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Coniglio v. Wenrich

A-2814-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

CONTRACTS; NOTES — An otherwise enforceable contract or promissory note can be invalidated if it is shown to have been executed under duress such as when the viability of the signing party’s business has been threatened by the beneficiary of the contract or note.

A business owner, who distributed health and beauty care goods to pharmacies and grocery stores, entered into an arrangement with a distributor of non-perishable goods to grocery stores. According to the arrangement, the health and beauty aids distributor was to distribute the other distributor’s goods to its own customer’s clients, either through direct sales from the non-perishable goods distributor or by purchasing the items from that distributor and then reselling them. The health and beauty aids distributor also allowed the non-perishable goods distributor to store merchandise in the health and beauty aids distributor’s warehouse facility and advanced cash to the non-perishable goods distributor so that it could buy a portion of the health and beauty aids distributor’s business. Initially, the arrangement was mutually beneficial and increased the profits of both parties. The relationship eventually became strained. The health and beauty aids distributor began to voice concerns about invoices for products that were never ordered and over the misapplications of cash he paid to the non-perishable goods distributor.

The non-perishable goods distributor sued the health and beauty aids distributor for breach of contract and unjust enrichment. At trial, the health and beauty aids distributor asserted that the non-perishable goods distributor failed to ship to customers on a number of occasions and as a result, the business owner’s relations with his clients became strained. The non-perishable goods distributor contended that the health and beauty aids distributor’s companies owed his companies a large outstanding debt. He also contended that as a result of the outstanding debt, he halted doing business with the health and beauty aids distributor because he had no security or assurances that the debt would be paid. The health and beauty aids distributor testified that nothing was past due and that he made significant payments throughout their business relationship but that the payments were not applied to valid invoices. The health and beauty aids distributor also testified that employees for the non-perishable goods distributor pressured him to sign two promissory notes totaling about one half million dollars before any further shipments would be made to his customers. The health and beauty aids distributor disputed the validity of the invoices for which his payments on the promissory notes were applied to and claimed that he found out that he overpaid the non-perishable goods distributor’s companies and subsequently stopped making payments on the promissory notes. A jury found that both promissory notes were executed under duress and that the health and beauty aids distributor had not been unjustly enriched. The non-perishable goods distributor’s motion for a judgment notwithstanding the verdict was denied by the lower court.

On appeal, the Appellate Division noted that an otherwise enforceable contract can be invalidated if it is shown to have been executed under duress, finding that the non-perishable goods distributor’s refusal to ship to the health and beauty aids distributor threatened the viability of the health and beauty aids distributor and resulted in the health and beauty aids distributor making decisions he otherwise would not have made. The Court also found that there was ample evidence for the jury to have found that the health and beauty aids distributor signed the promissory notes under duress. It also found that there was no error on the lower court’s part for not instructing the jury that it could have considered the health and beauty aids distributor’s payments to be an affirmation of his acceptance of the amounts the distributor claimed he was owed. The non-perishable goods distributor never raised the issue at trial, and the Court found that no unjust result occurred from the lower court’s decision not to issue such instructions to the jury. Thus, the lower court’s findings were affirmed.


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