Wolf v. The Marlton Corporation
57 N.J. Super. 278, 154 A.2d 625 (1959)
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Rule of Law:
A threat to perform a lawful act may constitute wrongful duress, justifying the threatened party's non-performance of a contract, if the threat is made for a malicious and unconscionable purpose that is morally or equitably wrongful.
Facts:
- On March 8, 1957, Milton and Sydelle Wolf entered into a contract with The Marlton Corporation to purchase a house to be built for $24,500, paying an initial deposit of $2,450.
- During the summer of 1957, the Wolfs experienced marital difficulties and consequently sought to withdraw from the purchase agreement.
- The Wolfs' attorney communicated their desire to cancel the contract and retrieve their deposit to Marlton's representatives.
- During negotiations to cancel the contract, the Wolfs' attorney informed Marlton's sales agent that if forced to complete the purchase, the Wolfs would resell the house to a purchaser who would be "undesirable" in the development.
- In a subsequent conversation with Marlton's president, Martin Field, the Wolfs' attorney reiterated the threat in stronger terms, stating that forcing the sale would be "the sorriest move" Field ever made and would ruin his building business.
Procedural Posture:
- Milton E. Wolf and Sydelle C. Wolf filed suit against The Marlton Corporation in the Camden County Court (trial court) to recover their $2,450 contract deposit.
- The County Court judge, sitting without a jury, entered a judgment in favor of the Wolfs.
- The Marlton Corporation (appellant) appealed the trial court's judgment to the Superior Court of New Jersey, Appellate Division, with the Wolfs as respondents.
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Issue:
Does a party's threat to perform a legal act—reselling a house to an undesirable buyer—for the malicious purpose of harming a developer's business constitute wrongful duress, justifying the developer's refusal to perform the contract?
Opinions:
Majority - Freund, J.A.D.
Yes. A threat to perform an otherwise legal act can constitute wrongful duress if it is made for a purely malicious and unconscionable motive to injure the other party's business, thereby justifying the threatened party's refusal to perform. The court reasoned that while a threat to do what one has a legal right to do generally does not constitute duress, the modern view recognizes that threats can be wrongful in a moral or equitable sense, even if not illegal. Citing the Restatement of Contracts, the court noted that acts that are wrongful in a moral sense and are used to cause fear can vitiate a transaction. The critical factor is the object of the threat; if made for an 'outrageous purpose,' a more critical standard is applied. The court concluded that threatening to resell a home to an undesirable purchaser for the sole purpose of injuring the builder's business is a malicious and unconscionable motive, making the threat 'wrongful.' This economic or moral duress is equivalent to physical duress in preventing performance, justifying the builder in treating the contract as breached.
Analysis:
This decision significantly expands the doctrine of economic duress by establishing that a threat to perform a facially legal act can be deemed wrongful based on the actor's malicious intent. It shifts the focus from the legality of the threatened act itself to the moral and equitable nature of the pressure being applied. The case sets a precedent that courts can look behind a party's exercise of a legal right to determine if it is being used as a tool for extortion or unconscionable coercion. This impacts contract law by providing a defense against 'bad faith' threats that, while not illegal, undermine the principles of fair dealing.
