence of the economic duress employed by Austin. Accordingly, the matter should be remanded to the trial court for a computation of its damages.

The order appealed from should be modified, with costs, by reversing so much thereof as affirms the dismissal of defendant Loral Corporation's claim and, except as so modified, affirmed.

BERGAN, J. (dissenting).

Whether acts charged as constituting economic duress produce or do not produce the damaging effect attributed to them is normally a routine type of factual issue.

Here the fact question was resolved against Loral both by the Special Term and by the affirmance at the Appellate Division. It should not be open for different resolution here.

In summarizing the Special Term's decision and its own, the Appellate Division decided that "the conclusion that Loral acted deliberately and voluntarily, without being under immediate pressure of incurring severe business reverses, precludes a recovery on the theory of economic duress" (35 A D 2d 387, 391).

When the testimony of the witnesses who actually took part in the negotiations for the two disputing parties is examined, sharp conflicts of fact emerge. Under Austin's version the request for a renegotiation of the existing contract was based on Austin's contention that Loral had failed to carry out an understanding as to the items to be furnished under that contract and this was the source of dissatisfaction which led both to a revision of the existing agreement and to entering into a new one.

This is not necessarily and as a matter of law to be held economic duress. On this appeal it is needful to look at the facts resolved in favor of Austin most favorably to that party. Austin's version of events was that a threat was not made but rather a request to accommodate the closing of its plant for a customary vacation period in accordance with the general understanding of the parties.

Moreover, critical to the issue of economic duress was the availability of alternative suppliers to the purchaser Loral. The demonstration is replete in the direct testimony of Austin's witnesses and on cross-examination of Loral's principal and purchasing agent that the availability of practical alternatives was a highly controverted issue of fact. On that issue of fact the explicit findings made by the Special Referee were affirmed by the Appellate Division. Nor is the issue of fact made the less so by assertion that the facts are undisputed and that only the application of equally undisputed rules of law is involved.

Austin asserted and Loral admitted on cross-examination that there were many suppliers listed in a trade registry but that Loral chose to rely only on those who had in the past come to them for orders and with whom they were familiar. It was, therefore, at least a fair issue of fact whether under the circumstances such conduct was reasonable and made what might otherwise have been a commercially understandable renegotiation an exercise of duress.

The order should be affirmed.

Ordered accordingly.

[1] The best reply Loral received was from a vendor who stated he could commence deliveries sometime in October.

[2] Loral makes no claim in this action on the second subcontract.

[3] See, e.g., du Pont de Nemours & Co. v. Hass Co., 303 N.Y. 785, supra; Gallagher Switchboard Corp. v. Heckler Elec. Co., 36 Misc 2d 225, 226, supra; 30 East End v. World Steel Prods. Corp., 110 N. Y. S. 2d 754, 757.

[4] See, e.g., Kohn v. Kenton Assoc., 27 A D 2d 709; Colonie Constr. Corp. v. De Lollo, 25 A D 2d 464, 465; Halperin v. Wolosoff, 282 App. Div. 876; J. R. Constr. Corp. v. Berkely Apts., 259 App. Div. 830; Boss v. Hutchinson, 182 App. Div. 88, 92.

[5] The suggestion advanced that we are precluded from reaching this determination because the trial court's findings of fact have been affirmed by the Appellate Division ignores the question to be decided. That question, undoubtedly one of law (see Cohen and Karger, Powers of the New York Court of Appeals [1952], § 115, p. 492), is, accepting the facts found, did the courts below properly apply the law to them.

[6] Loral, as do many manufacturers, maintains a list of "approved vendors," that is, vendors whose products, facilities, techniques and performance have been inspected and found satisfactory.

Timothy L. Biliouris vs. Mary B. Biliouris.

No. 05-P-933.

Barnstable.

April 11, 2006.

August 17, 2006.

Present: Lenk, Smith, & Graham, JJ.

John B. Hopkins for Mary B. Biliouris.

Steven S. DeYoung for Timothy L. Biliouris.

Smith, J.

In his findings in support of judgments of divorce nisi, a judge of the Probate and Family Court concluded, inter alia, that an antenuptial agreement executed by the parties was fair and reasonable at the time of its execution, was not the product of coercion or duress, and was not unconscionable at the time of its enforcement. On appeal, the wife challenges the judge’s rulings concerning the enforceability of the antenuptial agreement as well as other aspects of the divorce judgments, including the judge’s apparent determination that the husband’s medical office building was not a marital asset subject to equitable division pursuant to G. L. c. 208, § 34. We conclude that the judge did not err in upholding the antenuptial agreement but we vacate so much of the judgments as allow the husband to retain title to the medical office building property and remand the matter to the Probate and Family Court in order that the judge may further articulate the rationale for his decision with respect to that property and enter a new (or, if appropriate, revised) order pertaining thereto.

1. Background and proceedings. At the time the parties began their dating relationship in mid-1991, the husband, a physician, was thirty-one years of age and the wife, a home economics teacher, was thirty-five years of age. The wife had three children by an earlier marriage. In late September or early October, 1992, the wife learned that she was pregnant and shortly thereafter informed the husband of the pregnancy. Upon receipt of the news, the husband told the wife that he would not marry her unless she signed an antenuptial agreement (agreement). Thereafter, the husband’s attorney prepared an agreement that the husband presented to the wife.1 The wife sought the assistance of counsel who, upon review of the draft agreement, advised the wife not to sign it.

On December 31, 1992, the wife met at a restaurant with the husband and his attorney to discuss the agreement,2 and immediately thereafter went to a bank where, in the presence of a notary, the parties executed the agreement. On the same date, the parties also signed the exhibits pages listing the parties’ assets that were attached to the agreement.

The husband’s premarital assets (including stocks, mutual funds, a lot of land in West Barnstable, and a one-bedroom rental condominium in the Allston section of Boston) were worth $986,000; the wife’s premarital assets (including her interests in a pending lawsuit and a home in Sandwich in which the parties were then living) were worth $100,000. The parties’ financial statements (portions of which were attached to the agreement) reflect that at the time the agreement was executed the husband’s gross income was $6,400 per week and the wife’s gross income $1,675 per week.3

The antenuptial agreement (the pertinent provisions of which are set forth more fully in the margin) provides generally that the individual property of each party, as well as the appreciation thereon, shall remain the party’s sole and exclusive property, and that neither party shall have a claim to alimony from the other. 4

During their ten-year marriage, the parties had two children. By agreement, the wife was a “stay-at-home” mother and was the “primary caretaker of the home” while the husband ran his medical practice. In 1995, the parties sold their home in Sandwich5 and built a new home, title to which they held as tenants by the entirety, in West Barnstable. The cost of the West Barn-stable home (excluding the land) was either $500,000 or $600,000. The husband paid the mortgage on the home (granted in 1999) as well as other extraordinary expenses, and in addition, contributed initially $700 per month (later $1,000 per month) toward the operating expenses of the household. The wife contributed $4,3656 per month toward the operating expenses of the house. At the time of the divorce, the West Barnstable house was worth $1,075,000 and carried a mortgage of $86,000. Dining the marriage the parties enjoyed an upper middle class standard of living.7

In November, 2001, the husband filed a complaint for divorce, which was amended in August, 2002, to include a provision requesting that the court enforce the terms of the parties’ antenuptial agreement “and thereafter . . . make an equitable division of any assets of the parties, the disposition of which is not determined by the terms of said Agreement, such division to be fair and equitable pursuant to the terms of [G. L. c. 208, § 34].” The wife filed an answer and counterclaim requesting, inter alia, that she be granted a divorce on the grounds of cruel and abusive treatment or irretrievable breakdown of the marriage.

After a trial, the judge found that the antenuptial agreement was free from fraud, both parties having fully disclosed their assets at the time of execution, and neither party having unfairly taken “advantage of the confidential and emotional relationship that the party had with the other.” The judge further found that the parties had adequate opportunity to consult with independent counsel prior to signing the agreement, that the agreement indicated what rights the parties were giving up, that the wife (who had been through a prior divorce) would be aware of what rights she might have had absent the existence of an agreement, and that there had been “an adequate waiver.” Continuing, the judge found “that the [w]ife did not suffer from any duress and was not coerced into signing the agreement at the time of” its execution. Finally, the judge determined that the agreement was fair and reasonable at the time of its execution and was “not an unconscionable agreement” at the time of its enforcement. The judge concluded that the agreement was a binding contract and that there were no countervailing equities that would invalidate it.

By the terms of the judgment of divorce nisi (dated April 11, 2003) that was entered on the husband’s complaint, the parties were awarded joint legal and shared physical custody of the parties’ two minor children. The husband was allowed to retain his interests in assets worth approximately $1,962,000 (including his interest in the medical office building),8 while the wife was allowed to retain her interest in assets worth approximately $105,000. In addition, the judge awarded the wife, after adjustment, eighty percent of the equity in the West Barnstable home (based on the wife’s “contribution” or payment of eighty percent of the household’s operating expenses)9 and most of the contents of the home. The judge also awarded the wife $750 per week as child support and directed the husband to maintain his existing medical insurance for the benefit of the wife, the children of the marriage, and the wife’s children from her first marriage for so long as they qualify. Finally, the husband was ordered to maintain at least $500,000 in life insurance on his life, of which the wife was to be listed as beneficiary of $200,000 and each child of the marriage was to be the beneficiary of $150,000. The husband’s obligation to maintain life insurance was to terminate upon the emancipation of both children of the marriage. The judge dismissed the wife’s counterclaim for divorce.

By orders dated September 29, 2003, the judge denied the wife’s motions for new trial and to alter and amend judgment and findings of fact. The judge allowed the wife’s motion to revoke the judgment dismissing her counterclaim for divorce. By a judgment dated September 29, 2003, nunc pro tunc as of April 11, 2003, which was identical in all material respects to the judgment that was entered on the husband’s complaint, the wife was awarded a divorce for the cause of irretrievable breakdown of the marriage. The wife has appealed from the judgments of divorce nisi and the orders denying her postjudgment motions.

2. The antenuptial agreement. To be enforceable, an antenuptial agreement “must be valid at the time of execution and must also be fair and reasonable at the time of divorce.” Austin v. Austin, 445 Mass. 601, 604 (2005). “An antenuptial agreement must also, of course, comport with the rules governing the formation of all contracts, for example, . . . the absence of fraud, misrepresentation, and duress.” DeMatteo v. DeMatteo, 436 Mass. 18, 26 n.16 (2002). See Kindregan & Inker, Family Law and Practice § 20:7 (3d ed. 2002).

a. Coercion or duress. The wife argues initially that she was under duress at the time she executed the antenuptial agreement and “was coerced into signing it due to the circumstances in which she found herself.”10 More specifically, the wife asserts that the evidence at trial established that the husband wanted to have children, but given the wife’s age, he was concerned that she could not bear children or carry them to term. The wife asserts that there was an oral agreement between the parties where, as a “precondition” of the husband’s agreeing to marry her, she would have to become pregnant (which she did).11 Continuing, the wife asserts that the husband’s proposal of an additional condition (i.e., the execution of the antenuptial agreement), after she had become pregnant, was coercive in and of itself.

The problem with the wife’s argument is that the judge made no finding that any such oral agreement existed between the parties. (The husband vigorously disputed at trial that there was such an agreement.) Indeed, the judge denied the wife’s motion to amend findings of fact in which she sought to include findings with respect to the alleged oral agreement.

The wife also asserts, apparently apart from her argument concerning the alleged oral agreement between the parties, that the fact that she found herself, a pregnant single mother, presented with an agreement shortly before her scheduled wedding date and being told that if she did not sign the agreement there would be no wedding, is by its very nature coercive.12

It is settled that a person who enters into a contract “under the influence of such fear as precludes him from exercising free will and judgment” may avoid the contract on the grounds of duress. Coveney v. President & Trustees of the College of the Holy Cross, 388 Mass. 16, 22 (1983), quoting from Avallone v. Elizabeth Arden Sales Corp., 344 Mass. 556, 561 (1962). See Cappy’s, Inc. v. Dorgan, 313 Mass. 170, 174 (1943). See also Vakil v. Vakil, 66 Mass. App. Ct. 526, 530 n.7 (2006) (although the wife’s claim that she executed the antenuptial agreement under duress was not decided, we stated that there was “some support in the record” for the claim where, among other things, the husband was abusive to the wife throughout their marriages and the wife, by affidavit, averred that the husband had coerced her into signing the agreement by threatening to take their son to Iran and prevent her from ever again seeing the child). “Coercion sufficient to avoid a contract need not, of course, consist of physical force or threats of it. Social or economic pressure illegally or immorally applied may be sufficient.” International Underwater Contractors, Inc. v. New England Tel. & Tel. Co., 8 Mass. App. Ct. 340, 342 (1979), quoting from Struck Constr. Co. v. United States, 96 Ct. Cl. 186, 220 (1942). Here, we perceive nothing in the record that would cause us to disturb the judge’s finding that the wife’s execution of the ante-nuptial agreement was not the product of coercion or duress.

Even were we to assume that the wife was presented with a draft of the antenuptial agreement only one week prior to the parties’ wedding (as she claims, see note 1, supra), she still had sufficient time to review it, and did in fact seek the advice of independent counsel as to its terms. As we have stated, the wife rejected counsel’s opinion that she should not sign the agreement. The wife also acknowledged at trial that prior to executing the agreement and in response to a question posed by the notary, she informed the notary that her signing of the agreement was her “free act and deed.” While the wife’s pregnancy coupled with the husband’s insistence that there would be no marriage unless she signed the antenuptial agreement presented the wife with a difficult choice, those factors cannot be said, in the circumstances presented here, to have divested the wife of her free will and judgment.

Other jurisdictions have reached the same result on somewhat similar facts. See, e.g., Kilborn v. Kilborn, 628 So. 2d 884, 885 (Ala. Civ. App. 1993) (no error in the trial judge’s determination that an antenuptial agreement was valid and enforceable and not the product of coercion where the wife, though pregnant, signed the agreement after full disclosure and against the advice of counsel); Hamilton v. Hamilton, 404 Pa. Super. 533, 537 (1991) (antenuptial agreement not signed under duress where the wife, although “pregnant, unemployed, and probably frightened,” was represented by counsel and signed the agreement against his advice).13 To the extent the wife appeared to suggest at oral argument that duress or coercion may have resulted in this case from the prospect of her being a single mother and the economic circumstances that may flow therefrom, the husband testified that he informed the wife that even if she did not sign the agreement he would act as a father to the child and would support the child financially. In any event, even if the husband did not make that statement, a court may enter an order for the support of a child born out of wedlock pursuant to G. L. c. 209C, § 9.14

b. Validity of alimony waiver. The wife argues next that under the circumstances known and reasonably to be anticipated by the parties at the time of the execution of the antenuptial agreement, the waiver of alimony provision, as to her, was neither fair nor reasonable when it was made.15

“Antenuptial agreements that waive alimony are not ‘per se against public policy and may be specifically enforced.’ ” Austin v. Austin, 445 Mass. at 603-604, quoting from Osborne v. Osborne, 384 Mass. 591, 598 (1981). Vakil v. Vakil, 66 Mass. App. Ct. at 536. As we have stated, however, to be enforceable, an agreement must be valid at the time of execution. “In order [for such an agreement] to be valid at the time of execution, the judge must determine whether ‘(1) [the agreement] contains a fair and reasonable provision as measured at the time of its execution for the party contesting the agreement; (2) the contesting party was fully informed of the other party’s worth prior to the agreement’s execution, or had, or should have had, independent knowledge of the other party’s worth; and (3) a waiver by the contesting party is set forth.’ ” Austin v. Austin, 445 Mass. at 604, quoting from DeMatteo v. DeMatteo, 436 Mass. at 26.

In determining whether an agreement was fair and reasonable at the time of execution, reference may be made to numerous factors, including “the parties’ respective worth,. . . ages,. . . intelligence, literacy, and business acumen, and prior family ties or commitments.” Rosenberg v. Lipnick, 377 Mass. 666, 672 (1979). Austin v. Austin, 445 Mass. at 604. See DeMatteo v. DeMatteo, 436 Mass. at 30 (reasonableness of the monetary provision in an antenuptial agreement “cannot ultimately be judged in isolation”). “It is only where the contesting party is essentially stripped of substantially all marital interests,” and indeed, the terms of the agreement “essentially vitiate the very status of marriage,” that an agreement is not fair and reasonable. Id. at 31.

Here, the judge did not err in concluding that the waiver of alimony provision of the antenuptial agreement was fair and reasonable at the time of its execution. The wife was an educated professional who had a demonstrated earning capacity at the time she executed the agreement in 1992. Although the parties agreed that the wife would leave her job in order to be a “stay-at-home” mother, there is nothing in the record to suggest that the wife would be incapable of working and earning income to support herself in the event of a divorce in the future.16 Moreover, as we have discussed, the agreement provided that the wife’s separate premarital property (valued at approximately $100,000), and any appreciation thereon, would remain her property and not be incorporated into the marital estate subject to division.

The agreement (in the absence of any limitation or provision to the contrary) also permitted the wife an interest in marital assets accrued by the parties during the marriage. As the husband owned no home at the time the agreement was executed (and was residing with the wife and her three children in the wife’s home in Sandwich), and as the agreement specifically provided “that, in the event of their marriage, the parties expect to reside together in a location, style and manner mutually suitable to them”17 (emphasis supplied), it was reasonably foreseeable that the parties would acquire a home in which to raise the combined families and that at least some portion of this asset would be available for the wife’s support if the parties ultimately divorced. See Austin v. Austin, 445 Mass. at 606.18 In the circumstances presented, the parties’ agreement cannot be said to have vitiated the very status of marriage.19 If the terms of the agreement were unsatisfactory to the wife, she was “free not to marry.” DeMatteo v. DeMatteo, 436 Mass. at 33.

3. The medical office building. The wife argues that the judge erred in failing to include within the marital estate subject to equitable division pursuant to G. L. c. 208, § 34, the husband’s medical office building in South Dennis, held in the husband’s name alone, which has a stipulated present value of $450,000.

At trial, the husband testified that he purchased the medical office building in August, 1999, for $350,000, using premarital assets that originated in a Vanguard fund. He testified further that although the parties took out a $240,000 mortgage on the marital home in July, 1999 (there was no mortgage on the house prior to that time), he did not believe that the proceeds were used for the purchase of the medical office building.20 Rather, he stated that the mortgage funds were first put into a money market account to which the wife had no access and were later used for investments, including his purchase of an interest in a railroad. The wife testified to the contrary, stating that the mortgage was taken out to buy the medical office building and explaining that the husband had informed her that it was less expensive to get a home mortgage than a commercial mortgage.

The judge’s findings with respect to the medical office building are, at best, unclear. Although the judge found, consistent with the husband’s testimony, that “[t]he [h]usband “paid $350,000.00 for [the medical office building] property which originated from the Vanguard [a]ccount,” he also found, consistent with the wife’s testimony, that the parties took out the mortgage on the West Barnstable property in order to purchase the medical office building and that the husband “us[ed] the mortgage and other premarital funds” to buy the building.21,22 If, in fact, the mortgage funds (for which the marital home was placed as security) were used to purchase the medical office building, and the mortgage was paid through the husband’s earnings and income during the marriage, the judge’s findings do not make clear why the property was excluded (as it apparently was) from the marital estate subject to division under § 34. Nor do the judge’s findings make clear the basis for his decision to allow the husband to retain title to the property.

In the circumstances, we vacate the order concerning the medical office building property and remand the matter to the Probate and Family Court so that the judge may better articulate the rationale for his treatment of the property and enter a new (or, if appropriate, revised) order with respect to the property.

4. Alleged gift of real estate. In arguing that the judge erred in dividing the equity in the West Barnstable home, the wife asserts that the husband should not have received a credit in the amount of $93,700 for the value of the land on which the house was built as the husband had gifted an interest in the land to her when he executed, delivered, and recorded the deed conveying the West Barnstable property from himself to the parties as tenants by the entirety.

At the outset, it is doubtful that the wife’s brief assertions on the point, which are unsupported by citation to relevant authority, rise to the level of argument contemplated by Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975). Even were we to overlook the deficiencies in the wife’s argument, however, we would not disturb the court’s judgment with respect to the “credit.”

The antenuptial agreement does not prohibit the parties from “giving, devising, or bequeathing any of his or her property to the other by will, gift, or otherwise.” Even assuming that the husband’s deeding of the West Barnstable property to himself and the wife as tenants by the entirety created a presumption that there was a gift to the wife of an interest in the land, such a presumption is rebuttable. See, e.g., Osborne v. Osborne, 384 Mass. at 602; Ross v. Ross, 2 Mass. App. Ct. 502, 508-509 (1974), cert. denied, 420 U.S. 947 (1975). Here, the husband took a position at trial that is inconsistent with the view that he intended to make a gift to the wife of an interest in the value of the land itself. He testified essentially to his understanding that the value of the West Barnstable land that he brought into the marriage and later “commingled” with the assets belonging to him and the wife was protected under the terms of the antenuptial agreement and that he was entitled to reacquire the value of the land as of the date that he “signed it over [as] a marital asset” in 1995.23

Although the judge did not make a specific finding conceming the husband’s donative intent with respect to the land on which the marital home was built, we think it is implicit in his rationale and his issuance of a credit to the husband that he determined that no gift was intended. The judge also denied the wife’s request to amend findings of fact to reflect that the husband’s conveyance to her of an interest in the West Barnstable land “was a voluntary act on the part of the [h]usband and therefore a gift which removed the land as an asset under the purv[iew] of the [a]ntenuptial [a]greement.” While it would have been helpful to our review (particularly in the face of the joint title) if the judge had made more detailed findings on the question, the judge’s implicit finding with respect to the West Barn-stable land is consistent with the parties’ antenuptial agreement and cannot be said to be clearly erroneous.

5. Failure to grant divorce on grounds of cruel and abusive treatment. Upon consideration of the arguments raised by the wife, and in view of the wife’s request for a divorce, alternatively, on the grounds of cruel and abusive treatment or an irretrievable breakdown of the marriage, we cannot say that the judge erred by failing to grant the wife a divorce on the grounds of cruel and abusive treatment.

6. Additional challenges to findings and judgments. It is clear that the judge, on conflicting evidence, rejected the wife’s claim that the parties agreed that in exchange for the wife paying the majority of the household expenses, the husband would accumulate funds to be used for the education of all the children, including her children from her first marriage. We perceive nothing in the wife’s other arguments that would cause us to disturb further the judgment.

7. Conclusion. So much of the judgments of divorce nisi as allow the husband to retain title to the medical office building in South Dennis (paragraph 25 of each of the judgments) are vacated and the matter is remanded to the Probate and Family Court with instructions that the judge articulate the rationale for his treatment of the property and enter a new (or, if appropriate, revised) order with respect to the property.24 The judge may hold such further hearing(s) as he deems necessary. In all other respects, the judgments are affirmed.

So ordered.

1

The husband testified that he raised the subject of an antenuptial agreement shortly after learning of the wife’s pregnancy and that he presented the wife with the draft agreement approximately two months prior to the parties’ wedding on January 2, 1993. The wife testified that the husband broached the subject of an antenuptial agreement in November, 1992, but that she did not see the agreement until approximately one week before the parties’ wedding.

2

It is undisputed that the wife, who at times was crying at the meeting, stated initially that she did not wish to sign the agreement. The husband testified that there were no negotiations concerning the terms of the agreement.

3

The wife’s income consisted of her salary as a teacher ($660 per week) as well as Social Security and workers’ compensation benefits ($500 per week and $515 per week, respectively) she received on behalf of the three children of her first marriage after the death of her first husband in 1992. The Social Security benefits received by the wife for the benefit of the children were to be reduced proportionately as each child attained the age of eighteen years. The workers’ compensation benefits were to be reduced proportionately as each child completed his or her education.

4

The agreement provides, inter alia:

“1. Except as otherwise may be expressly provided elsewhere in this Agreement, the individual property of each of the parties, both real and personal, now owned by him or her, or which he or she may hereafter acquire or become entitled to, shall remain and be the sole and exclusive property of the owner, subject to his or her individual control and use as if he or she were unmarried. Neither shall acquire by reason of the marriage any interest in the separate property, now or hereafter acquired, of the other or the right to the control thereof, or any interest in the income or any increase in value arising therefrom. . . .

“2. In the event that the marriage of [the husband] and [the wife] shall terminate by reason of their divorce, or if action for legal separation is initiated by either of them, the parties hereby agree that, in view of their respective ages, existing families and issue, and individual assets and income available to each therefrom, neither party shall make any claim against the other for alimony, separate maintenance, or support, or a division or assignment of income or assets of the other as a part of, or in lieu of, such alimony under the laws of the Commonwealth of Massachusetts or any other jurisdiction.

“3. Each party hereby acknowledges that the agreements contained herein shall constitute a reasonable resolution of any rights they may acquire in the income, asset, or estate of the other in all foreseeable circumstances, including legal separation and termination of the marriage by divorce, giving consideration to their current and future ages, the length of the marriage, and other factors cognizable under Massachusetts General Laws, Chapter 208, Section 34, or similar laws of other jurisdictions.”

5

At the time of the marriage, title to the home was in the wife’s name. Shortly after the marriage the wife conveyed the property to herself and the husband as tenants by the entirety and the husband contributed $7,500 to the home (roughly the same amount as the wife’s down payment on the home).

6

This figure was reduced at some point when the wife’s oldest child from her previous marriage became emancipated and the wife stopped receiving Social Security benefits on his behalf.

7

At the time of the divorce, the wife was employed part-time as a teacher’s assistant at an elementary school at a salary of $236.40 per week. The wife also received Social Security benefits on behalf of one remaining eligible child of her first marriage in the amount of $255.80 per week and workers’ compensation benefits on behalf of her three older children in the amount of $604.65 per week. Although the judge found that the husband’s income as reflected on his financial statement was $2,302.60 per week, the judge stated that it is unlikely that the husband, who did not work on Fridays, was suffering the loss he was claiming from his medical practice. The husband presently lives with a female companion who is the facility manager at his medical office clinic and who earns approximately $60,000 per year.

8

The judge found that the bulk of the assets could be traced to the husband’s premarital assets.

9

As we have stated, the West Barnstable home was worth $1,075,000 at the time of trial. Because the home had been built on a lot for which the husband had paid $93,700 prior to the marriage, the judge deducted that amount from the value of the property (resulting in a sum of $981,300). The judge determined that the husband was entitled to twenty percent of the $981,300 value of the property (based on his twenty percent “contribution” or payment of the household’s operating expenses), or $196,260, as well as reimbursement for his payment of $19,543 toward the college costs of one of the wife’s children from her first marriage. The judge ordered the husband to transfer his interest in the West Barnstable property to the wife and to pay off the existing mortgage on the property before May 1, 2003. In consideration of the transfer, the judge ordered the wife to execute an unassignable noninterest bearing promissory note in the amount of $309,503 ($93,700 plus $196,260 plus $19,543), secured by a first mortgage, which was to “be due and payable [to the husband] upon the emancipation of the children [of the marriage], the sale of the real estate, or the [w]ife’s remarriage, whichever first occurs.”

10

In her brief and in her oral argument to this court, the wife made no attempt to distinguish legally between the terms “coercion” and “duress” and appears to use them synonymously. See Delaney v. Chief of Police of Wareham, 27 Mass. App. Ct. 398, 406 n.7 (1989).

11

The wife claims, in essence, a “prior agreement to marry” where she “completed her obligation [thereunder] by becoming pregnant.”

12

The wife makes no argument on appeal that her religious or moral beliefs contributed to the alleged coercive atmosphere at the time the antenuptial agreement was executed.

13

For additional cases upholding, against claims of coercion, duress, or undue influence, a trial judge’s determination that an antenuptial agreement executed by a woman who was pregnant was valid, see In re Marriage of Dawley, 17 Cal. 3d 342, 355 (1976); Herrera v. Herrera, 895 So. 2d 1171, 1173, 1175 (Fla. App. 2005); Mallen v. Mallen, 280 Ga. 43, 45-46 (2005); Osomo v. Osomo, 76 S.W.3d 509, 511 (Tex. App. 2002) (reasoning that because duress consists of a threat to do something a party has no legal right to do, and because the father had no legal duty to marry the pregnant mother, “[h]is threat to do something he had the legal right to do is insufficient to invalidate the premarital agreement”). Other appellate cases we have located in our research, in which courts have found coercion or duress (or that genuine issues of material fact existed as to whether there was coercion) in circumstances where, among other factors, an antenuptial agreement was executed by a pregnant woman, are distinguishable from the case at bar. In Holler v. Holler, 364 S.C. 256, 266-268 (Ct. App. 2005), the court, in concluding that the wife, who was from the Ukraine, did not enter into the premarital agreement freely and voluntarily, noted that not only was the wife pregnant at the time she executed the premarital agreement, but her visa was about to expire (thus requiring her to leave the United States unless she married), she could not understand the agreement, and she had no money of her own to retain or consult with an attorney or a translator. In Williams v. Williams, 617 So. 2d 1032, 1035 (Ala. 1992), the court held that summary judgment was inappropriate as the testimony in the case created genuine issues of material fact as to whether, among other things, the “the father’s conditioning the marriage on the pregnant mother’s signing the antenuptial agreement, joined with the mother’s moral objection to abortion and the importance of legitimacy in a small town, created a coercive atmosphere in which the mother had no viable alternative to accepting the father’s condition for marriage, i.e., signing the agreement.”

14

There is no merit in the wife’s additional arguments that she had no way to verify the husband’s disclosures concerning the existence and values of his assets in exhibit A to the parties’ agreement (or to correct errors concerning her own assets listed in exhibit B), and that she was coerced into signing the exhibits. As to the former point, the wife does not argue that the husband’s disclosures were incorrect in any material respect, and in fact, her attorney stated at trial: “We’ll stipulate that the [husband’s] assets as listed, we have no reason to dispute their value except [in minor respects] for the ring.” It is also not clear why the wife was unable to correct the value of her own assets appearing in exhibit B if they were, in fact, incorrect. In any event, the wife indicated during cross-examination at trial that the assets and values in exhibit B were substantially correct; her primary complaint was that her furniture, appliances, and other miscellaneous personal property were worth less than the $10,000 figure reflected in the exhibit. As to the latter point, we cannot say that the wife’s execution of the exhibits was the product of coercion or duress. We note also that the wife’s terse and sketchy assertions in the initial section of her brief that touch on the fairness and reasonableness of the agreement do not constitute argument within the meaning of Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975). We address the fairness and reasonableness of the agreement in our discussion, infra, of the validity of the wife’s waiver of alimony.

15

The wife made clear at oral argument that she was challenging the fairness and reasonableness of the agreement at the time of its execution and not its conscionability at the time of enforcement (the so-called “second look” during which a judge determines whether “due to circumstances occurring during the course of the marriage, enforcement. . . would leave the contesting spouse ‘without sufficient property, maintenance, or appropriate employment to support’ herself.” DeMatteo v. DeMatteo, 436 Mass, at 37, quoting from 1 Clark, Jr., Domestic Relations in the United States § 1.9 [2d ed. 1987], Austin v. Austin, 445 Mass. at 604. Korff v. Korff, 64 Mass. App. Ct. 94, 97 [2005]).

16

The wife had shown the ability to work full time prior to the parties’ marriage (and shortly thereafter) notwithstanding the fact that she had three children under the age of eleven from her first marriage. The wife was also receiving at the time she executed the agreement $1,015 per week for the benefit of her children by her first marriage and anticipated receiving substantial sums for their benefit for many years to come. See note 3, supra.

17

It seems implicit in this provision of the agreement that the parties anticipated residing in a location other than the home in Sandwich. We note that the agreement further provides: “If separation or divorce proceedings are commenced by either party against the other at a time when either is living in any house or apartment that had been initially obtained by the other, then at the request of the party who had initially obtained such residence, he or she thereupon will immediately vacate the same and remove all of his or her personal possessions therefrom.”

18

Although the agreement in the present case contains no provision, as in Austin, that the husband would assist the wife with support if there were no jointly owned marital home at the time of the divorce, we think the circumstances in this case, in their entirety, support the finding that the agreement was fair and reasonable.

19

As to the two remaining factors set out in Austin v. Austin, 445 Mass. at 604, the wife, as we have indicated, was fully informed of the husband’s worth at the time of the execution of the agreement, and the agreement sets forth a waiver by the wife of various spousal rights.

20

At the commencement of trial, the judge read into the record an agreed statement of facts prepared by the parties. One of the agreed facts was that the mortgage on the marital home “was originally taken out for $90,000 and the proceeds of which were used in part to fund the husband’s purchase” of the medical office building. After the wife’s attorney informed the court that the original mortgage was $240,000, the husband’s attorney indicated that the stipulation could be revised, stating his belief (with apparent agreement of the husband) that “what happened was $240,000 was used to purchase the [medical office] building and it was then paid down to $90,000 and they refinanced it to get a lower interest rate.” The judge then stated that the stipulation would read that the mortgage on the West Barnstable property “was originally taken out in the amount of $240,000. Currently $90,000.” The wife’s attorney responded: “That’s correct and the proceeds were used at least in part and that’s a matter of contention” (emphasis supplied). At trial, the husband testified that to the extent the stipulation stated that the proceeds of the mortgage were used in part to fund the purchase of the medical office building, he did not believe it was accurate.

21

The judge found, in addition, that the net profits of $25,000 from the sale of the Sandwich home in 1995 “went into the marital home,” that the money for the construction of the marital home was generated by the parties during the marriage from their respective incomes, and that the $240,000 mortgage on the marital home (which was reduced to $86,000 at the time of trial) was paid by the husband from his “income” and “rental income.” (The husband testified, among other things, that he aggressively paid the mortgage down through his “earnings”; the wife testified that the mortgage was paid with rental income received from the medical office building).

22

It is undisputed that both the husband and the wife signed the mortgage documents. “[I]n Massachusetts, the granting of a mortgage vests [legal] title in the mortgagee to the land placed as security for the underlying debt,” while equitable title is retained by the mortgagor. Maglione v. BancBoston Mort. Corp., 29 Mass. App. Ct. 88, 90 (1990). See Teschke v. Keller, 38 Mass. App. Ct. 627, 634 (1995); McLaughlin v. Amirsaleh, 65 Mass. App. Ct. 873, 883 (2006). The husband testified that he did not remember why he did not put the wife’s name on the medical office building property.

On appeal, the husband does not appear to argue that the disposition of the medical office building turns on his sole ownership of the property. Rather, while acknowledging that the mortgage was taken out and used (together with “other premarital funds”) to fund the purchase of the medical office building, he justifies the court’s award on the ground that the building “was purchased with his own premarital funds whether characterized as a mortgage on the marital home or through his investment accounts” and that “[i]t is a fiction to suppose that the marital home, found to be a marital asset, was anything more than a convenient vehicle for [him] to fund the purchase without dedicating his investment monies to this enterprise, which he could have done.” He also asserts that the wife failed to contribute in any way to the financing of the purchase of the medical office building and that it has never been part of the marital estate.

23

Although the husband opined at trial that the West Barnstable land was worth $200,000 in 1995, the judge credited him with the value of the property as of the date the antenuptial agreement was signed.

24

That part of the order requiring the husband to be solely responsible for the “homeowner’s” insurance and real estate taxes on the medical office building shall remain in effect as a temporary order.

BRADY v. UNITED STATES

No. 270.

Argued November 18, 1969

Decided May 4, 1970

Peter J. Adang, by appointment of the Court, 396 U. S. 809, argued the cause and filed a brief for petitioner.

Joseph J. Connolly argued the cause for the United States. With him on the brief were Solicitor General Griswold, Assistant Attorney General Wilson, Jerome M. Feit, and Marshall Tamor Golding.

Mr. Justice White

delivered the opinion of the Court.

In 1959, petitioner was charged with kidnapping in violation of 18 U. S. C. § 1201 (a).1 Since the indictment charged that the victim of the kidnapping was not liberated unharmed, petitioner faced a maximum penalty of death if the verdict of the jury should so recommend. Petitioner, represented by competent counsel throughout, first elected to plead not guilty. Apparently because the trial judge was unwilling to try the case without a jury, petitioner made no serious attempt to reduce the possibility of a death penalty by waiving a jury trial. Upon learning that his codefendant, who had confessed to the authorities, would plead guilty and be available to testify against him, petitioner changed his plea to guilty. His plea was accepted after the trial judge twice questioned him as to the voluntariness of his plea.2 Petitioner was sentenced to 50 years’ imprisonment, later reduced to 30.

In 1967, petitioner sought relief under 28 TJ. S. C. § 2255, claiming that his plea of guilty was not voluntarily given because § 1201 (a) operated to coerce his plea, because his counsel exerted impermissible pressure upon him, and because his plea was induced by representations with respect to reduction of sentence and clemency. It was also alleged that the trial judge had not fully complied with Rule 11 of the Federal Rules of Criminal Procedure.3

After a hearing, the District Court for the District of New Mexico denied relief. According to the District Court's findings, petitioner’s counsel did not put impermissible pressure on petitioner to plead guilty and no representations were made with respect to a reduced sentence or clemency. The court held that § 1201 (a) was constitutional and found that petitioner decided to plead guilty when he learned that his codefendant was going to plead guilty: petitioner pleaded guilty “by reason of other matters and not by reason of the statute” or because of any acts of the trial judge. The court concluded that “the plea was voluntarily and knowingly made.”

The Court of Appeals for the Tenth Circuit affirmed, determining that the District Court’s findings were supported by substantial evidence and specifically approving the finding that petitioner’s plea of guilty was voluntary. 404 F. 2d 601 (1968). We granted certiorari, 395 U. S. 976 (1969), to consider the claim that the Court of Appeals was in error in not reaching a contrary result on the authority of this Court’s decision in United States v. Jackson, 390 U. S. 570 (1968). We affirm.

I

In United States v. Jackson, supra, the defendants were indicted under § 1201 (a). The District Court dismissed the § 1201 (a) count of the indictment, holding the statute unconstitutional because it permitted imposition of the death sentence only upon a jury’s recommendation and thereby made the risk of death the price of a jury trial. This Court held the statute valid, except for the death penalty provision; with respect to the latter, the Court agreed with the trial court “that the death penalty provision . . . imposes an impermissible burden upon the exercise of a constitutional right . . . 390 U. S., at 572. The problem was to determine “whether the Constitution permits the establishment of such a death penalty, applicable only to those defendants who assert the right to contest their guilt before a jury.” 390 U. S., at 581. The inevitable effect of the provision was said to be to discourage assertion of the Fifth Amendment right not to plead guilty and to deter exercise of the Sixth Amendment right to demand a jury trial. Because the legitimate goal of limiting the death penalty to cases in which a jury recommends it could be achieved without penalizing those defendants who plead not guilty and elect a jury trial, the death penalty provision “needlessly penalize [d] the assertion of a constitutional right,” 390 U. S., at 583, and was therefore unconstitutional.

Since the “inevitable effect” of the death penalty provision of § 1201 (a) was said by the Court to be the needless encouragement of pleas of guilty and waivers of jury trial, Brady contends that Jackson requires the invalidation of every plea of guilty entered under that section, at least when the fear of death is shown to have been a factor in the plea. Petitioner, however, has read far too much into the Jackson opinion.

The Court made it clear in Jackson that it was not holding § 1201 (a) inherently coercive of guilty pleas: “the fact that the Federal Kidnapping Act tends to discourage defendants from insisting upon their innocence, and demanding trial by jury hardly implies that every defendant who enters a guilty plea to a charge under the Act does so involuntarily.” 390 U. S., at 583. Cited in support of this statement, 390 U. S., at 583 n. 25, was Laboy v. New Jersey, 266 F. Supp. 581 (D. C. N. J. 1967), where a plea of guilty (non vult) under a similar statute was sustained as voluntary in spite of the fact, as found by the District Court, that the defendant was greatly upset by the possibility of receiving the death penalty.

Moreover, the Court in Jackson rejected a suggestion that the death penalty provision of § 1201 (a) be saved by prohibiting in capital kidnapping cases all guilty pleas and jury waivers, “however clear [the defendants’] guilt and however strong their desire to acknowledge it in order to spare themselves and their families the spectacle and expense of protracted courtroom proceedings.” “[T]hat jury waivers and guilty pleas may occasionally be rejected” was no ground for automatically rejecting all guilty pleas under the statute, for such a rule “would rob the criminal process of much of its flexibility.” 390 U. S., at 584.

Plainly, it seems to us, Jackson ruled neither that all pleas of guilty encouraged by the fear of a possible death sentence are involuntary pleas nor that such encouraged pleas are invalid whether involuntary or not. Jackson prohibits the imposition of the death penalty under § 1201 (a), but that decision neither fashioned a new standard for judging the validity of guilty pleas nor mandated a new application of the test theretofore fashioned by courts and since reiterated that guilty pleas are valid if both “voluntary” and “intelligent.” See Boykin v. Alabama, 395 U. S. 238, 242 (1969).4

That a guilty plea is a grave and solemn act to be accepted only with care and discernment has long been recognized. Central to the plea and the foundation for entering judgment against the defendant is the defendant’s admission in open court that he committed the acts charged in the indictment. He thus stands as a witness against himself and he is shielded by the Fifth Amendment from being compelled to do so — hence the minimum requirement that his plea be the voluntary expression of his own choice.5 But the plea is more than an admission of past conduct; it is the defendant’s consent that judgment of conviction may be entered without a trial — a waiver of his right to trial before a jury or a judge. Waivers of constitutional rights not only must be voluntary but must be knowing, intelligent acts done with sufficient awareness of the relevant circumstances and likely consequences.6 On neither score was Brady’s plea of guilty invalid.

II

The trial judge in 1959 found the plea voluntary-before accepting it; the District Court in 1968, after an evidentiary hearing, found that the plea was voluntarily made; the Court of Appeals specifically approved the finding of voluntariness. We see no reason on this record to disturb the judgment of those courts. Petitioner, advised by competent counsel, tendered his plea after his codefendant, who had already given a confession, determined to plead guilty and became available to testify against petitioner. It was this development that the District Court found to have triggered Brady’s guilty plea.

The voluntariness of Brady’s plea can be determined only by considering all of the relevant circumstances surrounding it. Cf. Haynes v. Washington, 373 U. S. 503, 513 (1963); Leyra v. Denno, 347 U. S. 556, 558 (1954). One of these circumstances was the possibility of a heavier sentence following a guilty verdict after a trial. It may be that Brady, faced with a strong case against him and recognizing that his chances for acquittal were slight, preferred to plead guilty and thus limit the penalty to life imprisonment rather than to elect a jury trial which could result in a death penalty.7 But even if we assume that Brady would not have pleaded guilty except for the death penalty provision of § 1201(a), this assumption merely identifies the penalty provision as a “but for” cause of his plea. That the statute caused the plea in this sense does not necessarily prove that the plea was coerced and invalid as an involuntary act.

The State to some degree encourages pleas of guilty at every important step in the criminal process. For some people, their breach of a State’s law is alone sufficient reason for surrendering themselves and accepting punishment. For others, apprehension and charge, both threatening acts by the Government, jar them into admitting their guilt. In still other cases, the post-indictment accumulation of evidence may convince the defendant and his counsel that a trial is not worth the agony and expense to the defendant and his family. All these pleas of guilty are valid in spite of the State’s responsibility for some of the factors motivating the pleas; the pleas are no more improperly compelled than is the decision by a defendant at the close of the State’s evidence at trial that he must take the stand or face certain conviction.

Of course, the agents of the State may not produce a plea by actual or threatened physical harm or by mental coercion overbearing the will of the defendant. But nothing of the sort is claimed in this case; nor is there evidence that Brady was so gripped by fear of the death penalty or hope of leniency that he did not or could not, with the help of counsel, rationally weigh the advantages of going to trial against the advantages of pleading guilty. Brady’s claim is of a different sort: that it violates the Fifth Amendment to influence or encourage a guilty plea by opportunity or promise of leniency and that a guilty plea is coerced and invalid if influenced by the fear of a possibly higher penalty for the crime charged if a conviction is obtained after the State is put to its proof.

Insofar as the voluntariness of his plea is concerned, there is little to differentiate Brady from (1) the defendant, in a jurisdiction where the judge and jury have the same range of sentencing power, who pleads guilty because his lawyer advises him that the judge will very probably be more lenient than the jury; (2) the defendant, in a jurisdiction where the judge alone has sentencing power, who is advised by counsel that the judge is normally more lenient with defendants who plead guilty than with those who go to trial; (3) the defendant who is permitted by prosecutor and judge to plead guilty to a lesser offense included in the offense charged; and (4) the defendant who pleads guilty to certain counts with the understanding that other charges will be dropped. In each of these situations,8 as in Brady’s case, the defendant might never plead guilty absent the possibility or certainty that the plea will result in a lesser penalty than the sentence that could be imposed after a trial and a verdict of guilty., We decline to hold, however, that a guilty plea is compelled and invalid under the Fifth Amendment whenever motivated by the defendant’s desire to accept the certainty or probability of a lesser penalty rather than face a wider range of possibilities extending from acquittal to conviction and a higher penalty authorized by law for the crime charged.

The issue we deal with is inherent in the criminal law and its administration because guilty pleas are not constitutionally forbidden, because the criminal law characteristically extends to judge or jury a range of choice in setting the sentence in individual cases, and because both the State and the defendant often find it advantageous to preclude the possibility of the maximum penalty authorized by law. For a defendant who sees slight possibility of acquittal, the advantages of pleading guilty and limiting the probable penalty are obvious — his exposure is reduced, the correctional processes can begin immediately, and the practical burdens of a trial are eliminated. For the State there are also advantages — the more promptly imposed punishment after an admission of guilt may more effectively attain the objectives of punishment; and with the avoidance of trial, scarce judicial and prosecutorial resources are conserved for those cases in which there is a substantial issue of the defendant’s guilt or in which there is substantial doubt that the State can sustain its burden of proof.9 It is this mutuality of advantage that perhaps explains the fact that at present well over three-fourths of the criminal convictions in this country rest on pleas of guilty,10 a great many of them no doubt motivated at least in part by the hope or assurance of a lesser penalty than might be imposed if there were a guilty verdict after a trial to judge or jury.

Of course, that the prevalence of guilty pleas is explainable does not necessarily validate those pleas or the system which produces them. But we cannot hold that it is unconstitutional for the State to extend a benefit to a defendant who in turn extends a substantial benefit to the State and who demonstrates by his plea that he is ready and willing to admit his crime and to enter the correctional system in a frame of mind that affords hope for success in rehabilitation over a shorter period of time than might otherwise be necessary.

A contrary holding would require the States and Federal Government to forbid guilty pleas altogether, to provide a single invariable penalty for each crime defined by the statutes, or to place the sentencing, function in a separate authority having no knowledge of the manner in which the conviction in each case was obtained. In any event, it would be necessary to forbid prosecutors and judges to accept guilty pleas to selected counts, to lesser included offenses, or to reduced charges. The Fifth Amendment does not reach so far.

Bram v. United States, 168 U. S. 532 (1897), held that the admissibility of a confession depended upon whether it was compelled within the meaning of the Fifth Amendment. To be admissible, a confession must be “ ‘free and voluntary: that is, must not be extracted by any sort of threats or violence, nor obtained by any direct or implied promises, however slight, nor by the exertion of any improper influence.’ ” 168 U. S., at 542-543. More recently, Malloy v. Hogan, 378 U. S. 1 (1964), carried forward the Bram definition of compulsion in the course of holding applicable to the States the Fifth Amendment privilege against compelled self-incrimination.11

Bram is not inconsistent with our holding that Brady’s plea was not compelled even though the law promised him a lesser maximum penalty if he did not go to trial. Bram dealt with a confession given by a defendant in custody, alone and unrepresented by counsel. In such circumstances, even a mild promise of leniency was deemed sufficient to bar the confession, not because the promise was an illegal act as such, but because defendants at such times are too sensitive to inducement and the possible impact on them too great to ignore and too difficult to assess. But Bram and its progeny did not hold that the possibly coercive impact of a promise of leniency could not be dissipated by the presence and advice of counsel, any more than Miranda v. Arizona, 384 U. S. 436 (1966), held that the possibly coercive atmosphere of the police station could not be counteracted by the presence of counsel or other safeguards.12

Brady’s situation bears no resemblance to Bram’s. Brady first pleaded not guilty; prior to changing his plea to guilty he was subjected to no threats or promises in face-to-face encounters with the authorities. He had competent counsel and full opportunity to assess the advantages and disadvantages of a trial as compared with those attending a plea of guilty; there was no hazard of an impulsive and improvident response to a seeming but unreal advantage. His plea of guilty was entered in open court and before a judge obviously sensitive to the requirements of the law with respect to guilty pleas. Brady’s plea, unlike Bram’s confession, was voluntary.

The standard as to the voluntariness of guilty pleas must be essentially that defined by Judge Tuttle of the Court of Appeals for the Fifth Circuit:

“ ‘[A] plea of guilty entered by one fully aware of the direct consequences, including the actual value of any commitments made to him by the court, prosecutor, or his own counsel, must stand unless induced by threats (or promises to discontinue improper harassment), misrepresentation (including unfulfilled or unfulfillable promises), or perhaps by promises that are by their nature improper as having no proper relationship to the prosecutor’s business (e. g. bribes).’ 242 F. 2d at page 115.” 13

Under this standard, a plea of guilty is not invalid merely because entered to avoid the possibility of a death penalty.14

Ill

The record before us also supports the conclusion that Brady’s plea was intelligently made. He was advised by competent counsel, he was made aware of the nature of the charge against him, and there was nothing to indicate that he was incompetent or otherwise not in control of his mental faculties; once his confederate had pleaded guilty and became available to testify, he chose to plead guilty, perhaps to ensure that he would face no more than life imprisonment or a term of years. Brady was aware of precisely what he was doing when he admitted that he had kidnapped the victim and had not released her unharmed.

It is true that Brady’s counsel advised him that § 1201 (a) empowered the jury to impose the death penalty and that nine years later in United States v. Jackson, supra, the Court held that the jury had no such power as long as the judge could impose only a lesser penalty if trial was to the court or there was a plea of guilty. But these facts do not require us to set aside Brady’s conviction.

Often the decision to plead guilty is heavily influenced by the defendant’s appraisal of the prosecution’s case against him and by the apparent likelihood of securing leniency should a guilty plea be offered and accepted. Considerations like these frequently present imponderable questions for which there are no certain answers; judgments may be made that in the light of later events seem improvident, although they were perfectly sensible at the time. The rule that a plea must be intelligently made to be valid does not require that a plea be vulnerable to later attack if the defendant did not correctly assess every relevant factor entering into his decision. A defendant is not entitled to withdraw his plea merely because he discovers long after the plea has been accepted that his calculus misapprehended the quality of the State’s case or the likely penalties attached to alternative courses of action. More particularly, absent misrepresentation or other impermissible conduct by state agents, cf. Von Moltke v. Gillies, 332 U. S. 708 (1948), a voluntary plea of guilty intelligently made in the light of the then applicable law does not become vulnerable because later judicial decisions indicate that the plea rested on a faulty premise. A plea of guilty triggered by the expectations of a competently counseled defendant that the State will have a strong case against him is not subject to later attack because the defendant’s lawyer correctly advised him with respect to the then existing law as to possible penalties but later pronouncements of the courts, as in this case, hold that the maximum penalty for the crime in question was less than was reasonably assumed at the time the plea was entered.

The fact that Brady did not anticipate United States v. Jackson, supra, does not impugn the truth or reliability of his plea. We find no requirement in the Constitution that a defendant must be permitted to disown his solemn admissions in open court that he committed the act with which he is charged simply because it later develops that the State would have had a weaker case than the defendant had thought or that the maximum penalty then assumed applicable has been held inapplicable in subsequent judicial decisions.

This is not to say that guilty plea convictions hold no hazards for the innocent or that the methods of taking guilty pleas presently employed in this country are necessarily valid in all respects. This mode of conviction is no more foolproof than full trials to the court or to the jury. Accordingly, we take great precautions against unsound results, and we should continue to do so, whether conviction is by plea or by trial. We would have serious doubts about this case if the encouragement of guilty pleas by offers of leniency substantially increased the likelihood that defendants, advised by competent counsel, would falsely condemn themselves. But our view is to the contrary and is based on our expectations that courts will satisfy themselves that pleas of guilty are voluntarily and intelligently made by competent defendants with adequate advice of counsel and that there is nothing to question the accuracy and reliability of the defendants’ admissions that they committed the crimes with which they are charged. In the case before us, nothing in the record impeaches Brady’s plea or suggests that his admissions in open court were anything but the truth.

Although Brady’s plea of guilty may well have been motivated in part by a desire to avoid a possible death penalty, we are convinced that his plea was voluntarily and intelligently made and we have no reason to doubt that his solemn admission of guilt was truthful.

Affirmed.

Mr. Justice Black, while adhering to his belief that United States v. Jackson, 390 U. S. 570, was wrongly decided, concurs in the judgment and in substantially all of the opinion in this case.

[For opinion of Mr. Justice Brennan, concurring in the result, see post, p. 799.]

1

“Whoever knowingly transports in interstate or foreign commerce, any person who has been unlawfully seized, confined, inveigled, decoyed, kidnapped, abducted, or carried away and held for ransom or reward or otherwise, except, in the case of a minor, by a parent thereof, shall be punished (1) by death if the kidnapped person has not been liberated unharmed, and if the verdict of the jury shall so recommend, or (2) by imprisonment for any term of years or for life, if the death penalty is not imposed.”

2

Eight days after petitioner pleaded guilty, he was brought before the court for sentencing. At that time, the court questioned petitioner for a second time about the voluntariness of his plea:

“THE COURT: . . . Having read the presentence report and the statement you made to the probation officer, I want to be certain that you know what you are doing and you did know when you entered a plea of guilty the other day. Do you want to let that plea of guilty stand, or do you want to withdraw it and plead not guilty?

“DEFENDANT BRADY: I want to let that plea stand, sir.

“THE COURT: You understand that in doing that you are admitting and confessing the truth of the charge contained in the indictment and that you enter a plea of guilty voluntarily, without persuasion, coercion of any kind? Is that right?

“DEFENDANT BRADY: Yes, your Honor.

“THE COURT: And you do do that?

“DEFENDANT BRADY: Yes, I do.

“THE COURT: You plead guilty to the charge?

“DEFENDANT BRADY: Yes, I do.” App. 29-30.

3

When petitioner pleaded guilty, Rule 11 read as follows:

“A defendant may plead not guilty, guilty or, with the consent of the court, nolo contendere. The court may refuse to accept a plea of guilty, and shall not accept the plea without first determining that the plea is made voluntarily with understanding of the nature of the charge. If a defendant refuses to plead or if the court refuses to accept a plea of guilty or if a defendant corporation fails to appear, the court shall enter a plea of not guilty."

Rule 11 was amended in 1966 and now reads as follows:

“A defendant may plead not guilty, guilty or, with the consent of the court, nolo contendere. The court may refuse to accept a plea of guilty, and shall not accept such plea or a plea of nolo contendere without first addressing the defendant personally and determining that the plea is made voluntarily with understanding of the nature of the charge and the consequences of the plea. If a defendant refuses to plead or if the court refuses to accept a plea of guilty or if a defendant corporation fails to appear, the court shall enter a plea of not guilty. The court shall not enter a judgment upon a plea of guilty unless it is satisfied that there is a factual basis for the plea.”

In McCarthy v. United States, 394 U. S. 459 (1969), we held that a failure to comply with Rule 11 required that a defendant who had pleaded guilty be allowed to plead anew. In Halliday v. United States, 394 U. S. 831 (1969), we held that the McCarthy rule should apply only in cases where the guilty plea was accepted after April 2, 1969, the date of the McCarthy decision.

4

The requirement that a plea of guilty must be intelligent and voluntary to be valid has long been recognized. See nn. 5 and 6, infra. The new element added in Boykin was the requirement that the record must affirmatively disclose that a defendant who pleaded guilty entered his plea understandingly and voluntarily. This Court has not yet passed on the question of the retroactivity of this new requirement.

5

Machibroda v. United States, 368 U. S. 487, 493 (1962); Waley v. Johnston, 316 U. S. 101, 104 (1942); Walker v. Johnston, 312 U. S. 275, 286 (1941); Chambers v. Florida, 309 U. S. 227 (1940); Kercheval v. United States, 274 U. S. 220, 223 (1927).

6

See Brookhart v. Janis, 384 U. S. 1 (1966); Adams v. United States ex rel. McCann, 317 U. S. 269, 275 (1942); Johnson v. Zerbst, 304 U. S. 458, 464 (1938); Patton v. United States, 281 U. S. 276, 312 (1930).

Since an intelligent assessment of the relative advantages of pleading guilty is frequently impossible without the assistance of an attorney, this Court has scrutinized with special care pleas of guilty entered by defendants without the assistance of counsel and without a valid waiver of the right to counsel. See Pennsylvania ex rel. Herman v. Claudy, 350 U. S. 116 (1956); Von Moltke v. Gillies, 332 U. S. 708 and 727 (1948) (opinions of Black and Frankfurter, JJ.); Williams v. Kaiser, 323 U. S. 471 (1945). Since Gideon v. Wainwright, 372 U. S. 335 (1963), it has been clear that a guilty plea to a felony charge entered without counsel and without a waiver of counsel is invalid. See White v. Maryland, 373 U. S. 59 (1963); Arsenault v. Massachusetts, 393 U. S. 5 (1968).

The importance of assuring that a defendant does not plead guilty except with a full understanding of the charges against him and the possible consequences of his plea was at the heart of our recent decisions in McCarthy v. United States, supra, and Boykin v. Alabama, 395 U. S. 238 (1969). See nn. 3 and 4, supra.

7

Such a possibility seems to have been rejected by the District Court in the §2255 proceedings. That court found that “the plea of guilty was made by the petitioner by reason of other matters and not by reason of the statute . . . .”

8

We here make no reference to the situation where the prosecutor or judge, or both, deliberately employ their charging and sentencing powers to induce a particular defendant to tender a plea of guilty. In Brady’s case there is no claim that the prosecutor threatened prosecution on a charge not justified by the evidence or that the trial judge threatened Brady with a harsher sentence if convicted after trial in order to induce him to plead guilty.

9

For a more elaborate discussion of the factors that may justify a reduction in penalty upon a plea of guilty, see American Bar Association Project on Standards for Criminal Justice, Pleas of Guilty § 1.8 and commentary, pp. 37-52 (Approved Draft 1968). of all

10

It has been estimated that about 90%, and perhaps 95%, of all criminal convictions are by pleas of guilty; between 70% and 85% of all felony convictions are estimated to be by guilty plea. D. Newman, Conviction, The Determination of Guilt or Innocence Without Trial 3 and n. 1 (1966).

11

Malloy v. Hogan, 378 U. S. 1, 7 (1964). See also Haynes v. Washington, 373 U. S. 503, 513 (1963); Lynumn v. Illinois, 372 U. S. 528 (1963); Wilson v. United States, 162 ü. S. 613, 622-623 (1896).

12

“The presence of counsel, in all the eases before us today, would be the adequate protective device necessary to make the process of police interrogation conform to the dictates of the privilege [against compelled self-incrimination]. His presence would insure that statements made in the government-established atmosphere are not the product of compulsion.” Miranda v. Arizona, 384 U. S. 436, 466 (1966).

13

Shelton v. United States, 246 F. 2d 571, 572 n. 2 (C. A. 5th Cir. 1957) (en banc), rev’d on confession of error on other grounds, 356 U. S. 26 (1958).

14

Our conclusion in this regard seems to coincide with the conclusions of most of the lower federal courts that have considered whether a guilty plea to avoid a possible death penalty is involuntary. See United States ex rel. Brown v. LaVallee, 424 F. 2d 457 (C. A. 2d Cir. 1970); United States v. Thomas, 415 F. 2d 1216 (C. A. 9th Cir. 1969); Pindell v. United States, 296 F. Supp. 751 (D. C. Conn. 1969); McFarland v. United States, 284 F. Supp. 969 (D. C. Md. 1968), aff’d, No. 13,146 (C. A. 4th Cir., May 1, 1969), cert. denied, post, p. 1077; Laboy v. New Jersey, 266 F. Supp. 581 (D. C. N. J. 1967); Gilmore v. California, 364 F. 2d 916 (C. A. 9th Cir. 1966); Busby v. Holman, 356 F. 2d 75 (C. A. 5th Cir. 1966); Cooper v. Holman, 356 F. 2d 82 (C. A. 5th Cir.), cert. denied, 385 U. S. 855 (1966); Godlock v. Ross, 259 F. Supp. 659 (D. C. E. D. N. C. 1966); United States ex rel. Robinson v. Fay, 348 F. 2d 705 (C. A. 2d Cir. 1965), cert. denied, 382 U. S. 997 (1966); Overman v. United States, 281 F. 2d 497 (C. A. 6th Cir. 1960), cert. denied, 368 U. S. 993 (1962); Martin v. United States, 256 F. 2d 345 (C. A. 5th Cir.), cert. denied, 358 U. S. 921 (1958). But see Shaw v. United States, 299 F. Supp. 824 (D. C. S. D. Ga. 1969); Alford v. North Carolina, 405 F. 2d 340 (C. A. 4th Cir. 1968), prob. juris, noted, 394 U. S. 956 (1969), restored to calendar for reargument, post, p. 1060.

[Civ. No. 29510.

Second Dist., Div. Two.

Nov. 3, 1966.]

DONALD W. ODORIZZI, Plaintiff and Appellant, v. BLOOMFIELD SCHOOL DISTRICT, Defendant and Respondent.

Burton Marks, Green, Simlce & Lasher and Stuart A. Simke for Plaintiff and Appellant.

Harold W. Kennedy, County Counsel, and Raymond W. Schneider, Deputy County Counsel, for Defendant and Respondent.

FLEMING, J.

Appeal from a judgment dismissing plaintiff’s amended complaint on demurrer.

Plaintiff Donald Odorizzi was employed during 1964 as an elementary school teacher by defendant Bloomfield School District and was under contract with the district to continue to teach school the following year as a permanent employee. On June 10 he was arrested on criminal charges of homosexual activity, and on June 11 he signed and delivered to his superiors his written resignation as a teacher, a resignation which the district accepted on June 13. In July the criminal charges against Odorizzi were dismissed under Penal Code, section 995, and in September he sought to resume his employment with the district. On the district’s refusal to reinstate him he filed suit for declaratory and other relief.

Odorizzi’s amended complaint asserts his resignation was invalid because obtained through duress, fraud, mistake, and undue influence and given at a time when he lacked capacity to make a valid contract. Specifically, Odorizzi declares he was under such severe mental and emotional strain at the time he signed his resignation, having just completed the process of arrest, questioning by the police, booking, and release on bail, and having gone for 40 hours without sleep, that he was incapable of rational thought or action. While he was in this condition and unable to think clearly, the superintendent of the district and the principal of his school came to his apartment. They said they were trying to help him and had his best interests at heart, that he should take their advice and immediately resign his position with the district, that there was no time to consult an attorney, that if he did not resign immediately the district would suspend and dismiss him from his position and publicize the proceedings, his “ aforedescribed arrest” and cause him “to suffer extreme embarrassment and humiliation”; but that if he resigned at once the incident would not be publicized and would not jeopardize his chances of securing employment as a teacher elsewhere. Odorizzi pleads that because of his faith and confidence in their representations they were able to substitute their will and judgment in place of his own and thus obtain his signature to his purported resignation. A demurrer to his amended complaint was sustained without leave to amend.

By his complaint plaintiff in effect seeks to rescind his resignation pursuant to Civil Code, section 1689, on the ground that his consent had not been real or free within the meaning of Civil Code, section 1567, but had been obtained through duress, menace, fraud, undue influence, or mistake. A pleading under these sections is sufficient if, stripped of its conclusions, it sets forth sufficient facts to justify legal relief. (Gogerty v. Coachella Valley Junior College Dist., 57 Cal.2d 727, 731 [21 Cal.Rptr. 806, 371 P.2d 582] ; Krug v. Meeham, 109 Cal.App.2d 274, 277 [240 P.2d 732].) In our view the facts in the amended complaint are insufficient to state a cause of action for duress, menace, fraud, or mistake, but they do set out sufficient elements to justify rescission of a consent because of undue influence. We summarize our conclusions on each of these points.

1. No duress or menace has been pleaded. Duress consists in unlawful confinement of another’s person, or relatives, or property, which causes him to consent to a transaction through fear. (Civ. Code, § 1569.) Duress is often used interchangeably with menace (Leeper v. Beltrami, 53 Cal.2d 195, 203 [1 Cal.Rptr. 12, 347 P.2d 12, 77 A.L.R.2d 803]), but in California menace is technically a threat of duress or a threat of injury to the person, property, or character of another. (Civ. Code, § 1570; Rest., Contracts, §§492, 493.) We agree with respondent’s contention that neither duress nor menace was involved in this case, because the action or threat in duress or menace must be unlawful, and a threat to take legal action is not unlawful unless the party making the threat knows the falsity of his claim. (Leeper v. Beltrami, 53 Cal.2d 195, 204 [1 Cal.Rptr. 12, 347 P.2d 12, 77 A.L.R.2d 803].) The amended complaint shows in substance that the school representatives announced their intention to initiate suspension and dismissal proceedings under Education Code, sections 13403,'13408 et seq. at a time when the filing of such proceedings was not only their legal right but their positive duty as school officials. (Ed. Code, § 13409; Board of Education v. Weiland, 179 Cal.App.2d 808 [4 Cal.Rptr. 286].) Although the filing of such proceedings might be extremely damaging to plaintiff’s reputation, the injury would remain incidental so long as the school officials acted in good faith in the performance of their duties. (Schumm v. Berg, 37 Cal.2d 174, 185-186 [231 P.2d 39, 21 A.L.R.2d 1051].) Neither duress nor menace was present as a ground for rescission.

2. Nor do we find a cause of action for fraud, either actual or constructive. (Civ. Code, §§ 1571 to 1574.) Actual fraud involves conscious misrepresentation, or concealment, or non-disclosure of a material fact which induces the innocent party to enter the contract. (Civ. Code, § 1572; Pearson v. Norton, 230 Cal.App.2d 1, 7 [40 Cal. Rptr. 634]; Rest., Contracts, §471.) A complaint for fraud must plead misrepresentation, knowledge of falsity, intent to induce reliance, justifiable reliance, and resulting damage. (Sixta v. Ochsner, 187 Cal.App.2d 485, 489 [9 Cal. Rptr. 617]; Zinn v. Ex-Cell-O Corp., 148 Cal.App.2d 56, 68 [306 P.2d 1017].) While the amended complaint charged misrepresentation, it failed to assert the elements of knowledge of falsity, intent to induce reliance, and justifiable reliance. A cause of action for actual fraud was therefore not stated. (Norkin v. United States Fire Ins., 237 Cal.App.2d 435 [47 Cal.Rptr. 15].)

Constructive fraud arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice. (Civ. Code, § 1573.) Plaintiff has attempted to bring himself within this category, for the amended complaint asserts the existence of a confidential relationship between the school superintendent and principal as agents of the defendant, and the plaintiff. Such a confidential relationship may exist whenever a person with justification places trust and confidence in the integrity and fidelity of another. (Vai v. Bank of America, 56 Cal.2d 329, 338 [15 Cal.Rptr. 71, 364 P.2d 247]; Pryor v. Bistline, 215 Cal.App.2d 437, 446 [30 Cal.Rptr. 376].) Plaintiff, however, sets forth no facts to support his conclusion of a confidential relationship between the representatives of the school district and himself, other than that the parties bore the relationship of employer and employee to each other. Under prevailing judicial opinion no presumption of a confidential relationship arises from the bare fact that parties to a contract are employer and employee; rather, additional ties must be brought out in order to create the presumption of a confidential relationship between the two. (Annot., 100 A.L.R. 875.) The absence of a confidential relationship between employer and employee is especially apparent where, as here, the parties were negotiating to bring about a termination of their relationship. In such a situation each party is expected to look after his own interests, and a lack of confidentiality is implicit in the subject matter of their dealings. We think the allegations of constructive fraud were inadequate.

3. As to mistake, the amended complaint fails to disclose any facts which would suggest that consent had been obtained through a mistake of fact or of law. The material facts of the transaction were known to both parties. Neither party was laboring under any misapprehension of law of which the other took advantage. The discussion between plaintiff and the school district representatives principally attempted to evaluate the probable consequences of plaintiff’s predicament and to predict the future course of events. The fact that their speculations did not forecast the exact pattern which events subsequently took does not provide the basis for a claim that they were acting under some sort of mistake. The doctrine of mistake customarily involves such errors as the nature of the transaction, the identity of the parties, the identity of the things to which the contract relates, or the occurrence of collateral happenings. (Rest., Contracts, § 502, com. e.) Errors of this nature were not present in the case at bench.

4. However, the pleading does set out a claim that plaintiff’s consent to the transaction had been obtained through the use of undue influence.

Undue influence, in the sense we are concerned with here, is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, persuasion which overcomes the will without convincing the judgment. (Estate of Ricks, 160 Cal. 467, 480-482 [117 P. 539].) The hallmark of such persuasion is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extent that it approaches the boundaries of coercion. In this sense, undue influence has been called overpersuasion. (Kelly v. McCarthy, 6 Cal.2d 347, 364 [57 P.2d 118].) Misrepresentations of law or fact are not essential to the charge, for a person’s will may be overborne without misrepresentation. By statutory definition undue influence includes “taking an unfair advantage of another’s weakness of mind, or . . . taking a grossly oppressive and unfair advantage of another’s necessities or distress.” (Civ. Code, § 1575.) While most reported eases of undue influence involve persons who bear a confidential relationship to one another, a confidential or authoritative relationship between the parties need not be present when the undue influence involves unfair advantage taken of another’s weakness or distress. (Wells Fargo Bank v. Brady, 116 Cal.App.2d 381, 398 [254 P.2d 71]; Buchmayer v. Buchmayer, 68 Cal.App.2d 462, 467 [157 P.2d 9].)

We paraphrase the summary of undue influence given the jury by Sir James P. Wilde in Hall v. Hall, L.R. 1, P. & D. 481, 482 (1868) : To make a good contract a man must be a free agent. Pressure of whatever sort which overpowers the will without convincing the judgment is a species of restraint under which no valid contract can be made. Importunity or threats, if carried to the degree in which the free play of a man’s will is overborne, constitute undue influence, although no force is used or threatened. A party may be led but not driven, and his acts must be the offspring of his own volition and not the record of someone else’s.

In essence undue influence involves the use of excessive pressure to persuade one vulnerable to such pressure, pressure applied by a dominant subject to a servient object. In combination, the elements of undue susceptibility in the servient person and excessive pressure by the dominating person make the latter’s influence undue, for it results in the apparent will of the servient person being in fact the will of the dominant person.

Undue susceptibility may consist of total weakness of mind which leaves a person entirely without understanding (Civ. Code, §38); or, a lesser weakness which destroys the capacity of a person to make a contract even though he is not totally incapacitated (Civ. Code, § 39; Peterson v. Ellebrecht, 205 Cal.App.2d 718, 721-722 [23 Cal.Rptr. 349]); or, the first element in our equation, a still lesser weakness which provides sufficient grounds to rescind a contract for undue influence (Civ. Code, § 1575; Faulkner v. Beatty, 161 Cal.App.2d 547, 551 [327 P.2d 41] ; Stewart v. Marvin, 139 Cal.App.2d 769, 775 [294 P.2d 114]). Such lesser weakness need not be long-lasting nor wholly incapacitating, but may be merely a lack of full vigor due to age (Wells Fargo Bank v. Brady, 116 Cal. App.2d 381, 397-398 [254 P.2d 71]), physical condition (Weger v. Rocha, 138 Cal.App. 109, 114-115 [32 P.2d 417]), emotional anguish (Moore v. Moore, 56 Cal. 89, 93; 81 Cal. 195, 197-198 [22 P. 589, 874]), or a combination of such factors. The reported cases have usually involved elderly, sick, senile persons alleged to have executed wills or deeds under pressure. (Malone v. Malone, 155 Cal.App.2d 161 [317 P.2d 65] [constant importuning of a senile husband] ; Stewart v. Marvin, 139 Cal.App.2d 769 [294 P.2d 114] [persistent nagging of elderly spouse].) In some of its aspects this lesser weakness could perhaps be called weakness of spirit. But whatever name we give it, this first element of undue influence resolves itself into a lessened capacity of the object to make a free contract.

In the present ease plaintiff has pleaded that such weakness at the time he signed his resignation prevented him from freely and competently applying his judgment to the problem before him. Plaintiff declares he was under severe mental and emotional strain at the time because he had just completed the process of arrest, questioning, booking, and release on bail and had been without sleep for forty hours. It is possible that exhaustion and emotional turmoil may wholly incapacitate a person from exercising his judgment. As an abstract question of pleading, plaintiff has pleaded that possibility and sufficient allegations to state a case for rescission.

Undue influence in its second aspect involves an application of excessive strength by a dominant subject against a servient object. Judicial consideration of this second element in undue influence has been relatively rare, for there are few cases denying persons who persuade but do not misrepresent the benefit of their bargain. Yet logically, the same legal consequences should apply to the results of excessive strength as to the results of undue weakness. Whether from weakness on one side, or strength on the other, or a combination of the two, undue influence occurs whenever there results "that kind of influence or supremacy of one mind over another by which that other is prevented from acting according to his own wish or judgment, and whereby the will of the person is overborne and he is induced to do or forbear to do an act which he would not do, or would do, if left to act freely.” (Webb v. Saunders, 79 Cal.App.2d 863, 871 [181 P.2d 43].) Undue influence involves a type of mismatch which our statute calls unfair advantage. (Civ. Code, § 1575.) Whether a person of subnormal capacities has been subjected to ordinary force or a person of normal capacities subjected to extraordinary force, the match is equally out of balance. If will has been overcome against judgment, consent may be rescinded.

The difficulty, of course, lies in determining when the forces of persuasion have overflowed their normal banks and become oppressive flood waters. There are second thoughts to every bargain, and hindsight is still better than foresight. Undue influence cannot be used as a pretext to avoid bad bargains or escape from bargains which refuse to come up to expectations. A woman who buys a dress on impulse, which on critical inspection by her best friend turns out to be less fashionable than she had thought, is not legally entitled to set aside the sale on the ground that the saleswoman used all her wiles to close the sale. A man who buys a tract of desert land in the expectation that it is in the immediate path of the city’s growth and will become another Palm Springs, an expectation cultivated in glowing terms by the seller, cannot rescind his bargain when things turn out differently. If we are temporarily persuaded against our better judgment to do something about which we later have second thoughts, we must abide the consequences of the risks inherent in managing our own affairs. (Estate of Anderson, 185 Cal. 700, 706-707 [198 P. 407].)

However, overpersuasion is generally accompanied by certain characteristics which tend to' create a pattern. The pattern usually involves several of the following elements: (1) discussion of the transaction at an unusual or inappropriate time, (2) consummation of the transaction in an unusual place, (3) insistent demand that the business be finished at once, (4) extreme emphasis on untoward consequences of delay, (5) the use of multiple persuaders by the dominant side against a single servient party, (6) absence of third-party advisers to the servient party, (7) statements that there is no time to consult financial advisers or attorneys. If a number of these elements are simultaneously present, the persuasion may be characterized as excessive. The cases are illustrative:

Moore v. Moore, 56 Cal. 89, 93, and 81 Cal. 195 [22 P. 589, 874], The pregnant wife of a man who had been shot to death on October 30 and buried on November 1 was approached by four members of her husband's family on November 2 or 3 and persuaded to deed her entire interest in her husband’s estate to his children by a prior marriage. In finding the use of undue influence on Mrs. Moore, the court commented: “It was the second day after her late husband’s funeral. It was at a time when she would naturally feel averse to transacting any business, and she might reasonably presume that her late husband’s brothers would not apply to her at such a time to transact any important business, unless it was of a nature that would admit of no delay. And as it would admit of delay, the only reason which we can discover for their unseemly haste is, that they thought that she would be more likely to comply with their wishes then than at some future time, after she had recovered from the shock which she had then so recently experienced. If for that reason they selected that time for the accomplishment of their purpose, it seems to us that they not only took, but that they designed to take, an unfair advantage of her weakness of mind. If they did not, they probably can explain why they selected that inappropriate time for the transaction of business which might have been delayed for weeks without injury to anyone. In the absence of any explanation, it appears to us that the time was selected with reference to just that condition of mind which she alleges that she was then in.

“Taking an unfair advantage of another’s weakness of mind is undue influence, and the law will not permit the retention of an advantage thus obtained. (Civ. Code, § 1575.) ”

Weger v. Rocha, 138 Cal.App. 109 [32 P.2d 417]. Plaintiff, while confined in a cast in a hospital, gave a release of claims for personal injuries for a relatively small sum to an agent who spent two hours persuading her to sign. At the time of signing plaintiff was in a highly nervous and hysterical condition and suffering much pain, and she signed the release in order to terminate the interview. The court held that the release had been secured by the use of undue influence.

Fyan v. McNutt (1934) 266 Mich. 406 [254 N.W. 146], At issue was the validity of an agreement by Mrs. McNutt to pay Fyan, a real estate broker, a 5 percent commission on all moneys received from the condemnation of Mrs. McNutt’s land. Earlier, Fyan had secured an option from Mrs. McNutt to purchase her land for his own account and offer it for sale as part of a larger parcel to Wayne County for an airport site. On July 25 Fyan learned from the newspapers that the county would probably start condemnation proceedings rather than obtain an airport site by purchase. Fyan, with four others, arrived at Mrs. McNutt’s house at 1 a.m. on July 26 with the commission agreement he wanted her to sign. Mrs. McNutt protested being awakened at that hour and was reluctant to sign, but Fyan told her he had to have the paper in Detroit by morning, that the whole airport proposition would fall through if she did not sign then and there, that there wasn’t time to wait until morning to get outside advice. In holding the agreement invalid the Michigan Supreme Court said: ‘ ‘ The late hour of the night at which her signature was secured over her protest and plea that she be given until the next day to consider her action, the urge of the moment, the cooperation of the others present in their desire to obtain a good price for their farm lands, the plaintiff’s anxiety over the seeming weakness of his original option, all combined to produce a situation in which, to say the least, it is doubtful that the defendant had an opportunity to exercise her own free will. ... A valid contract can be entered into only when there is a meeting of the minds of the parties under circumstances conducive to a free' and voluntary execution of the agreement contemplated. It must be conceived in good faith and come into existence under circumstances that do not deprive the parties of the exercise of their own free will. ’ ’

The difference between legitimate persuasion and excessive pressure, like the difference between seduction and rape, rests to a considerable extent in the manner in which the parties go about their business. For example, if a day or two after Odorizzi’s release on bail the superintendent of the school district had called him into his office during business hours and directed his attention to those provisions of the Education Code compelling his leave of absence and authorizing his suspension on the filing of written charges, had told him that the district contemplated filing written charges against him, had pointed out the alternative of resignation available to him, had informed him he was free to consult counsel or any adviser he wished and to consider the matter overnight and return with his decision the next day, it is extremely unlikely that any complaint about the use of excessive pressure could ever have been made against the school district.

But, according to the allegations of the complaint, this is not the way it happened, and if it had happened that way, plaintiff would never have resigned. Bather, the representatives of the school board undertook to achieve their objective by over per suasion and imposition to secure plaintiff’s signature but not his consent to his resignation through a high-pressure carrot-and-stick technique—under which they assured plaintiff they were trying to assist him, he should rely on their advice, there wasn't time to consult an attorney, if he didn’t resign at once the school district would suspend and dismiss him from his position and publicize the proceedings, but if he did resign the incident wouldn’t jeopardize his chances of securing a teaching post elsewhere.

Plaintiff has thus pleaded both subjective and objective elements entering the undue influence equation and stated sufficient facts to put in issue the question whether his free will had been overborne by defendant’s agents at a time when he was unable to function in a normal manner. It was sufficient to pose "... the ultimate question . . . whether a free and competent judgment was merely influenced, or whether a mind was so dominated as to prevent the exercise of an independent judgment.” (Williston on Contracts, § 1625 [rev. ed.]; Rest., Contracts, § 497, com. e.) The question cannot be resolved by an analysis of pleading but requires a finding of fact.

We express no opinion on the merits of plaintiff’s ease, or the propriety of his continuing to teach school (Ed. Code, § 13403), or the timeliness of his rescission (Civ. Code, §1691). We do hold that his pleading, liberally construed, states a cause of action for rescission of a transaction to which his apparent consent had been obtained through the use of undue influence.

The judgment is reversed.

Roth, P. J., and Herndon, J., concurred.

ERROR to the district court for the Louisiana district.

The defendant in error filed his petition, or libel, in the court below, stating, that on the 18th day of February, 1815, he purchased of the plaintiffs in error one hundred and eleven hogsheads of tobacco, as appeared by the copy of a bill of parcels annexed, and that the same were delivered to him by the said Laidlaw & Co., and that he was in the lawful and quiet possession of the said tobacco, when, on the 20th day of the said month, the said Laidlaw & Co., by force, and of their own wrong, took possession of the same, and unlawfully withheld the same from the petitioner, notwithstanding he was at all times, and still was, ready to do and perform all things on his part stipulated to be done and performed in relation to said purchase, and had actually tendered to the said Laidlaw & Co. bills of exchange for the amount of the purchase money, agreeably to the said contract; to his damage, &c. Wherefore the petition prayed that the said Laidlaw & Co. might be cited to appear and answer to his plaint, and that judgment might be rendered against them for his damages, &c. And inasmuch as the petitioner did verily believe that the said one hundred and eleven hogsheads of tobacco would be removed, concealed, or disposed of by the [179] said Laidlaw & Co., he prayed that a writ of sequestration might issue, and that the same might be sequestered in the hands of the marshal, to abide the judgment of the court, and that the said one hundred and eleven hogsheads of tobacco might be finally adjudged to the petitioner, together with his damages, &c., and costs of suit, and that the petitioner might have such other and farther relief as to the court should seem meet, &c.

The bill of parcels referred to in the petition was in the following words and figures, to wit:

'Mr. Organ Bo't of Peter Laidlaw & Co. 111 hhds. Tobacco, weighing 120,715 pounds n't. fr. $7,544.69.

'New-Orleans, 18th February, 1815.'

On the 21st of February, 1815, a citation to the said Laidlaw & Co. was issued, and a writ of sequestration, by order of the court, to the marshal, commanding him to sequester 111 hogsheads of tobacco in their possession, and the same so sequestered to take into his (the marshal's) possession, and safely keep, until the farther order of the court; which was duly executed by the marshal. And on the 2d of March, 1815, counsel having been heard in the case, it was ordered, that the petitioner enter into a bond or stipulation, with sufficient sureties in the sum of 1,000 dollars, to the said Laidlaw & Co., to indemnify them for the damages which they might sustain in consequence of prosecuting the writ of sequestration granted in the case.^a

[180] On the 22d of March, 1815, the plaintiffs in error filed their answer, stating that they had no property in the said tobacco claimed by the said petitioner or ownership whatever in the same, nor had they at any time previous to the bringing of said suit; but disclaimed all right, title, interest, and claim, to the said tobacco, the subject of the suit. And on the same day, Messrs. Boorman & Johnston filed their bill of interpleader or intervention, stating that the petitioner having brought his suit, and filed his petition, claiming of the said Laidlaw & Co. 111 hogsheads of tobacco, for which he had obtained a writ of sequestration, when, in truth, the said tobacco belonged to the said Boorman & Johnston, [181] and was not the property of the said Laidlaw & Co., and praying that they, the said Boorman & Johnston, might be admitted to defend their right, title, and claim, to the said tobacco, against the claim and pretensions of the petitioner, the justice of whose claim, under the sale as stated in his petition, was wholly denied, and that the said tobacco might be restored to them, &c.

On the 20th of April, 1815, the cause was tried by a jury, who returned the following verdict, to wit: 'The jury find for the plaintiff, for the tobacco named in the petition, without damages, payable as per contract.' Whereupon the court rendered judgment 'that the plaintiff recover of the said defendants the said 111 hogsheads of tobacco, mentioned in the plaintiff's petition, and sequestered in this suit, with his costs of suit to be taxed; and ordered, that the marshal deliver the said tobacco to the said plaintiff, and that he have execution for his costs aforesaid, upon the said plaintiff's depositing in this court his bills of exchange for the amount of the purchase money endorsed, &c., for the use of the defendants, agreeably to the verdict of the jury.'

On the 29th of April, 1815, the plaintiffs in error filed the following bill of exceptions, to wit: 'Be it remembered, that on the 20th day of April, in the year of our Lord, 1815, the above cause came on for trial before a jury duly sworn and empannelled, the said Peter Laidlaw & Co. having filed a disclaimer, and Boorman and Johnston of the city of New-York, having filed their claim. And now the said Hector [182] M. Organ having closed his testimony, the said claimants, by their counsel, offered Francis Girault, one of the above firm of Peter Laidlaw & Co., as their witness; whereupon the counsel for the plaintiff objected to his being sworn, on the ground of his incompetency. The claimants proved that Peter Laidlaw & Co., before named, were, at the date of the transaction which gave rise to the above suit, commission merchants, and were then known in the city of New-Orleans as such, and that it is invariably the course of trade in said city for commission merchants to make purchases and sales in their own names for the use of their employers; upon which the claimants again urged the propriety of suffering the said Francis Girault to be sworn, it appearing in evidence that the contract was made by Organ, the plaintiff, with said Girault, one of the said firm of Peter Laidlaw & Co. in their own name, and there being evidence that factors and commission merchants do business on their own account as well as for others, and there being no evidence that the plaintiff, at the time of the contract, had any knowledge of the existence of any other interest in the said tobacco, except that of the defendants, Peter Laidlaw & Co. The court sustained the objection, and rejected the said witness. To which decision of the court the counsel for the claimants aforesaid begged leave to except, and prayed that this bill of exceptions might be signed and allowed. And it appearing in evidence in the said cause, that on the night of the 18th of February, 1815, Messrs. Livingston, White, and Shepherd brought from the British fleet the news that a treaty of peace had been signed at Ghent by the American and British commissioners, contained in a letter from Lord Bathurst to the Lord Mayor of London, published in the British newspapers, and that Mr. White caused the same to be made public in a handbill on Sunday morning, 8 o'clock, the 19th of February, 1815, and that the brother of Mr. Shepherd, one of these gentlemen, and who was interested in one-third of the profits of the purchase set forth in said plaintiff's petition, had, on Sunday morning, the 19th of February, 1815, communicated said news to the plaintiff; that the said plaintiff, on receiving said news, called on Francis Girault, (with whom he had been bargaining for the tobacco mentioned in the petition, the evening previous,) said Francis Girault being one of the said house of trade of Peter Laidlaw & Co., soon after sunrise on the morning of Sunday, the 19th of February, 1815, before he had heard said news. Said Girault asked if there was any news which was calculated to enhance the price or value of the article about to be purchased; and that the said purchase was then and there made, and the bill of parcels annexed to the plaintiff's petition delivered to the plaintiff between 8 and 9 o'clock in the morning of that day; and that in consequence of said news the value of said article had risen from 30 to 50 per cent. There being no evidence that the plaintiff had asserted or suggested any thing to the said Girault, calculated to impose upon him with respect to said news, and to induce him to think or believe that it did not exist; and it appearing that the said Girault, when applied to, on the next day, Monday, the 20th of February, 1815, on behalf of the plaintiff, for an invoice of said tobacco, did not then object to the said sale, but promised to deliver the invoice to the said plaintiff in the course of the forenoon of that day; the court charged the jury to find for the plaintiff. Wherefore, that justice, by due course of law, may be done in this case, the counsel of said defendants, for them, and on their behalf, prays the court that this bill of exceptions be filed, allowed, and certified as the law directs.

(Signed,) DOMINICK A. HALL,

District Judge.

New-Orleans, this 3d day of May, 1815.'

On the 29th of April, 1815, a writ of error was allowed to this court, and on the 3d of May, 1815, the defendant in error deposited in the court below, for the use of the plaintiffs in error, the bills of exchange mentioned in the pleadings, according to the verdict of the jury and the judgment of the court thereon, which bills were thereupon taken out of court by the plaintiffs in error.

Feb. 20th.

Mr. C. J. Ingersoll, for the plaintiffs in error. 1. The first question is, whether the sale, under the circumstances of the case, was a valid sale; whether fraud, which vitiates every contract, must be proved by the communication of positive misinformation, or by withholding information when asked. Suppression of material circumstances within the knowledge of the vendee, and not accessible [185] to the vendor, is equivalent to fraud, and vitiates the contract.^b Pothier, in discussing this subject, adopts the distinction of the forum of conscience, and the forum of law; but he admits that fides est servanda.^c The parties treated on an unequal footing, as the one party [186] had received intelligence of the peace of Ghent, at the time of the contract, and the other had not. [187] This news was unexpected, even at Washington, much more at New-Orleans, the recent scene of the [188] most sanguinary operations of the war. In answer to the question, whether there was any news calculated [189] to enhance the price of the article, the vendee was silent. This reserve, when such a question was [190] asked, was equivalent to a false answer, and as much calculated to deceive as the communication of the most fabulous intelligence. Though the plaintiffs in error, after they heard the news of peace, still went on, in ignorance of their legal rights, to complete the contract, equity will protect them. [191] 2. Mr. Girault was improperly rejected as a witness, because he and his partner had disclaimed, and Messrs. Boorman & Johnston, the real owners of the tobacco, had intervened and taken the place of the original defendants. Girault was not obliged to disclose his character of agent, and, as such, he was an admissible witness.^d The tendency of the modern decisions to let objections go to the credibility, and not to the competency of witnesses, ought to be encouraged as an improvement in the jurisprudence on this subject. Besides, the proceedings are essentially in rem, according to the course of the civil law, and that consideration is conclusive as to the admissibility of the witness. 3. The court below had no right to charge the jury absolutely to find for the plaintiff. It was a mixed question of fact and law, which ought to have been left to the jury to decide. 4. There is error in the judgment of the court, in decreeing a deposit of the bills of exchange by the vendee for the tobacco, no such agreement being proved.

Mr. Key contra, 1. Though there be no testimony in the record to show a contract for payment in bills of exchange, still the court may infer that such was the contract from the petition of the plaintiff below, supported as it is by his oath, and uncontradicted, as to this fact, by the defendant's answer. [192] The decree was for a specific performance, and the vendors took the bills out of court. 2. The judge's charge was right, there being no evidence of fraud. The vendee's silence was not legal evidence of fraud, and, therefore, there was no conflict of testimony on this point: it was exclusively a question of law; the law was with the plaintiff; and, consequently, the court did right to instruct the jury to find for the plaintiff. 3. Mr. Girault was an inadmissible witness. He and his partners were general merchants as well as factors. They sold in their own names, and might call the article their own or the property of their principals, as it suited them. But they were parties to the suit, and the intervention of their principals did not abate the suit as to them.^e [193] On every ground, therefore, Mr. Girault was an inadmissible witness. 4. The only real question in the cause is, whether the sale was invalid because the vendee did not communicate information which he received precisely as the vendor might have got it had he been equally diligent or equally fortunate? And, surely, on this question there can be no doubt. Even if the vendor had been entitled to the disclosure, he waived it by not insisting on an answer to his question; and the silence of the vendee might as well have been interpreted into an affirmative as a negative answer. But, on principle, he was not bound to disclose. Even admitting that his conduct was unlawful, in foro conscientiae, does that prove that it was so in the civil forum? Human laws are imperfect in this respect, and the sphere of morality is more extensive than the limits of civil jurisdiction. The maxim of caveat emptor could never have crept into the law, if the province of ethics had been co-extensive with it. There was, in the present case, no circumvention or manoeuvre practised by the vendee, unless rising earlier in the morning, and obtaining by superior diligence and alertness that intelligence by which the price of commodities was regulated, be such. It is a romantic equality that is contended for on the other side. Parties never can be precisely equal in knowledge, either of facts or of the [194] inferences from such facts, and both must concur in order to satisfy the rule contended for. The absence of all authority in England and the United States, both great commercial countries, speaks volumes against the reasonableness and practicability of such a rule.

Mr. C. J. Ingersoll, in reply. Though the record may not show that any thing tending to mislead by positive assertion was said by the vendee, in answer to the question proposed by Mr. Girault, yet it is a case of manoeuvre; of mental reservation; of circumvention. The information was monopolized by the messengers from the British fleet, and not imparted to the public at large until it was too late for the vendor to save himself. The rule of law and of ethics is the same. It is not a romantic, but a practical and legal rule of equality and good faith that is proposed to be applied. The answer of Boorman & Johnston denies the whole of the petition, and consequently denies that payment was to be in bills of exchange; and their taking the bills out of court, ought not to prejudice them. There is nothing in the record to show that the vendors were general merchants, and they disclosed their principals when they came to plead. The judge undertook to decide from the testimony, that there was no fraud; in so doing he invaded the province of the jury; he should have left it to the jury, expressing his opinion merely.

Mr. Chief Justice MARSHALL delivered the opinion of the court.

The question in this case is, whether the intelligence of extrinsic circumstances, which might influence the price of the commodity, and which was exclusively within the knowledge of the vendee, ought to have been communicated by him to the vendor? The court is of opinion that he was not bound to communicate it. It would be difficult to circumscribe the contrary doctrine within proper limits, where the means of intelligence are equally accessible to both parties. But at the same time, each party must take care not to say or do any thing tending to impose upon the other. The court thinks that the absolute instruction of the judge was erroneous, and that the question, whether any imposition was practised by the vendee upon the vendor ought to have been submitted to the jury. For these reasons the judgment must be reversed, and the cause remanded to the district court of Louisiana, with directions to award a venire facias de novo.

Venire de novo awarded.

[a] Sequestration, in the practice of the civil law, is a process to take judicial custody of the res or persona in controversv to abide the event of the suit. It may be applied to real or personal property, the right to which is litigated between the parties, or even to persons, as to a married woman, in a cause of divorce, in order to preserve her from ill treatment on the part of her husband, or to a minor in order to secure him from ill treatment by his parents. Clerke's Prax. Tit. 43. Pothier, de la Proc edure Civile, Partie I, Chap. 3. art. 2. § 1. Code Napoleon, Liv. 3. tit. 11., Des D ep ots et du S equestre, art. 1961. Digest of the Civil laws of Louisiana, 419. The sequestration may be demanded, either in the original petition, or in the progress of the cause at any time before it is set down for hearing by a petition from the party demanding it, with notice to the opposite party, on which the judge, after hearing counsel, pronounces his interlocutory sentence or decree. This sentence is to be provisionally executed notwithstanding an appeal. The sequestration is usually ordered, in possessory actions, where the preliminary proofs of the parties appear to be nearly balanced; where an inheritance consisting of personal effects of great value is in controversy; where there is ground to apprehend that the parties may resort to personal violence in contesting the enjoyment of the mesne profits; in actions of partition, where the property in litigation cannot be quietly enjoyed by the respective owners; and sometimes in cases where the suit is likely to be of long duration. Pothier, Ib. and § 2.

[b] 1 Comyn on Contr. 38. and the authorities there cited.

[c] Pothier, De Vente, Nos. 233 to 241. He considers this question under the four following heads. 1st. Whether good faith obliges the vendor, at least in foro conscientiae, not only to refrain from practising any deception, but also from using any mental reservation? 2d. What reservation binds the party in the civil forum, and to what obligations? 3d. Whether the vendor is bound, at least in foro conscientiae, not to conceal any circumstances, even extrinsic, which the vendee has an interest in knowing? 4th. Whether the vendor may, in foro conscientiae, sometimes sell at a price above the true value of the article. As Pothier's discussion throws great light on this subject, a translation of this part of his admirable treatise may not be unacceptable to the reader.

'ARTICLE I. 233. Although, in many transactions of civil society, the rules of good faith only require us to refrain from falsehood, and permit us to conceal from others that which they have an interest in knowing if we have an equal interest in concealing it from them; yet, in interested contracts, among which is the contract of sale, good faith not only forbids the assertion of falsehood, but also all reservation concerning that which the person with whom we contract has an interest in knowing, touching the thing which is the object of the contract.

'The reason is that equity and justice, in these contracts, consists in equality. It is evident that any reservation, by one of the contracting parties, concerning any circumstance which the other has an interest in knowing, touching the object of the contract, is fatal to this equality: for the moment the one acquires a knowledge of this object superior to the other, he has an advantage over the other in contracting; he knows better what he is doing than the other; and, consequently, equality is no longer found in the contract.

'In applying these principles to the contract of sale, it follows that the vendor is obliged to disclose every circumstance within his knowledge touching the thing which the vendee has an interest in knowing, and that he sins against that good faith which ought to reign in this contract, if he conceals any such circumstance from him.

'This is what Florentinus teaches in the law 43. § 2. Dig. De contr. empt. Dolum malum a se abesse proestare venditor debet, qui non tantum in eo est qui fallendi causd obscur e loquitur, sed etiam qui insidiose, obscure dissimulat.

'234. According to these principles the vendor is obliged not to conceal any of the defects of the article sold, which are within his knowledge, although these defects may not be such as fall within an implied warranty, but even such defects as the vendee would have no right to complain of, if the vendor who had not disclosed them was ignorant of their existence. Cum ex XII. tabulis, says Cicero, (Lib 3. de Off.) satis esset cautum ea praestare quae essent lingu a nuncuipata; a j urisconsultis, etiam reticencioe poena constituta, quidquid enim inest proedio vitii id statuerunt, si venditor sciret, nisi nominatim dictum esset, proestare oportere. The vendor, in this case, is held in id quanti (emptoris) intererit scisse. Dig. l. 4. De act. empt. and this r eservation may sometimes authorize a rescinding of the contract. 1. 11, § 5. Dig. de tit.

'235. This rule ought to be applied, although the vendor, who has concealed the defects in the thing sold, has not sold it for more than its value with these defects. The reason is that he who sells me a thing has no right to require that I should pay the highest price for it, unless I consent to buy it for that price; he has no right to require of me a higher price than that which I voluntarily give, and he ought not to practise any artifice to induce me to consent to buy it at a higher price than I should have been willing to give had I known the defects which he had maliciously concealed.

'236. Good faith obliges the vendor, not only not to conceal any of the intrinsic vices of the thing sold, but generally not to dissemble any circumstance concerning it which might induce the vendee not to buy, or not to buy at so high a price. For example, the vendee may have his action against the vendor if the latter has concealed the existence of a bad neighbourhood to a real estate sold by him, which might have prevented the vendee from purchasing had he known it: Si quis in vendendo proedio confinem celaverit, quem emptor si audisset, empturus non esset. Dig. L. 15. § 8. De contr. empt.

'237. These principles of the Roman jurisconsults, are more accurate and more conformable to justice than the decision of St. Thomas, which permits the vendor to conceal the vices of the thing sold, except in two cases, 1. If the vice be of a nature to cause the vendee some injury; and 2. If the vendor availed himself of his reservation in order to sell the thing at a higher price than it was worth. This decision appears to me to be unjust, since, as the vendor is perfectly at liberty to sell or not to sell, he ought to leave the vendee perfectly at liberty to buy or not to buy, even for a fair price, if that price does not suit the buyer: it is, therefore, unjust to lay a snare for this liberty which the vendee ought to enjoy, by concealing from him the vice of the thing, in order to induce him to buy that which he would not have been willing to buy for the price at which it is sold to him, had he known its defects.

'ARTICLE II. 238. Although it is with respect to the civil forum that the Roman jurisconsults have established the principles which we have stated, touching the obligation of the vendor not to conceal from the vendee any circumstance relative to the thing sold, and although they ought to be exactly followed, in foro conscientioe, yet they are little observed in our tribunals, and the vendee is not easily listened to who complains of the concealment of some vice in the thing sold, unless it be such a defect as falls within the doctrine of implied warranty. The interest of commerce not permitting parties to set aside their contracts with too much facility, they must impute it to their own fault in not having better informed themselves of the defects in the commodities they have purchased.

'239. There are, nevertheless, certain reservations touching the thing sold which have been thought worthy of the attention of the law, and which are obligatory on the vendor in the civil forum; as for instance, when the vendor knows that the thing which he sells does not belong to him, or that it does not irrevocably belong to him, or that it is subject to certain incumbrances, and conceals these facts from the vendee,' &c.

'ARTICLE III. 241. Cicero, in the third book of his Offices, has treated this question in the case of a corn-merchant, who being arrived at Rhodes, in a time of scarcity, before a great number of other vessels loaded with corn, exposes his own for sale: Cicero proposes the question whether this merchant is obliged to inform the buyers that there are a great number of other vessels on their voyage, and near the port? He states, upon this question, the sentiments of two stoic philosophers, Diogenes and Antipater; Diogenes thought that the merchant might lawfully withhold the knowledge which he had of the vessels on the point of arriving, and sell his corn at the current price: Antipater, his disciple, whose decision Cicero appears to adopt, thought, on the contrary, that this dissimulation was contrary to good faith. The reason on which he grounds this opinion is that the concord which ought to exist among men, the affection which we ought to bear to each other, cannot permit us to prefer our private interest to the interest of our neighbour, from whence it follows that, though we may conceal some things from prudence, we cannot conceal, for the sake of profit, facts which those with whom we contract have an interest in knowing. Hoc celandi genus, says he, non aperti, non simplicis, non ingenui; non justi, non viri boni: vertuti potius, obscuri, astuti, fallacis, malitiosi, callidi, veteratoris, vafri.

'This question only concerns the forum of conscience; for there can be no doubt that in the civil forum, the demand of a vendee cannot be listened to who complains that the vendor has not disclosed to him all the extrinsic circumstances relative to the thing sold, whatever interest the vendee might have in knowing them. The decision of Cicero is somewhat difficult to maintain even in the forum of conscience. The greater part of the writers on natural law have considered it as unreasonable.

'These writers are of opinion, that the good faith which ought to govern the contract of sale, only requires that the vendor should represent the thing sold as it is, without dissimulating its defects, and not to sell it above the price which it bears at the time of the contract; that he commits no injustice in selling it at this price, although he knows that the price must soon fall; that he is not obliged to disclose to the vendee a knowledge which he may have of the circumstances that may produce a depression of the price; the vendee having no more right to demand that the vendor should impart this knowledge than that he should give away his property; that if he should do it, it would be merely an act of benevolence, which we are not obliged to exercise except towards those who are in distress, which was not the case with the Rhodians, who were only in want of corn, but were not in want of money to buy it. The profit which the merchant makes in selling it for the price it is worth today, although he is conscious the price will fall to-morrow, is not iniquitous; it is a just recompense for his diligence in reaching the market first, and for the risk which he ran of losing upon his commodities if any accident had prevented his arriving so soon. It is no more forbidden to sell at the current price, without disclosing the circumstances which may cause it to fall, than it is to buy without communicating those which may cause it to rise. And Joseph was never accused of injustice for profiting of the knowledge which he alone had of the years of famine to buy the fifth part of the corn of the Egyptians without warning them of the years of famine that were to follow.

'Notwithstanding these roasons and authorities, I should have some difficulty, in the forum of conscience, in excusing the injustice of a profit which the vendor might derive from concealing a fact which would cause a fall in the price of the commodity, when that fall must be very considerable, and must certainly arrive in a very short period of time, such as that which the merchant knew of the near approach of a fleet to Rhodes laden with corn. In the contract of sale, as well as in other mutually beneficial contracts, equity requires that what the one party gives should be the equivalent of what he receives, and that neither party should wish to profit at the expense of the other. But in the case of the merchant, who, by dissembling the knowledge which he has of this fact, sells his corn at one hundred livres the cask, the market price of the day, can he, without illusion, persuade himself that the article which, in two days, will be worth no more than twenty livres, is the equivalent of one hundred livres which he receives? You will say that it is sufficient if at the time it be worth the price of one hundred livres for which he sells it. I answer, that a thing, which has a present and momentary value of one hundred livres, but which he certainly knows will be reduced in two days to the value of twenty, cannot be seriously regarded by him as truly the equivalent of the money which he receives, and which must always be worth one hundred. Does not his conduct imply, that he wishes, by his reservation, to profit and enrich himself at the expense of the buyers, to induce them to purchase a commodity by which he is certain they must lose in two days four fifths of the original cost?'

The merchant will smile at the rigid morality of this deservedly celebrated writer, who proceeds, in a fourth article, to consider whether the vendor may, in foro conscientia, sometimes sell at a price above the true value of the commodity. After laying down some general rules on this subject, he remarks, that 'they are not adopted in the civil forum, where a vendee is not ordinarily admitted to complain that he has purchased dearer than the true value, it being for the interest of commerce that parties should not be allowed to set aside their contracts with too much facility.' No. 242. In a subsequent part of his treatise he states what are the nature of the frauds that may be committed by the vendee, which he resolves into two classes. 1st. The first consists of any misrepresentation or circumvention which the vendee may employ in order to induce the vendor to sell, or to sell at a less price. 2d. Where the vendee conceals from the vendor the knowledge which he may have, touching the thing sold, and which the vendor may not possess. The former species of fraud, if sufficiently proved, he considers will invalidate the contract even in the civil forum. But the latter he deems only obligatory in foro conscientiae, both because unduly restricting the freedom of commerce, and because the vendor ought to know best the qualities of the articles he sells, and if he does not, it is his own fault. Nos. 294-298. In the fifth part, chap. 2., he considers the subject of the action which is given by the Code, l. 4. tit. 44. De rescind. vend., to the vendor for rescinding the contract on account of enormous lesion, or gross inadequacy of price, which, however, does not extend to merchandise, or other personal property, and, therefore, it is unnecessary to trouble the reader by extending this note to a greater length.

[d] Dixon v. Cooper, 3 Wils. 40. 1 Atk. 248. Benjamin v. Porteus, 2 H. Bl. 590. Mackay v. Rhinelander et al., 1 Johns. Cas. 408. Jones v. Hake, 2 Johns Cas. 60. Burlingame v. Dyer, Johns. Rep. 189.

[e] Intervention is a proceeding by which a third person petitions to be received as a party in a cause, either with the plaintiff or the defendant, and to prosecute the suit jointly with the party whose interests may be connected with his own. It may take place either before or after the cause is at issue, and set down for hearing; either in the court below, or upon appeal. But it cannot operate to retard the adjudication of the principal cause; which may either be determined separately, or the whole controversy may be decided by one and the same judgment. Clerke's Prax. tit. 38, 39. Pothier, De la Proc edure Civile, Partie 1, chap. 2, art. 3. § 3. Code de Proc edure Civile, Partie 1. Liv. 2. tit. 16. De l'Intervention, art. 339, 340. It may take place where the goods of one person are attached as the property or for the debt of another. Clerke's Prax. Ib. In actions of warranty, Pothier, Ib. Partie 1. chap. 2. art. 2. § 2. Code de Proc edure Civile, 1ere Partie Liv. 2. tit. 9. Des Exceptions Dilatoires, art. 183. So also in a suit for separation of property between husband and wife, the creditors of the husband may intervene for the preservation of their rights. Ib. 2 Partie. Liv. 1. tit. 8. Des Separations de Biens, art. 871.

Interest in the subject matter of the suit is a fatal objection to the competency of a witness by the civil law; (Pothier, Id. Partie 2. chap. 3.art. 4. § 3.;) but according to the above authorities, Mr. Girault appears to have been an inadmissible witness, because still a party to the cause notwithstanding the intervention of his principals.

S05F0982.

MALLEN v. MALLEN.

(622 SE2d 812)

BENHAM, Justice.

At issue in this appeal from a judgment and decree of divorce is the trial court’s decision to enforce a prenuptial agreement between the parties. Catherine (Wife) and Peter (Husband) Mallen had lived together unmarried for about four years when Wife got pregnant in 1985. While she was at a clinic to terminate the pregnancy, Husband called to ask her not to have the abortion and to marry him, to both of which requests she agreed. A few days later, nine or ten days before their planned wedding, Husband asked Wife to sign a prenuptial agreement prepared by his attorney. Wife contends Husband told her the agreement was just a formality and he would always take care of her. She took the agreement to an attorney whom she claims Husband paid, who advised her that he did not have time to fully examine it in the days remaining before the wedding. Wife did not consult another attorney or postpone the wedding, but spoke and met with Husband and his counsel about the agreement more than once. She agreed to sign it after a life insurance benefit was increased and the alimony provisions were modified to provide for increases for each year of marriage. The agreement provided that in the event of a divorce, Wife would receive a basic alimony amount to be adjusted for the number of years of marriage, and assets would belong to whomever owned the property originally or received it during the marriage. At the time the agreement was executed, Wife had a high school education and was working as a restaurant hostess, while Husband had a college degree and owned and operated a business. Wife had a net worth of approximately $10,000 and Husband’s net worth at the time of the agreement’s execution was at least $8,500,000. The record shows that Husband’s net worth, as of 2002, appeared to be approximately $22,700,000. After 18 years of marriage and the birth of four children, Husband filed an action for divorce in 2003 and sought to enforce the prenuptial agreement. The trial court held the prenuptial agreement enforceable and incorporated that holding in its final judgment, ruling in accordance with the agreement that Wife was entitled to $2,900 per month in alimony for four years and Husband was entitled to all the assets with which he entered the marriage and all assets accumulated during the marriage. This appeal is from that judgment.1

Three factors are to be considered in deciding the validity of a prenuptial agreement: “(1) [W]as the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts? (2) [I]s the agreement unconscionable? (3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?” Scherer v. Scherer, 249 Ga. 635, 641 (3) (292 SE2d 662) (1982). “Whether an agreement is enforceable in light of these criteria is a decision made in the trial court’s sound discretion. [Cit.]” Alexander v. Alexander, 279 Ga. 116, 117 (610 SE2d 48) (2005).

1. With regard to the first factor, Wife claims the agreement is infected with fraud, duress, and nondisclosure of material facts.

(a) Fraud. The alleged misrepresentation forming the basis of the fraud claim was a statement Wife avers Husband made to induce her to enter into the agreement, an assertion that the agreement was just a formality and a promise that he would “take care” of her. To avoid the general rule that “in the absence of special circumstances one must exercise ordinary diligence in making an independent verification of contractual terms and representations, . . .” (Hubert v. Beale Roofing, 158 Ga. App. 145, 146 (279 SE2d 336) (1981)), Wife asserts that by virtue of their engagement, she and Husband had a confidential relationship which excused her from the duty to verify Husband’s statement. While it is true that spouses enjoy a confidential relationship entitling one to repose confidence and trust in the other (Beller v. Tilbrook, 275 Ga. 762 (3) (571 SE2d 735) (2002)), Georgia law has not recognized the existence of a confidential relationship between persons who have agreed to marry. A majority of jurisdictions which have addressed the issue have recognized a special relationship between persons engaged to be married that imposes a higher duty with regard to contracts between the parties than exists between other contracting parties. Cannon v. Cannon, 384 Md. 537 (865 A2d 563) (2005); Griffin v. Griffin, 94 P3d 96 (Okla. Civ. App. 58) (2004); In re Estate of Hollett, 150 N.H. 39, 42-43 (834 A2d 348) (2003); In re Marriage of Drag, 326 Ill. App.3d 1051, 1056 (762 NE2d 1111) (2002); Wiley v. Iverson, 295 Mont. 511, 517 (985 P2d 1176) (1999); Randolph v. Randolph, 937 SW2d 815, 821 (Tenn. 1996); Fletcher v. Fletcher, 68 Ohio St.3d 464, 466 (628 NE2d 1343) (1994); Carpenter v. Carpenter, 19 Va. App. 147, 152 (449 SE2d 502) (1994); Pajak v. Pajak, 182 W.Va. 28, 33 (385 SE2d 384) (1989); Tiryakian v. Tiryakian, 91 N.C. App. 128, 132 (370 SE2d 852) (1988); Rosenberg v. Lipnick, 377 Mass. 666 (389 NE2d 385) (1979); Merrill v. Estate of Merrill, 275 Or. 653, 656 (552 P2d 249) (1976); Allison v. Stevens, 269 Ala. 288 (112 S2d 451) (1959). However, we believe Georgia law to be more consistent with the states that have rejected such a protective stance. See In re Marriage of Bonds, 24 Cal.4th 1, 27 (5 P3d 815) (2000); Eckstein v. Eckstein, 129 AD2d 552, 553 (N.Y. App. Div. 1987). In deciding that prenuptial agreements should not be considered void as against public policy, this Court in Scherer v. Scherer, supra, put into place the factors quoted above which are to be considered in judging the validity of such agreements, but did not impose the additional burden of acting in “the utmost good faith,” as would be required of persons in confidential relationships. OCGA § 23-2-58. Accordingly, we reject Wife’s contention that there existed when the agreement was executed a confidential relationship between the parties which would relieve her of responsibility to verify representations regarding the meaning and content of the agreement.

Applying, the rule requiring ordinary diligence in making an independent verification of contractual terms and representations (Hubert v. Beale Roofing, supra), Husband’s alleged statement that the agreement was a mere formality cannot serve as a basis for a claim of fraud since Wife could ascertain from the clear terms of the agreement that her rights in the event of divorce would be extremely limited. “In the absence of a special relationship or confidence between parties, a matter equally open to the observation of all parties, such as the terms of a written contract, will generally not support a claim of fraud. [Cit.]” Equifax v. 1600 Peachtree, LLC, 268 Ga. App. 186, 195-196 (601 SE2d 519) (2004). Husband’s alleged promise to take care of Wife is likewise insufficient as a basis for a claim of fraud because it amounts to no more than a promise regarding future action, which is not actionable. Id. at 195 (actionable fraud cannot be predicated upon promises to perform some act in the future or on a mere failure to perform promises made).

(b) Duress. The duress Wife asserts was applied to compel her to execute the agreement was that the .marriage would not occur in the absence of the prenuptial agreement and she would be left pregnant and unmarried. As was prefigured in the concurrence penned by then-Presiding Justice Sears in Alexander v. Alexander, supra, 279 Ga. at 118, we conclude that insistence on a prenuptial agreement as a condition of marriage “does not rise to the level of duress required to void an otherwise valid contract.” Id. See also In re Marriage of Murphy, 359 Ill. App.3d 289 (834 NE2d 56) (2005) (merely conditioning marriage upon the execution of an antenuptial agreement does not give rise to duress); Doig v. Doig, 787 S2d 100, 102-103 (Fla. App. 2nd Dist. 2001) (ultimatum that without the agreement there would be no wedding does not, in itself, constitute duress); Liebelt v. Liebelt, 118 Idaho 845, 848 (801 P2d 52) (1990) (refusal to proceed with the wedding unless the agreement was signed would not constitute duress). Compare Holler v. Holler, 364 S.C. 256, 268 (612 SE2d 469) (2005) (pregnant, non-English-speaking wife without employment or funds or ability to consult with counsel, and with expiring visa signed agreement written only in English under duress).

“Duress which will avoid a contract must consist of threats of bodily or other harm, or other means amounting to coercion, or tending to coerce the will of another, and actually inducing him to do an act contrary to his free will.” [Cit.] “The threats must be sufficient to overcome the mind and will of a person of ordinary firmness.” [Cit.]

Tidwell v. Critz, 248 Ga. 201, 203 (282 SE2d 104) (1981). Nothing in the record of this case suggests that Wife’s free will was overcome by the “threat” of not going through with the wedding. In fact, Wife exercised her free will and declined to sign the agreement in the form it was presented to her, acquiescing only when changes were made improving her position in the event of divorce or Husband’s death. The fact of Wife’s pregnancy does not make Husband’s insistence on the agreement rise to the level of duress. She had already demonstrated her willingness to terminate the pregnancy, so she cannot credibly claim the pregnancy put such pressure on her as to overcome her will.

(c) Nondisclosure of material facts. Attached to the prenuptial agreement executed by the parties were financial disclosure forms on which each party set out their assets and liabilities. Neither form listed income. Citing foreign authority based on the existence of a confidential relationship between persons engaged to be married, Wife asserts the absence of Husband’s income from the financial statement constituted the nondisclosure of a material fact which would render the agreement unenforceable. In Posner v. Posner, 257 S2d 530 (1972), the Florida Supreme Court held that in light of the confidential relationship of parties to a prenuptial agreement and the inadequate provision for the wife in the agreement under review, the husband’s failure to disclose significant sources of income rendered the agreement unenforceable. However, as we held above, parties to prenuptial agreements in Georgia are not by virtue of their planned marriage in a confidential relationship. Wife also cited DeLorean v. DeLorean, 211 N.J. Super. 432 (511 A2d 1257) (1986), for the statement in that case that New Jersey law would require a complete written disclosure of all assets and all income. We find that case more persuasive for its holding that under California law, which the agreement specified would be applied and which does not consider persons planning marriage to be in a confidential relationship, a prenuptial agreement is enforceable “[s]o long as the spouse seeking to set aside such an agreement has a general idea of the character and extent of the financial assets and income of the other. . . . Indeed, absent fraud or misrepresentation, there appears to be a duty to make some inquiry to ascertain the full nature and extent of the financial resources of the other.” Id. at 441. That statement of law is consistent with our holding above that persons planning marriage are not in a confidential relationship that will excuse a party from the duty to “exercise ordinary diligence in making an independent verification of contractual terms and representations____” Hubert v. Beale Roofing, supra, 158 Ga. App. at 146. In the present case, although the financial statement did not include income, it did reveal Husband to be a wealthy individual with significant income-producing assets, including an 80% ownership share of a business bearing his name. Wife had lived with Husband for four years and was aware from the standard of living they enjoyed that he received significant income from his business and other sources. Under those circumstances and in light of the authority cited above, Wife cannot be said to have demonstrated that the absence, from Husband’s financial statement of precise income data constituted the nondisclosure of material facts which would render the prenuptial agreement unenforceable.

2. Concerning the second inquiry to be made pursuant to Scherer v. Scherer, supra, Wife asserts that the disparity in financial situation and business experience rendered the prenuptial agreement unconscionable when executed. “An unconscionable contract is one abhorrent to good morals and conscience ... where one of the parties takes a fraudulent advantage of another [,] an agreement that no sane person not acting under a delusion would make and that no honest person would take advantage of.’ [Cit.]” William J. Cooney, P.C. v. Rowland, 240 Ga. App. 703, 704 (524 SE2d 730) (1999). We do not believe the agreement involved here fits that description.

Although Wife emphasizes differences between the facts of this case and-the facts in Adams v. Adams, 278 Ga. 521 (1) (603 SE2d 273) (2004), we consider that case similar enough to make applicable its holding that the agreement was not rendered unconscionable just because it “perpetuated the already existing disparity between the parties’ estates. . . .” Id. The differences emphasized by Wife, a prior marriage and more business experience on the part of the wife in Adams, though perhaps relevant to consideration of the first Scherer factor, are not particularly relevant to a consideration of whether the agreement here was unconscionable. Given our conclusion above that the agreement is not infected with fraud, and given the absence of any suggestion that Wife suffered from any delusion, the disparities between Wife and Husband in financial status and business experience do not demand a conclusion that the agreement was unconscionable.

3. The remaining factor to be-considered is whether circumstances have changed since the execution of the agreement so as to render its enforcement unfair and unreasonable. The changed circumstance which Wife contends in her brief renders enforcement of the agreement unfair and unreasonable is that Husband’s net worth increased by 14 million dollars during the marriage.

Since this Court’s adoption in Scherer v. Scherer, supra, of the factors to consider in determining the enforceability of prenuptial agreements, we have not had occasion to address directly the question of what changes in circumstance might render a prenuptial agreement unfair and unreasonable. However, in Curry v. Curry, 260 Ga. 302, 304 (3) (b) (392 SE2d 879) (1990), in considering a trial court’s application of those same factors to uphold a reconciliation agreement, this Court found no error in the trial court’s holding that there “has been no change in circumstances that [was] not foreseeable at the time that the agreement was entered into. . . .” That element of foreseeability has been recognized by other states as a key element in consideration of changed circumstances. In Reed v. Reed, 265 Mich. App. 131, 147 (693 NW2d 825) (2005), the court held that a significant growth of assets over many years “can hardly be considered an unforeseeable changed circumstance that justifies voiding the... prenuptial agreement.” The Supreme Court of South Carolina, in Hardee v. Hardee, 355 S.C. 382, 390-391 (585 SE2d 501) (2003), agreed with the lower court’s holding that the wife’s becoming totally disabled was not a change in circumstance that would render the prenuptial agreement unenforceable because “[t]he premarital agreement specifically noted Wife’s health problems [and it] was completely foreseeable to Wife that her health would worsen.”

In the present case, Wife was familiar with Husband’s financial circumstances from living with him for four years prior to marriage and must have anticipated that his wealth would grow over the ensuing years. Since the continued disparity in their financial situations was plainly foreseeable from the terms of the prenuptial agreement, Wife cannot rely on that as a change in circumstance which renders the agreement unfair.

Because the record in this case supports a finding that none of the factors set forth in Scherer v. Scherer, supra, call for a judicial repudiation of the prenuptial agreement signed by the parties, we conclude the trial court did not abuse its discretion in enforcing the agreement.

Judgment affirmed.

All the Justices concur, except Sears, C. J., Hunstein, R J., and Hines, J., who dissent.

1

We granted Wife’s application for discretionary review pursuant to this Court’s Family Law Pilot Project. See Wright v. Wright, 277 Ga. 133 (587 SE2d 600) (2003).

SEARS, Chief Justice,

dissenting.

Because I disagree with the majority’s conclusion that the parties’ prenuptial agreement is valid, I dissent.

Decided November 21, 2005.

Warner, Mayoue, Bates, Nolen & Collar, Edward E. Bates, Jr., Andrea M. Dyer, for appellant.

Davis, Matthews & Quigley, Richard W. Schiffman, Jr., Kurt A. Kegel, for appellee.

In Scherer v. Scherer,2 this Court held that a prenuptial agreement is unenforceable if there was a “nondisclosure of material facts” when the agreement was entered. Thus, under Scherer, parties entering a prenuptial agreement have a duty to disclose material facts even absent the presence of a confidential relationship. By necessity, whether a fact is material to a prenuptial agreement will depend on the property and alimony issues that are addressed in the agreement. In the present case, Mr. Mallen’s attorney prepared a prenuptial agreement that significantly limited Ms. Mallen’s right to alimony. The agreement provides that, in the event of a divorce, Ms. Mallen would be entitled to $1,000 per month in alimony, to be increased $100 a month for each year of the parties’ marriage, with Ms. Mallen’s right to alimony to terminate four years after the date of the parties’ divorce decree. Because a party’s income is a critical factor in determining the appropriate amount of alimony,3 Mr. Mallen’s income was material to the prenuptial agreement. In this regard, it is undisputed that, at the time the parties entered the prenuptial agreement, Mr. Mallen did not disclose his income to Ms. Mallen and that his income was approximately $560,000 per year.

Because this material fact was not disclosed to Ms. Mallen, I conclude that the parties’ prenuptial agreement is unenforceable. I therefore dissent to the majority opinion.

I am authorized to state that Presiding Justice Hunstein and Justice Hines join in this dissent.

2

249 Ga. 635, 640-641 (292 SE2d 662) (1982).

3

See McGinn v. McGinn, 273 Ga. 292, 292-293 (540 SE2d 604) (2001).

627 A.2d 683

HITESH PATEL, PLAINTIFF, v. VARSHA NAVITLAL, A.K.A. AS VARSHA NAVNITLAL PATEL AND VARSHA NAVNITALAL PATEL, DEFENDANT.

Superior Court of New Jersey Chancery Division Family Part Hudson County

Decided November 30, 1992.

Howard S. Feintuck, for plaintiff (Feintuch, Porwich & Feintuch, attorneys).

Vincent J. Agresti, for defendant.

HEALY, J.S.C.

The plaintiff, Hitesh Patel, has filed a two count complaint seeking an annulment, or in the alternative, a divorce. The defendant, Varsha Navitlal, filed an answer denying only those allegations in the first count which seek an annulment and admitting all allegations of the second count seeking a divorce predicated on the 18-month continuous separation grounds as contained in N.J.S.A. 2A:34-24.

In trial memorandum submitted prior to the taking of any testimony, plaintiff argues that the marriage should be annulled on the grounds that the defendant fraudulently induced plaintiff to marry her solely to gain entry into the United States, offering as proof the concealment of a relationship between the defendant’s mother and her paramour. Plaintiffs attorney relies on the provisions of N.J.S.A. 2A:34-l(d), fraud as to the essentials of the marriage and N.J.S.A. 2A:34-l(f), the general equity jurisdiction of the Superior Court as legal support for his argument. On the other hand, defendant takes the position that the annulment should not be granted because the plaintiff was aware of any impediment to the marriage, the marriage was consummated, and any fraud perpetuated against the plaintiff must be proven by clear and convincing evidence. In a pretrial conference, it was conceded by the attorney for the defendant that an annulment might affect the immigration status of the defendant who currently resides with her uncle in North Carolina.

Lying at the heart of this controversy, is the ethnic background of both parties and the social values of another culture. Both the plaintiff and defendant are Asian-Indians. The plaintiff is a naturalized citizen of the United States having resided in the City of Jersey City for eleven years. He is a highly educated individual with a masters degree in engineering.

By way of explanation, the plaintiff testified at trial that there currently exists a caste system in India. The plaintiff further testified that this caste system is predicated on factors such as heritage, religion, economic background and family location. According to plaintiff, in the Indian caste system, individuals occupy a certain status within a particular caste making them more or less desirable as a spouse. The defendant denied knowledge of such a caste system in India.

In the Spring of 1990, the plaintiff traveled to India and contacted a marriage broker for purposes of obtaining a wife of the same caste to live with him in the United States. This was the second marriage of the plaintiff through a marriage broker in India. Shortly thereafter and through the efforts of the marriage broker, the parties personally met twice to discuss marriage and the parties’ respective backgrounds. Although from different locations, the plaintiff was satisfied with the defendant as a prospective spouse. In discussing their parents, the defendant informed the plaintiff that her parents were living apart and in different locations. The plaintiff and the defendant married pursuant to a civil ceremony on June 8, 1990. The civil ceremony took the form of signing certain papers in the presence of one another. That night, the marriage was consummated at a hotel.

The plaintiff returned to the United States three days later and began the immigration process by filing a petition for the defendant’s entry into the United States. During this period of time, there was continuous correspondence between the plaintiff and the defendant. On August 2, 1991, the defendant received her four-month visa. After the defendant received her visa, the correspondence became less frequent between the parties. The plaintiff testified that the defendant’s conduct became suspicious because the defendant sought entry into the United States as soon as possible and because of the defendant’s refusal to coordinate travel plans to the United States. The plaintiff admitted that he never purchased the means for transportation of the defendant to the United States at any time.

The plaintiff testified that the defendant insisted on a religious Hindu ceremony to be held in India. The defendant claims it was plaintiff who demanded and paid for the religious ceremony. This agreement was made prior to plaintiffs return to India.

In October, 1991, the plaintiff returned to India. Shortly thereafter, the plaintiff learned that the defendant’s mother was living with a person of a different caste while still married to her husband. Her husband resided in another city. The plaintiff testified that this intercaste relationship constitutes a violation of the caste system that has embarrassed both him and his family and had he known of it, he would not have married the defendant. Although the parties met twice before the civil ceremony, the plaintiff admittedly did not inquire as to the relationship between the defendant’s mother and other men. Notwithstanding this, the plaintiff married the defendant a second time in a religious Hindu ceremony on November 10, 1991. The plaintiff testified that he was forced to marry the defendant in the Hindu ceremony because of threats against his family by brothers of the defendant the day before the marriage. Although a practicing Hindu, the plaintiff claims he did not understand the Hindu marriage ceremony. Although there is conflicting testimony as to the events following the second marriage, this court finds that the second marriage ceremony was not consummated.

The defendant came to the United States approximately two weeks after the Hindu ceremony prior to the expiration of her visa, arriving in New York while the plaintiff remained in India. The defendant attempted to contact relatives of the plaintiff shortly after arriving in the United States, to secure living arrangements with her in-laws but was unsuccessful. The defendant then and currently resides with her uncle in North Carolina. The parties never attempted to live as husband and wife while in the United States. After plaintiff returned to the United States, he attempted, without success, to have defendant’s visa revoked. On March 3, 1992, the plaintiff filed a complaint seeking an annulment, or in the alternative, a divorce.

Marriage is both a legal and social institution, contractual in nature, creating both rights and duties attaching to both parties. It creates status unique in the law subject to the control of the legislature. The contractual undertaking assumed in a marriage has been said to be akin to a partnership. Lindquist v. Lindquist, 130 N.J.Eq. 11, 20 A.2d 325 (E. & A.1941); Rothman v. Rothman, 65 N.J. 219, 320 A.2d 496 (1974).

Both the grounds for annulment and the grounds for divorce are controlled by statute N.J.S.A. 2A:34-1; N.J.S.A. 2A:34-2. The basic distinction between an annulment and divorce lay in the facts which give rise to the cause of action. In an annulment, the facts which justify a declaration of the court of nullity antecede the marriage itself. In the alternative, the facts which give rise to a dissolution of the marriage arise during the marriage. The petitioner in either case always bears the burden of proof.

Plaintiff seeks a judgment of nullity of the marriage between the parties predicated on the provisions of N.J.S.A. 2A:34-1(d) and (f) theorizing the existence of fraud as to the essentials of the marriage and under the general equity jurisdiction of the Superior Court. The defendant purports to have married the plaintiff for the sole purpose of securing entry to the United States, as well as the defendant’s failure to disclose to the plaintiff, the intercaste relationship that existed between defendant’s mother and her paramour.

It is undisputed that the first marriage ceremony between the parties was consummated. There is no proof before this court that the first marriage ceremony was defective in any manner. Our courts have long required a more substantial quantum of proof of fraud to entitle a party to an annulment where the marriage has been consummated. The fraud must be of an extreme nature pertaining to one of the essentials of the marriage. Akrep v. Akrep, 1 N.J. 268, 63 A.2d 253 (1949); Posciatta v. Buccino, 22 N.J.Super. 114, 91 A.2d 629 (App.Div.1952); Costello v. Porzelt, 116 N.J.Super. 380, 282 A.2d 432 (Ch.Div.1971). To entitle an applicant to an annulment, the proof must be by clear and convincing evidence and not subject to the availability of other inferences. Bilowit v. Dolitsky, 124 N.J.Super. 101, 304 A.2d 774 (Ch.Div.1973). This rule is equally applicable to the fraud as to the essentials of the marriage as well as its existence prior to the marriage.

The plaintiff traveled to India to marry a woman of the same caste. Through the efforts of a marriage broker, the parties were introduced. After that introduction, the parties met twice to discuss marriage and their respective backgrounds. The relationship between defendant’s mother and her cohabitant was not discussed. The plaintiff testified that although from a different location, an alleged material aspect of the caste system, he was satisfied with the defendant as a prospective spouse. Shortly thereafter, the parties married in a civil ceremony. Plaintiff claims that defendant married him for the sole purpose of gaining entry into the United States yet produces no proof of the existence of that intent at the time of, or prior to, the civil ceremony. In fact, both parties testified that it was their intention to live as husband and wife. It was plaintiffs intention to live in the United States. It was defendant’s intention to live with her husband as his wife. Both parties had the requisite intent to create a meaningful relationship at the time of the first marriage or civil ceremony as required by law. Faustin v. Lewis, 85 N.J. 507, 427 A.2d 1105 (1980).

Plaintiff proffers a certain course of events which occur after the first marriage ceremony and would have these facts serve as the basis for a circumstantial inference that the only reason why the defendant married the plaintiff was to gain entry to the United States. Such proofs, as the less frequent communication between the parties and the failure to coordinate travel plans, are rejected by this court as proving a preexisting intent on the part of the defendant not to legitimately marry the plaintiff. It was not until four days prior to the expiration of her visa, after a second marriage ceremony and after plaintiff failed to provide transportation for his wife to this country, did the defendant enter the United States. Plaintiff has failed to meet his burden of proof. The request of the plaintiff for an annulment predicated on the presentation of the facts as aforementioned, is hereby denied.

Plaintiff further states that the defendant’s failure to disclose the “intercaste” relationship that existed between defendant’s mother and her paramour constitutes fraud as to the essentials of the marriage. Because the marriage contract is said to be sui generis in many respects, it is incumbent upon the petitioner, by the applicable standard of proof, to define the essentials of the marriage. Carris v. Carris, 24 N.J.Eq. 516 (E. & A.1873). In V.J.S. v. M.J.B., 249 N.J.Super. 318, 592 A.2d 328 (Ch.Div.1991), the court stated, “What is essential to the relationship of the parties in one marriage may be of considerably less significance in another. Therefore, a determination of whether fraud goes to the essentials of the marriage must be decided on a case-by case basis.” Id. at 320, 592 A.2d 328.

The unrebutted proofs show that the plaintiff went to India and employed a marriage broker for the sole purpose of securing a spouse of the same caste. The plaintiff knew that differences existed between the parties which could materially affect the caste of the defendant. Notwithstanding these differences, the plaintiff married defendant in a valid civil ceremony. Plaintiff now claims that the intercaste relationship existing within defendant’s family, with knowledge and concealment of it by defendant, constitutes fraud as to the essentials of the marriage. The plaintiff relies on the equitable jurisdiction of this Court to annul the marriage.

Misrepresentation or concealment of a fact may well serve as the basis for claiming fraud as to the essentials of the marriage. Tobon v. Sanchez, 213 N.J.Super. 472, 517 A.2d 885 (Ch.Div.1986). However, the fraud alleged by the plaintiff in this case is not the type of fraud contemplated in our law of such a type to annul a marriage. In Carris, in distinguishing types of fraud, the court clearly held that false representations in regard to family, fortune, or external condition are not sufficient in degree to justify the court exercising its power to annul a marriage for the public policy consideration that a court should only exercise that power in cases when the fraud is of an extreme nature. Although the law of nullity and dissolution continues to evolve, this court holds that the fraud, alleged to exist in this case, is not the type contemplated by our law sufficient in degree to annul a marriage. Nothing on the record in this case suggest that the defendant was unable or unwilling to act as a wife to the plaintiff nor that she did not want to create for herself the status of wife. The parties intended to be married. To grant plaintiff an annulment for reasons which remain outside the control of one of the parties to the marriage would result in a miscarriage of justice. At best, plaintiffs argument rises to the level of a deficiency in a character trait, assuming that this court would even recognize the Asian-Indian caste system. Misconceptions as to character have been held not to support an allegation of fraud upon which an annulment may be based. Lindquist, supra.

Public policy encourages full disclosure of pertinent facts especially in contemplation of entering a bond as significant as marriage. V.J.S. v. M.J.B., supra. Conversely, the law imposes a duty to investigate in matters affecting character. In Lindquist, Justice Heher, writing for a unanimous court, stated

In regard to countenance, as well as to other personal traits and attributes of character, it is the duty of a party to make due inquiry beforehand, and not to ask the law to relieve him from a position into which his own discretion or want of diligence has led him. [130 N.J.Eq. at 20, 20 A.2d 325.]

Prior to the civil ceremony, the plaintiff was aware that not all requisites had been met by defendant to be considered of the same caste. It was incumbent upon plaintiff to conduct further investigation after being placed on notice of any alleged impediments, particularly in light of the fact that the defendant was presented to the plaintiff through a marriage broker. Plaintiff specifically waived any objection to any impediments by his marrying the defendant. Plaintiff is therefore equitably estopped from asserting any grounds of the Asian-Indian caste system as a basis for an annulment of the marriage or that it constitutes an essential of the marriage.

The application of the equitable doctrine of estoppel has been left to the discretion of the trial courts Faustin v. Lewis, 85 N.J. 507, 427 A.2d 1105 (1981). In Kasin v. Kasin, 81 N.J. 85, 405 A.2d 360 (1979), the Supreme Court stated:

The equitable principle of estoppel has been applied broadly and in a wide variety of matrimonial cases. It has been recognized that “in cases involving foreign divorce decrees, as in other situations, ... the application of the principles of equitable estoppel cannot be subjected to fixed and settled rules of universal application, but rests largely on the facts and circumstances of each particular case.” [citations omitted] The equitable rule precluding individuals from attaching foreign divorce decrees “[has] not [been] limited to situations of what might be termed ‘true estoppel’ where one party induces another to rely to his damage upon certain representations ... ”, Restatement (Second) of Conflict of Laws § 74, Comment b (1971), but has also encompassed situations sometimes termed “quasi-estoppel” where an individual is not permitted to “blow both hot and cold,” taking a position inconsistent with prior conduct, if this would injure another, regardless of whether that person has actually relied thereon. [81 N.J. at 94, 405 A.2d 360.]

The Kasin and Faustin cases have alleviated the formal requirements of the doctrine of equitable estoppel in lieu of a more practical approach in the interest of justice and returned discretion as to its application to the trial court. Although plaintiff sought a spouse of the same caste, he accepted a woman with an alleged impediment. Plaintiff accepted a spouse presented to him by a third party (a marriage broker) and conducted no investigation as to those requisites which he testified were essential. Under the facts and circumstances of this case, the plaintiff cannot “blow both hot and cold.” Plaintiffs petition for an annulment, predicated on the Asian-Indian caste system, is hereby denied.

Having determined that the first marriage ceremony was valid, this court need not pass upon the effect of the second marriage and all issues attendant thereto which serve only to obfuscate the true intent of the parties herein.

The plaintiff has filed a complaint alleging as grounds 18 months of continual separation with no prospect of reconciliation. Notwithstanding the testimony before the court, the defendant has admitted all allegations of the complaint. This court finds that the parties separated on or about June 11, 1990, three days after the original ceremony when the plaintiff returned to the United States. They have remained separate and apart since that time and there is apparently no prospect for reconciliation. Both parties have lived in separate habitations and have ceased all marital duties and relations toward one another. Ballard v. Ballard, 124 N.J.Super. 462, 307 A.2d 637 (Ch.Div.1973). The prima facie elements for a divorce having been proven by a preponderance of the evidence as well as the admissions contained in the pleadings, a judgement of divorce will be granted.

Jeffrey M. Stambovsky, Appellant, v Helen V. Ackley et al., Respondents.

First Department,

July 18, 1991

APPEARANCES OF COUNSEL

William M. Stein of counsel (Hood & Stein, attorneys), for appellant.

Andrew C. Bisulca of counsel (Mann, Mann & Lewis, P. C., attorneys), for Helen V. Ackley, respondent.

Jeffrey J. Ellis of counsel (Quirk & Bakalor, P. C., attorneys), for Ellis Realty, respondent.

OPINION OF THE COURT

Rubin, J.

Plaintiff, to his horror, discovered that the house he had recently contracted to purchase was widely reputed to be possessed by poltergeists, reportedly seen by defendant seller and members of her family on numerous occasions over the last nine years. Plaintiff promptly commenced this action seeking rescission of the contract of sale. Supreme Court reluctantly dismissed the complaint, holding that plaintiff has no remedy at law in this jurisdiction.

The unusual facts of this case, as disclosed by the record, clearly warrant a grant of equitable relief to the buyer who, as a resident of New York City, cannot be expected to have any familiarity with the folklore of the Village of Nyack. Not being a "local”, plaintiff could not readily learn that the home he had contracted to purchase is haunted. Whether the source of the spectral apparitions seen by defendant seller are para-psychic or psychogenic, having reported their presence in both a national publication (Readers’ Digest) and the local press (in 1977 and 1982, respectively), defendant is estopped to deny their existence and, as a matter of law, the house is haunted. More to the point, however, no divination is required to conclude that it is defendant’s promotional efforts in publicizing her close encounters with these spirits which fostered the home’s reputation in the community. In 1989, the house was included in five-home walking tour of Nyack and described in a November 27th newspaper article as "a riverfront Victorian (with ghost).” The impact of the reputation thus created goes to the very essence of the bargain between the parties, greatly impairing both the value of the property and its potential for resale. The extent of this impairment may be presumed for the purpose of reviewing the disposition of this motion to dismiss the cause of action for rescission (Harris v City of New York, 147 AD2d 186, 188-189) and represents merely an issue of fact for resolution at trial.

While I agree with Supreme Court that the real estate broker, as agent for the seller, is under no duty to disclose to a potential buyer the phantasmal reputation of the premises and that, in his pursuit of a legal remedy for fraudulent misrepresentation against the seller, plaintiff hasn’t a ghost of a chance, I am nevertheless moved by the spirit of equity to allow the buyer to seek rescission of the contract of sale and recovery of his down payment. New York law fails to recognize any remedy for damages incurred as a result of the seller’s mere silence, applying instead the strict rule of caveat emptor. Therefore, the theoretical basis for granting relief, even under the extraordinary facts of this case, is elusive if not ephemeral.

"Pity me not but lend thy serious hearing to what I shall unfold” (William Shakespeare, Hamlet, Act I, Scene V [Ghost]).

From the perspective of a person in the position of plaintiff herein, a very practical problem arises with respect to the discovery of a paranormal phenomenon: "Who you gonna’ call?” as a title song to the movie "Ghostbusters” asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man on an inspection of every home subject to a contract of sale. It portends that the prudent attorney will establish an escrow account lest the subject of the transaction come back to haunt him and his client—or pray that his malpractice insurance coverage extends to supernatural disasters. In the interest of avoiding such untenable consequences, the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and laid quietly to rest.

It has been suggested by a leading authority that the ancient rule which holds that mere nondisclosure does not constitute actionable misrepresentation "finds proper application in cases where the fact undisclosed is patent, or the plaintiff has equal opportunities for obtaining information which he may be expected to utilize, or the defendant has no reason to think that he is acting under any misapprehension” (Prosser, Torts § 106, at 696 [4th ed 1971]). However, with respect to transactions in real estate, New York adheres to the doctrine of caveat emptor and imposes no duty upon the vendor to disclose any information concerning the premises (London v Courduff, 141 AD2d 803) unless there is a confidential or fiduciary relationship between the parties (Moser v Spizzirro, 31 AD2d 537, affd 25 NY2d 941; IBM Credit Fin. Corp. v Mazda Motor Mfg. [USA] Corp., 152 AD2d 451) or some conduct on the part of the seller which constitutes "active concealment” (see, 17 E. 80th Realty Corp. v 68th Assocs., — AD2d — [1st Dept, May 9, 1991] [dummy ventilation system constructed by seller]; Haberman v Greenspan, 82 Misc 2d 263 [foundation cracks covered by seller]). Normally, some affirmative misrepresentation (e.g., Tahini Invs. v Bobrowsky, 99 AD2d 489 [industrial waste on land allegedly used only as farm]; Jansen v Kelly, 11 AD2d 587 [land containing valuable minerals allegedly acquired for use as campsite]) or partial disclosure (Junius Constr. Corp. v Cohen, 257 NY 393 [existence of third unopened street concealed]; Noved Realty Corp. v A. A. P. Co., 250 App Div 1 [escrow agreements securing lien concealed]) is required to impose upon the seller a duty to communicate undisclosed conditions affecting the premises (contra, Young v Keith, 112 AD2d 625 [defective water and sewer systems concealed]).

Caveat emptor is not so all-encompassing a doctrine of common law as to render every act of nondisclosure immune from redress, whether legal or equitable. "In regard to the necessity of giving information which has not been asked, the rule differs somewhat at law and in equity, and while the law courts would permit no recovery of damages against a vendor, because of mere concealment of facts under certain circumstances, yet if the vendee refused to complete the contract because of the concealment of a material fact on the part of the other, equity would refuse to compel him so to do, because equity only compels the specific performance of a contract which is fair and open, and in regard to which all material matters known to each have been communicated to the other” (Rothmiller v Stein, 143 NY 581, 591-592 [emphasis added]). Even as a principle of law, long before exceptions were embodied in statute law (see, e.g., UCC 2-312, 2-313, 2-314, 2-315; 3-417 [2] [e]), the doctrine was held inapplicable to contagion among animals, adulteration of food, and insolvency of a maker of a promissory note and of a tenant substituted for another under a lease (see, Rothmiller v Stein, supra, at 592-593, and cases cited therein). Common law is not moribund. Ex facto jus oritur (law arises out of facts). Where fairness and common sense dictate that an exception should be created, the evolution of the law should not be stifled by rigid application of a legal maxim.

The doctrine of caveat emptor requires that a buyer act prudently to assess the fitness and value of his purchase and operates to bar the purchaser who fails to exercise due care from seeking the equitable remedy of rescission (see, e.g., Rodas v Manitaras, 159 AD2d 341). For the purposes of the instant motion to dismiss the action pursuant to CPLR 3211 (a) (7), plaintiff is entitled to every favorable inference which may reasonably be drawn from the pleadings (Arrington v New York Times Co., 55 NY2d 433, 442; Rovello v Orofino Realty Co., 40 NY2d 633, 634), specifically, in this instance, that he met his obligation to conduct an inspection of the premises and a search of available public records with respect to title. It should be apparent, however, that the most meticulous inspection and the search would not reveal the presence of poltergeists at the premises or unearth the property’s ghoulish reputation in the community. Therefore, there is no sound policy reason to deny plaintiff relief for failing to discover a state of affairs which the most prudent purchaser would not be expected to even contemplate (see, Da Silva v Musso, 53 NY2d 543, 551).

The case law in this jurisdiction dealing with the duty of a vendor of real property to disclose information to the buyer is distinguishable from the matter under review. The most salient distinction is that existing cases invariably deal with the physical condition of the premises (e.g., London v Courduff, supra [use as a landfill]; Perin v Mardine Realty Co., 5 AD2d 685, affd 6 NY2d 920 [sewer line crossing adjoining property without owner’s consent]), defects in title (e.g., Sands v Kissane, 282 App Div 140 [remainderman]), liens against the property (e.g., Noved Realty Corp. v A. A. P. Co., supra), expenses or income (e.g., Rodas v Manitaras, supra [gross receipts]) and other factors affecting its operation. No case has been brought to this court’s attention in which the property value was impaired as the result of the reputation created by information disseminated to the public by the seller (or, for that matter, as a result of possession by poltergeists).

Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the subject transaction, nondisclosure constitutes a basis for rescission as a matter of equity. Any other outcome places upon the buyer not merely the obligation to exercise care in his purchase but rather to be omniscient with respect to any fact which may affect the bargain. No practical purpose is served by imposing such a burden upon a purchaser. To the contrary, it encourages predatory business practice and offends the principle that equity will suffer no wrong to be without a remedy.

Defendant’s contention that the contract of sale, particularly the merger or "as is” clause, bars recovery of the buyer’s deposit is unavailing. Even an express disclaimer will not be given effect where the facts are peculiarly within the knowledge of the party invoking it (Danann Realty Corp. v Harris, 5 NY2d 317, 322; Tahini Invs. v Bobrowsky, supra). Moreover, a fair reading of the merger clause reveals that it expressly disclaims only representations made with respect to the physical condition of the premises and merely makes general reference to representations concerning "any other matter or things affecting or relating to the aforesaid premises”. As broad as this language may be, a reasonable interpretation is that its effect is limited to tangible or physical matters and does not extend to paranormal phenomena. Finally, if the language of the contract is to be construed as broadly as defendant urges to encompass the presence of poltergeists in the house, it cannot be said that she has delivered the premises "vacant” in accordance with her obligation under the provisions of the contract rider.

To the extent New York law may be said to require something more than "mere concealment” to apply even the equitable remedy of rescission, the case of Junius Constr. Corp. v Cohen (257 NY 393, supra), while not precisely on point, provides some guidance. In that case, the seller disclosed that an official map indicated two as yet unopened streets which were planned for construction at the edges of the parcel. What was not disclosed was that the same map indicated a third street which, if opened, would divide the plot in half. The court held that, while the seller was under no duty to mention the planned streets at all, having undertaken to disclose two of them, he was obliged to reveal the third (see also, Rosenschein v McNally, 17 AD2d 834).

In the case at bar, defendant seller deliberately fostered the public belief that her home was possessed. Having undertaken to inform the public-at-large, to whom she has no legal relationship, about the supernatural occurrences on her property, she may be said to owe no less a duty to her contract vendee. It has been remarked that the occasional modern cases which permit a seller to take unfair advantage of a buyer’s ignorance so long as he is not actively misled are "singularly unappetizing” (Prosser, Torts § 106, at 696 [4th ed 1971]). Where, as here, the seller not only takes unfair advantage of the buyer’s ignorance but has created and perpetuated a condition about which he is unlikely to even inquire, enforcement of the contract (in whole or in part) is offensive to the court’s sense of equity. Application of the remedy of rescission, within the bounds of the narrow exception to the doctrine of caveat emptor set forth herein, is entirely appropriate to relieve the unwitting purchaser from the consequences of a most unnatural bargain.

Accordingly, the judgment of the Supreme Court, New York County (Edward H. Lehner, J.), entered April 9, 1990, which dismissed the complaint pursuant to CPLR 3211 (a) (7), should be modified, on the law and the facts, and in the exercise of discretion, and the first cause of action seeking rescission of the contract reinstated, without costs.

Smith, J. (dissenting).

I would affirm the dismissal of the complaint by the motion court.

Plaintiff seeks to rescind his contract to purchase defendant Ackley’s residential property and recover his down payment. Plaintiff alleges that Ackley and her real estate broker, defendant Ellis Realty, made material misrepresentations of the property in that they failed to disclose that Ackley believed that the house was haunted by poltergeists. Moreover, Ackley shared this belief with her community and the general public through articles published in Reader’s Digest (1977) and the local newspaper (1982). In November 1989, approximately two months after the parties entered into the contract of sale but subsequent to the scheduled October 2, 1989 closing, the house was included in a five-house walking tour and again described in the local newspaper as being haunted.

Prior to closing, plaintiff learned of this reputation and unsuccessfully sought to rescind the $650,000 contract of sale and obtain return of his $32,500 down payment without resort to litigation. The plaintiff then commenced this action for that relief and alleged that he would not have entered into the contract had he been so advised and that as a result of the alleged poltergeist activity, the market value and resaleability of the property was greatly diminished. Defendant Ackley has counterclaimed for specific performance.

"It is settled law in New York State that the seller of real property is under no duty to speak when the parties deal at arm’s length. The mere silence of the seller, without some act or conduct which deceived the purchaser, does not amount to a concealment that is actionable as a fraud (see, Perin v Mardine Realty Co., 5 AD2d 685, affd 6 NY2d 920; Moser v Spizzirro, 31 AD2d 537, affd 25 NY2d 941). The buyer has the duty to satisfy himself as to the quality of his bargain pursuant to the doctrine of caveat emptor, which in New York State still applies to real estate transactions.” (London v Courduff, 141 AD2d 803, 804 [1988], lv dismissed 73 NY2d 809 [1988].)

The parties herein were represented by counsel and dealt at arm’s length. This is evidenced by the contract of sale which, inter alia, contained various riders and a specific provision that all prior understandings and agreements between the parties were merged into the contract, that the contract completely expressed their full agreement and that neither had relied upon any statement by anyone else not set forth in the contract. There is no allegation that defendants, by some specific act, other than the failure to speak, deceived the plaintiff. Nevertheless, a cause of action may be sufficiently stated where there is a confidential or fiduciary relationship creating a duty to disclose and there was a failure to disclose a material fact, calculated to induce a false belief. (County of Westchester v Becket Assocs., 102 AD2d 34, 50-51 [1984], affd 66 NY2d 642 [1985].) However, plaintiff herein has not alleged and there is no basis for concluding that a confidential or fiduciary relationship existed between these parties to an arm’s length transaction such as to give rise to a duty to disclose. In addition, there is no allegation that defendants thwarted plaintiffs efforts to fulfill his responsibilities fixed by the doctrine of caveat emptor. (See, London v Courduff, supra, 141 AD2d, at 804.)

Finally, if the doctrine of caveat emptor is to be discarded, it should be for a reason more substantive than a poltergeist. The existence of a poltergeist is no more binding upon the defendants than it is upon this court.

Based upon the foregoing, the motion court properly dismissed the complaint.

Ross and Kassal, JJ., concur with Rubin, J.; Milonas, J. P., and Smith, J., dissent in an opinion by Smith, J.

Judgment, Supreme Court, New York County, entered on April 9, 1990, modified, on the law and the facts, and in the exercise of discretion, and the first cause of action seeking rescission of the contract reinstated, without costs.

Audrey E. VOKES, Appellant, v. ARTHUR MURRAY, INC., a corporation, J. P. Davenport, d/b/a Arthur Murray School of Dancing, Appellees.

No. 67-476.

District Court of Appeal of Florida. Second District.

July 31, 1968.

Wolfe, Bonner & Hogan, Clearwater, for appellant.

Julian R. Howay, St. Petersburg, for appellees.

PIERCE, Judge.

This is an appeal by Audrey E. Vokes, plaintiff below, from a final order dismissing with prejudice, for failure to state a cause of action, her fourth amended complaint, hereinafter referred to as plaintiff’s complaint.

Defendant Arthur Murray, Inc., a corporation, authorizes the operation throughout the nation of dancing schools under the name of “Arthur Murray School of Dancing” through local franchised operators, one of whom was defendant J. P. Davenport whose dancing establishment was in Clearwater.

Plaintiff Mrs. Audrey E. Vokes, a widow of 51 years and without family, had a yen to be “an accomplished dancer” with the hopes of finding “new interest in life”. So, on February 10, 1961, a dubious fate, with the assist of a motivated acquaintance, procured her to attend a “dance party” at Davenport’s “School of Dancing” where she whiled away the pleasant hours, sometimes in a private room, absorbing his accomplished sales technique, during which her grace and poise were elaborated upon and her rosy future as “an excellent dancer” was painted for her in vivid and glowing colors. As an incident to this interlude, he sold her eight l/^-hour dance lessons to be utilized within one calendar month therefrom, for the sum of $14.50 cash in hand paid, obviously a baited “come-on”.

Thus she embarked upon an almost endless pursuit of the terpsichorean art during which, over a period of less than sixteen months, she was sold fourteen “dance courses” totalling in the aggregate 2302 hours of dancing lessons for a total cash outlay of $31,090.45, all at Davenport’s dance emporium. All of these fourteen courses were evidenced by execution of a written “Enrollment Agreement — Arthur Murray’s School of Dancing” with the addendum in heavy black print, “No one will be informed that you are taking dancing lessons. Your relations with us are held in strict confidence”, setting forth the number of. “dancing lessons” and the “lessons in rhythm sessions” currently sold to her from time to time, and always of course accompanied by payment of cash of the realm.

These dance lesson contracts and the monetary consideration therefor of over $31,000 were procured from her by means and methods of Davenport and his associates which went beyond the unsavory, yet legally permissible, perimeter of “sales puffing” and intruded well into the forbidden area of undue influence, the suggestion of falsehood, the suppression of truth, and the free exercise of rational judgment, if what plaintiff alleged in her complaint was true. From the time of her first contact with the dancing school in February, 1961, she was influenced unwittingly by a constant and continuous barrage of flattery, false praise, excessive compliments, and panegyric encomiums, to such extent that it would be not only inequitable, but unconscionable, for a Court exercising inherent chancery power to allow such contracts to stand.

She was incessantly subjected to overreaching blandishment and cajolery. She was assured she had “grace and poise”; that she was “rapidly improving and developing in her dancing skill”; that the additional lessons would “make her a beautiful dancer, capable of dancing with the most accomplished dancers”; that she was “rapidly progressing in the development of her dancing skill and gracefulness”, etc., etc. She was given “dance aptitude tests” for the ostensible purpose of “determining” the number of remaining hours instructions needed by her from time to time.

At one point she was sold 545 additional hours of dancing lessons to be entitled to award of the “Bronze Medal” signifying that she had reached “the Bronze Standard”, a supposed designation of dance achievement by students of Arthur Murray, Inc.

Later she was sold an additional 926 hours in order to gain the “Silver Medal”, indicating she had reached “the Silver Standard”, at a cost of $12,501.35.

At one point, while she still had to her credit about 900 unused hours of instructions, she was induced to purchase an additional 24 hours of lessons to participate in a trip to Miami at her own expense, where she would be “given the opportunity to dance with members of the Miami Studio”.

She was induced at another point to purchase an additional 126 hours of lessons in order to be not only eligible for the Miami trip but also to become “a life member of the Arthur Murray Studio”, carrying with it certain dubious emoluments, at a further cost of $1,752.30.

At another point, while she still had over 1,000 unused hours of instruction she was induced to buy 151 additional hours at a cost of $2,049.00 to be eligible for a “Student Trip to Trinidad”, at her own expense as she later learned.

Also, when she still had 1100 unused hours to her credit, she was prevailed upon to purchase an additional 347 hours at a cost of $4,235.74, to qualify her to receive a “Gold Medal” for achievement, indicating she had advanced to “the Gold Standard”.

On another occasion, while she still had over 1200 unused hours, she was induced to buy an additional 175 hours of instruction at a cost of $2,472.75 to be eligible “to take a trip to Mexico”.

Finally, sandwiched in between other lesser sales promotions, she was influenced to buy an additional 481 hours of instruction at a cost of $6,523.81 in order to “be classified as a Gold Bar Member, the ultimate achievement of the dancing studio”.

All the foregoing sales promotions, illustrative of the entire fourteen separate contracts, were procured by defendant Davenport and Arthur Murray, Inc., by false representations to her that she was improving in her dancing ability, that she had excellent potential, that she was responding to instructions in dancing grace, and that they were developing her into a beautiful dancer, whereas in truth and in fact she did not develop in her dancing ability, she had no “dance aptitude”, and in fact had difficulty in “hearing the musical beat”. The complaint alleged that such representations to her “were in fact false and known by the defendant to be false and contrary to the plaintiff’s true ability, the truth of plaintiff’s ability being fully known to the defendants, but withheld from the plaintiff for the sole and specific intent to deceive and defraud the plaintiff and to induce her in the purchasing of additional hours of dance lessons”. It was averred that the lessons were sold to her “in total disregard to the true physical, rhythm, and mental ability of the plaintiff”. In other words, while she first exulted that she was entering the “spring of her life”, she finally was awakened to the fact there was “spring” neither in her life nor in her feet.

The complaint prayed that the Court decree the dance contracts to be null and void and to be cancelled, that an accounting be had, and judgment entered against the defendants “for that portion of the $31,090.45 not charged against specific hours of instruction given to the plaintiff”. The Court held the complaint not to state a cause of action and dismissed it with prejudice. We disagree and reverse.

The material allegations of the complaint must, of course, be accepted as true for the purpose of testing its legal sufficiency. Defendants contend that contracts can only be rescinded for fraud or misrepresentation when the alleged misrepresentation is as to a material fact, rather than an opinion, prediction or expectation, and that the statements and representations set forth at length in the complaint were in the category of “trade puffing”, within its legal orbit.

It is true that “generally a misrepresentation, to be actionable, must be one of fact rather than of opinion”. Tonkovich v. South Florida Citrus Industries, Inc., Fla.App.1966, 185 So.2d 710; Kutner v. Kalish, Fla.App.1965, 173 So.2d 763. But this rule has significant qualifications, applicable here. It does not apply where there is a fiduciary relationship between the parties, or where there has been some artifice or trick employed by the representor, or where the parties do not in general deal at “arm’s length” as we understand the phrase, or where the representee does not have equal opportunity to become apprised of the truth or falsity of the fact represented. 14 Fla.Jur. Fraud and Deceit, § 28; Kitchen v. Long, 1914, 67 Fla. 72, 64 So. 429. As stated by Judge Allen of this Court in Ramel v. Chasebrook Construction Company, Fla.App.1961, 135 So.2d 876:

“* * * A statement of a party having * * * superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties were dealing on equal terms.”

It could be reasonably supposed here that defendants had “superior knowledge” as to whether plaintiff had “dance potential” and as to whether she was noticeably improving in the art of terpsichore. And it would be a reasonable inference from the undenied averments of the complaint that the flowery eulogiums heaped upon her by defendants as a prelude to her contracting for 1944 additional hours of instruction in order to attain the rank of the Bronze Standard, thence to the bracket of the Silver Standard, thence to the class of the Gold Bar Standard, and finally to the crowning plateau of a Life Member of the Studio, proceeded as much or more from the urge to “ring the cash register” as from any honest or realistic appraisal of her dancing prowess or a factual representation of her progress.

Even in contractual situations where a party to a transaction owes no duty to disclose facts within his knowledge or to answer inquiries respecting such facts, the law is if he undertakes to do so he must disclose the whole truth. Ramel v. Chasebrook Construction Company, supra; Beagle v. Bagwell, Fla.App.1964, 169 So.2d 43. From the face of the complaint, it should have been reasonably apparent to defendants that her vast outlay of cash for the many hundreds of additional hours of instruction was not justified by her slow and awkward progress, which she would have been made well aware of if they had spoken the “whole truth”.

In Hirschman v. Flodges, etc., 1910, 59 Fla. 517, 51 So. 550, it was said that—

“* * * what is plainly injurious to good faith ought to be considered as a fraud sufficient to impeach a contract”,

and that an improvident agreement may be avoided—

“* * * because of surprise, or mistake, want of freedom, undue influence, the suggestion of falsehood, or the suppression of truth”. (Emphasis supplied.)

We repeat that where parties are dealing on a contractual basis at arm’s length with no inequities or inherently unfair practices employed, the Courts will in general “leave the parties where they find themselves”. But in the case sub judice, from the allegations of the unanswered complaint, we cannot say that enough of the .accompanying ingredients, as mentioned in the foregoing authorities, were not present which otherwise would have barred the equitable arm of the Court to her. In our view, from the showing made in her complaint, plaintiff is entitled to her day in Court.

It accordingly follows that the order dismissing plaintiff’s last amended complaint with prejudice should be and is reversed.

Reversed.

LILES, C. J., and MANN, J., concur.

[350 F.2d 446]

        COPYRIGHT MATERIAL OMITTED

[350 F.2d 447]

Mr. Pierre E. Dostert, Washington, D. C., counsel for appellants in No. 18,605, argued for all appellants.

        Mr. R. R. Curry, Washington, D. C., for appellant in No. 18,604.

        Mr. Harry Protas, Washington, D. C., for appellee.

        Mr. Gerhard P. Van Arkel (appointed by this court), Washington, D. C., as amicus curiae.

        Before BAZELON, Chief Judge, and DANAHER and WRIGHT, Circuit Judges.

        J. SKELLY WRIGHT, Circuit Judge:

        Appellee, Walker-Thomas Furniture Company, operates a retail furniture store in the District of Columbia. During the period from 1957 to 1962 each appellant in these cases purchased a number of household items from Walker-Thomas, for which payment was to be made in installments. The terms of each purchase were contained in a printed form contract which set forth the value of the purchased item and purported to lease the item to appellant for a stipulated monthly rent payment. The contract then provided, in substance, that title would remain in Walker-Thomas until the total of all the monthly payments made equaled the stated value of the item, at which time appellants could take title. In the event of a default in the payment of any monthly installment, Walker-Thomas could repossess the item.

        The contract further provided that "the amount of each periodical installment payment to be made by purchaser to the Company under this present lease shall be inclusive of and not in addition to the amount of each installment payment to be made by purchaser under such prior leases, bills or accounts; and all payments now and hereafter made by purchaser shall be credited pro rata on all outstanding leases, bills and accounts due the Company by purchaser at the time each such payment is made." Emphasis added.) The effect of this rather obscure provision was to keep a balance due on every item purchased until the balance due on all items, whenever purchased, was liquidated. As a result, the debt incurred at the time of purchase of each item was secured by the right to repossess all the items previously purchased by the same purchaser, and each new item purchased automatically became subject to a security interest arising out of the previous dealings.

        On May 12, 1962, appellant Thorne purchased an item described as a Daveno, three tables, and two lamps, having total stated value of $391.10. Shortly thereafter, he defaulted on his monthly payments and appellee sought to replevy all the items purchased since the first transaction in 1958. Similarly, on April 17, 1962, appellant Williams bought a stereo set of stated value of $514.95.¹ She too defaulted shortly thereafter, and appellee sought to replevy all the items purchased since December, 1957. The Court of General Sessions granted judgment for appellee. The District of Columbia Court of Appeals affirmed, and we granted appellants' motion for leave to appeal to this court.

        Appellants' principal contention, rejected by both the trial and the appellate courts below, is that these contracts, or at least some of them, are unconscionable and, hence, not enforceable. In its opinion

[350 F.2d 448]

in Williams v. Walker-Thomas Furniture Company, 198 A.2d 914, 916 (1964), the District of Columbia Court of Appeals explained its rejection of this contention as follows:

"Appellant's second argument presents a more serious question. The record reveals that prior to the last purchase appellant had reduced the balance in her account to $164. The last purchase, a stereo set, raised the balance due to $678. Significantly, at the time of this and the preceding purchases, appellee was aware of appellant's financial position. The reverse side of the stereo contract listed the name of appellant's social worker and her $218 monthly stipend from the government. Nevertheless, with full knowledge that appellant had to feed, clothe and support both herself and seven children on this amount, appellee sold her a $514 stereo set.

"We cannot condemn too strongly appellee's conduct. It raises serious questions of sharp practice and irresponsible business dealings. A review of the legislation in the District of Columbia affecting retail sales and the pertinent decisions of the highest court in this jurisdiction disclose, however, no ground upon which this court can declare the contracts in question contrary to public policy. We note that were the Maryland Retail Installment Sales Act, Art. 83 §§ 128-153, or its equivalent, in force in the District of Columbia, we could grant appellant appropriate relief. We think Congress should consider corrective legislation to protect the public from such exploitive contracts as were utilized in the case at bar."

        We do not agree that the court lacked the power to refuse enforcement to contracts found to be unconscionable. In other jurisdictions, it has been held as a matter of common law that unconscionable contracts are not enforceable.² While no decision of this court so holding has been found, the notion that an unconscionable bargain should not be given full enforcement is by no means novel. In Scott v. United States, 79 U.S. (12 Wall.) 443, 445, 20 L.Ed. 438 (1870), the Supreme Court stated:

"* * * If a contract be unreasonable and unconscionable, but not void for fraud, a court of law will give to the party who sues for its breach damages, not according to its letter, but only such as he is equitably entitled to. * * *"³

        Since we have never adopted or rejected such a rule,⁴ the question here presented is actually one of first impression.

        Congress has recently enacted the Uniform Commercial Code, which specifically provides that the court may refuse to enforce a contract which it finds to be unconscionable at the time it was made. 28 D.C.CODE § 2-302 (Supp. IV 1965). The enactment of this section, which occurred subsequent to the contracts here in suit, does not mean that

[350 F.2d 449]

the common law of the District of Columbia was otherwise at the time of enactment, nor does it preclude the court from adopting a similar rule in the exercise of its powers to develop the common law for the District of Columbia. In fact, in view of the absence of prior authority on the point, we consider the congressional adoption of § 2-302 persuasive authority for following the rationale of the cases from which the section is explicitly derived.⁵ Accordingly, we hold that where the element of unconscionability is present at the time a contract is made, the contract should not be enforced.

        Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.⁶ Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstances surrounding the transaction. In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power.⁷ The manner in which the contract was entered is also relevant to this consideration. Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain.⁸ But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the

[350 F.2d 450]

agreement are not to be questioned⁹ should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.¹⁰

        In determining reasonableness or fairness, the primary concern must be with the terms of the contract considered in light of the circumstances existing when the contract was made. The test is not simple, nor can it be mechanically applied. The terms are to be considered "in the light of the general commercial background and the commercial needs of the particular trade or case."¹¹ Corbin suggests the test as being whether the terms are "so extreme as to appear unconscionable according to the mores and business practices of the time and place." 1 CORBIN, op. cit. supra Note 2.¹² We think this formulation correctly states the test to be applied in those cases where no meaningful choice was exercised upon entering the contract.

        Because the trial court and the appellate court did not feel that enforcement could be refused, no findings were made on the possible unconscionability of the contracts in these cases. Since the record is not sufficient for our deciding the issue as a matter of law, the cases must be remanded to the trial court for further proceedings.

        So ordered.

        DANAHER, Circuit Judge (dissenting):

        The District of Columbia Court of Appeals obviously was as unhappy about the situation here presented as any of us can possibly be. Its opinion in the Williams case, quoted in the majority text, concludes: "We think Congress should consider corrective legislation to protect the public from such exploitive contracts as were utilized in the case at bar."

        My view is thus summed up by an able court which made no finding that there had actually been sharp practice. Rather the appellant seems to have known precisely where she stood.

        There are many aspects of public policy here involved. What is a luxury to some may seem an outright necessity to others. Is public oversight to be required of the expenditures of relief funds? A washing machine, e. g., in the hands of a relief client might become a fruitful source of income. Many relief clients may well need credit, and certain business establishments will take long chances on the sale of items, expecting their pricing policies will afford a degree of protection commensurate with the risk. Perhaps a remedy when necessary will be found within the provisions of the "Loan Shark" law, D.C.CODE §§ 26-601 et seq. (1961).

        I mention such matters only to emphasize the desirability of a cautious approach to any such problem, particularly since the law for so long has allowed parties such great latitude in making their own contracts. I dare say there must annually be thousands upon thousands of installment credit transactions in this jurisdiction, and one can only speculate

[350 F.2d 451]

as to the effect the decision in these cases will have.¹

        I join the District of Columbia Court of Appeals in its disposition of the issues.

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Notes:

        1 At the time of this purchase her account showed a balance of $164 still owing from her prior purchases. The total of all the purchases made over the years in question came to $1,800. The total payments amounted to $1,400.

        2 Campbell Soup Co. v. Wentz, 3 Cir., 172 F.2d 80 (1948); Indianapolis Morris Plan Corporation v. Sparks, 132 Ind.App. 145, 172 N.E.2d 899 (1961); Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69, 84-96, 75 A.L.R.2d 1 (1960). Cf. 1 CORBIN, CONTRACTS § 128 (1963).

        3 See Luing v. Peterson, 143 Minn. 6, 172 N.W. 692 (1919); Greer v. Tweed, N.Y. C.P., 13 Abb.Pr., N.S., 427 (1872); Schnell v. Nell, 17 Ind. 29 (1861); and see generally the discussion of the English authorities in Hume v. United States, 132 U.S. 406, 10 S.Ct. 134, 33 L.Ed. 393 (1889).

        4 While some of the statements in the court's opinion in District of Columbia v. Harlan & Hollingsworth Co., 30 App.D.C. 270 (1908), may appear to reject the rule, in reaching its decision upholding the liquidated damages clause in that case the court considered the circumstances existing at the time the contract was made, see 30 App.D.C. at 279, and applied the usual rule on liquidated damages. See 5 CORBIN, CONTRACTS §§ 1054-1075 (1964); Note, 72 YALE L.J. 723, 746-755 (1963). Compare Jaeger v. O'Donoghue, 57 App.D.C. 191, 18 F.2d 1013 (1927).

        5 See Comment, § 2-302, Uniform Commercial Code (1962). Compare Note, 45 VA.L.REV. 583, 590 (1959), where it is predicted that the rule of § 2-302 will be followed by analogy in cases which involve contracts not specifically covered by the section. Cf. 1 STATE OF NEW YORK LAW REVISION COMMISSION, REPORT AND RECORD OF HEARINGS ON THE UNIFORM COMMERCIAL CODE 108-110 (1954) (remarks of Professor Llewellyn).

        6 See Henningsen v. Bloomfield Motors, Inc., supra Note 2; Campbell Soup Co. v. Wentz, supra Note 2.

        7 See Henningsen v. Bloomfield Motors, Inc., supra Note 2, 161 A.2d at 86, and authorities there cited. Inquiry into the relative bargaining power of the two parties is not an inquiry wholly divorced from the general question of unconscionability, since a one-sided bargain is itself evidence of the inequality of the bargaining parties. This fact was vaguely recognized in the common law doctrine of intrinsic fraud, that is, fraud which can be presumed from the grossly unfair nature of the terms of the contract. See the oft-quoted statement of Lord Hardwicke in Earl of Chesterfield v. Janssen, 28 Eng. Rep. 82, 100 (1751):

        "* * * Fraud may be apparent from the intrinsic nature and subject of the bargain itself; such as no man in his senses and not under delusion would make * * *."

        And cf. Hume v. United States, supra Note 3, 132 U.S. at 413, 10 S.Ct. at 137, where the Court characterized the English cases as "cases in which one party took advantage of the other's ignorance of arithmetic to impose upon him, and the fraud was apparent from the face of the contracts." See also Greer v. Tweed, supra Note 3.

        8 See RESTATEMENT, CONTRACTS § 70 (1932); Note, 63 HARV.L.REV. 494 (1950). See also Daley v. People's Building, Loan & Savings Ass'n, 178 Mass. 13, 59 N.E. 452, 453 (1901), in which Mr. Justice Holmes, while sitting on the Supreme Judicial Court of Massachusetts, made this observation:

        "* * * Courts are less and less disposed to interfere with parties making such contracts as they choose, so long as they interfere with no one's welfare but their own. * * * It will be understood that we are speaking of parties standing in an equal position where neither has any oppressive advantage or power * * *."

        9 This rule has never been without exception. In cases involving merely the transfer of unequal amounts of the same commodity, the courts have held the bargain unenforceable for the reason that "in such a case, it is clear, that the law cannot indulge in the presumption of equivalence between the consideration and the promise." 1 WILLISTON, CONTRACTS § 115 (3d ed. 1957).

        10 See the general discussion of "Boiler-Plate Agreements" in LLEWELLYN, THE COMMON LAW TRADITION 362-371 (1960).

        11 Comment, Uniform Commercial Code § 2-307.

        12 See Henningsen v. Bloomfield Motors, Inc., supra Note 2; Mandel v. Liebman, 303 N.Y. 88, 100 N.E.2d 149 (1951). The traditional test as stated in Greer v. Tweed, supra Note 3, 13 Abb.Pr.,N.S., at 429, is "such as no man in his senses and not under delusion would make on the one hand, and as no honest or fair man would accept, on the other."

        1 However the provision ultimately may be applied or in what circumstances, D.C. CODE § 28-2-301 (Supp. IV, 1965) did not become effective until January 1, 1965.

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