McCubbin v. Buss
1966 Neb. LEXIS 579, 180 Neb. 624, 144 N.W.2d 175 (1966)
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Rule of Law:
A threat to perform a legally permissible act, such as terminating at-will employment, constitutes wrongful business coercion if the threat is unjust, inequitable, and used to induce an agreement on a collateral matter unrelated to the grounds for the threat.
Facts:
- Plaintiff worked as the general manager for defendant Goodrich Dairy, Inc. ('Dairy'), where defendant Harold H. Buss was president.
- In 1959, Plaintiff, Buss, and Dairy entered into a stock-purchase contract which obligated Dairy to purchase a deceased stockholder's shares.
- In January 1963, a stock transaction resulted in Buss obtaining a majority interest in Dairy's stock.
- In early 1964, Buss expressed a desire to cancel the stock-purchase contract, citing a potential financial burden on Dairy, but Plaintiff was reluctant.
- On April 7, 1964, following a disagreement over the contract, Buss threatened to terminate Plaintiff's employment unless he agreed to the cancellation.
- On April 8, 1964, Plaintiff signed the agreement to discharge the stock-purchase contract specifically to keep his job.
- On May 28, 1964, Buss terminated Plaintiff's employment anyway.
Procedural Posture:
- Plaintiff sued Goodrich Dairy, Inc. and Harold H. Buss in the trial court, seeking rescission of an agreement.
- The trial court entered a judgment against the Plaintiff.
- Plaintiff appealed the adverse judgment to this court.
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Issue:
Does a majority stockholder's threat to terminate a general manager's employment to compel him to sign an agreement discharging a separate stock-purchase contract constitute wrongful business coercion that renders the agreement voidable?
Opinions:
Majority - Smith, J.
Yes. A threat to terminate employment to coerce assent to a separate agreement constitutes wrongful business coercion, rendering the agreement voidable. Although an employer generally has the legal right to terminate an at-will employee, a threat to do so becomes wrongful when it is unjust and inequitable. The court found Buss's threat was wrongful because it was made with an improper motive—to gain leverage in a collateral matter (the stock contract)—rather than for any legitimate business reason related to Plaintiff's performance. The court determined that Buss's claims of financial hardship on the company and poor performance by the plaintiff were pretextual. The combination of the parties' relationship, the improper motive, the wrongful pressure on Plaintiff's employment interest, the inadequate consideration for the contract's discharge, and the direct causation between the threat and the agreement made the transaction voidable for business coercion.
Dissenting - Kuns, District Judge
The opinion notes a dissent but does not provide its reasoning.
Analysis:
This decision significantly clarifies the doctrine of business coercion, also known as economic duress. It establishes that a threat does not need to be independently illegal (e.g., a crime or tort) to be considered 'wrongful.' The court shifts the focus from the legality of the threatened act itself to the motive and equity of the threat in its context. By finding that a threat to exercise a legal right (terminating at-will employment) can be wrongful if made in bad faith to gain an advantage in an unrelated transaction, the decision broadens the protections available to parties with unequal bargaining power. This precedent encourages courts to look beyond the face of the threat to examine the fairness of the overall transaction and the propriety of the threatener's motives.
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